IMF advised to sell gold, invest in capital markets

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A panel of experts has advised the International Monetary Fund that it should sell $6.6 billion worth of the gold it holds and put the money in assets that provide higher yields. The experts also told the IMF that they should charge for the technical assistance they provide to nations, although they allowed that special arrangements should be made for less affluent countries that receive such help.The extra money is needed to fund a shortfall of $400 million per year for the organization expected by 2010. The money realized by the sale of 400 tonnes of the 3,217 tonnes of gold that the IMF currently holds would create an endowment fund that would earn the organization $195 in additional revenues after inflation. The panel also recommended that central banks reduce their gold sales by the same amount that they think the IMF should sell in order to compensate for the effect of the sale on world markets.Other recommendations of the panel, which includes former US Federal Reserve Chairman Alan Greenspan, European Central Bank president Jean-Claude Trichet, and Andrew Crockett, the president of JP Morgan Chase, included placing some of the money contributed by IMF shareholder governments into capital markets. They said that investing $30 billion could earn around $300 million per year after paying interest to the shareholder governments. The panel also suggested that the IMF loosen its rules regarding how it can invest its existing reserves, totaling $9 billion.Before the panels recommendation to sell some of the IMFs gold can be put into practice, it must be approved by 85 percent of the organizations shareholders as well as by the United States Congress.