IMF sells 200 tonnes of gold to India worth $6.7 billion

Discussion in 'Economy & Infrastructure' started by Rage, Nov 3, 2009.

  1. Rage

    Rage DFI TEAM Stars and Ambassadors

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    IMF sells 200 tonnes of gold to India worth $6.7 billion

    AFP 3 November 2009, 07:07am IST



    WASHINGTON: The International Monetary Fund announced on Monday the sale of 200 tonnes of gold worth 6.7 billion dollars to India's central bank to shore up IMF finances.

    The sale to India was nearly half the amount that the Fund has targeted for sale over the coming years.

    The IMF said the transaction, which was in the process of being settled, involved daily sales that were phased over a two-week period during October 19-30.

    Each daily sale was conducted at a price set on the basis of market prices prevailing that day, it said, in accordance with the institution's founding document.

    "I strongly welcome this transaction with the Reserve Bank of India," Dominique Strauss-Kahn, the IMF managing director, said in a statement.

    "This transaction is an important step toward achieving the objectives of the IMF's limited gold sales program, which are to help put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries."

    The Washington-based IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal after the United States and Germany.

    On September 18, its executive board approved the sale of 403.3 tonnes of gold, about one-eight of its current holdings, but assured it would do so in a way that would prevent disruption of the gold market.

    Under the plan, the IMF offers to sell gold directly to central banks "or other official sector holders if there were to be interest from such holders."

    If official demand were insufficient, the IMF said it could conduct the gold sales "on-market in a phased manner over time," in line with an approach already followed by central banks.

    The IMF would be constrained by the overall ceilings agreed by the central banks, which started on September 27, of 400 tonnes annually for the next five years.

    The IMF reiterated Monday its commitment to inform markets before any on-market sales begin.

    The IMF has made gold sales a key element of its new income model aimed at lowering its dependence on lending revenue to cover expenses.

    The Group of 20 key developed and developing countries, at their April summit in London, agreed the gold sales should allow the IMF to offer favourable conditions on loans to the poorest countries.


    IMF sells 200 tonnes of gold to India worth $6.7 billion - International Business - Biz - The Times of India
     
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  3. Rage

    Rage DFI TEAM Stars and Ambassadors

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    What the what the?

    Anybody with a sound knowledge of the current monetary situation care to take a shot at why the Central Bank's gone ape$hit over gold and bought "nearly half the amount that the Fund has targeted for sale over the coming years"?

    Or are we going the china way by buying "200 tonnes of gold worth 6.7 billion dollars to shore up the IMF's finances"?

    Bullion, anybody?
     
  4. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    Rage the rate in India for gold is around 17-18k per 10g as of now which is about to be shot up to 20k in 2-3 years hence I think it is a good buy :)
     
  5. AkhandBharat

    AkhandBharat Regular Member

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    It could also be to reduce the dollar reserves, since it has been predicted to depreciate in value in the short term. Investing in Gold is a prudent choice. It will reinforce the rupee if RBI decides it needs that.
     
  6. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    Kick out all the excess Dollars. Devalue the Rupee for further gains in exports. Gain a major vote in the IMF(since they lend to Pakistan) and get a lot of gold for the post recession market. :D
     
  7. tarunraju

    tarunraju Moderator Moderator

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    I think this is a sound decision given our gold market prices. It also ensures our dollars are converted to something that's really stable and appreciative in the global market.
     
  8. Singh

    Singh Phat Cat Administrator

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    Gold is a secure investment but doesn't always gives returns.

    For eg 850$ invested in Gold in 1980 would've yielded today only 1060$ adjust that for various parameters and its a negative roi.

    Gold rates usually shoots up in times of economic crises and bear runs. And during times of bull runs (which generally last much longer than bear runs) Gold rates should tend to fall.
     
  9. RAM

    RAM The southern Man Senior Member

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    IMF sells 200MT gold to India

    IMF sells 200MT gold to India


    The International Monetary Fund (IMF) has sold $6.7 billion worth of gold to boost its own cash reserves, the crisis-lender said on Monday, completing about half of a sale that was authorized in September. The IMF said it sold 200 metric tons to India’s central bank over a two-week period from October 19-30Its executive board has agreed to sell a total of 403.3 tons, or about one eighth of the IMF’s gold reserves.

    IMF Managing Director Dominique Strauss-Kahn said the sale marked an “important step” in the lender’s effort to secure its finances and step up lending programmes for poorer countries. The IMF said the sale was made at prevailing daily market prices. The lender is looking toward other central banks to complete the remaining gold sale but has said it will consider selling the cache in the open market.

    The Reserve Bank of India's gold stock has shot up by more than 55 per cent with the purchase of 200 tonnes of IMF gold at an estimated cost of USD 6.7 billion.

    RBI, which pledged gold during 1991 crisis with the Bank of England to raise resources to meet external obligations, today said it has purchased 200 tonnes of gold from International Monetary Fund (IMF) for USD 6.7 billion.

    "The Reserve Bank has decided to buy some gold...About 200 tonnes. That's normally we do (from) time to time. IMF is selling gold so we wanted to buy it," Finance Minister Pranab Mukherjee said in New Delhi.

    When asked whether it was a reflection of the growing economic strength of the nation, Mukherjee quipped, "the conclusion is yours."

    RBI has purchased almost half the gold which the IMF plans to sell to raise resources to augment its operations and provide concessional loans to poor countries.

    "The purchase was an official sector off-market transaction and was executed over a two week period during October 19-30, 2009 at market based prices," RBI said in a release.

    The decision to purchase gold will raise RBI's stock of the precious metal from 357 tonnes to 557 tonnes, representing an increase of over 55 per cent.

    Of the RBI's current gold stock of 357 tonnes valued at around USD 9.6 billion, 65 tonnes are being held abroad since 1991 in deposits with the Bank of England and Bank for International Settlement (BIS).

    Besides taking other steps to tide over the balance of payment crisis in 1991, RBI had pledged gold with the Bank of England to raise funds.

    India's foreign exchange reserves, in the aftermath of the Gulf crisis, dipped to USD 5.8 billion tonnes as on March 31, 1991.

    The forex reserves, however, started picking up with the onset of the liberalisation policies and peaked to USD 314.61 billion at the end of May 2008.

    The high level of foreign exchange reserves, which stood at USD 280 billion as on September 25, 2009, prompted the central bank to increase its stock of gold by purchasing that from the IMF.

    The IMF, in pursuance of the decisions taken at the G-20 summit in London, had decided to sell about 403.3 metric tonnes of gold to shore up its finances so that it can lend money to the poorest countries at concessional rates.

    "This transaction is an important step toward achieving the objectives of the IMF's limited gold sales programme, which are to help put the Fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries," IMF Managing Director Dominique Strauss-Kahn said in a statement.


    The Hindu : Business News : IMF sells 200MT gold to India

    news.outlookindia.com | RBI Buys 200 MT Gold from IMF
     
  10. NSG_Blackcats

    NSG_Blackcats Member of The Month OCTOBER 2009 Senior Member

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  11. AkhandBharat

    AkhandBharat Regular Member

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    What Happens to Gold at Dollar's Crossroads?

    What Happens to Gold at Dollar's Crossroads?
     
  12. sob

    sob Moderator Moderator

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    Since the 1970s when USA moved away from the Gold system the importance of Gold has been dwindling but in light of the current turmoil and period of uncertainity Gold has regained it's lost lusture.

    Mint ePaper - Article

     
  13. sob

    sob Moderator Moderator

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    Even as stocks tanked, gold sizzled at a new peak on the bullion market in Mumbai. Standard gold (99.5 purity) surged by Rs 155 per 10 grams to end at Rs 16,240 from the overnight closing level Rs 16,085. Pure gold (99.9 purity) also shot up by Rs 160 per ten grams to close at Rs 16,325 as against Rs 16,165 on Monday
     
  14. Yusuf

    Yusuf GUARDIAN Administrator

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    India has come a full circle eh!! 18 years ago, India pawned its gold to the western banks to take care of the balance of payment crises. Now it buys their gold to fund them. Great going.

    But then its a good move by the RBI to buy gold. Its always a safe investment and who better can vouch for it than us Indians who make a beeline to the jewelery store during Akshaya Triti and Deewali regardless of the price being at 10k, 13k or 17k.

    RBI will buy more gold in the future as well. The percentage of gold wrt to the overall reserves had fallen to 3% and with this buy, it goes up to 6%.
    Still India has over $200 billion in US treasury bonds which is a worry. China and Russia too have gone the gold way to take care of their dollar reserves.
     
  15. qilaotou

    qilaotou Regular Member

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    It's reported in Chinese media that private Indians own more than 15 thousand tones gold or goldwares. That's pretty impressive. When gold price goes up to 1500USD per ounce next year they are at least 50% richer. It's a good buy for Indians.
     
  16. Singh

    Singh Phat Cat Administrator

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  17. Indianrabbit

    Indianrabbit Regular Member

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    What rate did we bought it for? I hope we must have got bulk buying rate.
     
  18. Yusuf

    Yusuf GUARDIAN Administrator

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    I dont think there is any bulk buy discount on gold. Atleast not a big discount. Maybe they will ship the gold free of cost
     
  19. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    buying rate was rs15,41,000/kg if you take the rupee trading at 46 to a usd which was more like the case when this deal was done, which is more or less in tune with the existing market rate in india where the price at present is hovering between 16-17ks.

    discount could have been offered but then that would have been a low single digit figure.
     
  20. Singh

    Singh Phat Cat Administrator

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    1. Private Gold Reserves in India are over 25-30 thousand tonnes. That is over 20% of all known Gold Reserves (above the ground).
    2. Indians are the largest consumers of Gold and on an average buy over 800 tonnes of Gold per annum.
    3. 25% of all Gold produced annually is bought by Indians; 2000-2500 tonnes of Gold is produced per annum.
     
  21. hit&run

    hit&run Elite Member Elite Member

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    Very orthodox mentality, India should invest in many other assets as well not overwhelmingly in gold. If one can predict (which is not possible) market then he can rule the world. By purchasing gold we are empowering the dollar. A economy importing more then exporting should consider such adventures wisely.
    oh yes! one question RBI is not buying gold for domestic consumers ?
     

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