Is U.S. Buying Back its Own Gold

Discussion in 'Bullion Investing' started by spock1k, May 17, 2009.

  1. spock1k

    spock1k King of Hearts

    people jump up and down when i tell them that the imf doesnt own gold some of us like to walk around with our eyes shut for the rest there is spock :D


    On April 16, U.S. President Obama wrote a letter to congressional leadership seeking support for the U.S. government to loan the International Monetary Fund $100 billion. This is part of a plan for the IMF to expand its New Arrangements to Borrow (NAB) program from $50 billion to $500 billion.

    President Obama is portraying this loan as an investment rather than an expenditure when he stated in the letter, "Such participation effectively represents an exchange of assets rather than a budgetary expenditure, and it will not result in budgetary outlays or any increase in the deficit. That is because when the United States transfers dollars to the IMF under the NAB, the United States receives in exchange another monetary asset in the form of a liquid, interest-bearing claim on the IMF, which is backed by the IMF's strong financial position, including its significant holdings of gold."

    The supposed purpose of the increase in the NAB is to help combat worldwide financial crises. The United States would provide 20 percent of the assets for this purpose. China has already committed to lend $40 billion.

    There is a small chance that the difficult-to-understand language in President Obama's letter could be taken at face value.

    But, I don't really think so. There are a lot of implications to this proposed loan beyond what appears on the surface.

    There is growing pressure on the IMF to actually sell some or all of its supposed gold holdings. If this pressure becomes strong enough that action is taken, there are a number of potential problems that could be exposed:

    " The IMF does not physically hold the gold. It has been pledged by member nations who, in theory, have delivered the gold to one of four countries designated as depositories. The United States and United Kingdom are two of the designated depositories. It is entirely possible that one or more nations might, if called to turn over their gold, default on delivering their gold commitment.

    " Although the IMF tries to pretend that it audits the gold holdings, it then immediately contradicts itself by reporting that holdings in depositories are not audited by the IMF.

    " There is significant suspicion that some of the gold pledged to the IMF has been leased. If the IMF were to try to sell it, that could force the recall of some gold leases.

    " It is also possible that some of the gold pledged to the IMF has conflicting ownership claims.

    " The IMF only theoretically has 3,217 tons of gold, which at $920 gold spot is worth only $95 billion. Where would be the collateral for the other $400 billion of planned borrowings?


    read more here

    http://www.coinnews.tv/Is-US-Buying-Back-its-Own-Gold.htm
     
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  3. jaceravone

    jaceravone Member

    Why do you waste your time worrying about this. Just buy, buy, buy gold!
     
  4. 900fine

    900fine doggone it people like me

    My guess is that a major sale of gold by the IMF would have a downward pressure on gold spot.

    I doubt either the US or UK would default on a gold depository commitment.
     
  5. Pepperoni

    Pepperoni Senior Member

    Imf

    If that were to happen, it would not probably ever enter the paper market ( spot ). China is a likely buyer,with India being a distant second. It would take a lot of agreement from all parties to make this happen,and that never happens.

    Pep
     
  6. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    It's also possible that this spock character reads too many internet articles and not enough economics. Is there some sort of point you are trying to make?
     
  7. spock1k

    spock1k King of Hearts

    other then attacking me with your post. is there a point you are trying to make?
     
  8. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I apologize if my comment was taken as an attack. It wasn't meant that way. But a careful reading of the stuff you posted reveals that the writer isn't really familiar with the topic.
     
  9. claw

    claw Senior Member

    I think we are giving the Federal reserve our gold in exchange for worthless dollars that they can print up anytime. Any other opinions?
     
  10. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    The Fed receives US Treasury debt securities in return for putting money into the government checkbook. No gold is involved.
     
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