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To: roguedolphin who wrote (105342)	12/7/2009 9:12:08 AM
From: Proud Deplorable	2 Recommendations Read Replies (1) \| Respond to of 116555

Dear Jim, Since the actual carry trade on the dollar determines a "Synthetic Short" on the US dollar, then it is fair to assume that as soon as interest rates, for any reason, start to rise shorts will be closed and the dollar sustained and propped up. Isn’t that going to put big downward pressure on Gold? Could you kindly also let us know, in your view, what is going to be Gold’s biggest threat? Regards, CIGA Francesco Dear CIGA Francesco, This is a popular concept that needs explanation. 1. The size of the carry trade cannot be known. There are no reliable sources of information by which you can validate statements such as "The Mother of All Carry Trades,” made by popular academics. What passes through Libor and what any source of dollar lending does lies in a non transparent private treaty market. None of this in terms of a meaningful percentage can be gauged by reviewing COT (Commitment of Traders) data. You can therefore assume that any source that says they can size the carry trade is full of bull. 2. The carry trade is not an all on or off arena. Some will close their positions but others convinced that rates will remain relatively low for a period of time will enter transactions. Most commentators refer to the carry trade as if it was a singular large bull elephant that enters and exits certain trades, bashing and breaking everything in sight. As an example, on Friday some may have closed carry trade positions while other would have seen it as a point of entrance. 3. Those that participate in the carry trade are well financed (at least at the start) and generally of above average market intelligence. Commentators again see the carry trade as a static long of an asset and short a currency. That is so far from the truth that it is actually STUPID. I am sure some carry traders were sellers as gold approached $1224 and will be again at $1274-$1278. 4. Once getting a lead (profit) in the transaction a wise carry trader will see to hedging the currency and interest cost risks. 5. Much of the carry trade today is done as an OTC derivative transaction in legs (positions) or in whole or combinations thereof. 6. The major factor of the carry trade is that the currency of choice should have negative fundaments and a RELATIVE low interest cost. Note the word RELATIVE. That means if rates begin to rise, the short term interest rate should rise so as to maintain the state of RELATIVE low interest rates for the carry currency in comparison to other currencies. 7. Remember even then the carry trade is not one enormous trader, it is many traders, some entering and others exiting. To make the statement “synthetic dollar short,” it carries a connotation of a singular unit, unhedged and never changing, that will at some point attempt a singular exit. That simply is not the truth of the matter. The carry trade is destined to go for years in the US dollar with periods when their will be large positions and at other times smaller positions. Those who think differently should review the years of carry experience in the Japanese Yen. Recognize that the policies of the US Fed and Treasury are a mirror image of what resulted there for many years In conclusion, the concept "Synthetic Dollar Short" is glib when describing the carry trade and therefore an unknowable factor by which to trade gold. Trading gold, which is insurance against the effects of depraved economics, is the proper understanding of what gold is as a currency. Few if any will do as well as those reading here that entered gold under $300 and still maintain that position. I will advise taking the cost of your position out between gold at $1580 and $1620, letting the balance of your position ride as the price shows its intention of reaching Alf and Martin’s numbers. Respectfully yours, Jim

To: roguedolphin who wrote (105342)	12/7/2009 9:18:04 AM
From: Proud Deplorable	1 Recommendation Respond to of 116555

U.S. Mint now suspends all one ounce gold coin sales due to shortage of physical gold! Once again the U.S. mint has had to suspend sales of all its one-ounce gold coins, and some fractional ones too, as its supplies of physical gold cannot meet the demand. Author: Lawrence Williams Posted: Monday , 07 Dec 2009 LONDON - "The United States Mint has depleted its inventory of 2009 American Buffalo One Ounce Gold Bullion Coins. ... No additional inventory will be made available. As additional information becomes available regarding 2010-dated American Buffalo One Once Gold Bullion Coins, you will be notified." So said a memorandum issued Friday to authorized purchasers of U.S. Mint gold coins and reported by Jim Sinclair.. Mineweb reported only two weeks ago, on November 25th, the suspension of sales of American Gold Eagle coins by the Mint - U.S. Mint suspends American Eagle 1-ounce gold coin sales - again, which, at the time, reckoned such sales would be resumed early this month - but in the event, not only is the suspension of the Gold Eagle coin sales continuing, but also now the American Buffalo one ounce gold coin sales have also been suspended, with no new sales now planned until some time in 2010 - although the current sharp fall in the gold price may provide the Mint with a bit of respite from its supply/demand woes. But supply problems also persist with smaller gold coins, particularly given the enormous demand for fractional sized gold coins following the suspension of the one ounce Gold Eagles. Thus the Mint was forced to issue a second memo on Friday saying "the American Eagle Gold Tenth-Ounce Coin inventory was depleted" and that "inventory for the half-ounce and quarter-ounce coins remains very limited." Following the sale of these remaining gold coins on Friday, the Mint anticipated that it would again offer all fractional sizes by mid-December, but in an allocation process. On a more positive note for the Mint, the resumption of American Silver Eagle bullion sales will resume today. These silver coins were suspended along with the one ounce gold coins a week ago - also due to depletion. The Mint had been trying to control sales by not releasing the 2009 coins for sale until late in the year - they are usually available throughout the year, but demand has proven to be enormous. This doesn't mean though that coins are not available to the U.S. public as some authorized dealers will continue to hold stocks, although these are being depleted rapidly and premiums charged on sales are increasing. According to a report on website Coinupdate.com "The US Mint began sales of fractional weight American Gold Eagle bullion coins on December 3, 2009.... These fractional Gold Eagles are typically available throughout the year, but this year the Mint delayed the release to focus production on the one ounce bullion coins. After only one day of availability, the US Mint recorded sales of 56,000 of the one-half ounce coins, 58,000 of the one-quarter ounce coins, and 260,000 of the one-tenth ounce coins. They have indicated that the inventory for one-tenth ounce coins has already been depleted and the inventory for one-half and one-quarter ounce coins is limited. The remaining limited inventory will be offered via the US Mint's standard allocation process and additional inventory is expected to be available in mid-December." While the shortage of U.S. Mint offerings due to demand exceeding supply is, in reality, not that significant in terms of global gold sales it does demonstrate the extent to which demand for easily available physical gold has increased over the past two years. Some of this has been the ever increasing interest by the U.S. public in gold in general and also a certain amount of distrust generated by some commentators as to whether the various ‘paper gold' offerings were secure.