IMF GOLD SALE A MASTERSTROKE FOR CHINA, INDIA
IMF Gold sale is a masterstroke from India, China
2009-04-21 10:05:00
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It further says that this is a stroke of genius for India, and especially for China. “In our opinion, this action once again demonstrates that the leadership of India and China are more intelligent and more forward thinking than other major countries, and that they are manipulating the world players to accomplish several of their goals simultaneously.”
HERE IS WHAT THE GUILD SUMMARISED ON WHAT IT LOOKS LIKE ON THE SURFACE VERSUS WHAT IS ACTUALLY HAPPENING
1) APPEARANCE----It appears to be negative for gold prices.
ACTUALITY----Longer term, it is actually very bullish for gold prices. The actual outcome will be that most of this gold will never hit the market, especially if retail sellers panic and the price of the metal falls in the short term. Some central banks, primarily China's, have plenty of liquid reserves, and are willing buyers of gold, and they will be thrilled to get it so cheaply. - Already have
2) APPEARANCE----It appears to be positive for the IMF, in that it helps to accomplish their goal of loaning to the incompetent and bankrupt countries that approach them for loans, after all other sources of financing have turned the countries down.
ACTUALITY----It is true that the cash from the gold sales would solve that problem in the short run, but in the long run, these same countries will likely make the same mistake again. This is largely because their political organizations are focused on helping the political and business oligarchs who run the countries, and ignoring the best interests of the electorate. These countries will probably return to a much less capitalized IMF for more money later.
3) APPEARANCE-----It appears to be a selfless gesture on the part of China and India.
ACTUALITY----Both India and China would be buyers of the IMF's gold were it sold at reasonable prices. I imagine that China will be by far the biggest buyer of the gold, along with Russia and Saudi Arabia. Increasing their gold reserves (in exchange for the dollars in their reserves) would strengthen the value of their currencies. We anticipate that once China owns enough gold, they will partially back their currency with gold, making them the world economic and financial leader, and removing the U.S. from its position of economic power. The effect of these maneuvers will go a long way to setting THE CHINESE YUAN UP TO REPLACE THE U.S. DOLLAR AS THE WORLD RESERVE CURRENCY.
4) APPEARANCE----It helps all countries who would have to make contributions to the IMF to fund the loans that the IMF makes to indigent countries, many of which are never repaid.
ACTUALITY----This is true. However, it helps China and India more because their responsibility for financing the IMF grows as they become powerful financially.It is a method to get the IMF to self finance in the short run and save China and India money.
