One aspect of the IMF sale of gold to India which hasn't yet been discussed is what effect (if any) this has on the Russian government's on-again/off-again sale of some of its own gold - supposedly as a one-shot deal to reduce the short-term deficit.

The question I would ask is does this mean that Russia will simply choose to sell the gold privately, off-market - in one bloc? Certainly if the India purchase is any guide, the Russian government could get a much better price than by selling it on the open market - where that quantity of gold would briefly push the price lower (at least for Russia).

OR, does this send such a bullish signal to Russia about its gold that it simply postpones any sale - until it can even get a better price.

I also have to wonder if Russia's sudden decision to CANCEL its sale of gold (only days after making the original announcement) was because the Russian government "got wind" of the deal between India and the IMF.

or was just a head-fake to get the price down for their actual buy

If I were Russia, I'd use the gold as collateral to get a loan to pay their short-term expense -- gold is much more scarce than currency. Heck, borrow the money in USD and the interest could be essentially negative (the Fed will not strengthen the USD anytime soon).

If the value of the gold went up, you could essentially close the deal at a profit (having kept the gold for later sale, the appreciation in price could offset any interest paid). If the value of the gold went down (it can and does happen now and then) the worst that would happen is that the Russkies might have to turn over more collateral. So long as they can pay the loan's terms and <em>don't invest in any derivatives</em>, even that is no big whoop.

I would tell Russia: "hold your gold, cash is trash."