IMF gold and China -- trotsky, 12:08:31 02/26/10 Fri
first of all, it seems highly unlikely that China will buy the IMF's gold. just consider that last time around, China used a state agency not connected to the central bank, buying from domestic producers on the sly. only when the 400 tons were transferred to the PBoC did China tell anyone about it. why should it do things differently now? contrary to Western CB's and the IMF who have a habit of pre-announcing their every move in the gold market ten times before they actually do anything, China does not try to do everythig in its power to get the worst possible price.
secondly, whether the IMF sells its gold to China, or persons unknown, is completely irrelevant. gold may get a brief psychological boost if an official sector buyer were to step up, but in reality 190 tons of gold hardly matter to this market. the IMF could sell this amount in London in less than 2 hours (nearly 700 tons trade daily in London alone - on average). why everyone gets so excited over a measly 190 tons in a market with a theoretical supply of 155,000 tons is anyone's guess. this is a drop in the ocean, and will have no influence whatsoever on the bull market in gold beyond maybe a single day's worth of trading.
lastly, the faster the IMF sell its gold, the better. it is symptomatic of the looming bankruptcy of the dollar based fiat currency regime that the IMF feels compelled to cough up its gold. good riddance - anything that brings the day when we can return to a market-based money closer has to be embraced as a welcome development. |
