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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 399.01

+0.1%

4:00 PM EST

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To: TobagoJack who wrote (4423)	2/19/2006 10:31:03 PM
From: Taikun	Read Replies (1) of 218604

Wow: More on Short of Gold Over The Counter Derivatives: The Spread to Take Over without Risk Definition of hedge “SPREAD” A position in two or more of the same type or two or more items related to each other with offsetting value. In the case of this discussion, it is the buy side of the sale of hedged gold versus the non recourse lender to the hedging gold company. We will examine the relationship in default. We have examined the producer’s sale of these items to attempt to hedge their gold positions in order to obtain non recourse financing often over the past ten years. We recently examined the buy side of these instruments, assuming that all we have been told about the lack of risk the sellers have is true. So here is another take on this financial horror story beginning to knock over one company after another. You need to know that almost every recent takeover in the gold production industry has been a derivative accident. Think about it. What management would sell a gold producing company when gold was in a tested and proven up trend thereby giving up their personal long term cash cows that these companies tend to be for their management. Now if the lender behind all of these instruments was the same or was an inter-related entity they would have the buy side of the short of gold over the counter derivative. So this entity would both own the gold and be the creditor to the companies who have sold the over the counter derivatives to hedge their position and to obtain the non recourse loan. This would be a genius move as the owner of the gold to whom the gold company owes so much money is also the lender to the company to whom the company will eventually default. The result is called a SPREAD. The eventuality of gold at $1,650 can be easily understood if you will review how Ashanti settled its debt with the buyer of the gold (i.e. the lenders). It transferred ownership to these entities in the form of issuing large amounts of stock. It really could be that the gold producers were getting what they perceived was a good deal and they did not want to ask WHY. They never really looked hard at the buyer of their over the counter derivatives, seeing that as some other person’s problem. This alone proves to me that gold is going to at least to $1,650 and the only way to do gold business is NOT to be in any position where you have to borrow therefore entering into derivative risk. It is similar to "smoothing earnings" by the use of derivatives. In truth, that transaction is primarily motivated to beat the living dickens out of the tax man by being able to realize earnings in the year of your selection. It is a spread whereby the beneficiary of the tax benefit feels something can’t be right but never asks the other side: Are you real? The net result of all this is that “Jabba the Financial Hut” holds two things. He holds all that gold due to him and he holds the producing companies' eventual failure and transfer to him on the other side. It is an act of genius and perfectly legal. It is without any doubt the “Spread to Take Over without Risk.” It is an act of genius even if it is the genius of the “Dark Side.” May god help all the producers who will pooh-pooh this. But mark my words, the gold producing industry will consolidate and then the consolidator will fall into the hands of “Jabba the Financial Hut.” With gold in the $1,000s then, the shareholders of the consolidator will only have a few moments of the coli wobbles. I will wager you that not one major producer has a clue to the situation they are in. No company if they had sought me out would be is this situation jsmineset.com

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