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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Perspective who wrote (31147)10/25/2000 12:35:57 PM
From: pater tenebrarum  Read Replies (4) of 436258
 
you got that right. an estimated 10-14,000 tons is shorted in this manner...and there is NO WAY these loans can ever be paid back. which makes it all the more curious that loans which are practically GUARANTEED to default have a 1% interest rate. AND the collateral (gold) is being SOLD the moment it is borrowed! it's a huge carry trade, and it almost went bust last year on the Wash. agreement...gold soared by $84 in one week on the mere threat of CB supply diminishing somewhat. ever since, the bullion banks have piled paper short upon paper short to keep the price down and have talked all sorts of obscure exotic CB's into either selling or leasing their gold to keep the game going (Chile, Kuwait, Jordan, Uruguay, Bangladesh...). once they run out of these exotic suppliers i'd expect the paper gold market to seize up. in all probability the big players will then be bailed out, but the CB's will never get their gold back. that's gone forever.
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