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Gold/Mining/Energy : Barrick Gold (ABX)
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To: russet who wrote (2340)4/4/2002 8:57:07 AM
From: nickel61  Read Replies (1) of 3558
 
Something interesting is going on in the overall gold derivatives' positions. The top three U.S. gold bullion banks' positions fell from $73.2 billion in Dec00 to $48.9 billion in Dec01 reflecting the overall reduction in the gold carry trade positions over the course of 2001. John Doody (Gold Stock Analyst) says "recent CB efforts, overt and covert, are designed to keep a short-term lid on gold's price, effectively 'holding the door open' for the commercial banks to get positions squared, or get out all together. If one of these major banks was to require rescue by the Fed or the German or UK Central Bank, it would be far more damaging to world economies, and the rescue more costly, than to keep a lid on gold and allow the big commercial banks get out with survivable losses."

Taking a closer look at the Gold Derivatives Table published at the News & Views page (linked above), one can see that most of the reduction has occurred at J.P. Morgan which went from $30.5 billion 12/00 to $7.3 billion 12/01. I find this very interesting. That makes two out of the big three American gold derivatives' players showing a reduction to the $7 billion level.

Is it now Chase's turn in 2002 to move to the $7 billion level?

I think Doody's right. There holding the door open with derivatives in order to exit their carry trade positions or get the losses to a manageable level -- a workout as we have described many times before. And Chase may be the last to squeak through before the gold demand slams it shut.

This is the best evidence available why gold might be ready to explode. It's like holding a spring with your foot -- when you let go you'd better get out of the way.

Everywhere you look in gold's numbers -- derivatives, the LBMA, etc -- the numbers are telling us that the gold carry trade and mine lending are being unwound.
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