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If someone is into the gold market this might be of interest.
If you don't like the gold market don't read further.
>From: LePatron@xxxxxxxxxxxxxxxxxxx
>To: trdoptions@xxxxxxxxxxx
>Subject: David Marantette - U.S. Gold Sales / Patrick Bloomfield -
>Invisible hands squeezing gold
>Date: Tue, 19 Oct 1999 07:59:41 -0400
>
>Le Metropole Members,
>
>David Marantette has served commentary at the Dos
>Passos Table, entitled, "U. S. Gold Sales." Some
>surprising revelations.
>
>"Who in this country is buying this Gold? This may
>shock you. The biggest area of the country that is
>buying gold coins is the Silicon Valley area in
>California. Believe it or not, the computer people,
>the producers and sellers of computers, are the
>biggest buyers of gold coins. What do they know
>that we don’t know?"
>
>The following article was in Canada's Financial
>Post yesterday:
>
>
>Invisible hands squeezing gold
>Human nature may account for some unusual price moves
>Patrick Bloomfield
>Financial Post
>October 18, 1999
>
>
>"Talk about invisible hands shaping the markets! My guess
>is that we are seeing some very invisible hands at work
>today, but far from the kind envisaged by Adam Smith.
>
>Gold markets provide one illustration.
>
>A little more than week back, Chris Thompson, chairman
>of South African mining house Goldfields Ltd. was
>telling the world that this mining group, the world's
>second-largest gold producer, had bought back the
>bulk of its gold hedge position because it expected
>prices to rise. This past Friday Mr. Thompson
>reinforced his message: "Having looked at all the
>fundamentals of the current gold market, it seems
>inevitable to us that much higher gold prices are
>available."
>
>His words made some sense. Yet, the same day, the
>London spot bullion price continued its modest decline.
>
>Why? After all, the significant excess of global
>demand for gold over newly mined gold continues.
>Goldfields and its fellow South African mining giant,
>AngloGold Ltd., have been reported to be buyers. The
>major central banks had agreed to cap their selling,
>leasing and derivative business. And the scrap market
>ain't what it used to be last year.
>
>It seems a very fair guess that somebody was quietly
>feeding the market. And that gives at least a little
>substance to those rumours that continue to circulate
>of the U.S. Federal Reserve having baled out a major
>investment dealer by delivering on a gold contract
>due and also being prepared (with other central banks)
>to keep gold bullion markets in check.
>
>For asking the question that led to this line of
>thought (and for supplying some of the answers), I
>am indebted to a citizen of Dallas called Bill Murphy,
>who among other activities is chairman of an
>organization there called the Gold Antitrust Action Committee.
>
>Now I freely admit that this action group has a certain
>thrust, in that its members have long believed that there
>were too many darned invisible hands directing the
>world's bullion markets as it was, and that, among
>other results, this was going to precipitate a massive
>bear squeeze -- which it did.
>
>That said, there is sense to the suggested sequel,
>that the squeeze continues, but under the covers,
>so to speak.
>
>I also wonder whether it was wholly coincidence that
>Fed Chairman Alan Greenspan's chose to deliver his
>little homily just last week on the need to test
>the risk assumptions in those fancy little
>computer-driven asset diversification models.
>
>One has only to look back to the Long Term Capital
>affair 12 months ago to recall that this highly
>sophisticated hedge fund was basing its major
>currency and bond bets on models set up by some
>very high-powered people. Yet those bets still
>proved losers.
>
>I am sure that Mr. Greenspan had a like thought
>in mind when he pointed out the damage that can
>be done to any sophisticated model by abrupt
>changes in human sentiment.
>
>Did his words of caution also help accelerate
>one of those changes in human sentiment? Only
>time will tell.
>
>But to revert to my original topic, Ashanti
>Goldfields Ltd. told analysts in its recent conference
>call that it had done extensive sensitivity testing
>on its gold hedging and derivative positions. But
>that was not enough to spare it from margin calls
>as human sentiment changed and gold prices
>leaped upward.
>
>In combination with other factors, markets have
>certainly taken Mr. Greenspan's musings seriously.
>You can check out the extent of the current risk
>rethink by going to the web site (www.yardeni.com)
>of Edward Yardeni, Deutschebank Securities chief
>U.S. economist and market strategist.
>
>A week ago his numbers already suggested that the
>premium over 10-year bonds being paid for the
>Standard & Poor's 500-stock composite had fallen
>below 40% from a recent peak of near 50%.
>That was when the S&P was at 1275, some 28 points
>higher than last week's dismal close.
>
>If the premium were to slip further to a more normal
>20%, then that would imply a further decline of 170
>points or so off Friday's S&P closing level.
>
>In the market's current mood, the risk is that bargain
>hunters will hold their fire for that kind of target
>-- or a lower one. Last week, even buyers of Internet
>stocks had stopped to think." End
>
><A HREF="http://www.lemetropolecafe.com/scripts/products.cfm"Le Metropole
>Cafe</A>
>
>All the best,
>
>Bill Murphy
>Le Patron
>www.LeMetropoleCafe.com
>
>
>
>
>
>
>
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