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Gold/Mining/Energy : Gold Price Monitor

GDXJ 93.98

+0.6%

Nov 21 4:00 PM EST

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To: scotty who wrote (61599)	12/2/2000 5:33:14 PM
From: Alex	Read Replies (2) of 116764

<<This is a very complex financial crisis currently unfolding. It is critical to appreciate that the problems impacting the U.S. financial system today are of a much different nature and more severe than 1998. The overriding problems today are the consequences of years of credit and speculative excess – massive financial claims, enormous foreign debt, an acutely unstable financial sector, and an economy deeply mired in distortions and maladjustments. We just can’t shake the notion that some very negative surprises are lurking “around the next bend.” Surely, sinking stock prices and faltering credit system liquidity have the tendency to unearth ugly skeletons. There are likely major losses to be recognized in the derivative area, and we are waiting for one of the major derivative players to experience an accident. We have yet to hear any bad news from some of the large technology companies that were aggressively writing put options on their own shares. There are also potential accidents for the firms that were aggressively selling hedging products to company insiders, with many insiders also partaking in derivative speculation. On Wednesday, Reuters reported that the over-the counter derivatives market grew by almost 10% during this year’s first half to $103.9 trillion. Interest-rate swaps jumped 11% to almost $59 trillion. This data was compiled by Swaps Monitor Publications. Only time will tell as to the role this explosion in derivative positions has played in fostering the ballooning of U.S. financial sector assets and the explosion in foreign holdings of U.S. securities. We suspect derivatives have played a profound role in the U.S. bubble. Everything we see is ominous and we certainly don’t like the looks of any of this. This is going to be an extraordinarily difficult period.>> prudentbear.com

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