breaking news, instant views -2009.11.03

Breaking News Instant Views Date 2009-11-3 Source Bloomberg IMF Sells Gold to Central Bank of India, Netting $6.7 Billion By Sandrine Rastello Nov. 3 (Bloomberg) -- The International Monetary Fund said it is selling 200 metric tons of gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal in nine years. The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries. ….. The transaction, which involved daily sales from Oct. 19-30 at market prices, is in the process of being settled, the IMF said in the statement. The average price in the transaction with I ndia was about $1,045 an ounce , an IMF official said on a conference call with reporters. The lender has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. The IMF official declined to say whether other central banks have expressed interest in purchases. The 403.3 tons the IMF board agreed to s ell amount to one- eight of its stockpile. Gold prices reached a record of $1,072 an ounce on Oct. 14 and have gained 45 percent from a year ago. Gold futures for December delivery jumped $13.60, or 1.3 percent, to $1,054 an o unce on the New York Mercantile Exchange’s Comex division yesterday, the highest closing price for a most- active contract since Oct. 23. Says Kalidas….(Anil Selarka) Looks like Government of India has read my book, especially a chapter on Gold ( I had sent them a copy which was acknowledged) I have been campaigning in this column that RBI/MOF should make active market in Gold by minting gold bullion bars with the stamp of RBI Mint for sale to Indian savers. It looks like they have finally acted. To me it appears that RBI may be coming out with 5, 10, 20, 50, 100 and 1 kg bars with 9999 purity for sale to the Indian retail buyers and jewelry trades. Most banks may be selling gold in this form. They might be asked to make two way markets – so that the consumers are not cheated out by others. It is possible that inventories held by the banks might qualify as part of “Cash Reserve” – it should be because it is. The move also suggests that Government of India has finally decided to make a break with the dollar and diversify its holding / reserve into Gold. In future, almost all Central Banks will ask GOI whether it would be a buyer of their gold.Those who feared that large quantity of sale of gold by IMF might depress the gold prices should have second thoughts. There will be no more gold in the market. Indian Rupee will also attract lot of appeal. There will be more gold backing even if unofficially in future. Who would buy Swiss Franc when emerging strong economy like India has Rupee backed by gold? I am sure Government of India will make over 200% profits in less than two years.

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Breaking News Instant Views

Date 2009-11-3 Source Bloomberg

IMF Sells Gold to Central Bank of India,Netting $6.7 Billion By Sandrine Rastello

Nov. 3 (Bloomberg) -- The InternationalMonetary Fund said it is selling 200 metric tonsof gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal innine years.

The sale accounts for almost half the 403.3 tonsthat the Washington-based lender in Septemberagreed to sell as part of a plan to shore up itsfinances and lend at reduced rates to low-income countries. …..

The transaction, which involved daily sales fromOct. 19-30 at market prices, is in the process of being settled, the IMF said in the statement. Theaverage price in the transaction with India was

about $1,045 an ounce

, an IMF official said on aconference call with reporters.

The lender has said it is ready to sell directly tocentral banks and later make transactions on theopen market if necessary. The IMF officialdeclined to say whether other central banks haveexpressed interest in purchases.

The 403.3 tons the IMF board agreed to sellamount to one- eight of its stockpile. Gold pricesreached a record of $1,072 an ounce on Oct. 14and have gained 45 percent from a year ago.

Gold futures for December delivery jumped$13.60, or 1.3 percent, to $1,054 an ounce on theNew York Mercantile Exchange’s Comex divisionyesterday, the highest closing price for a most-active contract since Oct. 23.

Says Kalidas….(Anil Selarka) Looks like Government of India has read my book,especially a chapter on Gold ( I had sent them a copywhich was acknowledged)

I have been campaigning in this column that RBI/MOF should make active market in Gold byminting gold bullion bars with the stamp of RBI Mint for sale to Indian savers. It looks like they havefinally acted.

To me it appears that RBI may be coming out with 5,10, 20, 50, 100 and 1 kg bars with 9999 purity forsale to the Indian retail buyers and jewelry trades.Most banks may be selling gold in this form. Theymight be asked to make two way markets – so that the consumers are not cheated out by others.

It is possible that inventories held by the banksmight qualify as part of “Cash Reserve” – it should bebecause it is.

The move also suggests that Government of India hasfinally decided to make a break with the dollar anddiversify its holding / reserve into Gold. In future,almost all Central Banks will ask GOI whether it would be a buyer of their gold.Those who feared that large quantity of sale of gold by IMF might depressthe gold prices should have second thoughts. Therewill be no more gold in the market.

Indian Rupee will also attract lot of appeal. Therewill be more gold backing even if unofficially infuture. Who would buy Swiss Franc when emergingstrong economy like India has Rupee backed bygold?

I am sure Government of India will make over 200%profits in less than two years.