Monday, April 6, 2009

The Speculative Impact of IMF on Gold Prices

GOLD-SGDividendsWe really shouldn't be writing any post on a Monday night. It just seems so wrong like we are some kind of nerdy workaholics who do not have a life. Monday nights are for those serious underground party goers who really really know how to PARRRTY if you didn't know. Anyway, we were just looking at the prospectus of the SPDR (State Street Global Advisors) Gold ETF shares and read something interesting which we thought we should share since its highly related to the news about IMF selling their GOLD reserves.Of course, they might not sell in the end as taken directly out of a quote of MarketWatch " ....... the U.S. Congress must approve the proposal, and most member countries also will have to enact legislation to expand the IMF's investment authority."

Taken directly from the SPDR GOLD ETF prospectus ( written in 2004)
"Substantial sales of gold by the official sector could adversely affect an investment in the Shares. The official sector consists of central banks, other governmental agencies and multi-lateral institutions that buy, sell and hold gold as part of their reserve assets. The official sector holds a significant amount of gold, most of which is static, meaning that it is held in vaults and is not bought, sold, leased or swapped or otherwise mobilized in the open market.

A number of central banks have sold portions of their gold over the past 10 years, with the result that the official sector, taken as a whole, has been a net supplier to the open market. Since 1999, most sales have been made in a coordinated manner under the terms of the Central Bank Gold Agreement, under which 15 of the world’s major central banks (including the European Central Bank) agreed to limit the level of their gold sales and lending to the market. It is possible that the agreement may not be renewed when it expires in September 2009.

In the event that future economic, political or social conditions or pressures require members of the official sector to liquidate their gold assets all at once or in an uncoordinated manner, the demand for gold might not be sufficient to accommodate the sudden increase in the supply of gold to the market. Consequently, the price of gold could decline significantly, which would adversely affect an investment in the Shares. "

Ok that is all we gonna share...cos we are gonna party till the moon goes down .... Thats the way..ah ha ah ha..i like it...ah ha ah ha..that's the way..

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