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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Follies who wrote (53045)	5/21/2000 6:01:00 AM
From: d:oug	Respond to of 116763

dale, Very good question, and before I give my answer I will first document which areas of your question I have no understanding of since I have close to zero education and experience in those areas and only know what posters like Ron Reece explain as knowledge in their posts. You understand my position I hope, as trying to learn from Ron Reece's examples as being the incorrect side of the truth, that I have to be careful not to enter the realm of insanity. So here goes, a bank - yes, i know what a bank but don't push me on this one is long - when your investment goes into the toilet & you follow a billion dollars - i don't but bill gates does gold futures contracts - a mob hit using a gold bar rather than a concrete block sells calls - 10 10 234 or whatever those long distance number are 100 million dollars - bill gate's recent new house derivative exposure - Hutch caught with his pants down Why does it matter - only if it was the wife that caught Hutch ...of gold futures contracts and sells calls for 100 million dollars against that same amount of gold, what is their derivative exposure? Why does it matter if it was a hundred times that much? My answer(s) (Multiple Choice Format) (1) does not matter as long as the gold remains in paper format (2) matters if the gold on paper needs to be physically delivered (3) really, this is not my area of whats what The only example that may be in the same ballpark is that a Savings Bank only has a small percentage of the cash in it's vaults comparied to the amount received as deposits. No problem since if times are ok and normal than the Bank Model used to create the banking system will work. If times go bad and there is that "run" on the bank, along with all other banks in that nation, then collapse since the bank will have lost most all the depositor's money thru their investments that when bad. The money is "out there" but the bank defaults or whatever the term is, and with this worst case example here the FDIC can only cough up 1 cents on a dollar for the limit amount. Seems that someone ended up with all that lost money, but then the economy is in a bad way, so unless the money went to a safe nation...... My other answer is the same in that all the gold that was sold at cheap prices to keep the price of gold low was created the same way as paper money, this paper gold has no backing of something of value. Like you buy something and rather than pay cash and rather than use a check or credit card that will be turned over for cash, you take a plain white piece of paper and write on it " IOU 25 ounces of physical gold" and you also tell that person that you recommend that he hold that paper gold and don't try to take delivery, and to make this person agree to this you make him an offer he can not refuse. You say that you will buy lots of his paper money and give him paper gold and that just so long he continues this swap you will let him create all the paper money he wants without limit, and you will always charge low paper money value for the paper gold. This way that person/nation can obtain lots of gold for the price of cheaply made printing paper currency. The sky is the limit, as in no limit. To the Moon. They print paper money, they print paper gold. Supply & demand for paper money called inflation when the supply is greater than demand. Supply and demand for gold......... Seems that there is too much gold "out there". Paper or Plastic or Physical. doug