The International Monetary Fund says it will sell 191 tons of gold. The agency claims it needs the cash for lending. It may be that the IMF suspects that gold price will fall from their $1,100 level. Gold is often used as a hedge against inflation. Economists at the IMF may believe that the international economic recovery is slowing and that either inflation will stay low or that deflation will hit some economies like Japan.

The question for economists is whether the IMF’s views of the recovery should be judged by its statements, which say that global GDP is rising more quickly than they expected in most regions, or whether its gold sale says otherwise. What organization would sell 191 tons of gold if it believes that the price will go higher and that it can hedge against a drop?

Douglas A. McIntyre