|
|
NOTES FROM THE BULLION TRADING DESK
THE UNCHANGING FUNDAMENTALS
9th February 2005. Simon Heapes
Some gold investors may be concerned that there may be an announcement about IMF Gold-funded debt relief for Heavily Indebted Poor Countries (HIPC's). Recent comments from the governments of the UK, Germany, Canada and South Africa support this notion.
Yet let's look at the fundamentals (truths);
Out of the 41 Heavily Indebted Poor Countries (HIPC's) listed within the IMF (International Monetary Fund) 33 of them are GOLD producers! So therefore if the IMF sell there gold(3,000t) it would reduce the price of gold significantly by artificially flooding the market(temporarily). This would only be a quick fix and postpone their inevitable problem which is debt due to unemployment because of a lack of being productive.
Sure it would reduce or clear thier debt but within a short period of time they would be right back were they began having to borrow again, and who from, you guessed it, the IMF.
MARKET PROPOGANDER;
"When the gold price soars, what does the financial market ALWAYS focus on? Answer: inflation, crisis, safe-haven
investing. Wall Street (and its bullion banks), the Fed and US administrations abhor a higher gold price for those reasons and have done all they can to manufacture a lower gold price than should be over the last decade". - quote by Bill Murphy - GATA
The kind of media Propogander we have been hearing about Gold sales is designed to keep the US$ strong and precious metals down as Bill Murphy mentioned above.
Let me explain;
In each one of those HIPC's between 70 & 80% of the employment comes from there mining industry. If the market is flooded with IMF gold we will have a low price therefore reducing mining operations and putting miners out of work!! The HIPC's need a free market price in the precious metals to create more employment making them self sufficient so they don't end up in Debt.
For every miner employed within those countries you effectively feed about 10 dependants. Meaning if you put 100,000 miners to work you will feed and cloth about 1,000,000 people! SELLING IMF GOLD WOULD BE A CATASTROPHE within those nations making them even poorer than they are now.
THE TRUTH OF THE MATTER;
The IMF will not sell gold because most of the members of the IMF are HIPC's
(Mali, Tanzania, Ghana, PNG, Indonesia, South Africa & some South American) depend on gold mining for a good chunk of export revenue, investment and even GDP.
The IMF website points out it would take a majority vote to sell it's Gold, which makes it highly unlikely for them to vote in Gold sales creating higher unemployment for themselves.
"The IMF may sell gold outright on the basis of prevailing market prices, and may accept gold in the discharge of a member's obligations at an agreed price, based on market prices at the time of acceptance. These transactions in gold require an 85(%) percent majority of total voting power. The IMF does not have the authority to engage in any other gold transactions—such as loans, leases, swaps, or use of gold as collateral—nor does it have the authority to buy gold". - IMF Constitutional quote. ( http://www.imf.org/external/np/exr/facts/gold.htm )
It is well noted those selling Precious metals and metals shares are selling into strong hands, unfortunately with futuristic regretful consequences to themselves. Those who can see past the smoke & mirrors vael being produced by our financial engineers via our media are adding to their positions at artificially produced low prices.
I am quite often reminded of a statement by one of the AFBC's corporate Elders, "The media never let the truth get in the way of a good story".
At the end of the day, do not be moved by what you see, or in this case what you read or hear.
Simon Heapes.
(c) copyright 2004
www.anglofareast.com