25 February 2010

China Said to Purchase Remainder of IMF Gold Sale

This is being reported by Finmarket, a Russian news agency.

I would like this to be confirmed by an official Chinese news agency.

There are recent stories to the contrary from the region: IMF Purchases Not Feasible for China Says China Gold Association The CGA thinks it is more appropriate for China to buy actual foreign mining properties rather than refined bullion, except of course from local sources I'm sure.

I think it is highly unlikely that China would pre-announce any deal or their intentions until the price was firmly set. They are not like the Bank of England which announces its intentions first, and then works against itself in the market.

Having said that, this is credible story, because the Chinese Central Bank is a known buyer of gold, from a variety of sources both foreign and domestic. Further, they were said to very disappointed that India was able to purchase the entire 200 tons initially offered by the IMF at a private pricing of $1050 per ounce.

China would like to increase gold as a percentage of their official reserves closer to the international average which is about 10 percent. Right now their holdings are only 1.2% as I recall.

The bullion banks can use paper gold to manipulate pricing around key events like this week's options expiration in the short term. They are powerful, and have many friends, their demimonde, who will help them to spin the facts, place opinion pieces, and resurrect old studies, to convince a gullible public once again that their promises are good, that their paper riches are wealth. This is the essence of the shaping of public opinion, the hidden persuaders, the not always subtle propaganda campaigns that so often pass for news these days.

But the international currency regime is changing, and the developing countries are choosing to protect their reserves in traditional ways. For the first time in over twenty years the central banks have become net buyers of gold.

The wealthy are buying physical silver and gold in anticipation of a dislocation in the structure of the existing international currency regime, no matter what they might say publicly to reassure the markets. This we know. Whether this is the most prudent thing to have done only time will tell, since there are a range of possible outcomes, and probabilities. But change is in the wind; the time of reckoning approaches and the accounts will be tallied and settled.

Eventually the price manipulators may not be able deliver what they have already sold, and will face a default. As they have done so many times in the past, they will obtain some relief from the exchanges, which they virtually control, in the form of a paper settlement. If necessary, they will ask for a bailout from their friends in the government, at your expense if you are holding their paper.

Then we will see who believes in freedom and fair markets, and who stands for tyranny, for whatever reasons, whenever it suits their needs.

China To Purchase Half of IMF's Gold


China has confirmed the intention to purchase 191.3 tons of gold from the International Monetary Fund at an open auction, Finmarket news agency said.

World central banks started to increase their gold reserves after prices on gold began to climb in 2001. The IMF sells gold within the scope of a program to diversify sources of income and achieve an increase in lending.

The IMF announced an intention to sell 403.3 tons of gold in accordance with the adequate decision made by the board of directors of the fund in September of 2009. India, Mauritius and Sri Lanka purchased about 212 tons of the amount at the end of 2009. India purchased most – 200 tons.

China’s interest in international trade is connected with the development of the nation’s economy, as well as with the growing consumer demand in the country.

“Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market. China is interested in the development of the domestic consumer market,” the agency reports...