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To: orkrious who wrote (270739)	12/14/2003 7:59:10 PM
From: laura_bush	Respond to of 436258

So, everybody's not stupid. That's a relief. -g-/eom

To: orkrious who wrote (270739)	12/14/2003 8:28:20 PM
From: Tom Smith	Respond to of 436258

Sunday, December 14, 2003, 5:33:00 PM EST Reading the Fine Print Author: Jim Sinclair An event more important to gold than the capture of Saddam Hussein surfaced recently. Without a doubt, it will have wide implications for the investment community at large - not only in gold but in general equities as well. This announcement, which was issued in July of this year, has now become reality. Read the small print on the statements you receive from your bank, brokerage house or clearing house in the coming months. The August issue of "On Wall Street Magazine" offers insights into possible investor concerns. BROKERAGE FIRMS SCRAMBLE AS INSURERS DROP EXCESS-SIPC COVERAGE New York, NY – July 18, 2003 – A move by several major insurance companies to withdraw from writing so-called excess-SIPC coverage has the securities industry working feverishly to fill the gap and head off customer worries, On Wall Street Magazine reports in its August issue. Excess-SIPC coverage is insurance against brokerage account losses that exceed the limits provided by the government-backed Securities Investor Protection Corporation (SIPC) should a brokerage firm fail. “Even if excess-SIPC coverage were to disappear, which probably won’t happen, the risk to investors is more theoretical than real,” said Evan Cooper, On Wall Street editor. “In the unlikely event that a brokerage firm was to fail, brokerage accounts assets are usually protected because they are kept separately from the firm’s assets. The first level of protection is provided by SIPC, which insures accounts for up to $500,000 for the stocks and bonds held in each account and up to $100,000 in cash. It is only after SIPC coverage has been exhausted that excess-SIPC is used.” Like SIPC coverage itself, excess-SIPC insurance does not apply to investment losses or fraud, two ongoing concerns that weigh far more heavily than broker-dealer bankruptcy. The few insurers that provide this coverage are abandoning the lucrative line of business because the underlying policies force them to assume potentially unlimited liability. Currently, blanket policies place no limit on the number of accounts covered or the financial risk attached to each account. Said Cooper, “Excess-SIPC is coverage that securities firms have used as window dressing; it makes investors feel safe, while the likelihood that it ever will be used is about as great as a July snowstorm in Washington, D.C.” I have been informed that a similar reduction of insurance coverage is being contemplated in Japan for bank deposits. The announcement that I received this week from a prestigious brokerage firm read as follows: "Dear Valued Client: As you may be aware, there are significant changes which are taking place in the insurance market that will impact Excess SIPC Insurance. The primary providers of this coverage will be discontinuing this coverage. Basic SIPC Insurance which is provided by the Securities Investors Protection corporation, protecting accounts up to $500,000 in value, of which $100,000 may be in cash, is not impacted.” Soon, you will receive from your bank, clearing house and brokerage firms, a similar notification that excess SIPC insurance no longer exists on your account. Therefore, the absolute maximum insurance you have is $500,000 on all your accounts at that institution - possibly at all institutions in which you have accounts. This is happening because if an industry-wide problem occurred, there could be a limitation of insurance that might apply to any one claimant. While it may not be an important event for everyone, it certainly will be for the makers and shakers of markets. This is one reason why a new group, the international establishment investment banks, have entered the gold market. For gold, this event could be orders of magnitude more important than the capture of Saddam Hussein. The SIPC development is an event that I could not speak about until it became public knowledge. I have received my notice therefore you have or will receive yours soon. It is the quiet coming into gold of a new group of international establishment investment bankers because of the lack of availability of SIPC insurance over large investment accounts at brokerage houses, clearing houses and bank security accounts. I can assure you this is a dramatic development. The reason for this action by SIPC insurance providers is simple. The outrageous growth of the derivative industry is something no sane insurance company is willing to guarantee. Even the insane ones won’t take it on for that matter. It is not the fear of a bear market that has produced this final exit by major providers of Excess SIPC coverage to large accounts. Anyone knowledgeable of this industry knows that last risk insurance and the interest rate criteria of every derivative on earth cannot be set right or in the end guaranteed. The logical and inviting conclusion is whatever entity sits at the end of those derivative daisy chains is either without assets now or will declare bankruptcy the day they are called upon to perform. It is important to understand that the exit of major insurance companies providing excess SIPC coverage has occurred in what many equity people feel is a resurgence of the bull market - not a rally within a bear market. Still these insurance companies want out. The culprit here is the bond market and the clear perception that a classic long term top has fallen into place. There is no derivative ever granted on anything that did not have an interest rate risk and derivative characteristic. Derivatives do not like old soldiers “simply fade away.” They stay around in cyberspace getting larger and larger in the chain of transactions every time something occurs in the marketplace. All the respected math professors from the world’s leading institutions can jump up and down yelling that no derivative spread will ever fail. Yet I believe the major insurers of the marketplace transactions have just said otherwise. What does this all mean? In a nutshell here it is: 1/ General Equities: This development is neutral for bulls and bears. This means that fewer securities will be kept with financial institutions. So there will be less securities to borrow for the legal short seller which could curtail that activity. It can also be interpreted as a fear of the security of paper assets which in a long term sense is negative for general equities. 2/ Gold: This is one of the major reasons why international investment banks have since the announcement that excess SPIC insurance will no longer be available, been buyers of gold. This will impact the “Golden Keys” for gold positively which is the assessment of the storehouse of value content of paper assets versus gold. There are many other results but for today’s discussion this is sufficient for the categories mentioned above.