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To: Archie Meeties who wrote (2893)	7/10/2000 2:17:35 PM
From: pater tenebrarum	Respond to of 436258

don't forget, the gold carry trade is about as close to a financial free lunch as you can get. thus it attracts hedge funds like sh*t attracts flies. what's more, the general consensus is that we have entered a sort of economic nirvana, or utopia, the permanence of which is assured by means of a gaggle of bureaucrats fiddling with overnight lending rates. no-one considers for a moment that alternative scenarios might develop - it is much easier to extrapolate the experience of the last three or four years indefinitely into the future. the end of the gold carry trade is getting closer however...simply because so much gold has been lent out and sold off already by the CB's. once this source of supply dries up, it's over - possibly earlier. unfortunately there's a lot of secrecy surrounding gold lending activities. but look at the Bank of Canada - it has sold practically all its gold (only 1 m. ounces left). the Banks of Australia, Kuwait, Jordan, Denmark, have not even one measly ounce left in their vaults - all lent out (i.e. gone, forever). i suppose with the exception of the biggies, France and Germany, the same is true for many CB's. at the same time it is reasonable to expect further rationalization and the folding of smaller players to begin to reduce mine output, unless there's a sustained rise in the PoG. in other words, d-day is coming closer and closer... the BoE auction results need to be watched carefully...a big oversubscription would point to further hedge book close-outs and possible attempts by loan shorts to bail from some of their positions.