Two weeks ago, when considering the biggest question on every gold aficionado’s mind, namely how much longer will China keep its gold holdings in secret, we suggested that the answer may be not much longer. The reason: “China may be preparing to update its disclosed gold holdings because policy makers are pressing to add the yuan to the International Monetary Fund’s currency basket, known as the Special Drawing Right, which includes the dollar, euro, yen and British pound. The tally may come before the IMF’s meetings on the SDR next month or in October, Nomura Holdings Inc. said in an April 8 report.”
“Next month” is now this month, i.e., May, when the fluid IMF meeting was supposed to take place in which China’s inclusion into the SDR was supposed to be at the very top of the agenda.
Unfortunately, it appears that either China, or the IMF, or both, got cold feet about the long-overdue China gold inventory update. The reason: on April 30, IMF spokesman Gerry Rice held a press briefing in which the main topic was Greece. It had some very testy exchanges about the Greek Plan B such as the following:
QUESTIONER: Firstly, just to follow-up on Michael’s question. I think his question was whether the IMF had prepared a contingency plan for a Grexit. Respectfully, I don’t believe you answered that question. You answered a different question. So can you say whether or not the IMF has prepared or is preparing a possible Greek exit from the Euro Zone or any other contingencies should there be a default?
MR. RICE: So, I mean, maybe just on the direct question that Michael and you asked which I think was reference to the Spiegel report of the paper –
QUESTIONER: No, I’m not referring to the Spiegel report.
MR. RICE: You’re not?
QUESTIONER: I’m asking you directly whether the IMF… I have no idea what Spiegel is saying.
MR. RICE: Okay, so I would repeat just upfront that our baseline position is that we don’t anticipate, expect a Greek exit and, you know, as with all other countries, we are always looking at different scenarios because that’s part of the service that we provide to our members. So that’s par for the course with the IMF. We’re always looking at different scenarios for different countries. That’s part of our job. We wouldn’t be doing our job if we don’t do that.
QUESTIONER: And just to follow-up on that. So are you saying that the IMF may have — may be preparing other scenarios? I’m not sure how to interpret that response.
MR. RICE: I wouldn’t go beyond what I’ve said, in that again, our baseline, our expectation is that there will be no Greek exit from the Euro Zone and that’s what the Greek authorities have said and we very much respect that and are working with them toward that. And again, the IMF does its job in all countries and we look at different scenarios. And that’s not unique to Greece.
QUESTIONER: Can I just follow-up on a second question?
MR. RICE: No, I’m going to take someone else.
But while the endless Greek drama is somewhat entertaining, if not for millions of Greeks for whom any day is now a matter of life or death, what caught our attention is what the IMF spokesman said almost at the very end of his press conference. To wit:
QUESTIONER: Just a few questions about other countries. A quick clarification on SDR, in January the managing director mentioned there would be an informal board briefing in May. Is that still happening, or has it been pushed back?
MR. RICE: On the — sorry, I didn’t catch the first part on the —
QUESTIONER: On the SDR.
MR. RICE: Yes.
QUESTIONER: Is May still the — this month is still the timeline? Or has it been pushed back?
MR. RICE: …. the board meeting has been deferred because the work is underway and we’ll let you know as soon as that board meeting is scheduled again….
So, alas, what we thought would be an imminent, critical and extremely overdue public announcement from China has again been indefinitely postponed. And so with the gold community eagerly expecting a confirmation from China that its gold holdings have doubled, tripled or more, China – and the IMF – suddenly get cold feet. Again.
After all, why pay more for a commodity – especially one which the BIS (not to mention random spoofers) do everything they can to manipulate at whim – when you don’t have to disclose how many thousands of tons of it you have bought over the past 6 years, can still pay less for a few more months?
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