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Politics : Ask Michael Burke

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To: Henry Volquardsen who wrote (68295)	9/27/1999 4:29:00 PM
From: Freedom Fighter	Read Replies (1) of 132070

Henry, >>there is no massive short position created by the CB's gold leasing. The leases are for term and will be repaid at maturity with the proceeds of mine production. For the record I've been involved with gold leases professionally for close to two decades.<< It's my understanding that much of the gold that is lent by CBs is sold by the borrowers for use in jewelry making, art work, etc... The proceeds of the sales are then invested in higher yielding securities. The borrower in effect is earning an interest rate spread plus or minus the movement in the price of gold. For several years it has been all plus! Considering that it's possible that large amounts of the lent gold is no longer available to pay back loans, and mines can't just turn production on and off like a light switch, couldn't these gold loans act much like a short position and produce a mad scramble for physical gold if its price starts moving against the speculators that have borrowed it and sold it to finance other investments. Wayne

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