European Central Banks Agree to Cap on Gold Sales

Friday, August 07, 2009 , , , , 2 Comments

Well at least they aren't unloading the stuff on Ebay to China.


European central banks agreed to a third five-year cap on gold sales and said planned disposals by the International Monetary Fund could be done within the accord.

The European Central Bank and 18 other banks agreed to sell no more than a combined 400 metric tons of the metal a year through September 2014. That’s less than the annual cap of 500 tons in the current agreement, which expires Sept. 26.

“It’s positive for gold,” John Reade, an analyst at UBS AG in London, said by e-mail. Having the agreement “removes the small chance that European central banks would have dumped gold onto the market in an unconstrained manner.”

Central banks sold 73 percent less gold in the first half and full-year disposals may drop to the lowest since 1994, according to estimates from London-based researcher GFMS Ltd. The IMF wants to sell 403 tons from its reserves of 3,217 tons, the third-largest holding after the U.S. and Germany.

“The IMF has not signed and this leaves open the possibility that the Chinese, Russians, another central bank, could buy the 403 tons of IMF gold in one go,” Reade said.

China has the world’s sixth-largest holding at 1,054 tons and Russia is ranked 10th with almost 537 tons, World Gold Council data show.

Gold for immediate delivery in London slipped 0.8 percent to $955.92 an ounce by 3:14 p.m. local time today as a stronger dollar curbed bullion’s appeal as an alternative investment. The metal reached $971.68 yesterday, the highest since June 5.

Expect to see gold suffocated further as the boys in the nut vice (you know who you are, JP Morgan) flee to the safety of the yellow stuff. Did I say safety? That's surely not their motivating factor, is it?

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


If FOFOA has it right on his blog, the price of gold has to stay down in order for oil to flow.

JPM is just doing the world a favour and rigging the gold market so that the city transit can put some diesel in their buses and get all the tutors to work in the morning.

The IMF threat is a part-bluff designed to overhang the gold market and keep the downward pressure on gold intact. AFAIK, the IMF gold is actually stored in the central banks of the countries that have pledged it, and if I have that right, then what happens when that IMF gold (which may already be leased out and carried on the books as still extant) is requested and the gold that is pledged to the IMF is still in the ground somewhere in South Africa or Russia?

-IF- the IMF gold does actually get sold, it will be nothing but exchanging accounting entries and no one will be sure where it was or where it went.

You're right I do read GATA too much.

Oh noes, RoA, you're going to be accused of being a conspiracy theorist! Shame on you!

Knowing FOFOA, I am going to go ahead and say here that he likely DOES have it right. Probably *too* right.

the IMF has always been a scam, and it's absolutely adorable how they assist in gold price manipulation. "BREAKING ANNOUNCEMENT: xxx central bank to sell xxxx bazillion tons of gold!!" which of course never get sold... this move into futures by our friends at JPM, however, is a tad different.

We'll see how the old tactics meld with the new to create new and exciting perversion in futures.

Thankfully gold is resistant to manufactured bubble-creation. Besides, they don't dare touch it. It's like Kryptonite to these dickheads.