
The question now is, who buys the rest of the IMF gold? - Flemlord
http://news.bbc.co.uk/2/hi/business/8342089.stm
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jeromec
The IMF had slated the sell off of some gold for about a year now, although I
can't remember the reason. Gold is getting a bunch of attention right now
because it's a commodity, a hedge against inflation, and these are historic
economic times. However, there is a problem with gold. It's heavy. People
don't want to carry or trade it. It can go out of fashion just as rapidly as
it's rising. Next year the Fed will begin raising rates and the dollar will
regain strength, taking some momentum off gold. Betting against the dollar is
betting against the future of the U.S. economy, and Warren Buffet made his
stand clear on that yesterday. I expect gold to continue to be up though, as
the dollar and economy are in for less-than-stellar performance for several
years in my estimation.

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steveplace
_However, there is a problem with gold. It's heavy. People don't want to carry
or trade it._

We have electronic exchanges now, we can trade contracts based off the
underlying. We do the same thing with stocks, bonds, oil, etc.

We're probably going to see a little more irrational exuberance in gold,
getting frothy and bubbly for the next few years. It's an asset class that is
still in a bull market, and there are few of those left.

Full disclosure, i'm long some miners and gold.

~~~
jeromec
It's true that we can represent commodities with paper and digital bits (in
fact some say silver prices are misrepresented by paper and would explode if
the SHTF, and physical delivery was demanded), but that doesn't change the
meaning of my statement much. Unlike oil, stock or bonds, gold just sits
there, heavily, not doing much of anything. It's only attractive when people
lose faith in the ability of un-backed paper currency to hold its value. When
and if the U.S. can solidify that mentality gold will fall out of favor. I
agree, though, with a long gold position.

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arvindnatarajan
Usually, when someone puts up that much quantity of commodity for sale, you
expect a drop in price. But here the opposite has happened. Shows how weak the
dollar is. What makes a government like India's which has its own huge budget
deficits buy that much gold when it is trading at over $1,000 in a single
transaction?

Peter Schiff's response here: <http://www.youtube.com/watch?v=Aicc3siQiHQ>

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steveplace
Fun fact: generally when you buy shiny things from the IMF, you pay through
SDRs-- a bucket of currencies.

India this time used hard dollars to buy the gold, a very large and very
interesting data point.

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ivenkys
Simple reason - dilute/diversify your USD holdings.

Its pretty well known that the Chinese and Indian Banks hold one of the
largest USD reserves in the world and have been responsible for artificially
inflating the price of the USD , this has been going on for years.

China last year or probably earlier this year said "We would like another
currency other than the USD to be the World's Reserve Currency".

