Friday, October 30, 2009

Russia cancels sell off of Gold due to leak

This article talks about Russia's leaked plan to sell off 50 tons of gold at near record high prices. What is the truth though. There are conflicting ideas at play. Russia has a large budget deficit that this sale would decrease. But, Russia's plan has been to buy as much gold as they can the last while and continues to be their plan due to high inflation that will be experienced. However Gold has recently hit record highs. My thinking is that the so called leak was a strategic use of misinformation meant to drive the price of gold down since the Russians would be flooding the market with Gold. Once the market price has been driven down Russia could continue to purchase gold at a discounted rate. Unfortunately for Russia, the market gave no reaction to the news. They then announced they will no longer sell their Gold, because of the leak.

It seems to me that if they really wanted to sell their gold in the first place they would be happy the market gave no reaction to the news and they would be able to continue with their plan to sell at near record high prices.

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