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

To: long-gone who wrote (33471)	5/8/1999 10:07:00 AM
From: Enigma	Read Replies (1) \| Respond to of 116762

But Richard - don't you think this was a positive statement? IMO the British move may not sit well with other CBs - I realise this is a contrarian position here. For a day or two at least it wiped out billions of dollars of value from their reserves. d

To: long-gone who wrote (33471)	5/8/1999 10:47:00 AM
From: Ken Benes	Read Replies (2) \| Respond to of 116762

Richard: At some point in the battle, US gold reserves will be employed. The press release is already drafted waiting for a propitious moment to be released. You can bet that opportune moment will be in the midst of a gold rally/bond route. The central bankers have become fixated on the price of gold not because the metal will effect other commodity markets but because of the carry trade that has created a huge supply of market liquidity that are fueling economies thru out the world. Unfortunately, inflationary rates will be effected more by rising prices in oil and other commodities rather than what gold does. The impact of rising commodity prices on currencies and bonds is difficult to determine but without question it ends the concerns about deflation. The gold carry trade will collapse under the pressure of rising bond yields and a decline of the dollar(when and if this occurs). Gold that was leased was priced in dollars and proceeds were invested in the US bond market. Rising bond yields and a falling dollar will play havoc with that market for many reasons. When the leased positions are no longer rolled forward two events will occur. First, gold will have to be purchased on the open market to repay the loans. As bonds are liquidated to provide the funds to buy the gold, yields may come under further pressure. Many of the bonds bought with the proceeds of a gold sale have been used as collateral for other speculative interests. One million dollars in borrowed gold in 1996 dollars may have a factor of 100 in the creation of money backed by bonds put up as collateral. The scenario is obvious, the central banks will throw everything at the market to keep the price of gold from rising with its indirect effect at controlling perceptions of inflation. And gold is considered a commodity, what a fallacy. The global financial structure is tied more to the gold market than it has ever been. Unfortunately for those controling the market, their vision has become so myoptic that they fail to understand that perceptions of inflation will be effected more by the price of oil, metals, etc than by the price of gold. Markets are already wise to this. As the Asian economies continue to recover, their will be more pressure on commodity prices and those increases will be passed thru the price of imports coming into the US. The US trade deficit will go from bad to worse and at some point the dollar will begin its decline. As a result of that decline, the bond will falter, and finally the manipulation of the gold market collapses. The 8000 tonnes of overhang is going to be used to cover the leased gold that will no longer be rolled forward. Bankruptcies for the investment bankers who handled the trade will be averted, but the central banks will have 8000 to 10000 tons less gold than they started with. Controling the forward selling by the big gold companies and closing out existing positions will take care of another 3 to 5 thousand tonnes leaving the cb's with less than 15000 tonnes. The dynamic that led to the decline in the price of gold is over, the momentum has shifted. To members of this board you can relax your daily vigil for the event that will collapse markets and cause the price of gold to rise. There has been an insidious shift in the paradigm that will play out in time. KEn