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The Truth About the IMF's Gold Sales

Instead of the market expecting 500 tons of central banks' gold to be made available every year, the market now sees a mere 150 tons.

By Jeff Nielson of Bullion Bulls Canada


World Gold Council

released its most recent statistics on (official) central bank activity in the global gold market, and in doing so made it very clear what the "game plan" is for the IMF in dumping its gold.

The WGC numbers are nothing less than shocking. The same European central banks that were foolishly dumping 500 tons of their gold per year onto the market (and who knows how much they dumped unofficially?), have sold only 1.8 tons in the first nine months of the newest "sales agreement" of those central banks. And virtually all of that gold was expressly for the minting of gold coins -- to satisfy surging investor demand.

Consequently, with the antigold cabal having clearly exhausted all the gold reserves that those central bankers were willing to squander, nothing remains but a dwindling pile of IMF gold -- the remnants of the 400-ton sale. This one sale has been announced and reannounced so many times over the last two-plus years, that I'm sure many casual observers to the gold market assume that there have been several such sales.

After allowing India to scoop up half the 400 tons in one "gulp" (and seeing the bullish reaction in the market), the IMF bankers were given strict instructions by the antigold cabal: no more large, private sales. Instead, all gold must be dumped onto the market in a manner designed to do the absolute maximum amount of "technical damage" to the market (i.e., just like all the other central bank gold).

In that respect, we have the following data. Eric Sprott, the respected head of Sprott Asset Management (who recently started up his gold-trust "PHYS") tried to buy the last half of the IMF gold -- but was refused, without explanation. It was widely rumored that China's government also had tried to buy this gold.

What has the IMF actually been doing with that gold? Since the middle of February, it has dumped 38.7 tons of gold onto the market, according to the World Gold Council. This leaves the IMF with somewhere around 150 tons remaining. Let me put that into perspective. Instead of the market expecting 500 tons of central banks' gold to be made available every year, the market now sees a mere 150 tons - and no more on the horizon.

This is occurring as

central banks have switched

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to become net buyers, themselves, for the first time in decades, and last year they purchased (on a net basis) the most gold in 50 years. Regular readers will recall that I have frequently written on this subject -- both the (absurd)

IMF propaganda

, and the

significance of central bank behavior

and the new "sales agreement."

With retail investors buying gold by the ounce while central banks buy by the ton, a surge in demand by retail investors can cause the price of gold to rise by hundreds of dollars per ounce. Obviously, with the scale of purchasing by central banks, they can move the price up by thousands of dollars per ounce with even greater ease.

Most reputable gold commentators fully expect the price of gold to rise to somewhere between $3,000 and $10,000 per ounce. However, now that the new trend of central bank behavior has been firmly established, many of these same commentators (including myself) are now being much more emphatic that the "big move" to these higher price-elevations is something to be expected in the months ahead (if not weeks).

It is rare for investors to be presented with a scenario where both the fundamentals for a particular investment and the behavior of major "players" in the market are so unequivocally bullish. Yet the investment itself remains at a "bargain" price. In this one respect, we can thank the manipulation by the bankers, as they have allowed investors who have been late to understand the necessity of precious metals in every investor's portfolio to still enter the market at very attractive prices.

As a reminder, using "official" inflation numbers, the price of gold would have to more than double -- just to equal the 1980-high (at a time of much less favorable fundamentals for gold). However, when we use real inflation numbers (i.e., those supplied by John Williams of, gold would have to rise to $7,500 and ounce to equal the 1980 record.

With the debt markets of both eurozone and U.S. economies obviously highly stressed, none other than Marc Faber bluntly stated recently that "all Western governments are bankrupt." Those still gambling their wealth by holding banker paper, rather than protecting their wealth with precious metals are simply deer paralyzed by the approaching "headlights."

Jeff Nielson studied economics for four years at the University of British Columbia, before going on to attain a law degree from that same institution in 1989. He came to the precious metals sector around the middle of last decade as an investor, but quickly decided this was where he wanted to focus his career. After publishing his own, amateur blog for a year, in 2008 he founded Bullion Bulls Canada: a web-site providing information and analysis to precious metals investors. Today, reaches a global audience of precious metals investors in more than 120 countries.