Currently gold is trading at US$905 an ounce after dropping from over $920 yesterday.
Last Saturday the Group of Seven (G7) nations approved the sale of gold stocks held by the International Monetary Fund (IMF) to raise money for the financial organisation. More info here.
This is significant in that the IMF holds a whopping 103.4 million ounces of gold worth about $92 billion at current market value. Selling a portion of that stock would surely push prices down around the world as the supply of gold increased.
However, any sales of IMF gold must be approved by 85 percent of the votes held by its members and the US has 17 percent of the total votes, which gives it veto over the organisation’s decisions.
Given that the US Congress has to approve IMF gold sales, and that they are in the midst of an election campaign, and that the US economy is looking shaky - it is unlikely that the IMF will be selling its gold anytime soon. Still it is interesting to see an organisation like the IMF contemplate capitalising on the high gold price.
In other news pointing to the ongoing strength of gold, Japan’s top bullion house Tanaka Kikinzoku Kogyo K.K. announced it bought a record amount of gold last year.
You will recall me saying that gold is a good hedge against inflation. You might be interested in this article that shows gold performing better than housing as an asset that holds its value in times of prising prices.
Finally – six-year-old strikes kilo of gold.
