How Much Gold Does the IMF Have?
Gold reserves are approximately one quarter of the IMF’s official monetary holdings.
As part of its founding in 1944, members contributed 25% of their initial quota payments in gold and used it to pay interest on loans.
Article XIII, Rule F-1 describes the depositories designated by members. The current version was introduced in 1978 while an earlier amendment existed until 1956.
1. The United States
The International Monetary Fund’s gold holdings of 2,814 metric tons or over 100 million ounces, comprising over one-fourth of its official monetary gold, are predominantly held by the United States and account for more than one-quarter of overall official holdings. On its balance sheet, IMF values its gold at SDR 35 per ounce–roughly $50 an ounce at current prices; any discrepancies between book and realized sales are recorded as profits by the Fund.
Profits from IMF gold sales are deposited in the Special Disbursement Account and only used for activities or transactions that further the objectives of the Fund, per its Articles of Agreement.
2. Italy
IMF sales of gold to help fund debt relief efforts for heavily indebted countries have yielded substantial profits and have created significant value.
These profits, however, are limited under IMF Articles to purposes that benefit low-income member countries and any sales must receive approval of an 85 percent majority vote of the Executive Board before proceeding; this higher threshold has proven sufficient to prevent major IMF gold sales.
Italy held the 10th largest gold reserves as of 2014, totaling 553.3 tons in its vaults. Most of Italy’s foreign-held gold was stored in New York City, with only small portions situated in London. Despite recent calls to sell its reserves, however, Italy did not pursue this action.
3. China
China does not publicly report its gold reserves, though they could hold substantial stocks that it does not wish to make public since doing so would disrupt market prices and violate their policy of “storing gold among the people.”
WGC estimates that the People’s Bank of China purchased over double what was officially reported for purchase during its third-quarter purchases of gold, surpassing any prior quarterly total by some 129 tonnes.
At its founding in 1944, members paid 25 percent of their initial quotas (and any subsequent increases) in gold; interest on loans taken out through IMF also could be paid with gold. Furthermore, there was an SDR department within IMF where members could exchange SDRs for freely usable currencies like gold.
4. India
India will increase its share of global gold holdings to 10th position compared to other developed economies and China, but remains far below that of those countries such as South Africa or Russia. This move could also serve to diversify Reserve Bank of India foreign exchange reserves which rely heavily on dollars.
The IMF Executive Board recently authorized restricted sales of Fund gold, totalling one-eighth of total holdings. Proceeds from the sale will help put IMF financing on more sustainable footing and expand capacity to offer concessional loans to low-income countries.
To prevent market disruption, on-market sales will be conducted gradually over time, following the strategy used successfully by central banks under the Central Bank Gold Agreement. Prior to initiating any sales on-market, IMF will inform markets before beginning them and will report regularly on their progress.
5. Japan
The IMF sells a modest quantity of gold to increase lending to low-income nations and promote investment, without disrupting or impacting prices in any significant way.
Before the Second Amendment to the Fund’s Articles of Agreement in April 1978, Rule E-1 stated that gold used as payment for subscriptions shall be stored in depository facilities designated by members. While this reference no longer appears in Rule F-1 today, comments indicate it “incorporates two sentences from its pre-1978 provision.”
Modest IMF gold sales to benefit sub-Saharan African nations and LICs would strengthen not only its global role but also further American national interests. Any proposal for selling IMF gold should be thoroughly assessed by its Executive Board before going forward.
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