Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: TheBusDriver who wrote (12073)	5/10/2002 5:28:29 PM
From: waverider	Read Replies (3) of 36161

OK...so Joe borrows gold from Bobs Bullion Bank, then sells it on the open market. The lease rate is in effect the interest Joe owes the bank to borrow their gold. But as the bank sees gold going up, it raises its lease rate because it is beginning to see it as a more valuable, rising source of capital. You want to borrow their gold, you gotta pay more cuz everyone is beginning to want it. Right? Now then, I suppose the bank will want its gold back at some point, right? What happens then? Does Joe have to go back out and buy it on the open market? This sounds nasty for Joe since he may have to buy it back higher than he sold it for. Implications of the above, assuming I know what the hell I am talking about??? :) wr

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