Mark,...do you go to USAGOLD as well? They have a few interesting posters on their forum:
[PH in LA (10/1/98; 18:42:38MDT - Msg ID:307)
Now the whole story can be told!
Here is the source of my post yesterday (you heard it here first) about Merrill-Lynch's derivitive position: Date: Thu Oct 01 1998 19:22 Strad Master (Calling All Bears!!!) ID#250297: Copyright © 1998 Strad Master/Kitco Inc. All rights reserved ALL: I haven't had time to post this before but for those who are concerned that the market may tank due to over-leveraging this story will be of interest. I have a very close friend who is a stock analyist for a small fund ( $100 million or so ) . This little fund was just bought up by Merill-Lynch. On the day the Fed engineered the bailout of Long-Term Capital she happened to come over for a visit and she was telling me how bizarre it was for the Fed to call together heads of these big brokerages at the Fed office in NY. Apparently, it is not only unprecedented but almost illegal insofar as these people are not supposed to be in contact with one another so that insider trading laws don't get violated. What was more disturbing, though, was that she said she had a chance to look over the internal statements of Merill-Lynch and it was her conclusion that Merill is leveraged at a rate of about 97 to 1. If so, it is no wonder the big brokerages were willing to pony up to bail out Long Term Capital. If LTC suddenly had to dump all their holdings into the market it would cause such a spiral of selloff that Merill would soon be under water as well. It was her feeling that if the Market went down another %10 below the recent summer low, Merill would be out of business! As she put it, "If the Fed and the brokerages can't stop this selloff soon, we are all going back to living in mud huts." Pretty scary stuff, coming from her. She is a very conservative, generally bullish, long-term investment-oriented professional with no leanings toward gold, doom 'n gloom, astrology, or any other contrarian viewpoint. Anyway, if she is right, Puetz's crash due to leverage feeding on itself may not be quite so farfetched. Comments?]
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