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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (90114)	9/27/2002 5:36:12 PM
From: Jaakko	Read Replies (1) \| Respond to of 116764

Ratio of PAPER Gold to PHYSICAL Gold Since you said: "I find gold as a sector to be fascinating as it relates to macro-economics, money & banking, and currency" I would therefore very much appreciate your expert opinion on the subject that I tried to promote four years ago, namely that the gold bullion banks are operating in their gold lending business on the same basis as in lending currency. That is on a bank reserve basis: i.e. for every dollar that the banks have on deposit they lend out twenty. They can get away with this as long as the depositors don't withdraw their cash. If they do, then the banks have to call in 20 times the amount in loans to preserve their bank reserve ratio of 5%. In my opinion, if investors from here on were to take only PHYSICAL delivery of gold instead of accepting PAPER gold, the bullion banks would have to call back a multiple amount of PAPER gold loans in order to maintain their "gold reserve ratio". This could set off a real bull market in gold.... Do you think the gold bullion banks are levered in this fashion? If they are not, how would you explain the numbers that I calculated in the attached message four years ago which I was still able to find on the Kitco thread but no longer on the SI thread. Jaakko kitcomm.com