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IMF to buy Gold worth $2.3 billion
The International Monetary Fund (IMF) is turning from seller to buyer, with its plans to purchase more than $2 billion worth of gold on account of rising global risks. The IMF currently holds around 2800 tonnes of gold at various depositories
“The Fund is facing increased credit risk in light of a surge in program lending in the context of the global crisis. While the Fund has a multi-layered framework for managing credit risks, including the strength of its lending policies and its preferred creditor status, there is a need to increase the Fund’s reserves in order to help mitigate the elevated credit risks”, Bloomberg quotes a report by an IMF staff while also adding that a $2.3 billion gold purchase is in the planning.
IMF’s borrowers include Eurozone countries like Greece and Portugal. Greece is IMF’s biggest borrower and the nation is currently caught in a political deadlock that seems bent on denying itself the much needed bailout fund.
Countries like Spain is also officially in recession after its first quarter GDP contracted. Other nations in the Eurozone region is also showing increased signs of slow manufacturing activity and economic growth.
In such a risky financial environment, the IMF’s move could be considered wise and can be seen as an indication of how much trust the mainstream financial community now has on precious metals like gold.