World Gold Council Anticipates Orderly Execution of IMF Gold Sales
announcement by the International Monetary Fund (IMF), that the next phase of
its previously announced gold sales programme will be undertaken in a phased
and transparent manner. The gold sales follow the IMF Executive Board’s
decision in
The successful first phase sale to Central Banks had no impact on the smooth
functioning of the gold market and the remaining sales to be undertaken in
phase two of the programme are also not anticipated to be disruptive. The
sales by the IMF in phase two do not represent a net addition to supply
because they will be accommodated under the Central Bank Gold Agreement.
The sale of 212 tonnes to the central banks of
(10t) and
total amount of gold to be sold by the IMF under the programme and was
executed at market prices, in line with the IMF’s Articles of Agreement. It
also took place in accordance with the stated commitment of the IMF to follow
the recommendations of The Crockett Report[1] of 2007 and ensure that its
gold sales do not disrupt the smooth functioning of the gold market.
The next phase will see 191.3 tonnes (t) sold to the gold market and
reaffirms the commitment by the IMF to follow the recommendations of The
Crockett Report. IMF has stated that: “The initiation of on-market sales does
not preclude further off-market gold sales directly to interested Central
Banks.” Further, 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.”
“The public restatement by the IMF of its commitment to execute the final
sales under its previously approved programme in a responsible manner, once
again demonstrates its commitment to an orderly market.
“The outlook for gold remains positive precisely because of the unique
diversity of the gold market. Resilient investment demand, and progressive
improvements in jewellery and industrial demand are part of the picture.
Supply trends are equally as important as demonstrated in 2009. Net
purchasing by central banks in recent quarters, constrained mine supply and a
more stable level of recycling activity, all help to ensure that gold
continues to retain the qualities which make it an important preserver of
wealth and a key component of an effectively diversified portfolio for
central banks and investors alike.”
World Gold Council recently released its Gold Demand Trends report for
2009 which provides data that indicates Central Banks are continuing to
diversify their portfolios with an increased allocation to gold. The Gold
Demand Trends report revealed a significant reduction in net official sector
sales in 2009 of 44t compared to an average of 444t over the five year period
up to 2008 with Central Banks, in the aggregate, turning net buyers in the
last three quarters of the year.
Given the IMF’s status as effectively the global “lender of last resort”,
World Gold Council believes it is imperative that the organisation continues
to hold large gold reserves and acknowledges the IMF’s public declarations
that:
“The IMF should continue to hold a relatively large amount of gold among
its assets, not only for prudential reasons, but also to meet unforeseen
contingencies.”
Notes to Editors:
World Gold Council
The World Gold Council’s mission is to stimulate and sustain the demand
for gold and to create enduring value for its stakeholders. It is funded by
the world’s leading gold mining companies. For further information visit
http://www.gold.org.
Gold Demand Trends
The full 2009 Q4 Gold Demand Trends report in English, including country
breakdowns, can be viewed at:
http://www.gold.org/assets/file/pub_archive/pdf/GDT_Q4_2009.pdf
Crockett Report
It was the Crockett Report that first proposed the IMF should adopt a new
income model, including the establishment of an endowment, funded by the
proceeds of limited and structured gold sales. At the G-20 Leaders Summit in
April of 2009, heads of state proposed to use additional resources from the
gold sales to provide an extra US
over the next 2-3 years.
A copy of the full Crockett Report can be found at:
http://www.imf.org/External/np/oth/2007/013107.pdf
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[1] See Notes to Editors
SOURCE World Gold Council