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To: Tommaso who wrote (127751)	10/5/2001 5:35:23 PM
From: Real Man	Respond to of 436258

Hi Tommaso! My thinking was this - the bullion banks did the same thing to gold as they did to money, i.e., inflate gold supply using gold loans. The mechanics is as follows: They loan gold to producers (or Jewelry), which they in turn sell back to the bank. The bank then makes another gold loan until the total amount of loans is, say 10x the original amount. In the event of a default the whole scheme collapses, and gold supply shrinks (abruptly), just like money supply would. I think this process should lead to a sharply higher POG. Higher Aussie will put a pressure on Australian hedges (known to hedge big time). If a mine goes under, it will have to default on the gold loans. Will it put a pressure on the Aussie or the dollar? I'm not so sure about that, cause Forex markets are very big compared to gold market. Naively I would think derivatives meltdown will push US dollar sharply down against the Aussie and other currencies.