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.

Non-Tech : Invest / LTD -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (3396)	9/25/1998 1:40:00 PM
From: Shelia Jones	Read Replies (1) \| Respond to of 14427

Wow Lucretius, looks like what we got here is one of those battles between ancient Roman gods and Nano meters...gg. While waiting for my home to turn into a living organism capable of fulfilling my every desire into the infinity of time, I'm just content to see where my AU lions take me. This report pretty much sums it up: biz.yahoo.com Friday September 25, 12:27 pm Eastern Time Gold market eyes day of reckoning for fund shorts By Derek J. Caney NEW YORK, Sept 25 (Reuters) - U.S. gold traders are viewing the recent rally in gold prices driven by hedge funds covering their short positions at a time when central banks are looking to restrict gold supply in the market. Gold prices are trading at their highest level in more than 12 weeks, with many analysts believing that gold is being reconsidered as a safe haven amid concerns about the economies of Japan, Russia and Latin America, as manifest in the recent vulnerabilities in the currency and worldwide equities markets. Against this backdrop, highly leveraged hedge funds are now believed to be fearful of being on the wrong side of the market. Traders and analysts spoke of a day of reckoning for the funds that borrowed gold from dealers to execute short positions earlier in the year. Such dealers will, in turn, borrow gold from central banks. With the recent downturn in the economies around the world, central banks are believed to want the gold that they lent back in their reserves. One-month lease rates, as implied by London Bullion Markets Association members, increased 130 basis points overnight to 1.70 percent. Lease rates are the cost of borrowing gold from central banks and are often used as a barometer of physical tightness in the gold market. ''(Hedge funds) borrowed gold to short the market earlier in the year because it was one of the cheapest sources of money around,'' said Ian MacDonald, executive vice president of MKS Finance USA. ''But now the central banks are concerned over the (worldwide) financial situation and they want that gold back in their reserves.'' Meanwhile, many hedge funds are lining up to declare losses they've sustained in Russia and other markets and are believed to be increasingly short of cash to buy back their positions. ''They're in a double whammy because they don't have the money to buy the gold back and they will be forced to cover in a market that's moving against them.'' Dinsa Mehta, managing director for Chase Manhattan Bank, agreed that the central banks were beginning to constrict gold supply. ''The central banks around the world are beginning to exercise some caution regarding their gold reserves,'' he said. ''There was a mindset in which gold was considered just another asset to be lent to the market as opportunities arise. But that seems to be changing in light of the weakening economic situation.'' Gold bullion for London delivery has spent the last 10 months trading between $270.75 and $314.40 an ounce after falling from the February 1996 high of $417.70 an ounce. Could this situation reverse the trend? ''It's a little early to tell,'' one bullion trader said. ''We need to see some evidence of fresh buying in the market before we're convinced this is a reversal.''