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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: James W. Riley who wrote (106525)	8/4/2008 4:56:04 PM
From: ChanceIs	Respond to of 206325

>>>would you include the hedge fund problems in your list of things that are different this time?<<< An excellent question. Let me think. I think that the LTCM blowup in the fall of '98 put the fear of God in the hedgies. They all pulled in their horns. Direct action from Congress or threats of more regulation gave them religion for a while. I don't think that hedgies were a factor in the 2001 meltdown. They might have turned a quick speculative flip. I don't think that they were accident victims back then. Today they surely are. You have to throw the big investment banks in there as well today. They have all moved into commodity trading especially heavily. Somebody (Morgan I think) was about the business of purchasing oil storage tanks so they could actually take delivery and hold for price improvement vice paper trading. I know that the IBs have laid off large numbers of traders. My sense (weak gut feeling) is that the IBs are tending to sell off tangible things when under pressure while leaving the Pandora's Box of Level III assets untouched. Tangible would be something like an oil futures contract where there is a solid market and good price visibility. A Level III assets would be a big package of CDOs with lots of derivatives infested like maggots. You don't want to sell because you are likely get far below true value in the current market conditions. If you sell, then somebody gets to shine a light in the Level III box and make guesses about what else is in there. Witness Merrill's recent sale of "assets" at $0.22 on the buck. Short answer...yes. There was little forced selling of commodity linked assets in 2001, and much, much more today. To blather on, there are huge piles of sovereign wealth money looking for homes. They are tired of buying US investment banks. I think the Chinese took a position in Merrill in December which has already lost 50%. The Chinese in particular like to buy oil, even if the short term Olympic boom may be ending. They want energy long term. That is another point. The Chinese are well known to have been purchasing oil assets in almost every form - oil fields, futures, companies - for several years. it smells of big time buy and hold to me. Just a gut feel, but I think that the SWF have not been shaken out, and are looking to get longer.