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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 10/23/2009 : 17:04:40
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This was also posted on the sister site goldforum-
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Excerpt-
The mineweb.com story about Russian gold sales that the usual New York gold commentator spoke of above, is restricted to subscribers only. Fortunately, the story was posted in its entirety over at lemetropolecafe.com yesterday afternoon, and I've cut and paste a chunk of it below.
TheBullionDesk.com
Russia could sell 45t from gold reserves by end of month - source
London, 22 October 2009 -- A large consignment of gold to be sold into the loco London market by a state-backed Russian body, as reported earlier today, could top 45 tonnes and may take place by the end of this month, a Russian expert said.
The government agency for precious metals and minerals, Gokhran, intends to sell its first large shipment of gold since the Soviet era, Russian news agency Interfax reported today.
The sale would take place via state-owned export trading company Almazjuvelir, based in Moscow, on the London fix, Interfax reported, citing an unnamed source.
The news surprised Russia watchers in the London bullion market - the move would run counter to a trend by Russia's central bank over the past two years to increase its purchases of gold.
In September, the central bank of the Russian Federation added 12.9 tonnes to its gold reserves, bringing its total gold purchases for this year to more than 70 tonnes and eclipsing the whole of its purchases for 2008, which stood at 69 tonnes.
But the central bank and Gokhran operate independently, several sources said, raising the credibility of the story.
"It's possible. Gokhran holds gold, platinum and possibly silver. It goes back to the dark old murky days when Russia used to hide inventories from the market," one trader said. "The two big questions are: who has said it - does he have authority - and what is ‘big’?"
The story appears to be backed up by evidence in Russia's draft budget for 2010-2012, released earlier this month.
A Russian expert, who declined to be named, said via email: "You have to remember that the Byzantine Empire often employs a well-organised planned approach to commercial activities. Gold is generically viewed there as an asset of the last resort - not a particularly desired one that has to be flogged off as soon as possible."
Gokhran (or Go-Hran) is effectively a depository that keeps the metal and then sells it if and when it is ordered to do so by the Finance Ministry (MinFin), the source said.
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The gold bears are laughing out loud thinking this will force down gold's price and kill the gold bull, but how soon they forget that lower prices brings out bargian hunters, and hasn't China stated that it wants to increase its gold reserves without pushing up the price of the yellow metal?
I sense this December will be a good time to buy yourself a Christmas present consisting of PMs (As goes gold, silver follows.)
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Country
1000+ Penny Miser Member
USA
3121 Posts |
Posted - 10/23/2009 : 17:30:29
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Another article on the subject states that sales would be to fund a budget deficit. This sounds like market manipulation to me, possibly coordinated, to temporarily force down the price of GOLD so that they can buy some more GOLD at cheaper prices. Actually, Russia wouldn't have to sell the GOLD - just put out a rumor and cause some panic. Rumors like this are done on Wall Street just to panic weak investors to fork over their securities to strong investors.
"...some traders said they were sceptical of the bullion sale plans as the Russian central bank had increased stocks of gold as part of its international reserves by 14 percent in the last nine months to 19 million ounces.
"Why would they accommodate the international market when their own central bank is trying to buy gold?" said Afshin Nabavi, head of trading at MKS Finance in Geneva."
Of course, it could be true. Who would want the GOLD and what does Russia need for its economy or military or elites? This might be part of a bigger deal in progress. Could the 2009 GOLD already been sold?
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Edited by - Country on 10/23/2009 19:06:49 |
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fb101
Administrator
USA
2856 Posts |
Posted - 10/23/2009 : 19:33:43
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I'll bet the Chinese under the covers will buy the whole lot and pay for it in US Tbonds.
That is, IF it's real, which I doubt. I find it easier to believe the manipulation theory. |
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Edited by - fb101 on 10/23/2009 19:34:49 |
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beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
Posted - 10/25/2009 : 17:39:57
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| The whole transaction could be conducted in-house between the Russian Central Bank and Gokhran without telegraphing their moves to the investment community. This is a publicity stunt to try and temporarily affect the direction of the bullion market. The tonnes, if actually sold, will be easily absorbed by the burgeoning Central Bank demand of other countries, or as fb101 suggests, the Chinese. You might see a knee-jerk reaction by "the sky-is-falling" gold bears if this actually comes to pass, but no more than perhaps back down to $1020 an ounce, and most likely for not more than a week. Methinks that would be one of the few buying opportunities you are going to see as the price accelerates. Back up the truck if it happens! |
Hoard now and hold on!
http://coppermillions.blogspot.com/
http://wherewillyoubein2012.blogspot.com/ |
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 10/25/2009 : 20:21:35
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If Russia is selling someone is buying...probably China or the IMF.
If you read toward the bottom you will see the following statement:
"Auctions and "restitution" sales (1976–80). The IMF sold approximately one-third (50 million ounces) of its then-existing gold holdings following an agreement by its member countries to reduce the role of gold in the international monetary system."
Well....that sounds like price fixing to me...
Gold in the IMF
September 18, 2009
Gold played a central role in the international monetary system until the collapse of the Bretton Woods system of fixed exchange rates in 1973. Since then, the role of gold has been gradually reduced. However, it is still an important asset in the reserve holdings of a number of countries, and the IMF remains one of the largest official holders of gold in the world. Consistent with the new income model for the Fund agreed in April 2008, on September 18, 2009, the IMF Executive Board approved gold sales strictly limited to 403.3 metric tons, representing one eighth of the Fund's total holdings of gold. Resources linked to these gold sales will also help boost the Fund's concessional lending capacity.
How the IMF acquired its gold holdings
The IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF's total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $9.2 billion) on the basis of historical cost. As of August 28, 2009, the IMF's holdings amounted to $98.8 billion at current market prices.
A portion of these holdings was acquired after the Second Amendment of the IMF's Articles of Agreement in April 1978. This portion, amounting to 12.97 million ounces (403.3 metric tons) with a market value of $12.4 billion as of August 28, 2009, is not subject to restitution to IMF member countries (see below), unlike gold the IMF acquired before 1978.
The IMF acquired the majority of its gold holdings prior to the Second Amendment through four main types of transactions.
First, when the IMF was founded in 1944 it was decided that 25 percent of initial quota subscriptions and subsequent quota increases were to be paid in gold. This represents the largest source of the IMF's gold.
Second, all payments of charges (interest on member countries' use of IMF credit) were normally made in gold.
Third, a member wishing to acquire the currency of another member could do so by selling gold to the IMF. The major use of this provision was sales of gold to the IMF by South Africa in 1970–71.
And finally, member countries could use gold to repay the IMF for credit previously extended.
The IMF's legal framework for gold
Role of gold. The Second Amendment to the Articles of Agreement in April 1978 fundamentally changed the role of gold in the international monetary system by eliminating the use of gold as the common denominator of the post-World War II exchange rate system and as the basis of the value of the Special Drawing Right (SDR). It also abolished the official price of gold and ended the obligatory use of gold in transactions between the IMF and its member countries. It furthermore required that the IMF, when dealing in gold, avoid managing its price or establishing a fixed price.
Transactions. Following the Second Amendment, the Articles of Agreement limit the use of gold in the IMF's operations and transactions. The IMF may sell gold outright on the basis of prevailing market prices, and may accept gold in the discharge of a member country's obligations (loan repayment) at an agreed price, based on market prices at the time of acceptance. Such transactions require Executive Board approval by an 85 percent majority of the total voting power. The IMF does not have the authority under its Articles to engage in any other gold transactions—such as loans, leases, swaps, or use of gold as collateral—nor does it have the authority to buy gold.
Restitution. The Articles also provide for the restitution of the gold the Fund held on the date of the Second Amendment (April 1978) to those countries that were members of the Fund as of August 31, 1975. Restitution would involve the sale of gold to this group of member countries at the former official price of SDR 35 per ounce, with such sales made to those members who agree to buy it in proportion to their quotas on the date of the Second Amendment. A decision to restitute gold requires support from an 85 percent majority of the total voting power. The Articles do not provide for the restitution of gold the Fund has acquired after the date of the
Second Amendment.
How and when the IMF has used gold in the past
Outflows of gold from the IMF's holdings occurred under the original Articles of Agreement through sales of gold for currency, and via payments of remuneration and interest. As noted, since the Second Amendment of the Articles of Agreement, outflows of gold can only occur through outright sales. Key gold transactions included:
• Sales for replenishment (1957–70). The IMF sold gold on several occasions to replenish its holdings of currencies.
• South African gold (1970–71). The IMF sold gold to member countries in amounts roughly corresponding to those purchased from South Africa during this period.
• Investment in U.S. government securities (1956–72). In order to generate income to offset operational deficits, some IMF gold was sold to the United States and the proceeds invested in U.S. government securities. Subsequently, a significant buildup of IMF reserves prompted the IMF to reacquire this gold from the U.S. government.
• Auctions and "restitution" sales (1976–80). The IMF sold approximately one-third (50 million ounces) of its then-existing gold holdings following an agreement by its member countries to reduce the role of gold in the international monetary system. Half of this amount was sold in restitution to member countries at the then-official price of SDR 35 per ounce; the other half was auctioned to the market to finance the Trust Fund, which supported concessional lending by the IMF to low-income countries.
• Off-market transactions in gold (1999–2000). In December 1999, the Executive Board authorized off-market transactions in gold of up to 14 million ounces to help finance the IMF's participation in the Heavily Indebted Poor Countries (HIPC) Initiative. Between December 1999 and April 2000, separate but closely linked transactions involving a total of 12.9 million ounces of gold were carried out between the IMF and two members (Brazil and Mexico) that had financial obligations falling due to the IMF. In the first step, the IMF sold gold to the member at the prevailing market price and the profits were placed in a special account invested for the benefit of the HIPC Initiative. In the second step, the IMF immediately accepted back, at the same market price, the same amount of gold from the member in settlement of that member's financial obligations. In the end, these transactions left the balance of the IMF's holdings of physical gold unchanged.
The IMF's strictly limited gold sales approved in September 2009
On September 18, 2009, the Executive Board approved the sale of 403.3 metric tons of gold (12.97 million ounces), which amounts to one-eighth of the Fund's total holdings of gold. In accordance with the priority of avoiding disruption of the gold market, the Executive Board adopted modalities for the gold sales consistent with guidelines it had earlier established (see below).
This decision is a key step in implementing the new income model agreed in April 2008 to help put the IMF's finances on a sound long-term footing. A central component of the new income model is the establishment of an endowment funded by the profits from the sale of a strictly limited portion of the Fund's gold, being the gold the Fund has acquired after the Second Amendment of the Articles. In July 2009, the Executive Board agreed that resources linked to gold sales would also help boost the Fund's concessional lending capacity.
In August 2009, the European Central Bank and other central banks announced the renewal of their agreement (Central Bank Gold Agreement) on gold sales, which are not to exceed 400 metric tons annually and 2,000 metric tons over the five years starting on September 27, 2009. The announcement notes that sales of 403 tons of gold by the IMF can be accommodated within these ceilings. This ensures that gold sales by the Fund would not add to the announced volume of sales from official sources.
Executive Board guidelines for gold sales
The IMF's Executive Board has reaffirmed the long-standing principle that the Fund has a systemic responsibility to avoid causing disruptions that would adversely affect gold holders and gold producers, as well as the functioning of the gold market. To that end, in February 2008, the Board endorsed the following guidelines to govern the envisaged gold sales:
(i) Sales should be strictly limited to the amount of gold that the Fund has acquired since the Second Amendment of the Articles of Agreement (12,965,649 fine troy ounces or 403.3 metric tons, which represent one-eighth of the Fund's total holdings).
(ii) The Fund's gold sales should not add to the announced volume of sales from official sources.
(iii) The scope for sales of gold to one or more official holders should be explored. This would be advantageous because such transactions would redistribute official gold holdings without changing total official holdings. There would also be the practical advantage that the Fund could receive sales proceeds earlier, thereby beginning to generate income from an endowment sooner.
(iv) Absent sufficient interest from other official holders to purchase gold directly from the Fund, phased on-market sales would represent the most appropriate modality for potential gold sales. This would follow the approach adopted successfully over a number of years by current Central Bank Gold Agreement participants.
(v) A strong governance and control framework, together with a high degree of transparency, would be essential for gold sales conducted by the Fund. A clear, transparent communications strategy, including regular external reporting on sales, should be adopted, in order to assure markets that the gold sales are being conducted in a responsible manner.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
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beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
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MichaelOnion
Penny Pincher Member
USA
105 Posts |
Posted - 11/01/2009 : 23:35:36
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Great move by Russia (who is probably buying all they can). Maybe I should start a rumor that MichaelOnion is selling his gold and see if the prices dip so I can buy more  |
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beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
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MichaelOnion
Penny Pincher Member
USA
105 Posts |
Posted - 11/02/2009 : 23:11:29
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| LOL! beauanderos. Yes, onions for all |
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Russia to sell Gold
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