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To: Bill Harmond who wrote (79699)	10/5/1999 11:32:00 PM
From: GST	Read Replies (4) \| Respond to of 164684

William re: all I see is gold. What I see William is a house of cards -- and gold is one of the key cards at the base. Do you remember LTCM? Ten billion in capital, 90 billion borrowed against that capital, and a trillion in leveraged contracts written against that 100 billion. Russia defaults, LTCM goes into meltdown and credit spreads send the emergency sirens wailing. That is the power of leverage in our markets. That is what makes our markets tick or sweat -- and that is what you do not seem to see. There are roughly $25 trillion in currency related derivatives out there William -- a house of cards -- and at the base there is a pillar called gold leasing helping to provide the leverage to hold up the house. The unified pledge not to increase gold leasing is far more important than you seem to realize. The root of the leverage pyramid William -- the bottom card -- is gold leasing for the gold carry trade -- and one step removed is the yen carry trade. It is all a matter of interest rates -- not just fed funds -- but the lease rates on gold, and credit spreads between classes of debt -- which, as I am sure you know, are HIGHER than last year at the worst point in the 'Asian' crisis. Why are they flashing red and why are the sirens sounding today? I will give you a hint -- it is not because the financial world is on the edge of its seat waiting to see what the day traders are going to do with their 'enormous' pool of capital and their keen investment savvy <g>