MARKET SAVVY : Lawmakers Cautiously Support IMF’s Alternative to Gold Sale
The International Monetary Fund’s apparent decision to back away from dumping part of its gold reserves to help poor nations--and to use an accounting change instead to raise capital for such aid--got a cautious OK from some members of Congress on Wednesday.
The proposal “is preferable to the original plan of selling gold in the open market,†said Rep. James A. Leach (R-Iowa).
Gold prices have edged higher this week, to about $256 an ounce, as the plan was leaked.
The IMF’s gold reserves are registered on its books at about $46 an ounce. That’s because it received the gold from member countries at least 25 years ago.
The IMF said it could sell gold at market prices, buy it right back at the same price, and increase the value of its assets by $1.1 billion, which could then finance debt relief for some nations.
In the United States--which, along with other nations, must OK major IMF moves--some in Congress have opposed IMF gold sales, arguing the organization shouldn’t reduce members’ reserves. The sale idea has also faced opposition from members of Congress from gold-producing states.
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