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China Looking To Buy Gold From IMF - Mike Swanson (09/22/09)

Submitted by Mike Swanson on Tue, 2009-09-22 06:57.

This morning gold is up on news that China is considering buying gold directly from the IMF. The IMF regularly sells gold and the news always seems to spark fear in gold bugs that gold prices will drop. Over the years I've seen this happen a few times a year, sometimes leading to one day drops in gold, but not once has IMF gold sales ended an upward trend in gold prices.

But it sparks fear. It makes gold bugs think gold is manipulated and all of the banks are working to make sure they'll never see their day in the sun.

But today China said they are thinking about just sucking up any IMF sales. We're talking about $13 billion worth of gold. What this shows is that there is powerful support on gold right now.

China is really secretive about the amount of gold it holds. It last reported its holding in 2003 when it said it had 400 tonnes. Earlier this year it revealed that it had 1,054 tonnes.

An offical at the Chinese central bank told reuters, "China only has about 1,000 tonnes of gold reserves and the investments in other assets are performing not very well."

China is buying gold. The United States is printing more money and piling up massive deficits. Were this goes no one knows, but what is clear is that the trend is up for gold. Gold is above 1000 an ounce and seems to now have big support in the 990-1000 area.

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