After a weekend of World Bank and IMF meetings, the calls to sell off IMF gold reserves have begun anew.  It's funny how big government never looks at how to cut spending or reel in bureaucracy, but rather wants to sell off assets.  These gold assets should be the ultimate insurance policy in the event of a fiat currency default, not the bridge loan for filling in deficits in the operating budget of the IMF.   The calls this weekend have come again from Gordon Browne, UK Chancellor of the Exchequer and Japanese finance minister Omi. 

If there is one person on a global scale who can have the finger pointed in his direction as the worst judge of the gold market and when to sell gold assets, it's Brown.  One thing that has been proven over the last seven years since the Bank of England, Bank of Australia, Bank of France, Bank of Spain, Bank of Portugal, Bank of Switzerland…(the list goes on and on, you get my point) is that when these banks sell, the price heads higher after the sales.  So we say, let the IMF or any central bank sell as much of their gold reserves as they care to into the market.  Let that gold enter the strong hands of individual investors around the globe.  The sooner gold leaves the hands of central banks, the sooner we'll see a market free from the constant potential of overhang sales and opaque lending and swap activity.  Thankfully the IMF will be changing the transparency of the gold loan and swap market in the coming year.

The market has gobbled up over 60 tonnes of central bank sales in the last 4 weeks alone.  The Bank of France has sold nearly 400 tonnes in the last two and a half years and the market has continued higher.  We have no doubt the market could digest another set of sales akin to the Bank of England's +400 tonne sales in 1999 to 2001.  The increased central bank sales in the last month along with the tired (and never completed) IMF sale red herring have been sitting on the market over the past  few weeks and we've still managed to trend higher.  In the past the combination of IMF sale rumors and increased central bank sales would tank the gold price in short order.  We've entered a new paradigm.  The market is digesting increased sales and taking everything else in stride.  We will trend higher in short order.