Some may think that the IMF dumping gold is part of the vast conspiracy to suppress the price of gold. Instead, I propose the IMF sale of gold is sheer stupidity on the part of the IMF. However, given that I do not like the IMF or its meddling, I am glad they are doing it.
Reasons To Cheer IMF Gold Sales
1) If the IMF wants to dump gold in favor of paper assets diminishing in value over time, it's fine by me. I hope they dump it all. It will reduce the amount of meddling they can do down the road.
2) IMF gold sales are a bull market phenomenon. The UK dumping gold at $250 marked the bottom.
3) China is a possible recipient of the gold. If the real reason for this move is to allow China to get rid of some US dollars or treasuries in return for gold I view that as good thing.
Bretton Woods II is coming to an end. That we know. What we do not know is the timeframe or the replacement. However, China may need to accumulate gold for whatever the next agreement might be. IMF gold sales may be a small step down that path.
Gold is consolidating recent gains now. Bear in mind that March to August is generally a seasonally unfavorable period. That is not a prediction of a further pullback, although it is likely. Further consolidation is a good thing that will add fuel for the next leg higher.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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