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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: waverider who wrote (12120)	5/10/2002 6:49:59 PM
From: russet	Read Replies (2) \| Respond to of 36161

OK...so Joe borrows gold from Bobs Bullion Bank, then sells it on the open market. The lease rate is in effect the interest Joe owes the bank to borrow their gold. But as the bank sees gold going up, it raises its lease rate because it is beginning to see it as a more valuable, rising source of capital. You want to borrow their gold, you gotta pay more cuz everyone is beginning to want it. If Joe is dating Bobs daughter, he can borrow a oz of gold for 5 years at a locked in rate, and sell it at spot for US$310. If he gets a gold lease rate of 2% per year, it costs him US$6.20 per year interest to do this. He now has US$310 to invest in something. He could buy a futures contract to deliver an oz of gold for a cost of $358.8 on Dec 31 2006,...not sure but maybe that costs him $10, so maybe he can buy 25 contracts for a total of $250 and still have enough money to pay the $6.20 per year interest for 5 years and other other fees he may be charged in completing the transactions (just multiple by the appropriate numbers to fulfill the minimum contract sizes) and still have enough money left over to take Barbie, Bob's daughter out to McDonalds for lunch. Now as we know from this thread,...gold is going to US$2000 shortly so Joe will make, 25($2000-10-358.8) = US$40780.00 per oz of gold he borrows from Bob and he is out of pocket absolutely nothing to do it and gets a full stomach, and maybe something from Barbie (gggggg) Now we know Joe will not be satisfied borrowing only one oz from Bob, so he will probably do this with 1000 oz of gold, and he will be a retired multi millionaire as soon as gold hits US$2000, and he will become the biggest goldbug here,...or not (ggggggggggg)

To: waverider who wrote (12120)	5/11/2002 3:10:16 AM
From: TheBusDriver	Respond to of 36161

Well Russet gave you one version<grin> Yes, at some point the gold loan will be called. It can be rolled over or the bank can ask for the gold back. You see the bank doesn't really want the gold. They are now more interested in the interest generated from leasing the gold. Banks see gold as a non-income producing millstone around their necks. But if that were to change and the gold DID have to be returned, well it has to be, you can roll it over forever......there are TONS of leased gold. that is where these forcasts of $2000 gold comes from. Personally I think that this is so serious a problem that the gov'ts around the world will not let this happen. Gold might rise but they WILL find a way to let these derivitive players off the hook or it could bring down our entire money system as we know it. Can you tell I think POG and POG prices are manipulated? A rouge wave is going to blow all this up someday I think. The cracks at JPM are just the beginning I hope. Wayne

To: waverider who wrote (12120)	5/11/2002 4:59:37 AM
From: TheBusDriver	Respond to of 36161

This might help a little too: from "the gold bull market this week" @ the-privateer: "Let's take a clear-eyed look at all this. Gold was never going to go up in $US terms without a BIG fight. And it hasn't. Borrowing Gold is still easy, and VERY "cheap". Look at Gold lease rates. As you can see, there is a suggestion in a "bottoming" in rates, but the "long" one year rate is still only a whisker above the 1.0% level. And if you go from there to check out the relationship between Gold and the $US Index, you can see that the Dollar is falling faster in terms of other currencies than Gold is rising in terms of the Dollar. Since Gold broke above $US 300 on March 27, the $US index is down 3.98% (118.91 to 114.18) while Gold in $US terms is up 3.01% ($US 302.20 to $US 311.30) So, progress is slow - but steady. The charts on this page are all looking perfect. The bar charts have shorter-term moving averages comfortably above the longer-term ones. The point and figure chart is waiting for another upturn - which it would get at a spot future Gold close of $US 312 or higher." the-privateer.com This is a subscription service and one I highly recommend. You can subscribe just to the gold commentary if you like. Wayne