Russian Gold

This isn't a "Done Deal", yet...but could affect gold prices if it goes through...

Russia to sell 20-50 T gold in 2009

 

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There are very conflicting details coming from Russia, in fact there is some suggestion from other Kremlin sources that they want to diversify assets out of US dollars because of the precipitous declines - into other currencies and strategic assets like PM's.

 

True, true...but (imo) some of that rhetoric is aimed at forcing the Administration to defend the dollar. Other countries such as China have resisted pressure from Washington to strenghen their currencies. I see the Administration continuing a weak dollar policy until the trade deficit stabilizes and employment picks up here at home.

With all that said...a stable dollar is still in our trading partners' best interest. I don't see any of this "dollar dumping" talk going anywhere. I agree that it doesn't make much sense for Russia to accumulate PMs over the past nine months just to sell them off in the last two...but maybe they're just doing a little profit taking...like they say.

I'm just asking...if they follow through on selling off that much gold in the next two months, wouldn't that affect the prices we pay for coins from the Mint? ...afterall, it's all about us!

I was planning on buying a Gold Proof Buffalo in a few days...but might hold off until I hear a little more about what the Russians plan to do.

All this is just Personal Opinion and Conjecture...not fact!

 

What is going on in Russia's central bank is the same confusion and indecision that is going on in the Obama administration in the USA about what to do with Afghanistan.

I can appreciate the quick profit taking scenario, but cooler heads may prevail and shoot for the long term.

Russia as many countries, has a large trade surplus with the United States. Unlike days of old, the USA does buy a fair amount of energy from Russia in the form of LNG and some oil. But their trade with the USA pales in comparison to the trade surplus that China runs with the USA. Neither country really can afford to dump the dollar until they have enough reserves in other currencies and or PM's that they can shelter from the storm in lost revenues from exports.

The downturn in the USA and the depreciation of the dollar makes goods from overseas more expensive, coupled with an economic downturn in the USA that predicates buying goods that are imported, it really does become a lose lose situation for the Chinese and Russians. They do not have many options available, other than harsh words like "dumping dollars", without their appreciating that it really would hurt them in the offing - unless or until they are confident they can tide the resultant storm.

 

From russia with love. Gold fingers. Now 20 ton gold. Krispy and i will buy them all.

 

Not just from this article and your posts, which I appreciate your posting and getting to read, but I am beginning to agree about holding off a few days on buying the AGB Proof. I'd like to see how the coins sold in the first week. I don't see a sell out occurring on the Proofs. I won't wait that long to buy one if I decided to get one in the end. Definitely jump on one in the next 30 days, but if things change due to the massive gold sale for instance, maybe just getting some fractional bullion 2009 AGE will be more my course of action. Just thinking out loud here...

And, yes, after elaine buys out all 99.9999% of available gold coin stock then I shall heroically swoop in and do my part to buy those remaining 0.0001% bits!

 

The number of announced sales is much larger than the number of completed sales. This sort of disinformation comes out all the time. For all you know, Russia intends to BUY gold and wants to talk the price down. Think about it, if you planned to buy or sell a large amount of gold or silver, would you pre-announce it or try to complete it before it was announced?

 

Kind of a game eh? If you like golds prospects you want to make it sound pretty bad, so if anyone is foolish enough to take you at your word they will dump their gold so you can get a better deal. On the other hand if people realize that people try to talk the prices down in such Byzantine ways they will bid the price up.

Then if you realize that people look at the announcements as being market manipulative, you want to sell off some gold so you announce you are selling off gold, people think you are gaming them, they bid the price up, and you make out better.

It seems to me that the best game is you announce you are selling gold, but you really want to buy it, you actually sell the gold, when people percieve you are not gaming them,they sell also, the market collapses and you go in and buy all you can from your profits.

OR......

 

Good point :thumb:

Worst case scenario...assuming the Russians follow through and sell the max amount (50 tonnes)...the short-term price could dip down into the 975-980 range...everything else being equal. That would be $100/Oz dip in Mint prices...wishful thinking on my part.

 

I don't think 50 tonnes is enough to depress the market price very much or for very long. Under the Washington Accord, central banks were selling 500T annually and gold was rising from about $300 to the current price at the same time. Most likely the gold will be sold as a private placement to another central bank and not dumped on the market -- if it even happens.

 

Believe me, the Russians do not want to depress the market price for gold, don't forget they are major producers and exporters of gold. They have no interest in killing the golden goose. They already bit it when their national budgets were written with $100+ per barrel oil, then the bottom dropped out on them - they didn't want or need that to happen because then they were in a tailspin that they are still recovering from.

The whole thing of selling gold came to play because of the budget shortfall, no doubt created by the depressed market for oil. Now that oil is rising once more that shortfall is lessening.

 

Likely this proposed sale (or the proposed 403 tonne IMF sale) has little to do with the fall in gold today. Gold is a tad "over-bought" at the moment and it wouldn't be unusual to see it drop back and test its 60 day moving average...(about $1000).

Personally, I may wait a week or two before pulling the trigger on the 2009 Gold Proof Buffalo. The mint price bracket probably won't change this week, but next week could be another story. No sense throwing away money if it can be avoided.

 

Gold was over bought and overdue for a bit of a correction. The IMF may well sell 400+ tonnes, but there is no way they are going to dump it on the market either otherwise they would depress the price and drive down the reserves of many central banks.

 

I agree. In the end, they will probably place the gold with various central banks. Also, we have to keep in mind that the IMF has been threatening to sell its gold for years. Usually the announcement of a possible sale is enough to move the price down, at least temporarily.

 

well the Russians already backed out of selling their gold because of the "leak" of possible sale..

 

If the London AM/PM Gold Fix averages less than 1041.50 tomorrow, we'll see a U.S. Mint bracket drop this week...sooner than I thought.

 

Latest update...

http://www.businessweek.com/ap/financialnews/D9BK5NHO0.htm

Btw, looks like we're dropping a US Mint gold price bracket on Thursday. We may drop another bracket in a couple of weeks as we test support at the 60 moving average (imo).

 

I'm interested in why you think there is support at the 60 [day] moving average. It is a pretty non-standard measure for support.

 

Now there is more discussion going on in Russia on selling about $1.7 B of gold to make up for the first budget deficit they have had in years. In other words, they are deeply concerned about a pitifully small budget deficit by comparison to what is going on in the USA where the budget deficit continues to mushroom by the day and they keep adding on more things, like a third bailout for GMAC.

 

Good point. The Russians basically have a balanced budget while we just monetize the debt to the tune of a trillion dollars a year and believe there will be no consequences. :whistle: Whistling past the graveyard...