Resourceinvestor.com report has mentioned that in the past proposals to sell gold by IMF were blocked by the US Congress. Congress because of its weighted voting power was a virtual veto on any IMF gold sales. Now that Congress is a much more liberal makeup than it was earlier, it may not block IMF gold sales. Especially since these limited sales are done in a non-disruptive manner.

There is a good possibility that there might be more IMF gold sales in future years. This is because no one has any plans to address the massive bleeding of dollars by the US Treasury. Obama and the Congress are preoccupied with other agendas that they haven’t done anything about it. Obama is offering such potpourris of social programs that the dollar will strain under them.

There is anything positive for the dollar on the political scene in the near future. Although the IMF gold sales may turn into reality soon, you shouldn’t worry about them at all. It doesn’t dampen my enthusiasm for gold and sliver, for that matter. Investing in gold and silver makes a lot of sense for these times, and it always pays back.

You shouldn’t panic at the idea of the IMF selling gold; it has been going on for years. In the 1970s both the IMF and the US Treasury sold gold while it marched to $850. European central banks have been selling gold for years, so it’s nothing to be majorly concerned about.

Additionally, there should be a recommendation for gold sales, maybe up to 400 tons and “sold in a way that didn’t disrupt the market, much like what has been followed by the European Central Bank Gold Agreement (EGA), which limits sales to 500 tonnes per year.”

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Chief Executive Officer Edward Zore said “Gold just seems to make sense; it’s a store of value,” in an interview. Earlier at a conference hosted by Standard & Poor’s in Brooklyn he made the following comments: “In the Depression, gold did very, very well.”

This was welcoming news, especially for the gold investors. But many of them do not need validation to make them feel good about their gold investments, since they already know the value of gold investments. Other investors are curious now that how come an esteemed institution like Northwest Mutual shares their feelings about how to protect against potential declines in the value of the dollar. Maybe Northwest Mutual knows something that we don’t.

So far the Northwest Mutual has accumulated about $400 million in gold; and CEO Zore hasn’t disclosed Northwestern’s plans for future gold investing. Maybe there is a message for us from this investment, to think about protecting our own savings.

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Citigroup has observed that “gold is oscillating around $800/oz as speculators have locked in profits. We view the outlook favorable for a test of $1,000.” Citigroup analysts see precious metals “as well-positioned” because the Fed and other central banks want to see re-inflation as the operative now.

There has been so much concern about subprime debt, that it has created a “liquidity crisis.” Central bankers react to liquidity crises by printing more money; adding to inflationary pressures and making precious metals more attractive to investors.

Citigroup analysts have also warned that “the IMF is taking measures (e.g., job cuts) aimed at convincing the U.S. and Europe to allow 400 tons of gold sales.” The IMF has been rumbling about selling gold for quite some time now, and if it is successful in getting approved by the US government to sell gold we can expect years of turmoil in the gold market.

IMF and the US have sold gold before, were big sellers in the early 1970s, when gold was around $200 and silver traded below $2.00. Sales of gold by agencies doesn’t result in lower gold prices over the long run, in the short run it can be hectic.

We are living in highly inflationary times, and during inflationary times gold and silver have always proven to be smart investments.

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Gene Arensberg, editor of Got Gold Report and an analyst, believes that gold’s price increase of $21.50 in September was significant. He also believes that it was a breakout from a huge consolidation triangle. Arensberg expects the gold trading to continue to up, with higher gold price soon.

This is good if you’ve bought gold in the past few months. Investors who just a few years ago entered the gold/silver markets are confident that they made the right decision. The silver market is not quite paying back as much as gold is, with the recent gold price increase confirmed gold’s move out of the triangle.

Well the silver investors can be reassured by the positions reported by the large bullion banks. The banks have short positions in silver, and it hasn’t changed. The banks did not add silver as prices rose, which is usually what they do if they expect lower prices in the intermediate. Bullion banks always add to their short positions when they expect lower intermediate prices.

Compared with the commercial traders’ (36 in all) net short silver futures positions, two bullion banks’ percentage fell from 76.3% to 62.2%. This is a positive sign for silver investors as it shows that the bullion banks are not ready to take increased short positions in silver.

According to Arensberg’s analysis, the bullion banks increases in their short positions in gold may be the reason that gold broke out of the consolidation triangle. The bullion banks might have reduced their short gold positions fearing that the gold was going to break out the triangle anyway.

The reasons for buying gold and silver by the bullion banks are the expansive monetary policies of the world’s central banks, primarily the US central bank and the Federal Reserve System. The bullion banks decisions are interesting, as in the short-run their activities will influence the prices of gold and silver, but in the long-run the quantity of freshly-created fiat currencies will determine gold and silver prices.

Arensberg’s Report is the best free technical analysis of the gold/silver market. It does a good analysis at the large commercials’ and the bullion banks’ positions in the gold and silver markets. You should also read it as it provides detailed technical analyses.

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The Saudi central bank, however, did not disclose where the additional gold came from. The WGC had gathered the information from a footnote in the latest SAMA quarterly report. The footnote read “Gold data have been modified from the first quarter 2008 as a result of the adjustment of the SAMA’s gold accounts.” This raised a speculation that maybe the central bank had owned the additional 179.9 tons but not reported them officially.

Saudi Arabia is now the world’s fourth-largest holder of foreign exchange reserves, and the 16th largest gold holder.  This puts Saudi Arabia ahead of Great Britain and Spain. These gold holdings make up only 2.8% of Saudi’s total reserves. The revelation of WGC’s Saudi gold holdings came after China revealed last year that it was holding 1,000 tons of gold, more than double what it had previously had.

Previously, all news about central banks was about selling.  The news and speculation about central bank selling used to be so damaging that in 1999 fifteen European central banks agreed to the Central Bank Gold Agreement, which limited selling by those banks.  This agreement’s goal was to provide for a more stable gold market and not to hurt the third world countries that relied on gold exports for foreign exchange.  Some analysts are predicting that for the first time in nearly two decades, central banks may be net buyers of gold and not sellers.

The Indian central bank bought 200 tons from the IMF.  These would have been sold under the Central Bank Gold Agreement if India had not shown interest in buying. Russia, China and other countries are adding to their gold reserves on a regular basis by purchasing from domestic producers.

Monetary authorities have again recognized the value of gold. The world may not be ready to go back on a gold standard, but the central bank’s addition to their gold holdings has increased the price of gold to record highs.  If the central banks continue to buy, the price will only go up.

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The wholesalers can still change their pricing if the Mint releases small quantities.  No coins have been allocated so there is the possibility that there could be a short mintage.  Short mintage is just an outside possibility.

US Mint did receive huge criticism for not being able to meet the demand in 2008 and 2009.  The financial crisis of 2008 came out of the blue, and the Mint didn’t see it coming and wasn’t ready; just like the Wall Street, the banking industry and the government.  I think the Mint will have a huge supply of fractional-ounce Gold Eagles on hand when they are released.

The release of the fractional-ounce Gold Eagles should be seen as a sign of success of its bullion coins programs. The belated release should not be construed as flaw on the Mint. The Mint has dedicated its production to the more popular 1-oz coins: the 1-oz Gold Eagles, the 1-oz Silver Eagles and the 1-oz Gold Buffalos.

If the Mint was to consider only profit, it would have been producing the fractional-ounces Gold Eagles all along. But because the Mint has a bigger margin in the small coins it chooses to produce the lower-margin coins (1-oz Gold Eagles, primarily) in efforts to satisfy demand.

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The IMF let its intentions be known several years ago. It wanted to sell 400 tons of gold and announced that the sale would be in compliance with the Central Bank Gold Agreement (CBGA). This would not disrupt the gold market. However, the IMF sold this gold directly to the Reserve Bank of India.

Some analysts were surprised that the buyer was India and not China. They were hoping that China would be the buyer because the IMF sold under the CBGA. But, neither the China nor India gave any indications of dealing with the IMF directly.

Now that 200 tons of gold is still remaining, gold market analysts are speculating that China will buy the rest. This is pure speculation because no analysts have contact with the decision makers at China’s central bank, People’s Bank of China. This sale has set a major precedent.

This sale has also raised many questions and concerns. One concern is that the central banks buying gold might be cutting their own throats. Central Banks are the major holders of dollars, and any purchases of gold would lower the dollar because dollars would be eschewed in favor of gold. Questions arising include: Has the Reserve Bank of India now set a precedent? Will it be acceptable for central banks to convert large quantities of dollars into gold? If yes, who will be next?

If this is the case, Central Banks of China, Taiwan or Japan, all major holders of dollars, could be the next buyers. The bullion houses, that are short huge quantities of gold on the COMEX, were counting on the IMF sales being dampers on the price of gold. However, this didn’t seem to happen.

There still is a major bull market for gold and silver. Investors with big pockets have the luxury of waiting on price dips to buy. Investors who have no experience in this market should consider biting the bullet and entering at these levels. With gold, you have to be bullish, without any limits.

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Warren himself dabbled in gold and silver in the 1960s and made his legendary 130 million-ounce purchase in 1998. He cannot be labeled as a gold-bug, buy has always favored income producing investments. It can be seen that his strident attacks on the dollar and criticism of the handling of the financial crisis are backdoor recommendations to invest in gold.

How else can one protect against inflation and the destruction of the dollar? Well, Buffett had two recommendations for his shareholders: “Be good at what you do and increase your earning power, and own a wonderful business that does not need capital.”

These recommendations do sound great, but they do not answer the question on how to protect your accumulated wealth against inflation. It’ll be hard if you’re no longer working, but Buffett’s still working at age 78, along with his partner Charlie Munger who is 85.

Another of Buffett’s observation that spewed at the Berkshire Hathaway meeting was: “The world is in uncharted waters, and nobody knows the exact impact of unprecedented bailout and stimulation packages. US Government Bonds are among the poorest choices for investors today, especially non-Americans.”

The observations are interesting. Buffet also said that the US is following policies that are bound to have inflationary consequences because the people who are going to pay are buying fixed-interest US government bonds that will be worth less when they redeem them.

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Many Americans put gold or silver in their IRAs, they use precious metals warehouses to store them. Those who buy gold and silver outside IRAs should secure the metal themselves. Gold or silver can be stored in a bank safe deposit box or secured away from a bank. The decision is entirely yours. If you own your home, you’ve many more storage options. If you live in an apartment, bank safe deposit boxes should be your preferred storage place. You shouldn’t store gold or silver in a bedroom as itt’s the first place that a burglar looks for cash, guns and jewelry.

Other forms of gold like ETFs, futures contracts and gold mining shares can also be owned. ETF (Exchange Traded Funds) allows you to own shares in a company that owns gold buy you do not own the gold. You get the dollar for dollar price of gold, but you do not own gold.

Futures contracts, by going “long” term in the contract, means that you have the “right” to own the gold represented by the contract once the contract matures. Also with futures contracts, you get the dollar for dollar price of gold, plus you gain the advantage of leverage. This is beneficial for you as you have to put up far less money than if you were buying gold that was mailed to you.

If you buy futures contracts with ETFs, you do not own the gold. You have the right to take delivery of the gold once the contract matures, but you would need to pay the full value of the contract. The leverage that comes with futures contracts works against you if gold goes down before it goes up. It is better that Futures contracts be left to commodity speculators as it’s not suitable for gold investors.

It is also better to own mining shares. Mining shares provide greater leverage because stock shares trade “times earnings” than the outright ownership of gold. If you selected a mining company that made moves which increased earnings, your stock price will rise. These stocks don’t entitle you to own gold, but you own “proxy gold” which would increase in value if your gold mining company makes good decisions.

If you want to protect against inflation and against financial uncertainties, you should buy gold. Gold could be of any format, gold bullion coins or gold bars. Have it delivered and secure it yourself. You shouldn’t let anyone else to look after your gold.

You circumstances might be different, and you might be better off buying and storing offshore, i.e., out of the USA. BullionVault, a highly-professional precious metals firm owned by Galmarley Limited, offers you choices of storage in London, Zurich and New York. You can store the precious metals either in London or Zurich.

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