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Friday, April 15

Duck security at DEFCON1, Russia still in doghouse, and gentle reminder to Gold Bugs

WASHINGTON, April 14 (Reuters) - U.S. officials bolstered security on Thursday for a duck nursing eggs near the White House to protect her from demonstrators at a global economic summit beginning on Friday... workers on Thursday afternoon erected a second line of metal crowd-control barriers about 10 feet (three metres) outside stanchions already in place...

Officials are concerned protesters could disturb the mallard hen, who is incubating what officials say are nine eggs at the foot of a tree on the sidewalk in front of the Treasury Department and next door to the presidential residence.

"We are widening the perimeter around the duck as a precautionary measure," Treasury spokesman Rob Nichols said...

The bird spends her days nibbling mulch around her, dozing in the spring sunshine, or feathering her nest. Every evening at dusk, she covers her eggs and leaves for about 15 minutes to feed, a Treasury official said.

Decision-making about the duck's safety was closely guarded.

"We don't comment on security matters," Nichols said.
Pundita doesn't need to look at the calendar to know when the World Bank-IMF Spring Meetings are approaching. The squirrel, who was traumatized during his childhood by mobs of protestors hopping up and down and shrieking outside IMF headquarters, bunkers in my garage with the words, "They're coming they're coming they're coming."

I suppose he sees the street barricades going up. Yes, this is the time of year in Washington that streets are clogged with bedraggled youth wearing T-shirts that read SAVE THE WORLD KILL WORLD BANK, asking passersby, "Please you know where is cheap hotel?" and littering Northwest Washington with granola bar wrappers printed in French and German.

It shouldn't be too bad this year; the troops are saving their euros to travel to Scotland for the July G7 summit. Notice I typed G7, not G8. In addition to the IMF and World Bank meetings this weekend, there will be two meetings in Washington of the "G7" finance ministers, Reuters reports. This suggests Russia wasn't invited. And now a cautionary tale for Gold Bugs:
...On the table [at the Washington G7 meetings] are proposals that range from increasing grant aid, the establishments of an international finance facility that would double aid for the poor countries, and the sale of IMF gold to finance a portion of the debt relief.

The United States, the largest single shareholder of both the IMF and World Bank, has rejected the British proposal for the finance facility and gold sales.

The U.S. has argued that its own plan would permanently wipe off the debts with increased grant handouts -- versus decades of loans -- through the World Bank's International Development Association, the lender's lowest-cost lending arm.

But critics say the U.S. plan of outright grants would give the bank less money to lend to poor countries.

IMF Managing Director Rodrigo Rato said if shareholders decide to use some of the IMF gold stocks, it would be better to sell bullion rather than revalue it on its balance sheet.

But he said great care should be taken not to disrupt bullion markets and suggested the IMF join the voluntary central bank agreement, under which they say in advance how much gold they will sell and over what period of time.

"If the board would take that decision, it should be taken technically by selling gold in the market, not by reviewing the value of the gold in our balance sheet," he told a news conference before the meetings.

"Secondly, to do that without disrupting the market -- that is, to do that being part, formally or informally, of the central banks' agreement for selling gold," he said.

European central banks agreed last March to limit total gold sales to 2,500 tonnes over five years from 2004 to avoid distorting the market, under an agreement known as the Central Bank Gold Agreement.

But Rato stressed that the decision to sell gold belonged to the IMF's board of member governments. Selling the gold would require an 85 percent majority backing on the board.

"At the end of the day all of the proposals have their trade-offs ... but some of their aspects are feasible," Rato said. "The question is for governments to make a decision."

The IMF is the world's third largest holder of gold, behind the United States and Germany.
As to what talk of selling IMF gold might portend for gold investors--probably not much. As to what it could mean for individual gold traders--always the same old story, which has earmarks of The Pit and the Pendulum. Playing against the Lords of the Craps Table is not for the fainthearted.
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