China eager to buy IMF gold for $1,000 per ounce
By David Lew
BEIJING: Two months after India’s Reserve Bank made big global news with the purchase of 200 tonnes of gold from the International Monetary Fund (IMF), bullion traders are now waiting for the ‘golden’ news of 2010. The news in question: Will China buy the remaining 203 tonnes of gold from IMF soon?
Bullion trader and gold investors in China want the dragon country to take the plunge and buy the rest of the IMF gold, following India’s footsteps. India bought 200 tonnes of IMF gold for $1,045 an ounce. Soon after the India purchase, gold price zoomed to touch a high of $1,227 per ounce in November last year. Since then, the yellow metal price has come down. Gold is these days hovering around the $1,100-1,150 price range.
Last year, IMF approved the long-talked-about sale of 1/8th of its holdings, in "a volume strictly limited to 403.3 metric tons, with these sales to be conducted under modalities that safeguard against disruption of the gold market." The main IMF parameter to sell its gold reserve was that the sale has to be done at current market prices. So, now, the moot question is whether China will take the next step and buy 203 tonnes of gold from IMF at the current market price--$1,100-1,150 range?
Buying gold at the current market price would mean that China will be paying almost the same money per ounce of gold that India paid to IMF. Bullion experts recommend that China should go in for the IMF gold buy in this new year, as otherwise its ambitious task to mop up 10,000 tonnes of gold reserves in the next 10 years may be difficult to achieve.
China is the world’s biggest gold producer. In April, China increased reserves of gold by 76 percent to 1,054 tons since 2003. GFMS recently predicted that China will overtake India as the largest consumer of gold in the world.
China is willing to buy IMF gold, but not at the high price that India paid. Gold price may be zooming to records; but China wants to wait and watch so that price of the yellow metal crashes to realistic levels. Now, the question is will China be able to buy IMF gold at $1,000 per ounce in 2010.