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Gold/Mining/Energy : Gold and Silver Mining Stocks -- Ignore unavailable to you. Want to Upgrade?

To: goldsheet who wrote (353)	6/14/2000 8:32:00 PM
From: russwinter	Respond to of 4051

Regards long puts; I don't think these Aussies have that much physical gold to deliver. I noticed that most of the Aussie puts were in the money, 325 or higher. Of course buying the put gives them the right to sell at that 325 price. To close out the position they would have to buy physical gold from some source and then deliver to the put seller at the 325 price. The point is that physical gold gets pulled out of the Comex or some other Board warehouse, and leaves those markets missing a big chunk of the coverage for the multitude of other paper transactions out there. The best analogy would be a bank run. If these transaction were to snowball, Comex-like gold could disappear in fast order. The bullion dealers want expansion of their paper market not contraction. May not happen, but closing out a put buy in this manner drains the vault, and is contractive. Will be interesting to see if Comex inventories are down next week.