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Politics : Ask Michael Burke
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To: Henry Volquardsen who wrote (68295)9/27/1999 4:52:00 PM
From: pater tenebrarum  Read Replies (1) of 132070
 
Henry, i will defer to your professional judgement then...the fact remains, the gold that's been leased has been sold and as you say the leases will be paid back with gold that's still in the ground. in the meantime, lease rates have shot up quite a bit, lessening the lure of forward sales and today's ECB announcement has lifted a cloud of uncertainty that has been hanging over the gold market. i am now assuming that the favorable supply/demand characteristics of the gold market will come to the fore, since central bank selling and leasing has been the main factor pressuring the price of gold in spite of same. the hedging by producers was imo just in reaction to the CB factor - the incentive for producers to short has been removed as well and significantly it was mainly producers bidding at the last BoE auction. a few weeks ago when gold was hovering just above it's recent 20-year lows it was officially declared 'dead' on CNBC Europe...<G>
anyway, if today's move was a dead cat bounce, it was a hell of a dead cat bounce.
one question: if the leases are to be repaid with future mine production, in what way does e.g. a hedge fund that's borrowing gold acquire a claim on said production? do they enter into agreements with the producers?

regards,

hb
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