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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: Enigma who wrote (1881)	1/9/2000 8:06:00 AM
From: nickel61	Respond to of 3558

This is an exchange between FOA and the owner of the USA Gold Forum : Yes, I think we are in the middle of an extended workout. None of the BBs are in a rush to cover these (carry trade and other) bad loans because in doing so they must borrow gold to do it. There is no way they could bid the physical market. If they did it would completely dry up what gold is supplying the retail markets. If they must return gold they must borrow to do it and create same problem in the lending arena. Their image is seen on the borrow side and the rates spike. We saw this recently. So they fall back into the financial workout mode and the rates relax. The ECB/BIS really nailed this entire play to the wall. An entire industry was built on expanding the liquidity for international traders as our Washington officials looked on with approval. The top people knew why gold was originally (starting years ago) being taken down, yet they smiled as these funds (and others) "coat tailed" the fall. And why not smile, these trades were using huge leverage to build (and support) the American market mania. The ECB said "enough is enough" earlier this year, but no one listened. I guess they thought these people (ECB) were nobodies? Then the BIS said they were going to cut it off short and the US asked for some time to work it out. Ha! They worked it out all right! Our treasury head watched them flood the gold paper onto the markets like madmen. What amazes me is that most of these "big inside" operators create the market and really didn't know why the original gold (and loan guarantees) was being supplied by the Euro arena. I always thought they did and their stories to clients about "CBs no longer using gold" was just a "good retail story". When the ECB and the BIS told Greenspan "it done", it hit these BBs like a nuclear blast! I don't think anyone yet understands that these people are now the sole backup for an entire asset class that cannot be made whole. On the surface, they may have to make good on 5 or 10 billion. But underneath, the ECB could crush them by running gold into the thousands. That's why I say "it's all over people", because this bull is going to run the equity of the dollar creating banks into the ground. And the US FED has no power to stop it. There is no way the US will use one ounce of it's gold to support a "banking crisis" if a "currency war" becomes the result! Some think that if we have one it's as bad as the other. They should study "currency war" history, preDollar! The BBs can go for the ride slowly (and be controlled) or they can kill themselves by attempting to cover. What a master play this has been. ------------------------------------------- --So FOA....This new gold market; it is a free market, yes? --In the Robert Mundell speech for which Steve H provided a link, the laureate said as early as 1997 there would be a new gold market and that central banks would look to settling with gold at free market prices. He suggested that this would occur in the 21st century. Was it last year, the gave Prize was awarded to Black and Scholes -- and then LTCM -- where Scholes was employed --promptly went under water? Now Mundell wins the Nobel Prize while the gold carry trade implodes. The former honed tools for statist economics; the latter honed tools for free currency and gold markets and a much-needed competitor for the dollar. One became the tools of the status quo; the other the tools for a new economy.----------- ---------------------- Boy,,,, Michael, I have to tell you, Mundell knew the story and no one listened! Now the whole Dollar/IMF system is in change and most of the nonEURO US trade partners have bet their entire economic society on a prosperous, buying American public. The next few years will be history to remember. By the way, any thoughts on a "Britian in the EU"? (smile) -------------------------------------- -----In talking with colleagues in the gold industry, the feeling is that it will be a long time before the Wall Street trading firms and mining companies sanction again something like the gold carry trade -- at least to the degree that it was utilized in the late 1990s. Perhaps this was a usable idea that had got out of control? There is little doubt that the European action with respect to gold, sanctioned by Alan Greenspan who attended the Washington meeting, was aimed at the hedge funds and foreign exchange traders at the big banks. Leveraged trading was beginning to frustrate some nations' foreign policies and the mechanisms previously established to keep crisis situations from getting out of control. What good is it to try to save a country like Indonesia with fresh loans, stiff political and economic sanctions when hedge funds can easily destroy the Indonesian currency through derivative plays and leverage and undermine the intent of the international agencies. (Please don't construe from this that I back IMF actions during this Asian contagion lending crisis. I do not. I simply offer the foregoing as an explanation for the cb's actions.) So they acted to cut off the life-blood from the speculators -- the gold and yen carry trades. The two pronged attack on the bullion banks, foreign exchange desks, hedge funds, et al co-incided with the latest jawboning by Alan Greenspan with respect to the stock market. He has to be getting a little fed up with being laughed at and ignored by the speculators whenever he warns of the excesses in the equities markets. Perhaps now they will find out the central banks still have teeth? This all goes hand in hand and marks a turning point. The financial world has changed in the last few weeks and I think the man on the street is just now finding out that something has happened. At the moment I can say with pleasure that the markets have become infinitely more interesting, and with no pleasure that they have perhaps become infinitely more dangerous.--------------- ----------------------- Dangerous is the right word, MK! Indeed, I did little more than "extend" my context into your "just written" perception. As events have unfolded we can clearly see what this gold market means to Euroland. Traders are busy trying to build a strategy to gain from a move in gold while the very trading arena they use may go up in smoke! I know that the BIS wants gold over $400. Yet, for the same reasons they didn't buy at $280 they don't have to buy physical now. The BIS is responsible for all gold movements between CBs, it's in their charter. Few know what they are doing untill after the fact. Today, they can let the BB "paper crunch" do their work for them. Soon. How fast it gets there will be determined by how the BBs can workout their problems. I suspect we will see rental rates rise each time one of them has to slice off some capital. When this process is wide open Another said he will be writing again (above $360 should do it). The changeover of oil to Euro settlement is the next area to discuss and I am intrested to follow how this ties with gold. On another note:: With the EU recently (last week?) accepting South Africa into a "favoured nation" trade status, I suspect that any of the SA gold shares that survive this may be left alone (just a guess). The EU needs the SA minerals as much as oil and that country may become very important to them. We will watch as this all plays out. Also to ALL::: Everyone is down on Bill Murphy for the wrong reasons. They don't have to do anything but continue to discuss this in public to be a huge success! What ever else can be done will indeed help more! Investors can and do think, read and hear much better than most advisors give them credit for. With the "right insights", they will know to move their assets as events unfold. Walking assets have more impact than standing armies. So don't discount what GATA is doing. From my perspective, most all mines will have a rough time (not only from hedges) in this new bull. If people keep reading GATA they will at least know to run from BB controlled shares as they will be the first hit. I always say, bullion first and foremost. But, human nature as it is, the biggest and most free mines are the next place to be. They won't run as bullion will later, but everyone can't be totally in gold. It's a physics problem at these low values! So "GOOD WORK" Bill, I know the sweat is running on the other team! Thanks to everyone for reading and discussing FOA JCS (10/18/99; 19:53:36MDT - Msg ID:16834)