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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (6707)	9/18/2002 3:00:34 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 89467

JPM has to be bailed until they can no longer be bailed /jw

To: yard_man who wrote (6707)	9/18/2002 3:22:09 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 89467

Dear Mr. Turk, by James Sinclair September 14, 2002 Dear Mr. Turk: Please accept my sincere gratitude for your accomplishments on behalf of the gold community. By bringing the truth of what has and is occurring in the gold market to the general public, you have given increased legitimacy in establishment and general investors' eyes to what we have been dealing with for many years. Thank you. The gold short can be compared to a stock issue in which more shares are sold short than all the issued and authorized shares in existence. Might I add to your arsenal the following factual concepts: All gold producers of 100,000 ounces on gold per annum have sold short a total of 2.4 years of estimated next 12 months production. However gold producers of 100,000 or more per year represent only 11% of the total outstanding gold derivatives world wide. Figures found in BIS & IMF quarterly & annual reports. Total world gold derivatives on the books of all reporting commercial & investment banks depending on method of valuation are IMF & BIS 280,000,000,000. I believe the figure of $300,000,000,000 is more accurate, but the difference is small in percentage terms. The means by which notional value of a derivative may become real market value is Risk Control Program (RCP) software which is utilized by all arbitrageurs wishing to remain solvent. As an arbitrageur and past owner of arbitrage dealing firms as well as a clearing house, brokerage firms, NYSE member firms, trading firms and well respected metal dealers, I understand the logic of Risk Control Program software. At gold $305 and rising, RCP software begins calling for gold purchases to maintain the risk factor of gold derivatives at the risk percentage of the original assumption of the position. At gold $354, the RCP software will call for one ounce of gold long for each ounce of gold short for the entire world position of gold derivatives. At gold $354, that means on the $300,000,000,000 of gold derivatives, the demand for gold would equate at today's gold price to 900,000,000 ounces of gold or above 20 years production assuming the rate of gold production remains at the present levels which is not expected. At the modest declining rate of production now predicted by the industry, the short position at gold $354 is therefore 24 years production. If we are to accept the figures of central banks of what their gold inventory is, the total gold owned by all the central banks of the world is 856,000,000 ounces. However, central banks do not publicly account for gold leased because all leases expire in one year from the day of granting and it is assumed the gold is returned. Therefore, leased gold is not deducted from the gold inventory of central banks. Therefore, at $354 and rising, RCP software will call for the purchase of 900,000,000 ounces which is a demand for gold beyond the world supply of gold -- a logical market impossibility. Your statement that the industry of gold derivative financing is short 4 years of production, then is not correct. At present, gold short of the gold derivative position is 24 years production. As gold rises, the short becomes active losses and require gold purchases to avoid total bankruptcy of the gold derivative industry. Demand will outrun world total supply. This gold derivative situation is therefore The Mother of All Short in market history. Even the cornered short in "Piggly Wiggly Stores, Inc." on the New York Stock Exchange engineered by Jesse Livermore in the early 1900s was not short more stock that the total capitalization. The gold short can be compared to a stock issue in which more shares are sold short than all the issued and authorized shares in existence. Please reexamine your statement that the short of gold is only 4 years production. 97% of all gold derivatives are unlisted. That means they are: 1. Unregulated. 2. Not listed on any formal exchange. 3. Not clearinghouse funded. 4. Totally dependent on the balance sheet of the grantor for financial integrity. 5. Non-transparent. 6. Without standard trading, so closure cannot be made at will. 7. Dealers are commonly not the good name commercial or investment bank holding companies, but rather subsidiaries of these good names which are not guaranteed as to trade debts. 8. 69.4% of the total derivatives on all types of assets of $72,000,000,000,000 are on the books of U.S. institutions. 9. JPM alone holds 25.5 trillion of all types of derivatives or 35% of the world total. A 1% loss would cost them more than their liquid capital position. When asked for his opinion on unlisted derivatives, Warren Buffett categorized them as SEWAGE. Respectfully submitted, James Sinclair