Revisiting The IMF Sale

Given the carnage over the last couple of days, the IMF sale has faded into the background. David Lew of Commodity Online has kept the memory green by bringing up the subject again, in an article entitled "Why there is golden silence on IMF gold sale." His piece features speculation on the subject from Mark Robinson:

Respected bullion analyst Mark Robinson says there is suddenly no talk about anyone buying the rest of IMF gold. “I feel the silence these days on IMF gold sale could be a well-knit strategy from China. The Chinese central bank is eager to buy IMF gold to shore up its foreign exchange reserves. But China is not willing to pay the kind of money that India paid to IMF to buy gold. China wants to buy IMF gold below $1,000 per ounce. It looks if gold price continues to fall like this way, soon you will find gold hitting below $1,000 per ounce and China will then jump into buying the IMF gold,” Robinson told Commodity Online.

Robinson argues that there is a feeling among central banks across the world that India paid a little too high price to buy the IMF gold and thereby put them in troubles. “No central bank wanted to touch IMF gold above $1,000 per ounce. So now that gold price is falling, central banks must be waiting for further falls to scout for IMF gold,” he added.

The article also mentions that India's purchase price for the 200 tons its central bank bought was considered much too high at the time. That price, which was only slightly below the current price, now looks low. However, the decision makers of central banks are not likely to be market-oriented enough to shift perspective in this way. It's likely that, if $1,000 was the ceiling price then, it's the ceiling price now. However, getting the IMF gold at below $1,050 will enable the People's Bank of China staff to say they bought more sensibly than buyers at the central banks of India.