Interview: RBC's Gero Says Despite Greek Crisis, IMF and Central Banks Show Little Appetite for Gold Sales

14 May 2010, 4:08 p.m. EST
By Terry Wooten, Interviewed By: Daniela Cambone
Of Kitco News

 

New York -- (Kitco News) --Gold has become a second haven for investors in the current Greek -European debt crisis and the International Monetary Fund and central banks appear to have little appetite to sell the metal, according to George Gero, vice president with RBC Capital Markets Global Futures.

Gero said when the Greek crisis first surfaced in the news, gold went down $40 to $50 because there was a feeling that the IMF has a history of selling gold and might force Greece to divest of some of their holdings of the metal. "The first blush was for the fund managers to push the button," Gero said in an interview with Kitco News on the sidelines of the recent Hard Assets Investment Conference in New York.

As the situation cleared, Gero said, people started "to concentrate on the behavior of the Euro and not so much the dollar, which became a kind of a haven. Now, gold is a second haven."

Gero said, however, the markets are focusing nervously on who is next in the European scenario. "Is it Spain. Is it Portugal? Is it Ireland?  Or will this general bailout be enough to keep the Euro supported?' he asked.

Gero said it is interesting that the IMF has not sold more gold because they had lobbied the U.S. Congress to sell 203 tonnes, of which they only sold half.

"So we are not sure how much they are going to be selling, if and when," Gero said. "Because there doesn't seem to be appetite among the member banks in each September sale to want to sell their quota of 500 tonnes total."

--By Terry Wooten of Kitco News, twooten@kitco.com