You know that the rally in Gold has reached bubble proportions when the International Monetary Fund (IMF) announces that they are selling a huge chunk of their gold reserves. The sale of a 12.5% share of their gold position is a big supply that is going to be coming onto the market, and could potentially pressure gold prices.
According to the Marketwatch report: " In a statement on Monday, Managing Director Dominique Strauss-Kahn said the IMF had made "difficult but necessary choices" to close an income shortfall and make the agency more efficient through a "new and sustainable income and expenditure framework."
The sale could generate over $13b. I knew that the IMF was a bloated bureaucracy that had all kinds of debt, but they need to sell $13b? Ouch.
The IMF announced that they were starting a cost cutting program, to try and save over $100m a year. What ever happened to the principal of leading by example. Here we have the IMF running around the 3rd world telling countries how they should run their economies, and the in house finances of the IMF are a total mess.
The gold sale needs to be approved by the U.S. Congress. Perhaps Congress needs to reform the IMF, so they can become a good example of fiscal discipline to the countries they preach to.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/08/08
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Reader Comments (Page 1 of 1)
4-08-2008 @ 7:05PM
blogs11111 said...
The IMF(International Monetary Fund) is having to sell off it's assets and the MBA (Mortgage Bankers Association) is having trouble paying it's mortgage on it's new building. Now we definitely live in interesting times. Does any of it shock me anymore? Not really. I went through the shock, anger, sadness period for about 6 mos. I realized they couldn't fix this and their actions might even make it worse. So I'm just watching this crisis snowball and watching my lifestyle dwindle around me. We'll all adapt, so we're not the richest nation or the superpower anymore, who cares about all that foolish pride anymore. The American dream is now the American nightmare, but maybe now all the excesses will go away and we'll realize we never needed all those things in the first place. Even when times are horrible sometimes something good comes from it, maybe this time some good lessons. Who knows.
4-08-2008 @ 9:42PM
jerry mcdonald said...
That would be fine if all the CEO'S and congress would be stuck in jail! Paulson,wolfowitz,bernake,free trade,clinton,banks,bush, let the revolution begin.
4-09-2008 @ 1:11AM
Glenn Brooks said...
If the IMF is selling...I am buying...GOLD that is....these idiots are always wrong...when GOLD goes to $1400 an oz or more they will have egg on their face...future inflation is going to drive the price of GOLD UP...if you were around in the late 1970's you know what I mean...the fullness of time will tell...