View Full Version : Japan's Omi Recommends IMF Sell Gold Reserves
WASHINGTON -(Dow Jones)- Japan's finance minister said Saturday he had proposed to the International Monetary Fund's policy-steering body that the fund sell its gold reserves to cover its falling income.
"Japan has told (the committee): 'Why not sell gold?'" Finance Minister Koji Omi told reporters after attending the International Monetary and Finance Committee's spring meeting in Washington.
Omi's proposal is in line with Japan's long-held stance as well as recommendations made earlier this year by a high-level panel at the IMF. In late January, the panel, chaired by Andrew Crockett, president of JPMorgan Chase & Co. (JPM), urged the fund to sell some of its vast gold reserves and invest the proceeds to raise income.
The fund currently is unable to earn enough revenue to cover its operating costs because of its shrinking loan portfolio. Countries such as Brazil, the Philippines and Uruguay have paid off loans from the fund ahead of schedule, reducing interest payments to the international lender, while fewer nations are seeking the fund's financial support.
Commodities traders have been closely watching the IMF's handling of gold. The fund is the third-largest holder of gold reserves in the world, after the U.S. and German central banks. As of late last year, the IMF said it held 103.4 million ounces of gold.
Omi Saturday also repeated Japan's position that countries shouldn't rely too much on exchange-rate changes as a means of reducing the world's trade imbalances.
"It's important that each country...move ahead with structural reforms and healthy developments, instead of trying to fix global imbalances solely through exchange rates," Omi said.
"The consensus (among the IMFC members) is that (each) individual country ( should) maintain steady developments by resolving its own structural problems and, through that process, mend the world's imbalances," he said.
Earlier, Omi had attended the IMFC's spring meeting. Members of the committee discussed a range of issues, from the fund's battered finances, to the world's economy, to global trade imbalances.
DOW Jones
Takashi Nakamichi
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070414%5cACQDJON20070414212 5DOWJONESD%20%20JONLINE000395.htm&
Looks like the news is getting itself ready to be announced to the masses, I wonder how the masses handle it.
idianov
04-14-07, 11:22 PM
The news of IMF selling Gold comes up every time Gold is threatening $700 level.
Jim Sinclair from jsminset.com commented on this couple of months ago:
"Should the IMF decide to sell gold, it is a bullish, not bearish event. Only the announcement of such an event could impact the not knowledgeable and even that would only last for a very short time. This is true for all the above reasons and because the cash market for gold has overtaken the paper gold market.
1. Any sale by the IMF or any central bank on gold will never see the market.
2. Historically such sales, even if they appear to be related to the market, is in fact to other central banks.
3. With almost ever central bank wishing to diversify their reserves and with gold clearly as a performing asset, selling all of the IMF gold would be easy because of central bank interest.
4. Historically, the selling of gold by the IMF was the most bullish thing that happened for the 1968 to 1980 bull market. The reason this is true is because it allows major players to enter the gold market in large ots at one price and free of commission.
"
Source link (http://www.jsmineset.com/ARhome.asp?VAfg=1&RQ=AR,1&ARList=1&cTID=&cCat=&PRID=&cSubCat=&Full=1&Archive=&ArtSel=$4396$)
With regards to mass participation in Gold market, check out the current traffic rating of Kitco.com (http://www.alexa.com/data/details/traffic_details?site0=kitco.com&site1=&site2=&site3=&site4=&y=r&z=3&h=300&w=540&range=max&size=Medium&url=kitco.com)
The news of IMF selling Gold comes up every time Gold is threatening $700 level.
Jim Sinclair from jsminset.com (http://jsminset.com) commented on this couple of months ago:
"Should the IMF decide to sell gold, it is a bullish, not bearish event. Only the announcement of such an event could impact the not knowledgeable and even that would only last for a very short time. This is true for all the above reasons and because the cash market for gold has overtaken the paper gold market.
1. Any sale by the IMF or any central bank on gold will never see the market.
2. Historically such sales, even if they appear to be related to the market, is in fact to other central banks.
3. With almost ever central bank wishing to diversify their reserves and with gold clearly as a performing asset, selling all of the IMF gold would be easy because of central bank interest.
4. Historically, the selling of gold by the IMF was the most bullish thing that happened for the 1968 to 1980 bull market. The reason this is true is because it allows major players to enter the gold market in large ots at one price and free of commission.
"
Source link (http://www.jsmineset.com/ARhome.asp?VAfg=1&RQ=AR,1&ARList=1&cTID=&cCat=&PRID=&cSubCat=&Full=1&Archive=&ArtSel=$4396$)
With regards to mass participation in Gold market, check out the current traffic rating of Kitco.com (http://www.alexa.com/data/details/traffic_details?site0=kitco.com&site1=&site2=&site3=&site4=&y=r&z=3&h=300&w=540&range=max&size=Medium&url=kitco.com)
IMF is bleeding a lot of red ink, losses last year were about 2.5 billion SDR's. Losses are continueing this year. Assets/loans have gone from 19,227 billion SDR's to 9,482 billion SDR's. Current exchange rate 1 USD =
0.657013 SDR Turkey holds over 7 billion of the 9 billion SDR's on loan and Turkey runs the risk of prepayment this year.
http://www.imf.org/External/Pubs/FT/quart/2007fy/013107.pdf
63 page IMF PDF doc of January 2007 income statement.
If the world pays off their IMF loans at the same rate as last year, by the end of this year the IMF will have no loan assets outstanding and the only asset they'll be holding is the 103 million ounces of the shiny metal.
If the IMF is no longer able to create money through lending than who is inflating the money supply. I don't see this as a good thing for gold.
babbittd
05-27-08, 11:23 PM
Jim Sinclair from jsminset.com (http://jsminset.com) commented on this couple of months ago:
"Should the IMF decide to sell gold, it is a bullish, not bearish event. Only the announcement of such an event could impact the not knowledgeable and even that would only last for a very short time. This is true for all the above reasons and because the cash market for gold has overtaken the paper gold market.
1. Any sale by the IMF or any central bank on gold will never see the market.
2. Historically such sales, even if they appear to be related to the market, is in fact to other central banks.
3. With almost ever central bank wishing to diversify their reserves and with gold clearly as a performing asset, selling all of the IMF gold would be easy because of central bank interest.
4. Historically, the selling of gold by the IMF was the most bullish thing that happened for the 1968 to 1980 bull market. The reason this is true is because it allows major players to enter the gold market in large ots at one price and free of commission.
"
Source link (http://www.jsmineset.com/ARhome.asp?VAfg=1&RQ=AR,1&ARList=1&cTID=&cCat=&PRID=&cSubCat=&Full=1&Archive=&ArtSel=$4396$)
John Embry talked about that in his last Investor's Digest (http://www.sprott.com/pdf/investorsdigest/digest.pdf)
on IMF gold-selling announcements:
...this initiative requires Congressional approval that will take many months, if not years, if it is even forthcoming at all.
The IMF's gold does actually belong to the organization, as it has been allocated to the IMF by many nations who are the real owners. There has always been a question, which has never been satisfactorily addressed, as to whether the 3,200 tonnes that the IMF supposedly owns is being double-counted because the donors really consider it as their gold also. This raises the possibility that the proposed sale might just be a book entry closing out a previous lease transaction, in which the gold was loaned and subsequently sold by the borrower and it not coming back to the original owner. To top it off, the IMF acknowledged that the sale will occur under the auspices of the Washington Agreement and will therefore not be additional supply, as it will just replace absent European central bank sales.
IMF is bleeding a lot of red ink, losses last year were about 2.5 billion SDR's. Losses are continueing this year. Assets/loans have gone from 19,227 billion SDR's to 9,482 billion SDR's. Current exchange rate 1 USD =
0.657013 SDR Turkey holds over 7 billion of the 9 billion SDR's on loan and Turkey runs the risk of prepayment this year.
http://www.imf.org/External/Pubs/FT/quart/2007fy/013107.pdf
63 page IMF PDF doc of January 2007 income statement.
If the world pays off their IMF loans at the same rate as last year, by the end of this year the IMF will have no loan assets outstanding and the only asset they'll be holding is the 103 million ounces of the shiny metal.
If the IMF is no longer able to create money through lending than who is inflating the money supply. I don't see this as a good thing for gold.
Isn't one of the reasons the IMF is going the way of the dinosaurs is that the same countries that it purported to "help" are increasingly rejecting its prescriptions? Malaysia in particular refused IMF involvement in its economy after the 1990's "Asian Crisis". Former Malaysian Prime Minister Mahathir was a particularly vocal critic of the IMF (and that dastardly currency speculator Soros as well, as I recall :p)
ASEAN looks for money swap consensus
April 4, 2001
Web posted at: 4:54 AM EDT (0854 GMT)KUALA LUMPUR, Malaysia -- An agreement to create a Southeast Asian web of currency swaps to protect currencies in times of financial distress so far eludes officials meeting here...
...The aim is to link international reserves of the 10 countries from the Association of South East Asian Nations (ASEAN) with those of China, South Korea and Japan, as a form of facility that can be tapped in a financial crisis...
...But creation of the scheme faces a big obstacle as Malaysia is staunchly opposed to the participation of the International Monetary Fund to supervise its implementation...
...The country, which balked at IMF assistance during the Asian economic crisis of 1997-98, says there is no role for the Washington-based institution in the regional currency plan...
...Malaysia did not turn to the IMF for financial help during the Asian crisis...
...Its radical approach of imposing capital controls and pegging its currency at 3.8 ringgit to the U.S. dollar to ward off speculative attacks on its foreign exchange and stock markets helped it recover faster than its neighbors...
http://archives.cnn.com/2001/BUSINESS/asia/04/04/asean.swaps/index.html
Wednesday, 11 December, 2002, 06:58 GMT
IMF repents over Malaysian criticism
The International Monetary Fund has praised Malaysia's economic performance, after a short recession last year, and admitted it was wrong to oppose fixing the currency to the dollar...
...The IMF said Malaysia's astute handling of its economy showed it was wrong to advise against a currency peg...
...Malaysia fixed its currency to protect it from speculators in direct contravention of the IMF's advice during the Asian financial crisis between 1997 to 1999.
As a result it has fared much better economically than most of its neighbours who followed IMF policy at the time...
http://news.bbc.co.uk/2/hi/business/2564557.stm
BlackVoid
06-10-08, 03:42 PM
Hopefully they will sell all gold (I like to buy it cheap!). After that they can go bankrupt, I really don't care. :D It would be a better world without them.
The real question is, do they REALLY have gold? My guess is that this was loaned out (and sold) to other banks a long time ago. This is just jawboning. If there are still no sales within 1 year, then this is just a bluff.
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