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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: ild who wrote (22060)	11/19/2004 4:21:54 PM
From: ild	Read Replies (1) of 110194

Date: Fri Nov 19 2004 15:21 trotsky (@housing bubble) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved Maria Bartiromo just averred on CNBC that it may 'never burst'. this is it...it's over. that was the bell ringing in the beginning of the end of the housing bubble. Date: Fri Nov 19 2004 15:17 trotsky (P. Yorkie, 12:19) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved 'social conventions'? what an odd way of putting it. to me it is quite clear that if it weren't for the state FORCING us to use its fiat money, gold would be our medium of exchange. there can actually be no doubt whatsoever about this, since the free market has chosen gold in a long process of trial and error ( during which less useful stuff like e.g. sea shells got discarded ) . what you call 'social convention' is really the barrel of a gun in the hand of a robber baron. the fact that gold is nowadays simply hoarded has to do with Gresham's law: bad money ( paper ) has driven good money ( gold ) out of circulation. always happens that way. the manufacturing uses of gold really are quite secondary ( one could even say, totally unimportant ) in determining its value. it remains first and foremost the only form of money that can't be subjected to default - it's the ultimate means of payment - a fact even acknowledged by chief paper pusher Greenspan. Date: Fri Nov 19 2004 14:41 trotsky (art_vandila@BGOI) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved sorry, i wanted to reply yesterday already but then didn't find the time. 1. terminology: they're called 'non-hedge' derivatives in order to comply with new GAAP rules on derivatives accounting. but they're really hedges, namely project loan hedges ( mostly ) relating to the Julietta financing. 2. further hedge writedowns can be expected, but the company is actively reducing the outstanding hedges ( 66,000 oz. were closed out in the first 9 months, 15K of which were closed out last quarter ) . 3. the remaining outstanding contracts will become a far smaller percentage of output as soon as Refugio starts producing. since financing of Refugio doesn't require a bank loan, no fresh hedges have to be put on. 4. the hedge book is still too large anyway, but the Julietta project debt hedges will be closed out completely by 2006 ( the loan has been paid back in its entirety by now ) , which will leave only relatively small open positions if they refrain from adding new ones ( and that seems to be the plan , since they're on track to close out between 80-90,000 oz. this year alone ) .

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