will imf gold sale hit bullion market?, page-7

The IMF has been talking about selling gold for years.

In reality, the IMF does not actually own any gold. It was established by various governments around the world pledging x tons of gold each, towards this body called the IMF. All governments already had their gold stored at the NY Fed vault, so they didn't even have to move it.

The pledge amounted to the ability for the IMF to exchange the market value of their gold for dollars. In turn, they loaned those dollars to countries in crisis, at interest. The interest earned on those dollars lent, provided them with the money to pay their staff and keep on functioning.

However, while the IMF could use their gold-backing to borrow into existence a similar amount of dollars, they always owed (with interest, albeit at concessional foreign aid rates) that same about back.

If the IMF could actually sell their gold (especially seeing as they borrowed against it when it was worth $500/oz, but now it's worth much more), they could create more money to function.

However, here's the problem - the IMF doesn't actually own any gold. All it owns is a promise from a variety of countries around the world, which store their gold in the NY Fed depository, that a certain portion of their country's gold will be segregated for the use of the IMF.

Using that gold as collateral for the IMF's loans is one thing. Giving the IMF the ability to actually sell that gold at present market values is something entirely different.

The USA has, by far, the largest dedication of gold to the IMF pool. In order for the IMF to sell off any gold, it needs to convince: Congress, the Senate, the President.

Because of the structure of the agreement which brought the IMF into existence, they don't have any right to any particular ounce, nor to any particular country's gold. They have a right to a certain, undifferentiated tonnage of gold, without regard for which country provides it. Theis is to allow for some countries running into hard times and selling off their gold. In such a case, more well endowed nations would allocate a bit more to the cause. So, should the IMF sell a single ounce of gold, who's to say whether that ounce belongs to the USA, UK, Germany, etc? For this reason, the IMF must convince every country of the need, in order to sell a single ounce of gold.

They can't do this - they've tried repeatedly. The IMF only announces plans to sell when gold is going vertical.

The IMF owns no gold to sell. Ergo, it will not sell any gold, ever!

The IMF exists to ensure stability. Should gold prices spike in a way that indicates disruption to the accepted order, one could argue that the IMF has a responsibility to do whatever is necessary to bring the gold price back into line.