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Pastimes : Ask Mohan about the Market

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To: John Hunt who wrote (16821)	10/23/1998 6:13:00 AM
From: John Hunt	of 18056

The Wizard of Fed gold-eagle.com << Last week the Fed made its celebrated preemptive strike on the financial markets by lowering the Fed funds rate by ¼%. The timing of the cut, coming after bond futures had closed and the day before the expiration of October equity options had all the hallmarks of a classic short squeeze. The fact that it was widely applauded in the financial press demonstrates that manipulation has become the status quo in what currently passes as a financial system. >> << It is significant that LTCM was widely believed to be short 300 tons of gold and that the price did not explode when the bullion price rose above $300. This was reported to be because of a central bank's willingness to allow the new owners of the firm, the largest investment banks and brokers on Wall Street, out of the trade. In fact, Alan Greenspan said in testimony to Congress on the issue of CFTC supervision of the derivatives market, "Nor can private counter parties restrict supplies of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise." (Italics mine.) His willingness to state that central banks would increase lending on any price rise demonstrates that central bankers still regard the price of gold as a barometer of faith in the financial system as it is presently constituted. >>

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