IMF to sell 191.3 tonnes of gold on market 'shortly'

The International Monetary Fund said Wednesday it was ready to sell 191.3 tonnes of gold on the market in a bid to reduce its dependence on lending revenue.

At Wednesday's market price of about 1,120 dollars an ounce, the gold to be sold would be worth nearly 6.9 billion dollars.

The fund "will shortly initiate the on-market phase of its gold sales program" of a total 403.3 tonnes approved for sale last September, the Washington-based institution said in a statement.

The initial phase was set aside exclusively for off-market sales to public entities, such as central banks, among the IMF's 186 members.

A combined 212 tonnes was sold during that first phase - more than half the approved total - snapped up by the central banks of India, Mauritius and Sri Lanka.

India, the first customer, bought 200 tonnes, followed by Mauritius (two tonnes) and Sri Lanka (10 tonnes). The IMF said that the 212 tonnes of gold sold off-market to date have fetched 7.2 billion dollars, generating profits of about 4.5 billion dollars compared with the price assumed when the gold sale was approved.

The average price of the gold sold off-market was 1,050 dollars an ounce, sharply topping the 850 dollars penciled in.

As for what would be done with the additional revenues, Andrew Tweedie, the fund's finance director, said in the statement that "it is probably a little early to speculate," given the remaining gold to be sold.

"We still need to see what happens to the gold price during the second half of the sale before we can conclude that we have additional revenues."

The IMF underscored that gold sales were still available to state entities.

"The initiation of on-market sales does not preclude further off-market gold sales directly to interested central banks or other official holders," it said.

IMF members agreed in 2008 that the fund could sell an eighth of its gold assets in order to diversify its financial model so that it no longer relies on lending.

Profits from the sales will be used to create an income-generating endowment that is part of the revamped IMF income model.

"In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time," in line with an approach used by central banks to avoid market disruptions, the IMF said.

Certain banks participating in the Central Bank Gold Agreement have said the IMF gold sales can be accommodated under the agreed ceilings of 400 tonnes annually and 2,000 tonnes in total over the five years that started on September 27, 2009, the fund noted. AFP