US seeks alternatives to IMF gold sales

In response to congressional opposition, the U.S. government is seeking alternatives to a plan by the International Montetary Fund (IMF) to sell gold to finance debt relief.

Under the IMF proposal, up to 10 million oz. of the yellow metal would be auctioned off to provide debt relief to the world’s poorest countries. Interest from the sale would be used to pay down debt owed by Third World nations.

But gold sales by European central banks in recent months unrelated to debt relief have pushed prices to new lows. Critics fear that more large-scale sales could drive the price down further, making gold mining unprofitable and forcing the closure of mines in developing and indebted nations.

According to Treasury Secretary Lawrence Summers, the U.S. government is evaluating alternatives that would be less disruptive to poor nations, particularly those that consider gold mining an economic cornerstone. More than three-fourths of the developing nations targeted for debt relief are gold producers.

The U.S. Congress joins governments of gold producing nations in Africa and the Black Caucus Foundation, a non-profit organization, as well as representatives from the gold mining industry, in opposing the IMF scheme.