Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (16141)	8/19/1998 8:15:00 AM
From: Amelia Carhartt	Read Replies (2) \| Respond to of 116774

You mean selling MSFT? Yes, I did and he ain't no dummy.

To: long-gone who wrote (16141)	8/19/1998 7:19:00 PM
From: goldsnow	Read Replies (3) \| Respond to of 116774

Gold trap set by Russia? it will cost you if you allow to drop Gold? Rouble support using gold not risk-free - analysts 10:48 a.m. Aug 19, 1998 Eastern By Patrick Chalmers LONDON, Aug 19 (Reuters) - Russia's pledge to use gold and other precious metals to support the rouble could involve swaps or loans rather than sales, which could backfire if gold prices fall, analysts and dealers said on Wednesday. Gold prices wobbled then recovered on Tuesday after Russian Central Bank Deputy Chairman Sergei Aleksashenko said the country was using all instruments to support the rouble, including its gold and other precious metals reserves. Dealers put the limited reaction down to confusion over Russia's tactics and to the weight of short positions already in place for gold. Tony Warwick-Ching, metals analyst at Flemings Global Mining Group, said there were several options available to the Russians. ''One is that the Russian central bank uses its stocks of gold, silver and platinum group metals as collateral for fresh lines of credit from western banks,'' he said in a report. ''The second is that it uses some of its gold reserves -- around 520 tonnes plus whatever is left with the finance ministry -- for swaps, i.e. a simultaneous spot sale and forward purchase. ''The third is that it makes outright sales of its precious metals,'' he said. Several dealers discounted the possibility of reserve sales, saying these were very much the ''nuclear option'' and would be a sign of catastrophic debt problems. ''It is more likely that they will use their metals as loan collateral... they would really only sell metals as a last resort,'' said one dealer. Warwick-Ching said a lot of gold was currently available to the market, particularly in Zurich, as illustrated by the daily figures released by the London Bullion Market Association. Wednesday's lease rates showed one-month gold at 0.44 percent and 12-month metal at 1.39 percent. ''There is clearly plenty of gold in Zurich, where spot bullion is at a discount to London, and it could be of Russian origin,'' he said. ''Our bet is that some gold has been mobilised as collateral.'' Were Russia to opt for a gold swap, a move several analysts said was conceivable given recent market rumours of a large forward transaction, one of the approaches might be for an immediate spot sale with a forward purchase one year from now. ''That would be the most plausible given the lease rates for the short months,'' said one analyst. He said Russia might get $285 per troy ounce or less for a spot sale, with the buy-back price for a year ahead at around $300. ''Obviously we are dealing with sovereign credit and they are expecting someone to take a reasonable degree of exposure but it's not just Russia which is the risk, it's also the gold market,'' the analyst said. Swapping 100 tonnes, or 3,215,100 troy ounces, would net Russia more than $900 million at a cost which would depend on the gold price in 12 months' time. ''If you took it out at the current spot rate and it went down to $250, we would be expecting them to buy it back in a year's time at $300,'' he said. Of Russia's other precious metals, palladium was the likeliest candidate for some form of loan strategy using the metal as collateral. Last month, central bank chairman Sergei Dubinin said the country had worked out a procedure for using its palladium in just such a deal, though he gave no specific details. At the time, 200 tonnes was the widely touted figure for Russian stocks, which at Wednesday's palladium price of $280.00 per troy ounce would be worth $1.8 billion. One thing that was clear was just how much cash the Russians need. Dubinin told a parliamentary committee the bank had spent $3.5 to $3.8 billion to support the rouble since July 20. He said the bank's gold and foreign currency reserves were at levels last seen before the receipt of International Monetary Fund money, but did not give an exact figure. Russia's central bank said on Monday its foreign exchange and gold reserves were down to $17.0 billion as of August 7, from $18.4 billion on July 31. Copyright 1998 Reuters Limited