Gold News !!

WASHINGTON (AFP) - The International Monetary Fund Monday proposed the sale of 403.3 tonnes of gold to bolster its sagging coffers as part of a critical financial overhaul.
The sale, amounting to some 12 percent of its gold reserves, could yield around 11 billion dollars, IMF officials said, supporting a reorganization of the institution as it seeks to survive a downturn in lending to troubled countries, its main income source.
Managing director Dominique Strauss-Kahn said in a statement the IMF would use the funds to help shore up IMF finances and create a new endowment with more diverse investments to generate income.
The announcement comes with the IMF in the midst of an intense effort to trim costs and slash jobs as its lending is scaled back, with some countries refusing the IMF's conditional aid.
The IMF faces a budget shortfall of some 140 million dollars for the fiscal year 2008 that ends on April 30.
The sale would affect some 13 million ounces of the IMF's 103.4 million ounces of gold reserves.
IMF officials said the sale would likely take place over several years in an effort to avoid market disruption.
Still, the sale could have a dramatic impact on the market, where according to IMF officials some 500 tonnes are traded annually.
Gold prices recently hit an all-time record above 1,000 dollars an ounce. An IMF official speaking on condition of anonymity said an average price of about 850 dollars an ounce would generate about 11 billion dollars.
Of that, some 6.6 billion dollars would be used to create the endowment, he said.
The IMF said the executive board agreed to revamp the institution's income model from one that primarily relies on lending to one that "generates funds from various sources."
The expansion of the fund's investment authority is contingent on a charter amendment that would need legislative action in most member countries. In addition, approval by the US Congress is required for the US executive director to vote for the gold sale.
The reform plan requires approval by 85 percent of the voting power of the institution's 185 member nations, which is dominated by the US.
Strauss-Kahn hailed the executive board's proposal for a new financial framework, calling it "a landmark agreement that will put the institution on solid financial footing and modernize the IMF's structure and operations."
"We have made difficult, but necessary choices to close the projected income shortfall and put the Fund's finances on a sustainable basis," he said.
The investment policies would include safeguards to ensure that the broadened investment authority "does not give rise even to perceived conflicts of interest."
At the same time, the board considered the medium-term budget for the financial years 2009-2011, which includes "deep spending cuts" of 100 million dollars, and approved the administrative budget for the 2009 financial year that begins May 1, 2008.
"With these measures the fund expects to close the projected income-expenditure gap of 400 million dollars within a few years," said the multilateral institution, created in the aftermath of World War II with a mission to promote global financial stability.
If approved, the new income model "could generate an additional 300 million dollars" in income within a few years, the IMF said.
Nearly 400 jobs are targeted for elimination, officials said. That process, currently under way, includes a period of voluntary departures that ends on April 21.
The announcement came ahead of the spring meetings of the IMF and its sister institution, the World Bank, in Washington this weekend.(written by: veronica smith, source:yahoo.com)