How will disruption of the gold market be avoided?
The Crockett Committee recommended a number of safeguards on gold sales to avoid disruption of the gold market: • The Committee recommended a firm limit on the volume of gold sales as a key safeguard, given the IMF’s standing as the third largest official holder of gold. • The Committee recommended that the IMF’s gold sales should not add to the announced volume of sales from official sources. Hence, the IMF’s gold sales should be coordinated with current and future Central Bank Gold Agreements (CBGA). (Under the current CBGA, a group of European central banks have agreed to limit their gold sales to no more than 500 metric tons annually). • Phasing of IMF gold sales over time is also recommended by the Crockett Committee to avoid disruption of the gold market, together with careful handling of the public communications related to gold sales.
• The IMF’s Executive Board has reaffirmed the long-standing principle that the Fund has a systemic responsibility to avoid causing disruptions that would adversely affect gold holders and gold producers, as well as the functioning of the gold market. Hence, the Executive Board has adopted modalities for the gold sales consistent with guidelines it endorsed in February 2008 to safeguard against market disruption: • Sales should be strictly limited to the amount of gold that the Fund has acquired since the Second Amendment of the Articles of Agreement (12,965,649 fine troy ounces or 403.3 metric tons, which represent one-eighth of the Fund’s total holdings). • The Fund’s gold sales should not add to the announced volume of sales from official sources. (Participants in the recently renewed Central Bank Gold Agreement noted that the Fund’s sales can be accommodated under the announced ceilings, ensuring that on-market gold sales by the Fund would not add to the announced volume of sales f
