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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Warpfactor who wrote (14756)	6/30/2002 1:20:51 PM
From: que seria	Read Replies (2) \| Respond to of 23153

Warp: Here are some links that address the charge (not shown to be a fact) that the U.S. has swapped gold with Germans to facilitate sale or lease of U.S. gold on the market in Europe: First, the Gold Anti-Trust Action Committee (GATA) claims: gata.org fgmr.com and a history of gold leasing: goldensextant.com then some quick and/or accusatory summaries from the peanut gallery: the-moneychanger.com mips1.net The feds respond: http://www.ustreas.gov/education/faq/international/goldsilver.html#q4 but GATA and others remain skeptical: gata.org goldbankone.com goldbankone.com I admit I don't know what to think. I'd heard accusations such as these before and took them to be fantasies of the Black Helicopter crowd, believing my gov't surely could not be so stupid and bureaucratically self-serving as to sell or (what may amount to the same thing) lease any significant part of our nation's gold. As my confidence in the integrity of gov't officials has gone down, and the gov't paperwork evidencing Exchange Stabilization Fund and Working Group on Financial Markets authority has become known to me, I concede the feds just might have done some significant selling or leasing. If so, I'm disgusted. When a nation leases its gold to a bullion bank or others, it is so the lessee can sell it--that's the only way the lessee (or someone downstream of it) can meet the demand that prompts the lease. So the risk of default by the lessee upon a demand to return the gold is then in part a function of whether and how well the lessee has protected the lessor against the risk of default inherent in a large gold price rise. That would typically be done via options/hedges of some kind with counterparties. As LTCM shows, the degree of price rise raises the questions: at what price point is there net protection for the lessee's hedges with one or more counterparties--and how solvent are they, anyway? JPM, Goldman Sachs, and Citigroup are the three leading derivatives holders among banks, and are widely understood (especially JPM) to be so for gold derivatives. When I short JPM I am betting against the success of what I take to be gov't encouraged (if not sponsored) efforts to suppress the price of gold in order to maintain financial equilibrium. Considering how much money and motive the centrals banks and hedgers/counterparties have to keep the price of gold at a point that still shows a positive return on hedge books (often said to be below ~$340/oz.), I would not short without protective calls. My interest in the US gold sales/leasing allegations is first as a citizen; secondarily as an investor. I'm always going to be long gold shares anyway, for the foreseeable future, given my view of the dollar and US financial health. Gold registers fear with huge sensitivity; we haven't seen much fear yet, but gold is saying it's coming. News of major US gold leases or sales would spike the gold price but is a poor risk/reward basis for buying gold shares. Occurrence of such sales/leases remains speculation at this point, however plausible the inference. That's all I have to answer your question. BTW, no, I don't own any physical gold or silver. Too much theft risk, and far greater leverage in the stocks. I'm not expecting Armageddon, just more of a grinding bear market and a declining currency. Gold shares are a hedge--and in my case also a large sector bet.