When India announced its purchase of 200 tonnes, it added a statement that it may buy more of the I.M.F. gold.   This implied that it was limited by the I.M.F to 200 tonnes.   But the I.M.F. never said that.   Rather it said it would announce the sale of any other portion of their gold to the public.   It has been several months since another sale has taken place.   Now with this announcement, we are given the impression that central banks have not come forward to buy and are not buyers.   Talk about ‘spin’!

China for sure would not buy if an announcement were to be made.   It would rather buy once the gold were sold in the open market, for it could buy through its chosen bullion bank or bullion banks and do so, under the radar.   In fairness to the I.M.F. we have to say that they have said they are open to central banks buying direct from them still, and will announce such sales.   But you must realize that any further sales through the ‘open’ market will be done anonymously.   This levels the playing field.   However, all we will now hear is the completion of such sales.   If the I.M.F. decides to sell 4 tonnes a week, we will hear about it through the E.C.B. website in tonnage terms but with no further details.   Will we hear of a 100 tonne sale done this way?   Unlikely, but possible!

The market first reacted by fearing a dumping of this amount of gold, but once it gathered itself together, realized that it could as well be bullish for the gold price.   After all 191 tonnes is an amount that the gold market does not see often, so a big buyer in the wings, finding that for one price can get a good lump might well come and bid for it.   Will the I.M.F. offer the amount to the market or drip feed it?   No one knows.   Will they say to the market there is 191.3 tonnes on offer, we don’t know.   They can now play the game as they choose.   If they want to sell the gold quickly, it is incumbent upon them to accept a bid for the entire amount, but rarely is life so straightforward, these days.   The waters are now muddied!

The reality is that there is the demand for such amounts in one sale.   But the real question is, “do the I.M.F. want to sell it in one go?”   We now have to wait and see.

The impact on the gold price, whichever way it goes is clear.