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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (26920)	12/27/2007 8:17:23 PM
From: carranza2	Read Replies (1) \| Respond to of 218201

Carefully read this 11/30 article on the growth of gold derivatives: goldensextant.com Then think about the implications of a serious amount of them requiring physical delivery of gold. A short squeeze is not out of the question. The author is a lot more lurid than I can be when he concludes that: The reported figures indicate that the mountain of gold options now almost certainly exceeds 30,000 tonnes -- an amount roughly equal to the world's total claimed official gold reserves. How many of these options are cash settlement only? Have the bullion banks actually committed to delivering physical gold in anything like these notional amounts? If so, they have put themselves and the fiat monetary system of which they are a part at a new level of risk, one scarcely hinted at in the ongoing unraveling of various forms of credit derivatives. Large players currently content to take paper cannot be expected to remain blind to its risks forever. When they finally awaken to the difference between claims on gold and physical possession of bullion itself, the world is likely to witness a bank run and gold rush of epic proportions. Producers are getting rid of their hedge books because they are the ones who probably face the obligation of delivering physical possession. But who knows how these derivatives are structured. Perhaps ibanks and hedge funds have to deliver bullion, too.

To: TobagoJack who wrote (26920)	12/27/2007 10:49:24 PM
From: carranza2	Respond to of 218201

I recognized player two's point several weeks ago when I first read Murray Pollitt's note I linked here: Message 24165726. The large number of derivatives and the manipulation of the gold market by central banks is well known. It was brilliantly and comprehensively established here: gata.org I thought of throwing out the possibility of there not being enough gold to meet for the shorts to meet their delivery obligations [to the extent they may exist] in public and in private but didn't do so because I couldn't find any corroboration or hard data and didn't wish to seem foolish and outre particularly as this kind of speculation about short positions in gold which cannot be fulfilled has been around for a long time. See: goldensextant.com goldsilverbullion.com I will say this: Player Two's reports are the first time I've heard of a concrete transaction which corroborates the speculation. If the speculation plays out, great. I have a substantial bunch of dollops and tranches of gold now which will benefit. However, I won't be disappointed if it doesn't happen.