IMF Gold Sales Stopped

U.S. Congress and President Bush will stop the International Monetary Fund from selling its gold, the chairman of the Joint Economic Committee said.

The IMF has been considering gold sales as a way of covering bad loans it has made to impoverished borrowers now unable or unwilling to repay, but Congressional approval would be required.

JEC Chairman Rep. Jim Saxton, R-N.J., said he favors IMF debt relief through write-offs financed out of the IMF's other resources.

"The potential profits on IMF gold sales rightfully belong to the original donor countries and their taxpayers," he said. "These IMF gold sales would amount to a hidden appropriation from the donor countries that were the original source of the gold."

Saxton said the IMF failed to implement the proper lending safeguards and accounting controls for making such loans.

"Not surprisingly, some of its loans have gone bad, and the consequences should not be papered over," he said. "The IMF's mistaken forays into development lending have proven counterproductive, and should not be repeated."

Bill Murphy from Gata.org says that "this KILLS any potential for IMF gold sales in my book and should give a HUGE lift to the gold price in the days and weeks ahead."

The IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF’s total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $9 billion) on the basis of historical cost. As of February 28, 2005, the IMF's holdings amounted to $45 billion (at then current market prices).

The Group of Seven richest countries meets on April 15 to review a report by the IMF on the possibility of selling some of its gold. The U.S. is the largest shareholder of the IMF with a 17 percent voting stake, which is enough to block an 85 percent majority required to approve a gold sale.

Read more on Bill Murphy's analysis of this news here.