May 5, 2003 - You can always count on the International Monetary Fund to bash gold. It is a reliable servant to those who would like to keep the gold price subdued.
To achieve this disagreeable objective, the IMF can point to many scurrilous accomplishments. For example, it forces its member countries to pretend that gold is not money and prohibits them from returning to a Gold Standard to discipline the money creation proclivities of politicians. Equally scandalous is that it instructs central banks to ignore generally accepted accounting principles and national law to hide from public view the amount of their gold loans. But these outrageous policy directives are not the only way the IMF bashes gold.
Whenever the gold price begins rising, you can reliably expect the IMF propaganda machine to go into full force. We saw an example of that practice just a few years ago when the IMF proposed selling some of its gold, ostensibly to help poorer countries. Many quickly saw through that proposal.
Though couched in humanitarian terms of debt relief, the proposal's intent was quickly questioned given that some of the poor countries it supposedly intended to help were gold producers who would be harmed by the IMF's proposed gold dishoarding. Consequently, various countries - including a broad and eclectic coalition in the US Congress - stopped that proposal in its tracks, but not until the publicity surrounding the proposal had done a lot of psychological damage to the gold market.
Now that the gold price has been rising again, I have been wondering how long it would be before some anti-gold IMF proposal was brought out of the closet again in an attempt to talk down the gold price. The answer turns out to be 'not long'.
A staffer for the Congressional Research Service recently sent the following email to a number of people in the gold industry soliciting comments:
"I am doing a project for Congress on the International Monetary Fund and its gold stockpile. I am trying to assess the impact of a proposal that 1.9 million ounces should be sold annually for the next twenty years in order to pay for certain long-term activities. I need to know roughly how much gold comes to the market each year. Would the inflow of an additional 1.9 million ounces have a negative impact on world gold prices over this lengthy period of time?
Thank you for your assistance. I would appreciate a response as soon as possible. Also let me know whether you can be cited or whether you desire to remain off the record as a source of information."
The IMF supposedly holds about 3,217 tonnes of gold. I say 'supposedly' because there has been so much deceit surrounding gold by central banks that it is prudent to remain skeptical about any government statement about it. For example, the IMF says that they do not lend their gold, but who really knows?
The IMF is a creature of the 1944 Bretton Woods conference. When that monetary system broke-up in the 1960's, the IMF should have been disbanded along with it, but unfortunately, it wasn't. Like a piece of old chewing gum stuck to your shoe the IMF just hangs on, without any useful purpose except to annoy you, which is what the IMF does to me with its virulent anti-gold policies.
There have been initiatives in Congress and elsewhere to wind-up the IMF. Too bad none of these efforts have taken root.
I would like to see the IMF wound up and its gold returned to its member countries pari passu. Some of that gold may leak back into the market by the same governments now active in gold lending and/or dishoarding, but at least the IMF hoard would no longer exist to be used to threaten the market. And besides one could safely assume that much of that gold once returned would be retained in the vaults of countries like France and others who recognize gold for what it is, money and power, and much better money than the US dollar. But for now, be prepared for another barrage of anti-gold propaganda from the IMF.
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