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<DIV><FONT face=Arial size=2>Does anyone have an explanation for the 20pt.
discrepancy between Dec and Mar in the T-Bonds?</FONT></DIV>
<DIV><STRONG><FONT face=Arial size=2><A
href="mailto:dlc@xxxxxxxxx";>dlc@xxxxxxxxx</A></FONT></STRONG></DIV></BODY></HTML>
</x-html>From ???@??? Wed Oct 06 18:26:57 1999
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From: "Larry Muir" <trdoptions@xxxxxxxxxxx>
To: realtraders@xxxxxxxxxxxx
Subject: Fwd: Jon E. Dougherty - Gold 'rush' pricing threatens banks
Date: Wed, 06 Oct 1999 16:47:25 PDT
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here is an article I picked up on the net
my analysis: be long gold...
everybody has to think for themselves...
read it if you want to and draw your own conclusions
>>Subject: Jon E. Dougherty - Gold 'rush' pricing threatens banks
>Date: Wed, 6 Oct 1999 15:13:08 -0400
>
>>
>This timely article discusses the hot issue of the
>day in the gold world. Jon E. Dougerty gets to the
>heart of the matter in this well written
>WorldNetDaily.com piece.
>
>>
>Gold 'rush' pricing
>threatens banks
>Short trading, manipulation
>to blame, charge some
>
>--------------------------------------------------------------------------------
>
>By Jon E. Dougherty
>© 1999 WorldNetDaily.com
>
>Several months ago, when Gold Anti-Trust Action
>committee chairman Bill Murphy warned congressional
>leaders that something was amiss in the gold market,
>few listened. And throughout the summer months,
>when Murphy's best industry minds were sounding the
>alarm that the market price of gold was being
>artificially manipulated downward, not many industry
>leaders, central bankers and gold bullion bank CEOs
>heeded their warnings.
>
>Today, however, Murphy said it is a different story.
>The industry is finally beginning to come around
>after the price of gold jumped from around $290 an
>ounce, where it has been for most of the past year,
>to its current level of about $315 an ounce.
>
>And today, he said, there is panic -- or, at a
>minimum, "near-panic in the gold loan industry."
>
>At issue is whether some of the world's most
>influential central and bullion bankers have
>attempted to manipulate the gold market to their
>advantage, and the advantage of key investors, by
>artificially depressing the price of gold while
>making short-term loans on millions of ounces of
>non-existent gold. For years, this appears to have
>been the case, Murphy said, because of the
>uncharacteristic "supply-and-demand" behavior of
>the gold market.
>
>Murphy voiced his suspicions to WorldNetDaily in
>May, saying, "I've been a trader for 25 years, and
>I began noticing that the gold market was just
>not trading the way it was supposed to."
>
>Over the past couple of years, said Murphy, when
>gold reached a plateau of $295-300 per ounce,
>"I began noticing that the market price for gold
>would always stop (at a certain level), lose, then
>come right back" to the previous level -- but never
>higher. That didn't follow the established rules of
>supply and demand, he explained, and caused alarm
>bells to go off in his mind, and in the minds of
>his industry gurus.
>
>Murphy said this led to an enormous short on gold
>futures -- in the neighborhood of 10 tons -- though
>banking industry specialists continued to advise
> banking executives that short positions on gold
>were only leveraged "in the 3- to 4-ton neighborhood."
>
>Now, Murphy said, key banking industry executives are
>waking up to the reality that it has become virtually
>impossible for the gold mining industry to keep up
>with "all of the gold futures contracts that are out
>there." Hence, as he and GATA predicted, normal
>supply-and-demand forces may now be poised to take
>over the gold market as European central banks
>move to limit gold leasing.
>
>"Gold bullion (in Australian and Asian markets) was
>quoted at $324.50/$326.50 per ounce late on Tuesday,"
>Reuters reported Oct. 5, "after trading as high as
>$331.50 -- the highest in two years amid a need by
>holders of big short positions to cover their bets
>or face potentially ruinous financial consequences."
>
>In a separate story, Reuters also reported that
>some Australian central banks might be short to
>cover gold loans.
>
>"As spot bullion failed to stay above the resistance
>at around $330 an ounce in late afternoon (yesterday),
>profit-taking and fresh buying emerged," said the
>report. "A bullion trading source said market talk
>that an Australian bank was facing huge losses from
>recent sharp gains in bullion prices triggered fresh
>buying as the bank would be forced to cover its
>positions soon."
>
>"Banking sources in bullion markets in Australia said
>most Australian banks running gold books were short
>'to some degree,'" Reuters said.
>
>"All of what has been occurring in the gold market has
>been the result of one-way trading," Murphy told
>WorldNetDaily. The recent announcement by the Bank
>of England to sell most of their gold reserves, the
>offer to buy short loan positions by some of the
>world's wealthy, and the announcement by 15 European
>central banks that they would cut back on their
>gold leasing "demonstrates that all the supply was
>coming from borrowed gold," he said.
>
>"All of a sudden, the European central banks were
>saying, 'We're going to restrict this borrowed gold
>and it's going to affect your lease rates,'" Murphy
> said. Consequently, "over the summer, the lease
>rates for borrowed gold rose from 1 percent to 3
>percent (per annum) right after the Bank of
>England's announced sale."
>
>Most European banks, Murphy believes, were unaware
>"of what they were getting into" by shorting so
>many gold loans, and the move to restrict further
>leases of gold was an attempt to stop the bloodletting.
>
>European banks, he said, were fooled by "the published
>figures that there were only about 4,500 tons of gold
>loans, but we've been telling people the loans are
>actually for something over 10,000 tons." Once the
>realization began to spread, he said, "it led to
>increased lease rates now of about 5-6 percent."
>
>"If you were borrowing leased gold all summer at $258
>an ounce with a 3 percent rate," Murphy said, "and
>now all of a sudden gold jumps to $315 an ounce at
>5 or 6 percent, what kind of a great loan does that
>turn out to be?"
>
>Worse, he said, the "global hedge funds that would
>be used to cover these loans are also massively short.
>The 10 million ounces of gold still out in these
>'structured loans' amounts to more than these
>mining companies either have in the ground or can
>produce in a reasonable amount of time." Even
>the Union Bank of Switzerland, Murphy said,
>announced yesterday that the hedge funds are
>"short 20 million ounces of gold."
>
>As of June 30, West Africa's Ashanti Goldfields
>was hedged 11 million ounces of production -- or
>roughly 50 percent of its reserves -- vs. 8.75 million
>on March 31, according to a report by John Hathaway
>of Tocqueville Asset Management. Using "conservative
>assumptions," the value of the "hedged book,"
>he wrote, was $290 million.
>
>However, that asset would become worthless "if gold
>traded at $325; at $350, the company would begin to
>face margin calls," Hathaway wrote. "The Ashanti
>hedge book is a bet that the gold market will
>remain quiescent and trouble-free. Ashanti's sanguine
>view is not unusual. Few in the industry are prepared
>for a spike in the gold price, especially one which
>does not retrace."
>
>"Ashanti's U.S. banker is Goldman Sachs, according
>to market sources, perhaps explaining why Goldman
>was rumored to be a big buyer of gold options l
>ast Wednesday, following gold's explosive
>two-day move," said a report from TheStreet.com.
>
>Murphy said gold would likely reach a level
>of "$400 an ounce in the near term if there
>is a massive sale or something, but in essence
>it will take $600 an ounce to clear the market --
>meaning to get it to a proper supply-and-demand
>equilibrium price."
>
>"I believe central banks discovered they had
>collectively a gigantic short position" in gold,
>via exposure to gold producers, Donald Coxe, chairman
>of Harris Investment Management and Jones Heward
>Investments of Chicago, told TheStreet.com.
>
>He said some mining companies increased their
>so-called hedging activities in recent years to
>combat the decline in gold prices.
>
>"The companies essentially took a loan against their
>future production and used the cash to maintain
>current operations," the report said. "But had the
>price of gold continued to weaken, it would have
>further depressed the future value of their assets,
>potentially forcing some producers into bankruptcy
>or into the arms of bigger firms, neither situation
>being particularly palatable to lenders."
>
>"If you're a producer whose cost (of production)
>is $270, and the price is $250, you're trying to make
>up the difference in interest income," Coxe said.
>"But if gold is at $220, you're out of business.
>Central banks looked into this and said, 'Are
>these guys good for it?'"
>
>Additionally, finance officials realized they were
>putting their own assets at risk -- both in actuality
>and via their exposure to hedged producers -- because
>of the uncertainty regarding future gold sales,
>Coxe told TheStreet.com.
>
>Jon E. Dougherty is a staff writer for WorldNetDaily.
>
>
>
>no spam here or any other kind of meat
>--------------------------------------------------------------------------
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