This has some significance because of the speculation that the public sale of gold by the IMF which was secretive and selective, was not a legitimate sale to raise funds, but a means of bailing out the bullion banks who had taken gold on lease and sold it, but were unable to return it because of the tightness of supply in the physical bullion market, increasingly disconnected from the NY based paper market.
Several private bullion buyers, including Eric Sprott, are reported to have made firm and well priced offers to buy large tranches of gold from the IMF, only to be curtly turned away as ‘ineligible.’ The IMF is selling at the prices they determine ex-market to the people to whom they wish to sell.
Just as Gordon Brown sold England’s gold at artificially low prices to bail out the bullion banks in NY and the City, so the IMF and its constituent members are selling the public stores of gold, largely from a few developed western nations, to support what essentially appears to be a crony capitalist banking fraud involving the secretive sale of public assets at artificial prices with the gains pocketed by a few state-sponsored banks.
Peter Brimelow reports that “The news of the day, of course, was the discovery by the Virtual Metals analyst, Matthew Turner, that the IMF engaged in what appears to have been the biggest gold swap in history prior to the end of their FY end on March 31st.
Thebulliondesk.com (first of the wire services to report) says:
“In its 2010 annual report, the BIS said that “gold, which the bank held in connection with gold swap operations, under which the bank exchanges currencies for physical gold,” stands at 8,160.1 million in special drawing rights, equivalent to 346 tonnes this year, up from nil in 2009.
While the data is relevant to the end of BIS’ 2010 financial year in March, data posted to the International Monetary Fund and carried by Bloomberg show the swap still growing in April, analyst Andy Smith of Bache Commodities noted.
To now, this implies a swap of about 380 tonnes from the end of 2009, he said in a report.”
The new Washington Agreement, which started at the end of last September, allowed signatories to engage in gold derivative transactions for the first time in a decade. Very convenient.
Although none of the major bullion banks (actual or potential CB counterparties) will want to discuss this, the high probability is that much of this gold was actually sold into the market. Very likely this accounts for the contra-seasonal slump of gold in December, which it will be recalled was neither preceded by the usual loss of physical premiums nor accompanied by the usual open interest action.
This in effect means the end of the Washington Agreement restraint on CB gold selling, at a time when several signatories are in bad shape. Most likely this is what caused the selling pressure in gold today, especially after the NY open.”
As we have most recently seen with the bloated CDS and CDO credit markets, long standing control frauds can cause quite a splash when they inevitably collapse. We need to bear this in mind when the governments start making their excuses, once again, for taking the ‘necessary actions’ to support the banks for the good of the people, from whom they have once again stolen billions to provide a fat living for their friends and themselves.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.