Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BSGrinder who wrote (68321)	9/28/1999 7:32:00 PM
From: Henry Volquardsen	Respond to of 132070

Kit, if central banks curtail leasing, as they have pledged, and producers stop forward sales, as is being reported, doesn't that dramatically reduce the supply available for current trading? the central banks that made the pledge were a group of European central banks. There are quite a few central banks outside of this group that are also involved in leasing and can increase if needed and a rise in lease rates is likely to encourage further lending. I am not predicting they will just that it is available. Also the Europeans pledged not to increase their lending so they are likely to continue to lease gold at the current rate, in other words they will continue to roll over their current leases. At least that is my reading of the statement. also I have seen no report of producers ceasing forward sales. but if they did they are on the other side of the lease so this action would net increase the supply of leasable gold available elsewhere, not reduce it. fwiw I have seen a number of producers watching the market trying to time some hedge sales. Also, why doesn't gold that is being sold forward as a "hedge" have the same market effect as a short sale? it has the same effect on the current price but the question was whether it created the possibility for a short squeeze. A hedge sale will be satisfied through production so the seller will not need to reenter the market. The short seller is going to have to reenter the market and will create buying demand at some future point hence the possibility for a squeeze. Henry