From today's Gartman Letter...... (11-3)

"Moving on to the gold market, the news this morning is huge, for the International Monetary Fund reported late yesterday that it had sold 200 tonnes of gold to the Reserve Bank of India. This is half of the 403.3 tonnes that The Fund said it intended to sell over the next year, and of course removes one of the truly large overhead supply concerns for this market. The only question remaining is who shall take the remaining 203.3 tonnes, and the guess is that it shall eventually be China… the latter being conjecture on our part of course, but a reasonable conjecture to be sure. The particulars of the IMF’s announced sale to India have not yet been made public, but they soon shall be. However, we are told that they involved daily sales phased over the last two weeks of October.

In one of the great examples of understatement we can recall reading… ever… The IMF’s Managing Director, Mr. Dominique Strauss-Kahn, said that he "strongly welcome[s] this transaction with the Reserve Bank of India.” We would certainly guess that he does, for the Fund has badly wanted to sell this gold for a very long while, and its sale has been rumoured time and time and time again over the years. Now at least half of the gold the Fund intends to sell has been moved in one swift transaction.

Mr. Strauss-Kahn went on to say that "This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the Fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries…. The fund is standing ready for an initial period to sell gold directly to central banks and other official holders that may be interested in such sales."

In mid-September, putting downward pressure upon gold prices at the time, the IMF’s executive board said that it intended to sell the 403.3 tonnes of gold noted above. We are told that that is 1/8th of the Fund’s total holdings of gold bullion… which is itself the third largest gold reserve position in the world following that of the US and Germany governments, which between them own just over 3,200 tonnes of gold.

What this shows is that the gold that the IMF wants to sell can be sold readily and swiftly to a single buyer when necessary, and it can be done very quietly. We have always said that when the time comes for the IMF to sell its gold holdings, either India or China will be there as the buyer. India has made its purchase, and we are certain that it is but a matter of time until China and the IMF announce much the same deal, for given China’s inordinately small holdings of gold as a percentage of its total reserves it needs to buy a goodly sum of the metal and it needs to do it n one transaction. It will… sooner rather than later."