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Gold/Mining/Energy : Gold Price Monitor
GDXJ 105.33+5.2%Nov 26 4:00 PM EST
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To: goldsheet who wrote (53682)6/5/2000 11:44:00 AM
From: Ken Benes  Read Replies (3) of 116777
 
I just read thru the GATA Gold Derivative/Banking crisis and had a couple of ambivalent feelings. First, it would not surprise me that the amount of gold on loan is substantially higher than originally thought; second, there is a lot of anecdotal instances to support their thesis along with a good amount of hearsay evidence from a variety of sources. This is not the kind of stuff that is going to sway a lot of people. If true, a crisis may or may not develop depending on a lot of factors. For the time being, an investor should continue to evaluate a decision to invest in gold based on current conditions, which are not favorable.

A final note, the central banks have over 32000 tonnes of gold. If the amount on loan is greater than 10000 tonnes, the bankers still have quite a bit left to hold the gold market in check for a considerable amount of time. Once the decision was made to control the price of gold, the bankers are forced to continue with the policy until either their gold runs out, or the demand for the metal drops. If the market is stabilized, the gold loans can to be rolled out to perpetuity unless some external event rocks the banking system. Then the gold loans could exasperate a difficult situation. I would not look to the loans to percipitate a crisis for quite awhile.

Ken
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