TODAY In Gold & Silver ›

IMF gold will be sold within pact

Reuters | Thu, 30 Jul 2009 09:25
[miningmx.com] -- The planned sale of 403 tonnes of IMF gold will take place within a new European central bank gold pact currently being negotiated, a senior International Monetary Fund official said on Wednesday.

The IMF has provisionally agreed to sell the gold to raise resources for increased lending to poor countries.

A deciding vote by the fund's 186 member countries is expected before IMF meetings in Istanbul in October, and requires the support of 85 percent of the membership.

"We have committed as part of our new income model to have that gold sale, if done on the markets, to be done through the central bank sales mechanism," said Reza Moghadam, director of the IMF's Strategy, Policy and Review Department.

Moghadam told a conference call the sales would probably occur "all the time" within the central bank agreement and could take two to three years before sales are completed.

He said he hoped negotiations on the new Central Bank Gold Sales Agreement will also be finalised by October. The current 5-year agreement expires in September.

European central banks have agreed to regulate gold sales under the terms of two successive Central Bank Gold Sales Agreements, or CBGA, starting in 1999. The agreements were a key part in supporting an eight-year market rally, with prices for the precious metal at one point topping $1,000 an ounce mark.

Spot gold was last at $928.20 on Wednesday. While the IMF is not currently a signatory of the pact, selling its gold within the CBGA would avoid disruptions to the gold market.

Under the terms of the existing CBGA, in force since 2004, signatories can sell a maximum of 500 tonnes of gold per year -- although sales have fallen well short of the quota in recent years.

Analysts have also speculated that China ma be interested in buying some or all of the IMF gold, after Beijing revealed in April it had secretly raised its gold reserves since 2003, confirming years of speculation it had been buying.

The IMF said on Wednesday it would use some of the proceeds from the sale of its gold to increase lending to poor countries by up to $17 billion through 2014.

The IMF holds 103.4 million ounces (3,217 tonnes) of gold, which had a market value of about $12 billion as of March 31.