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India and China want IMF to sell its $100b gold April 21, 2009

Posted by tkcollier in Economy & Business.
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Another example of the emerging Markets thinking outside-of-the-box to come up with a seemingly simple solution to re-starting the developing world’s growth.

India and China may press for the sale of the entire gold reserves of the International Monetary Fund (IMF) to raise money for the least developed countries.

The IMF holds 103.4 million ounces (3,217 tonnes) of gold that, if sold, can fetch about $100 billion.

A draft paper exchanged between New Delhi and Beijing proposes that the gold be sold in bullion markets over a period of two to three years. The money thus raised must be used in tackling poverty in the poorest nations.

via India and China want IMF to sell its $100b gold.

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1. tkcollier - April 21, 2009

According to some UBS commentary “The IMF’s gold is not worth $100bn (as least not to the IMF): as most of the gold has to be sold back to shareholders at SDR35/oz (about $52/oz). The shareholders then, we suppose sell gold on the open market and give the whole proceeds (less $52/oz) back to the IMF. So even if the US agreed to this (and we very much doubt it would) we cannot see all the countries agreeing to forgo the profits on their IMF gold holding to help the poor. So we expect this to be very much a non-starter.”


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