IMF Sells 10 Tonnes Of Gold To Sri Lanka. India Plans To Buy More Gold From IMF !
- The past 2 weeks acceleration in gold price is turning doubters into gold bugs. It has been a long time coming. But well worth the wait. Many central banks are shoring up their reserves with gold. This is a sign that the USD is toast! In the past, central banks kept USD because it is the world reserve and international trade settlement currency. Now that everyone and their pet goldfish are talking about abandoning the USD, gold is returning as money with a vengeance. This upward gold price move looks like going parabolic soon!
IMF sells 10 tonnes of gold to Sri Lanka
The International Monetary Fund said Wednesday it had sold 10 tonnes of gold to Sri Lanka’s central bank for 375 million dollars, as part of a restructuring of IMF financial resources. It was the third IMF sale of gold in a month as the Washington-based institution seeks to reduce its dependence on lending revenue and bolster its finances amid the global economic crisis.
“The sale was conducted on the basis of market prices prevailing on” Monday, the IMF said in a statement. Gold prices had hit a record high that day, topping 1,170 dollars an ounce. Since then, the price of the precious metal has soared higher to new all-time peaks as investors seek a safe haven amid economic uncertainty.
The sale brought the total IMF gold sold to central banks to 212 tonnes. India bought 200 tonnes between October 19 and 30 for 6.7 billion dollars and Mauritius bought two tonnes on November 11 for 71.7 million dollars.
Sri Lanka’s central bank in early November said it has been buying gold to diversify its reserves amid volatile currency markets but refused to reveal from which sources the bank was buying the gold or at what prices.
India plans to buy more gold from IMF
India is open to buying more gold from the International Monetary Fund (IMF). It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation. A government official said that the additional purchase would depend on the “successful pitching by RBI”. “RBI is an independent body, and the government does not interfere in its affairs. It will get the gold if its bid is successful and at the price it has offered,” said the official.
RBI did not respond to Financial Chronicle questions if it was bidding for the remaining IMF gold. The purchase of the first lot of 200 tonnes, RBI had said at the time, was a part of its foreign exchange reserves management operations.
Responding to query from FC, an IMF spokesperson said the gold sale process was still under way and “there is no fixed timetable for completing the sale”. Its spokesperson further said that “the fund does not wish to comment on discussions with individual members.”
RBI has good reasons to further enrich its gold reserves. In just three weeks it has been able to benefit by as much as $800 million on the investment of $6.7 billion it made in buying 200 tonnes from IMF. Since 1999 RBI has been periodically valuing its gold reserves at “prices close to the market”. It has not done so since it purchased the gold from IMF.
RBI bought the 200 tonnes at $1,045 an ounce. The transaction, from IMF to RBI, involved daily sales that were staggered over a two-week period, October 19-30, with each daily sale conducted at a price set on the basis of that day’s market price.
Disclaimer – I am not a financial advisor. This is not an advice to buy, sell or hold any stocks or bonds or any precious metals. I am long gold and silver.
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