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Gold/Mining/Energy : KITCO - Gold discussion -- Ignore unavailable to you. Want to Upgrade?

To: Robert Dirks who wrote (108)	9/18/1998 1:12:00 PM
From: kitkat	Read Replies (1) \| Respond to of 989

The quiet today is awesome. Nothing is moving. Volume has been down since the release of bill's sexploits last week. You get the feeling that everyone is waiting, holding their breath, until the next shoe DROPS. It's strange that the Kitco server is down. Hopefully, Bart is gearing up for the implementation of the new screens. A reminder...The Kitco backup server is operational at www.kitco.com/backup.

To: Robert Dirks who wrote (108)	9/21/1998 5:14:00 PM
From: Bill Grant	Read Replies (1) \| Respond to of 989

XAU taking a bath today. techstocks.com

To: Robert Dirks who wrote (108)	9/24/1998 12:49:00 PM
From: Robert Dirks	Respond to of 989

LTCM Alert from USAGOLD - IMHO this is only the tip of the iceberg... A consortium of investment banks, headed by Morgan Stanley, Merrill Lynch, Goldman Sachs and Union Bank of Switzerland is bailing out the Long Term Capital Management L.P., a hedge fund with heavy derivative bets in various markets. We'll spend today's report on the situation at LTCM as could be go down as the seminal event in the upcoming bear market for equities and the dollar. Reportedly LTCM, headed by gambling addict, John Merriweather, and advised by derivatives gurus and Nobel price winning economists, Robert Merton and Myron Scholes, has lost upwards of a $100 billion playing the derivatives markets. An analysts quoted in Reuters this morning summarized what was going on behind the scenes at LTCM: "Obviously these guys had greed beyond any measure of fear and they are not even paying the consequences. The banking system is having to bail them out because they are so scared that if (LTCM) goes down it will take the banks down.'' In a scathing article this morning the Washington Post said LTCM's "swift decline was propelled in part by its strategy of borrowing heavily to finance large market bets. The heavy borrowing, or high leverage, meant that once the fund suffered losses, it was forced to sell some of its other holdings to meet margin calls from creditors concerned that the fund's collateral was no longer sufficient to meet minimum loan requirements. Being forced to sell while markets were in turmoil only compounded the fund's losses -- and added to turmoil both in emerging markets and in the United States, where it was easier to unload investments such as Treasury bonds." There are unconfirmed rumors that the fund has a heavy short position in gold. We have said for years here at USAGOLD in in our monthly newsletter that gold has been held down by derivatives players on Wall Street and London playing the short side of the market. We have also said that the next equities crash will be blamed on derivatives. We will stick with both those observations. Up until recently both were unprovable tenants because of the secrecy of these operations. LTCM in our opinion is only one sinkhole in the derivatives' swamp. What we see here is likely to become one story among many as this whole mess unfolds. One thing is certain: It is unlikely that if LTCM held large short gold positions, it would take out more. My guess is that their entire operation will be hold. One of the interesting aspects of this Federal Reserve Bank supervised bailout -- itself an anomaly (why would the Fed bail out a hedge fund established to gamble away its investors money?) -- is the fact that LTCM borrowed money from the big banks to wage its bets. This is a company headed by a man who, according to the Washington Post this morning, bet millions on a Wall Street bar room game of liar's poker -- a symptom of the arrogance that permeated LTCM's operations. Here is a question for you: How do the participating financial firms expect to get re-paid by a company that has no source of income except from its potential winnings? With a country, or even a bank, that goes belly-up you can merge it, hope that it starts to make money again, etc. At least there's hope. Where's the money going to come from to pay back the bailout of LTCM? More gambling?? According to press reports this morning, the bail bondsmen are going to hold the derivatives positions hoping that time will wash all. But these are losing positions! Big time losing positions! And that is a forlorn hope. It is likely to get worse. In short, this strategy is not going to work in our opinion. Let's face it, doesn't this approach sound haunting familiar? Think Japan and its moribund banks. They are now joined by at least one moribund hedge fund with more likely to follow. It should be noted that the firms participating in the bailout are all heavy derivatives players themselves, as a result, one would have to understand this apparent act of kindness for what it is -- enlightened self interest. If LTCM goes, they go. $100 billion is no small amount by anyone's standards, not even the Federal Reserve's blank check would easily cover. Most of the news stories this morning are warning that the LTCM collapse could spread rapidly to other hedge funds and undermine the viability of the banks that have loaned this hedge fund the money to carry out these high stakes gambles. That position in physical gold looks better by the day.