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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (13111)	10/4/1999 1:04:00 PM
From: jfhh	Respond to of 57584

Hello Rande I noticed that CellNet Data Systems, CNDS, is in a very good buy range right now. It is not a momo, but a good swing trade that usually moves on news. I am at work right now so I cannot give any background, but if anyone does some dd they might find it to their liking. I am in today at 3 15/16. I haven't been able to keep up with posts since last Thursday, so I hope your efforts are going well. Speaking of, I gotta go. Good Trading, John

To: Rande Is who wrote (13111)	10/4/1999 1:20:00 PM
From: Kanetsu	Read Replies (1) \| Respond to of 57584

I doubt this is too significant, and it's confusing as hell, but in Japan many sellers of commodity funds, beginning in 1993, used gold carry forwards to guarantee the principal of the funds. 70-85% of the money raised for these funds (billions of yen) would go to gold to guarantee the principal. The funds typically run 5-7 years, after which the 70-85% put in gold carry forwards ("kinteiki" as it is known in Japanese) would compound to equal 100% of original principal. The remaining 15% would be put in highly speculative investments such as managed futures and hedge funds. Due to regulatory turf battles, trading houses and commodity brokers in Japan could not use financial instruments such as zeros to guarantee principal, hence they used gold. Big banks like Morgan Stanley would write the gold carry forwards for the funds and pay a nominal interest rate on the gold. Morgan would borrow the gold, and put the money in to something yielding a higher rate and keep the spread between the new instrument (probably US$ zero coupon bonds) and the low interest they were paying the commodity funds for the gold. (less than 2% annually) Now, 6 years later a lot of these Japanese commodity funds are maturing and preparing for redemption. Morgan and the other banks have to buy the gold back for delivery to the funds. Ironically, most of these fund's speculative money were invested in commodity programs using moving average, trend following systems, who were forced to cover their massive shorts on gold and even go long, making gold even more expensive. It would be interesting to discover which institution wrote the most of these "kinteiki" deals as I bet it is the one hurting the most. Just thinking out loud, sorry for the lack of brevity...