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Gold/Mining/Energy : Gold Price Monitor
GDXJ 97.68+5.0%Nov 10 4:00 PM EST
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To: russwinter who wrote (62513)1/6/2001 11:21:40 AM
From: Bruce Robbins  Read Replies (1) of 116753
 
I agree with what you are saying. With everything going on right now, it will be harder for the central banks to control gold while there are other fires to put out. IMO Al and his pals are trying to avoid a bank panic. A run on the banks at this point would be fatal. As for gold, the open interest for all contracts (see the-privateer.com is at an all time low, trading desks are closing- how easy is it to manipulate something that is so small <g>. There is not too much volatility in something that barely trades through a small collection of traders IMO. The lease rates reflect the fact that the central banks are all ready to lease the gold to keep the fiat currency market afloat. The problem is what is the difference between the actual paper gold floating around in contracts, derivatives etc vs the actual bullion sitting in the vaults? Is it subject to a "fractional reserve" type system where only a small portion of the gold actually has to back the contracts? What would happen if everyone wanted delivery of the physical? Perhaps the Middle East or OPEC will demand payment for oil in gold bullion or dump the US$ and debt instruments they hold for gold. That might get things moving again. Something big has to demand payment in physical. Increasing jewelry demand (which is what the World Gold Council is trying to do) will be a drop in the bucket. If only we could get a sustained run up to $350-400 to kill the gold company hedging and forward sales. That might make a difference too.

Bruce
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