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To: Shack who wrote (71800)	2/26/2001 12:58:32 PM
From: pater tenebrarum	Respond to of 436258

yes, i've heard about this. btw, Veneroso and associates now estimates the total size of the gold leasing market to be 17,000 tons - more than three times the 'official' estimate. if that is true, we could be in for some real fireworks in due time.

To: Shack who wrote (71800)	2/26/2001 1:09:25 PM
From: russwinter	Read Replies (1) \| Respond to of 436258

Musical chairs Rest assured that the Cabel is searching the globe for physical gold to stem the bleeding. I think we can also assume that some bozo will lease or sell them some. How much is the question. If we see lease rates drop here, then we will know the answer. But, so far it looks like they are out of luck. It is critical that they get lease rates back down and soon. That means they have to con someone out of real gold not just create more paper. So the question is: are some CB's reassessing the credit risk of these gold loans? kitco.com Another key right now are the producer hedgers/cappers. They have an incredible opportunity to buy back ounces in a race to the finish line. I have to believe there is some drama going on with hedge managers at these companies. Should significant hedger closeouts hit the market that has the effect of withdrawing even more scarce physical gold. The incentive for doing so is considerable as the contango on forward futures is now approaching 3%. The means that gold for two years out now trades at about $278 ($262 spot X 106%). Since many hedgers have prices set above $300 they have a chance to book a profit on their hedge books, and show how slick they are as managers. The COO's also have to be wondering about the merits of loaning gold at 3%. Perhaps at those cheap rates they should be buyers instead? The other key to this game of musical chairs are the carry trades. The spread between six month treasuries and six month lease rates are now approaching 200 basis points. If the Wizard of Oz lowers rates this week, then that will drop even more. Is that enough to keep the trade intact? I don't think so. The carry trade crowd has to be worried, as this is a moment of truth. And finally there are the massive speculative shorts. Are they feeling a little nervous? Could they panic at this rather critical moment? So despite the quiet appearance of the gold market today, there is plenty going on behind the scene. It's like a game of musical chairs. Who will be able to make it the last chair? Once we break out all kinds of crap will hit the fan. I don't claim to know the outcome, but somehow I'm feeling lucky.