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G7 approves IMF gold sales from April to raise resources
The Group of Seven nations on Saturday approved the sale of gold by the International Monetary Fund from April as part of a broad reform of its budget, Italian Economy Minister Tommaso Padoa-Schioppa said.
- Reuters
- Published: 00:45 February 10, 2008
Tokyo: The Group of Seven nations on Saturday approved the sale of gold by the International Monetary Fund from April as part of a broad reform of its budget, Italian Economy Minister Tommaso Padoa-Schioppa said.
"There was an acceptance among the G7 that resources should be raised by selling gold," Padoa-Schioppa, who is also the head of the IMF's steering committee (IMFC), told reporters after a meeting of G7 finance ministers in Tokyo.
He said the agreement would be finalised in April and would complement spending cuts being drawn up by the IMF under its new managing director, Dominique Strauss-Kahn.
"The current gold price means a flow of income can be ensured," Padoa-Schioppa said.
Morgan Stanley analyst Stephen Jen said the fund held 103.4 million ounces of gold worth some $92 billion at current market prices. That was up from $23 billion just five years ago.
"The IMF is rich, if it wants to be," he wrote in a recent note to clients, issued before the G7's approval of the gold sales. "This is arguably a good time to consider selling some of these gold holdings and investing the proceeds in financial securities with positive yields."
A surge in oil prices has boosted gold's appeal as a hedge against inflation.
The precious metal gained more than 30 per cent in 2007 as safe-haven buying increased due to the credit market turmoil and worries about the health of the dollar as it fell to record lows against the euro.
Gold continued its upward march this year. Cash gold hit a record high of $936.50 an ounce on February 1.
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