The 2007 Crockett Report recommended that the IMF establish an endowment, funded by the proceeds of limited and structured gold sales. In June 2009, the process allowing the IMF to sell 403.3 tons of gold was finalized. The joint statement on gold released in August 2009, announcing the renewal of C.B.G.A., included the following wording:
"The signatories recognize the intention of the IMF to sell 403 tons of gold and noted that such sales can be accommodated within the above ceilings.' To date, 212 tons of gold have been sold by the IMF in off-market transactions and the IMF has announced plans to offer the remainder of its saleable gold on the open market."What Does Phase Two of the IMF Gold Sales Mean?
After directly offering gold to the world's central banks, selling to only a few of them, the IMF moved to Phase Two of their gold sales. Please understand though that Phase One allowed the IMF to announce to whom they had sold gold and what amount. Many central banks would have been unhappy that their potential purchase would be announced, simply because it could affect the gold price and send it higher, making future purchases more expensive. This is particularly so of inscrutable China, who last year announced that they had added to their reserves over the previous five years. This was well after the event and was seen not to imply that more would be bought by China (we believe they continue to buy surreptitiously). So, once the IMF had completed Phase One they turned to Phase Two.
This was to the 'open market.' The terms of Phase Two implied, by definition, that no buyers would be named. Sales through the open market by the IMF would be to buyers who the IMF would not know themselves. It is a condition of the 'open market.'
The 'Open Market'
What is the 'open' market? It is the gold market where brokers or banks representing clients buy and sell gold. It is a 24-hour market where such professionals at one time or another during the day buy and sell gold for their clients. The main physical market is in London, where it has been for hundreds of years. Five leading Bullion banks come together twice a day to buy and sell gold for their clients who are linked to them through the dealer's banks who, in turn, are connected to all their worldwide buyers and sellers by phone. The results of their twice-daily dealings are published on the website www.goldfixing.com where you can see which of the banks were buyers and which were sellers at that fix.
Why Didn't the IMF Name Those to Whom They Sold Gold?
Are the names of those who bought gold from the IMF known to the market? No. Each broker or bank involved keeps the names of their clients to themselves. This is preferred by most clients anyway. This is perfectly normal and has no sinister connotations, whatsoever.
To repeat what we said above, even the IMF would not know who they sold gold to. All they would know is their own bankers who would only know the buying banks at the time the gold sold, but not their clients.
Will New IMF Sales Affect the Gold Price? If So, How?
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