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To: long-gone who wrote (19602)	9/24/1998 9:01:00 PM
From: goldsnow	Respond to of 116774

The world would never accept Dollar as permanent and pre-imminent reserve currency..too risky..Let's look at POG few years now..that is whoever has courage to hold for a long term... US majors mount $6bn rescue By Staff reporters and agencies Wall Street's biggest powerbrokers and the Federal Reserve Bank of New York have joined forces to mount a $US3.5 billion ($6.1 billion) rescue for a stricken US hedge fund amid fears that its collapse could threaten major US banks. Merrill Lynch, Travelers Group, Goldman, Sachs and JP Morgan were among the investment and commercial banks that agreed at an extraordinary meeting in New York on Wednesday to shore up Long-Term Capital Management LP, which had borrowed heavily to make multibillion-dollar arbitrage bets on global bond markets. The rescue comes as anxiety mounts about the health of the world economy and follows indications from the US Federal Reserve that it may soon cut interest rates, possibly on Tuesday next week, in response to fears of global recession. On Wednesday the Fed chairman, Dr Alan Greenspan, told US law-makers that the US economy, though still showing solid growth, was fraying at the edges, and that international economic conditions had deteriorated in the past month. In anticipation of an interest rate cut, sharemarkets around the globe surged yesterday. The Japanese market climbed 3.02 per cent on the back of a 257-point rise on Wall Street. Hong Kong was also strong, with the Hang Seng index up 4.95 per cent. The Australian market closed at 2614.90 – a rise of 41.60 points – after being ahead more than 60 points earlier in the day. Sharemarket gains continued in early European trading, with German stocks up more than 3 per cent and London's FT-SE 100 rising more than 2 per cent. The unprecedented rescue of Long-Term Capital and the involvement of the Fed shows how concerned regulators and bankers are becoming about the health of financial institutions worldwide. While the Fed has no jurisdiction over risk-taking hedge funds like Long-Term Capital, it is responsible for the safety of the US banking system. At one point Long-Term Capital had borrowed more than $US100 billion to finance its bets. Lenders faced huge losses if the hedge fund failed, according to a person close to the firm's partners. "If we were in more normal times, we might have said let the chips fall where they may, but to have fears that things could be unravelling for the banking system domestically as well as abroad is a bit too much," said Mr Chuck Hill, the research director at First Call Corp. Executives from more than a dozen banks and securities firms met with Long-Term Capital in the New York Federal Reserve Bank's 10th-floor boardroom in downtown Manhattan during the past few days as the hedge fund's net assets sank to about $US500 million, from $US2.3 billion just three weeks ago. The president of the New York Federal Reserve, Mr William McDonough, left a London conference on credit risk early to deal with the real thing. The losses are "shocking", said Mr Richard Klitzberg, who has marketed hedge funds for about 16 years. The Russian debt default and the sharp devaluation of the rouble were being blamed for wiping out many of Long-Term Capital's assets. While firms including Bankers Trust and Credit Suisse First Boston also lost money as a result of swings in the markets caused by Russia, Long-Term Capital's were bigger because it relied on borrowed money to increase its bets. The lending group will appoint an oversight committee to "direct LTCM's overall strategy and the implementation of its risk reduction objectives", according to a release issued by the firm. Long-Term Capital will have more than $4 billion in net assets after the infusion. In return, it's giving up control. On the local market yesterday, earlier gains were pared back in late afternoon trade as some investors took profits. Buyers concentrated on key industrial and mining stocks as Australian 10-year bonds retreated to 5.15 per cent, the lowest level since regular bond sales commenced in 1982. The market saw the injection of $6.8 billion of market value, bringing the total added this week to $12.4 billion. Banking issues paced the rises with the Banking and Finance Index adding 2.4 per cent. The sector has lost 2.2 per cent over the past month, with some analysts seeing the falls as providing for long-term outperformance and attractive dividend yields. The Commonwealth Bank added 19¢ to $20.18, Westpac gained 33¢ to $9.78, NAB rose 67¢ to $21.55 and ANZ climbed 16¢ to $9.04. Media performed strongly, the sector index rising 2.8 per cent. News Corp, which has a 78 per cent weighting in the index, saw its ordinary stock rise 38¢ to $11.28 and its preferred issues gain 31¢ to $9.78, with two-thirds of its revenue coming from the US. Premium blue-chip industrials were stronger – Telstra up 6¢ to $4.61, Brambles adding $1.25 to $35.75 and AMP 13¢ to $21.95. Resources performed well, with the diversified issues accounting for much of the gains. Rio Tinto rose 27¢ to $19.75 and BHP added 17¢ to $12.81. Of other issues, WMC gained 7¢ to $4.99, Comalco dipped 10¢ to $6.20 and MIM added 1¢ to 77¢. Gold stocks gained after December gold rose $US2 to $US292.50 an ounce in New York. Acacia rose 6¢ to $2.10 and Newcrest added 8¢ to $2.

To: long-gone who wrote (19602)	9/24/1998 9:51:00 PM
From: goldsnow	Respond to of 116774

Thursday September 24, 12:59 pm Eastern Time NY gold trade dismisses LTCM shortcovering By Derek J. Caney NEW YORK, Sept 24 (Reuters) - Rumors that beleaguered hedge fund Long Term Capital Management had large short positions in the gold market were dismissed by market participants Thursday, most of whom pointed out that the fund was not an active player in the commodities markets. The New York Federal Reserve Bank announced Tuesday a $3.75 billion bailout for the fund that saw its capital shrink by 80 percent since the year began as the global economic picture worsened. The fund was headed by former Salomon Inc vice chairman John Meriwether, who made his name in bond trading. But rumors began circulating late Wednesday and overnight that the company had a large short position in the gold market that was to be unwound as part of the bailout plan. ''It has never been Long Term Capital Management's policy to comment on our positions,'' a LTCM spokesman said. Gold for December delivery rallied $3.40 to $296.00 an ounce on the COMEX division of the New York Mercantile Exchange, trading as high as $297 earlier in the session. But the market has yet to steer far from the $289.60-$297 trading range of the past two weeks. ''The gold market saw a spurt of short-covering a half-hour before closing Wednesday,'' said Carlos Perez-Santalla, a gold trader for Hudson River Futures on the floor of the COMEX division of the New York Mercantile Exchange. ''The assumption was that it had something to do with Long Term Capital. But I have my doubts.'' Further rumors began circulating that the fund had large off-exchange positions in the over-the-counter options markets outside of the U.S. ''They have no positions in the gold market,'' said Martin Armstrong, president of Princeton Economics International, who runs his own fund. ''Ninety-eight percent of what they do is in interest rates. They have little involvement in commodities, if any.'' Other gold traders agree. ''Rumors like this tend to serve the gold bulls quite well,'' one commission house trader said. ''They get people talking about how LTCM has to cover millions of ounces of gold, hoping they can run some stop loss orders above the market. But we don't cross paths with these guys at all.'' But as another metals analyst noted, sometimes a rumor of such selling is all the market needs to rally. ''If there's rumors of fund short-covering, it could definitely lead other funds to do the same,'' he said. ''I don't see any direct impact on the gold market from (LTCM),'' Hudson River's Perez-Santalla said. ''It does, however, demonstrate instability in the market, which tends to be bullish for gold.'' biz.yahoo.com