Rumors were China [Apr 25, 2009: China Begins Building Gold Reserves] was going to buy this stash of gold from the IMF; but it appears India “won”.   This will drop the International Monetary Fund stake but still keep it at spot #3 in world's reserves, and send India screaming up the charts from 14th [Oct 13, 2009: Largest Gold Reserves by Country]  Gold fever is spreading across he globe as central banks go wild printing paper currency….

Via Reuters:

• The International Monetary Fund has sold 200 tonnes of gold to the Reserve Bank of India for $6.8 billion, quietly executing half of a long-planned bullion sale that has threatened to slow gold's ascent.
• The sale, which surprised traders who expected China to be the leading buyer, will relieve the gold market of some uncertainty over how and when the IMF would sell 403.3 tonnes of gold, about one-eighth of its total stock.
• It also fueled speculation that other governments — including Beijing — may be ready to diversify their reserves even at near-record gold prices, helping soak up IMF supply that the fund may otherwise be forced to sell on the open market.
• Although the IMF's plan to sell a share of its gold holdings in order to increase low-cost lending to poor countries had been flagged for a year before it was formally approved in September, both the speed of the deal and the buyer were a surprise.
• Although India is the world's biggest consumer of gold, primarily in the form of jewellery and investment among its billion-plus people, its central bank had given few indications of being a front-runner in the move to diversify into bullion.
• An IMF official said the sale was concluded at an average price of about $1,045 an ounce and that the transaction would be paid in hard currency and not in IMF Special Drawing Rights.
• “The fact that they've sold the gold to India would suggest there's going to be fewer official sales by the IMF on the market. So that might be a positive theme for the gold price,” said David Moore, commodities strategist at Commonwealth Bank of Australia.
• The market's focus has now shifted to China, which has reportedly been in talks with the IMF about buying some of the fund's bullion as Beijing seeks to shift some of its more than $2 trillion in foreign exchange reserves away from the U.S. dollar.  “Now people may think China will buy the other half,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

• “The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolio with gold,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. dollar.” 
• “It’s more or less certain that government of India expects the U.S. dollar to weaken,” said Suresh Hundia, president of the Bombay Bullion Association Ltd., in an interview today. The purchase is “not so much about India betting gold prices will increase but that the dollar will fall. They are looking to diversify their foreign exchange reserves.”

[Oct 29, 2009: Paul Tudor Jones 3rd Quarter Investor Letter - Another Gold Bug]
[Oct 8, 2009: Is Ben Bernanke Ruining Indian Weddings?]
[Sep 29, 2009: NYT - Out from India's Alleys, Gold Loans Gain Respect] 
[Mar 17, 2009: John Paulson Joins David Einhorn as Gold Bug with Stake in AngloGold Ashanti (AU)]

There are many, many merchants who want to offer you cash for gold these days, and many of them are rip-offs. Consumer Reports took the time to shop around some jewelry and record which methods give real returns for gold.

The not-for-profit consumer group shopped identical 18k pendant jewelry to three of the more widely advertised mail-in gold buyers, as well as pricing a sale at local jewelry stores and pawn shops. The price of gold fluctuates day to day, but one thing remained constant—mailing in your jewelry to “convenient” vendors was almost never worth it:

The cash-for-gold companies paid 11 to 29 percent of the day's market price for gold; the other venues, about 35 to 70 percent.

Consumer Reports recommends using a daily price calculator, like Dendritics', in combination with a digital kitchen scale and the karat stamp to figure out what your jewelry is actually worth.

Where have you received the best price for sold gold? When is selling versus holding a piece worth it? We welcome your (far more experienced, likely) take in the comments.

sell my gold

Rambling  … the crowded trade phrase doesn't work in this case. The gold market is quite small, for example the mkt cap of the senior gold mines (all components of the HUI & XAU) is a little over $200B (by comparison Microsoft is $252B). That’s gold in the ground. Above ground govs own a few 10s of thousands of tons, the rest is stashed & traded. 90%+ of all gold mined still exists, most silver OTOH is consumed in electronics factories etc.  

The US has $50T in personal & gov debt. The banks have 100s of trillions in worthless hidden CDS junk for which there’s no market except the public via FED slight of hand without which banks would be flat bankrupt & out of business. Government Treasury Bonds are no better than currency, paper IOUs & probably uncollectible as things deteriorate or holders get paid off with worthless script with severe purchasing power losses, legalized theft, not much difference. Houses, the biggest item in most people’s lives are in trouble & no hope of rescue for decades.  

The buying power of twenty US dollars in 1913 bought you almost one troy ounce of gold or about 13 ounces of silver. Today $20 will buy you 1/54th of an ounce of gold (0.57 grams), a 98% drop in paper buying power in 96 years.

When the Spaniards looted Mexico, Espanola & Cuba of their gold & silver it flooded the market in Spain causing tremendous inflation much the same as 20thC Western bank fiat. Between 1503 & 1560 approx 112 tonnes of gold was brought to Seville in addition to 1500 tonnes of silver from Mexico & the Indes from 1530 to 1570. The gold silver ratio started out at 2:1 in the early 16thC & gradually widened to 12:1 by 1608.  This was a one time world event exc for South African mines but SA mine assets were better controlled. For a while Spain was the leading power until they met their match in Elizabeth I. Europe’s lead bankers gravitated to Antwerp who the Prince of Orange  brought to England when  crowned William III then settled the remnants of Catholic ambitions at the Battle of the Boyne where James was routed. A few years later the Bank of England sprang into being & fractional money-lending went systemic across a growing empire refining the methods of the Knights Templar bankers Philip V had executed to resolve his debt, the Goldman Sachs of the day (or does Goldman answer to the BoE today?) stealing land along the Crusader corridor for a few hundred years offering protection for fees. Market manipulators similar in some ways to GS et al.

Modern political parties & royalty seek monopoly powers they share between each other according to society’s mood. Sometimes they like to experiment with feudalism, fascism, socialism, communism, today a weird mix of them all, governments like to be big & bureaucrats must be paid, socialist benefits funded to keep populaces orderly, in debt & in fear, bankers like to live like royalty, poppy fields protected in foreign lands, soldiers paid & equipped. How to keep all this going except by fiat & material growth without vast colonies to exploit, & excess fiat growth begins to weaken the Empire as demographics fall apart, consuming peaks out & the FED bungs its mates $12 trillion this year, $20 trillion next & the $100 trillion CDS won’t go away, so best solution is gear up the fraud & swap dollars for Euros, Reals, gold, oil, copper, anything except dollars before anyone stops them which of course isn’t going to happen, & unless Bernanke & co do something radical, which he won’t, it looks like fait accompli approaching & the ruling elite get the loot & the people get a kick in the head as usual.

 In view of which, probably not a crowded trade though the dollar would climb ten or twenty points if banks & funds close their dollar shorts, frighten gold hoarders into selling their stash, then sell dollars again a year or so later.

This mess took 96 years to make. World reserve fiat kept it going smoothly till mid 2007 & finance  broke down so the situation is very young, a short 30 months old. A look at an $INDU:$GOLD chart shows the DOW's real position. The 2000 high of 44 dropped to 7 in March & now 10. $USB:$GOLD is down from the 2000 high of 0.4 to 0.1  In due course gold will peak like the DOW in 2000 but, this is a trade that can & will get more crowded over the next 4 years. Sit back & watch.

11/02/09 Gaithersburg, Maryland – I think we’re still in the early stages of what could become a gold mania. While there are a lot more people talking about gold now and the gold price is close to all-time highs, it remains an underowned asset. Only a small fraction of investors own any gold at all. Hardly any institutions own any gold, either. As we now have 10 years of market-beating data for gold, it’s going to attract more attention.

I think that attention will eventually carry it to a price of $2,000-3,000 pretty easily — maybe more. So far, gold has had a steady march up since 2000. The last leg, the mania phase, always has a rapid and explosive move before it’s all over. We’re not there yet.

As for what will pull gold back down, I think a strong economic recovery could derail gold’s story for a time, but as long as the U.S. dollar makes its way to new depths over time, I think the gold price will drift higher.

Most people think of gold as an inflation hedge. To me, it is more than that. Gold is primarily a bet against the creditworthiness of the issuers of paper currencies. In other words, as the creditworthiness of the U.S. government weakens — thanks to high debts and deficits — gold will be a strong asset… and gold stocks ought to be one way to juice the return you get from gold. Our two gold stocks are up 80% and 40% since we bought them earlier this year. If we get any pullback in gold, I’ll be a buyer.