Some thoughts from The Daily Bell, a free-market oriented web site that analyzes political and economic events in a clear headed fashion...

Once upon a time, the sales (many never went through) of gold by central banks were an expression of contempt for the yellow metal. We recall that British Prime Minister Gordon Brown sold gold out of Britain at something like US$300 or US$400 an ounce and has never lived it down. But he pronounced himself satisfied at the time and still doesn't make any apologies, though he has been well excoriated on this as on other matters.

The IMF, too, is "satisfied" with its sale of gold to the Indian central bank. Since we believe gold is going much higher, we wonder if the IMF brain-trust will be satisfied in several years. In fact, it won't matter. They would have been satisfied to sell their gold for one dollar a ton, in our opinion. More satisfied in fact (as it would mean that the monetary elite had managed to get gold down to a "realistic" price). The IMF and the central banks that cluster around it can print all the money they want. If the IMF REALLY wants or needs funding, it can get it any one of a number of ways. So far as we are concerned, the point of the sale was to illustrate once again what money is and is not.

As the Daily Bell said, the IMF is trying to send a message that gold is not money and not valued by the central banks that matter, i.e. the EU and USA. This is at odds with the fact that some central banks are now publicly accumulating the yellow metal -- I believe this is a game changer. What ever gold market overhang existed from the threats of gold sales by the IMF and fiat money supporting central banks is now effectively over.

The Asians (Chinese and Indians) will step up and buy whatever becomes available. Where else can large purchases be made? As the Daily Bell  noted, these societies have lots of experience with paper money -- the Chinese invented it during the Song dynasty and they know from many experiences that it always ends badly. This should set a floor on the price of gold around $1000, though it's possible the price could dip lower for short periods of time. Any downside risk in buying gold is now effectively zero.