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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Killswitch who wrote (12165)	5/9/2002 4:54:13 PM
From: Dan Duchardt	Respond to of 19219

Posted for information, without opinion as to merit (COMTEX) B: Flap Over Gold Derivative "Firings" B: Flap Over Gold Derivative "Firings" May 08, 2002 (Miningweb/All Africa Global Media via COMTEX) -- Gold bug extraordinaire Bill Murphy reported in a circular to readers of the LeMetropole Web site that JP Morgan Chase's derivatives operations are in chaos. The bank flatly denies the claims and Miningweb has verified that at least one of the executives said to have been "fired" is still on staff. Murphy's note reads: "?my source received the following from a futures and options broker in London who works for one of the Gold Cartel bullion banks: * The gold derivative department of J.P. Morgan Chase is being investigated. * The man who ran the department has been fired. * This was discussed on CNBC Europe, but was called "still a rumor" by the program host. * It appears the "conspiracy guys" were right all along." Murphy also says a South African source with links to JPMC claims it has: "lost control of the gold market and that the gold derivative department was a mess." Donald Eckert, global bullion risk manager at JPMC New York, was contemptuous of the claims and says nobody has been fired in the derivatives or bullion trading departments. He also denied Murphy's report that JPMC managing director of global commodities, Dinsa Mehta, was axed "two weeks ago". Eckert says Mehta volunteered for retirement after the global forex options, forex and gold trading desks were rationalized into a single department. "He was not fired at all, he chose to resign." As Muphy notes, corporate resignations and retirements are often sublimely obtuse with highly charged executives suddenly in the mood for family time and more golf. Enron Another wrinkle is Mehta's involvement in the Enron fiasco. The House Committee on Energy and Commerce in March called on JPMC to provide copies of any correspondence involving Mehta and Enron's Mahonia subsidiary. Mahonia was a Jersey (British Channel Islands) energy trading business established by JPMC in the early 90s which did most of its business with Enron. Initially it focused on year-end transactions apparently designed to shift tax losses between reporting periods but also served as a capital raising vehicle. When Enron collapsed, Mahonia owed JPMC billions of dollars, which insurers are now refusing to cover because they say the energy transactions were fraudulent. Mehta's precise role in Mahonia is unclear, but he is said to have boasted to colleagues about the fees the transactions generated for JPMC, and which presumably translated into handsome bonuses. The structure of the energy trades was nearly identical to gold hedging with which Mehta would have been especially familiar. Hedging Indeed, Mehta is well known as an arch proponent of hedging and says routinely that gold has been "stripped of its monetary attribute by the globalisation of the international financial system" and that gold has lost its "crisis currency" role. He was not wholly negative, noting at the 2000 Australian gold conference: "Freed of central bank supply, underlying fundamentals are building an impressively positive case: low investment in new supply, net reserve exhaustion, and a solid demand base, that should allow cycle ranges to eventually trend higher perhaps sharply higher toward the end of the central bank supply pipeline." While he relentlessly promoted gold hedging, Mehta was never an all-or-nothing player. He urged companies to do nothing more than manage their revenues better according to the price cycle and has credible evidence to show that it worked in gold's trough. "A gold mining company can today position itself anywhere along a wide risk spectrum. The derivatives market simply enables that choice," he said. The problem now is that the hedgers have been caught on the hop in failing to call the cycle turn more precisely ? they came to believe their own thesis that gold is irredeemably a commodity. In the context of the current uptrend in gold prices, Metha's retirement probably might rightly be taken as another bullish sign. by Tim Wood Copyright Miningweb. Distributed by All Africa Global Media(AllAfrica.com)