afrol News, 19 February - The World Gold Council has welcomed the announcement by the International Monetary Fund (IMF), that the next phase of its previously announced gold sales programme will be undertaken in a phased and transparent manner.

The gold sales follow the IMF Executive Board's decision in September 2009 to approve sales of the metal totalling 403.3(t). The successful first phase sale entral Banks had no impact on the smooth functioning of the gold market and the remaining sales to be undertaken in phase two of the programme are also not anticipated to be disruptive.

The sales by the IMF in phase two do not represent a net addition to supply because they will be accommodated under the Central Bank Gold Agreement.

The sale of 212 tonnes to the central banks of India (200t), Sri Lanka (10t) and Mauritius (2t) in November 2009 represents more than half of the total amount of gold to be sold by the IMF under the programme and was executed at market prices, in line with the IMF's Articles of Agreement. It also took place in accordance with the stated commitment of the IMF to follow the recommendations of The Crockett Report[1] of 2007 and ensure that its gold sales do not disrupt the smooth functioning of the gold market.

The next phase will see 191.3 tonnes (t) sold to the gold market and reaffirms the commitment by the IMF to follow the recommendations of The Crockett Report.

The IMF has stated that: "The initiation of on-market sales does not preclude further off-market gold sales directly to interested Central Banks." Further, IMF's Executive Board has reaffirmed "the long-standing principle that the Fund has a systemic responsibility to avoid causing disruptions that would adversely affect gold holders and gold producers, as well as the functioning of the gold market."

Aram Shishmanian, Chief Executive Officer, World Gold Council, said: “The public restatement by the IMF of its commitment to execute the final sales under its previously approved programme in a responsibl manner, once again demonstrates its commitment to an orderly market.

"The outlook for gold remains positive precisely because of the unique diversity of the gold market. Resilient investment demand, and progressive improvements in jewellery and industrial demand are part of the picture. Supply trends are equally as important as demonstrated in 2009. Net purchasing by central banks in recent quarters, constrained mine supply and a more stable level of recycling activity, all help to ensure that gold continues to retain the qualities which make it an important preserver of wealth and a key component of an effectively diversified portfolio for central banks and investors alike," he said.

The World Gold Council recently released its Gold Demand Trends report for 2009, which provides data that indicates Central Banks are continuing to diversify their portfolios with an increased allocation to gold. The Gold Demand Trends report revealed a significant reduction in net official sector sales in 2009 of 44t compared to an average of 444t over the five-year period up to 2008 with Central Banks, in the aggregate, turning net buyers in the last three quarters of the year.

Given the IMF's status as effectively the global "lender of last resort", World Gold Council believes it is imperative that the organisation continues to hold large gold reserves and acknowledges the IMF's public declarations that: "The IMF should continue to hold a relatively large amount of gold among its assets, not only for prudential reasons, but also to meet unforeseen contingencies," the body said.

The World Gold Council's mission is to stimulate and sustain thedemand for gold and to create enduring value for its stakeholders. It is funded by the world's leading gold mining companies.

By staff writer

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