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U.S. Lawmakers Oppose Sale of IMF Gold Stocks.
Reauters this morning reports that a dozen U.S. lawmakers have told U.S. Treasury Secretary John Snow to oppose proposals for the sale of some of the International Monetary Fund's gold stockpile to pay for debt relief for the world's poor nations.
These 12 senators from U.S. mining states said sales of the IMF's 103 million ounces of gold reserves, the world's third-largest, would hurt gold producers and cause job losses, including in impoverished countries like Peru and Tanzania.
The U.S. Treasury is likely to march in lockstep with the senators' arguments.
"We do not believe it is necessary to sell IMF gold to achieve debt relief for the poorest countries. We will review the IMF report on proposals to fund debt relief when it is released," Treasury spokesman Rob Nichols said.
The letter is signed by senators from the U.S. gold-rich states of Nevada, Colorado, Montana, South Dakota, Idaho, Utah, Alaska, New Mexico, California and Washington.
"We believe that careful consideration must be given to any proposal that could have such adverse effects on this important commodity market, and the businesses and communities in the U.S. and around the world that are affected by it," the senators wrote in the Jan. 31 letter.
The U.S. executive board member to the IMF is barred from voting to sell IMF gold reserves unless the U.S. Congress has approved the move first.
Finance chiefs of the rich Group of Seven nations asked IMF Managing Director Rodrigo Rato last weekend in London to report back by April on proposals for using IMF gold reserves to write off debts of the fund's poorest borrowers.
In the letter, which preceded the G7 London meeting, the senators noted it was the second time in five years that "serious proposals have surfaced that would effectively raid a core reserve asset of the IMF."
The lawmakers said the threat of gold sales in 1999 pushed gold prices to 20-year lows, caused unemployment, while several mines had to close in western U.S. mining states.
The senators said they did not oppose debt relief and urged the U.S. Treasury and IMF to develop "more viable and less disruptive alternatives to IMF gold reserve sales."
"We doubt that IMF gold sales -- which were soundly rejected as a policy matter just five years ago -- will make any more sense today," they added.
Gold traders in anticipation of an IMF move to sell Gold reserves, sold Gold earlier this week to the point where Gold tested it's support level at $411.00. With the liklihood that Gold reserves will not be sold by the IMF in response to the Senators' letter, the metal has strongly rebounded in the last two days to it's current $418.00.
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