IMF GOLD SALES??? Can anyone explain this?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I thought I was foloowing this bulletin, and waht if means to the Gold market, but then I got CONFUSED!! What's it about, going to result in, infer to any sphere of Y2K, etc.!
Whoops. My first time trying to do this. ________________________________________________ Tuesday September 7, 5:56 pm Eastern Time
IMF to revalue gold, avoiding open-market sales
(adds reaction from Rep. Saxton in paragraphs 16-17)
By Mark Egan
WASHINGTON, Sept 8 (Reuters) - The International Monetary Fund will revalue some of its gold to fund debt relief thereby avoiding open-market gold sales, a politically difficult proposition that spooked gold markets, documents posted on the Internet revealed on Tuesday.
An agenda for the fund's upcoming annual meeting, to take place later this month, revealed that it would revalue 10 million ounces of its 103 million ounce gold stockpile to market values, yielding ``$1.1 billion in net cash value.''
``This proposal replaces the previously agreed sale of a maximum 10 million ounces from the IMF's gold reserves,'' according to a draft agenda, a copy of which was obtained by Reuters from the Dutch finance ministry's Web site.
The IMF had originally planned to sell the gold to finance its obligations under the Highly Indebted Poor Countries Initiative, which aims to reduce the debts of 41 of the world's poorest nations. The sales were also pegged to fund its Enhanced Structural Adjustment Facility low-interest loan program.
The proposal had received strong political opposition from U.S. lawmakers and others who had claimed open-market gold sales would harm poor gold-producing countries and hurt gold prices.
The new plan should calm gold markets which were nervous about the effect on prices from a gold sale from the world's second largest holder of bullion. The IMF's open-market sales plan suffered a blow when gold hit a 20-year low in July after the Bank of England sold 25 tonnes of gold as part of its plan to cut its reserves by 415 tonnes.
The document said the new proposal has two advantages over the previous plan -- it would not disturb gold markets and was politically achievable.
It said the proposal was still being discussed.
The documents released on the Internet provided few details on the new plan but sources told Reuters the latest plan had already been approved by the Group of Seven nations.
Under the plan, countries which owe the IMF money from past loans, such as Mexico, would buy IMF gold the day before loan payments are due and then repay the installment the next day with the same gold, sources familiar with the scheme told Reuters.
The plan raises cash for the IMF because the fund values the gold on its balance sheet at about $46 an ounce. Since gold is actually worth about $255 an ounce, the transaction would net the IMF profits of about $209 an ounce, or about $2.1 billion.
After selling the gold, the fund would return $46 per ounce back to its General Resource Account and then transfer the $2.1 billion in profits to a trust fund. The trust would invest the $2.1 billion and use the proceeds to fund both the HIPC debt relief initiative and ESAF.
The new plan will likely appease the gold industry and lawmakers from U.S. gold producing states since the IMF's gold would probably never leave its vaults.
But the plan would require approval from the U.S. Congress since gold sales are still involved. Even though the plan may be less contentious than the original proposal, some in Congress may still cry foul.
Many U.S. lawmakers are strongly opposed to the ESAF program which they claim foists overly restrictive fiscal policies on poor countries.
Those opponents could argue that the revaluation plan is a convoluted solution for a simple problem and that the IMF might be better off writing off its failing ESAF loans rather than jumping through hoops to save the program.
Rep. Jim Saxton of New Jersey, an ardent opponent of the IMF, denounced the ``murky'' plan and urged Congress to oppose it.
``Congress should reject this and any other proposal to provide more taxpayer resources to the IMF at least until all the questions are answered about the possible misuse of IMF loans in Russia,'' the Republican Vice-Chairman of the Joint Economic Committee said in a statement referring to allegations that IMF loans were laundered by Russian authorities.
The debt relief plan, which builds on an earlier framework, was agreed by the G7 this summer in Cologne. The IMF's obligation under the expanded Highly Indebted Poor Countries Initiative debt relief plan is $2.3 billion.
The $2.1 billion in profits from the gold revaluation plan would generate profits over time which would allow the IMF to fund both its HIPC obligations and make up the funding shortfall in its ESAF loan program, sources said.
The overall HIPC plan agreed to in Cologne calls for debt relief of $23.7 billion.
Related News Categories: currency, politics, US Market News
-- Gregg ABBOTT (firstname.lastname@example.org), September 08, 1999
Wow! 2.1 billion out of thin air. Sure do wish I could do that!
-- c (email@example.com), September 08, 1999.
Let me get this straight. IMF is "revaluing" its gold holding to present market value, and selling 10 million ounces at the market. At a market price of (say) $210/oz., IMF gets $2.1 billion cash for its gold. At some earlier point in time IMF bought those 10 million ounces of gold at some lower price. Its profit in this transaction is the current sale price less its initial cost. Buy low, sell high. Make a buck. Happens all the time. It doesn't take an MBA from Harvard to figure it out.
So what's the novelty here?
(O.T: Is IMF exempt from taxes?)
-- Tom Carey (firstname.lastname@example.org), September 09, 1999.
Wow - what a scam! Almost as slick as the creation of the Federal Reserve. The NWO elite bankers are using the IMF as a front for ripping off third world countries. No wonder they are willing to loan out so much! And they make it sound like it is all intended to "help" these poor starving countries. When it is all said and done, they still owe just as much, plus interest.
-- @ (@@@.@), September 09, 1999.
Hmmm. Are they maybe using this as a way to take gold out of a fund which is *required* to have hard assets, and transfer it to a fund which has looser controls?
"After selling the gold, the fund would return $46 per ounce back to its General Resource Account
... so... they took an ounce of gold out and put $46 in paper money back in the General Resource Account. Is that right?
"and then transfer the $2.1 billion in profits to a trust fund. The trust would invest the $2.1 billion and use the proceeds to fund both the HIPC debt relief initiative and ESAF."
Sounds like a home equity loan. But where did the gold go when it was paid back?
"The new plan will likely appease the gold industry and lawmakers from U.S. gold producing states since the IMF's gold would probably never leave its vaults."
-- Linda (email@example.com), September 09, 1999.
You got that right Linda.
Time is running out to make these plays...
the cabal are lining their pockets...
-- Andy (2000EOD@prodigy.net), September 11, 1999.
To get around the illegal aspects of these kinds of fund transfers, they get third world countries to sign paper saying that they received the gold as a loan, and then paid it back the next day. The article mentions Mexico, but I bet they are doing this with 50 different countries using the same gold.
-- @ (@@@.@), September 11, 1999.