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Gold/Mining/Energy : At a bottom now for gold? -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (1336)	6/30/1998 3:47:00 PM
From: Alan Whirlwind	Read Replies (1) \| Respond to of 1911

REAL POP free float = rootbeer + vanilla ice cream. --A&W

To: Ahda who wrote (1336)	7/1/1998 2:13:00 AM
From: ahhaha	Read Replies (3) \| Respond to of 1911

Repurchase agreements. Repos. Short term dealer agreements to buy a fixed lot of securities that enable the FED to create or destroy short term liquidity. When FED wants to create permanent reserves the most aggressive way to achieve this is through the purchase of T-Bills for FED's account. When FED buys, the check to pay for the Bills is received by dealers and deposited in banks. This causes the reserve base to increase. Sales are the reverse. RPs aren't permanent. They are agreements to buy and sell securities a little later so that say, an initiation of buy side RPs causes the same short term effect as outright permanent buy, but several days later the RP agreement expires so the funds come back without a market action of sell to bring them back. The amount of RPs out at any instant is the RP float and the free float is the net of buys over sells. Otherwise it's a borrowed float. This is commensurate to borrowed and free reserves, but the difference is the ephemeral nature of the RPs. The free float enables the FED to deceive the market by having a mass of phantom money out that serves to commandeer interest rates, but also has the indirect psychological effect of making borrowers believe there is more money at a given price than is actually the case. The original intent of the advent of the RP market some 20 years ago was money supply fine tuning. Now it's more of a rate obfuscation and market rigging attempt. FED believes they are ironing out the discontinuities in supply and demand and so are creating stability. Even the more astute financial analysts have to be reminded that money supply and interest rates are not simply inversely related. The FED uses RPs to manipulate interest rates, they have abandoned overt money supply control. Entrenched money growth is not easily subdued and is the gold buyer's yellow brick road.