Re: [TNF] Fw: Don't look too good for JPM... from gold eagle...

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Its always intersting to hear rumors provided they are rumors, not
fantasies.  A good rumor requires reflection of a good command of
knowledge of how the process works.  To begin with, gold reserves, like
proven oil reserves, do not need to be mined to have value.  The mining
of gold is a separate contract from the ownership of the gold to be
mined.  3.7 million ounces of gold reserve has a value of less than $1
billion, a value arrived at by subtracting extraction cost and carrying
cost from anticipated market value at time of market delivery.  Not a
big deal.  The $44 trillion is notional value, which in itself means
potential for derivative losses as well as profits.  True, the fall of
the dollar is giving JPM/Chase headaches, but banks in the US do not go
bankrupt.  Besides the OTC derivatives are hedged so many time over, it
is hard to traced which which the fan is flowwing when the stuff hit the
fan. Bank may become insolvant, in whcih case FDIC would first step in
to take care of the individual accounts and eventually the Fed will step
in to take care of the corporate accounts. The derivative exposures will
most likely hit the bank holding company and will be handled beside
closed doors.  Greenspan has already made it very clear that no money
center banks will be allowed to fail, particularly if the threat of
failure comes from the US Treasury talking the dollar down.  The holding
company may fail, but the bank subsidiary will continue to operate.

When the dollar falls, by definition, gold goes up.  But its not all
that simple because gold prices in dollar is determined by many other
factors, such as interst rate, market balance, panic, derivative
unwounding trends, etc.  The key is no bank needs to deliver gold, they
can always deliver gold substitute - or dollars, of which there is never
a shortage unless the Fed creates one.  Greenspan told Congress last
week something that everyone knows but many have forgotten, that the
value of the dollar is a matter of national security, which compels the
Fed to follow the lead of the US Treasury.  So much for the
"independence" of the central bank.  Greenspan told Congress: "The
Secretary of the Treasury is the spokesman for the US on the dollar."
And Strong Dollar is still in the US national interst, though not too
strong.  Now market participants can guess wrong and they often do, and
remember, Soros has not made any killing since 1997 and has in fact lost
quite a bit in recent years.  The odds are, those who bet against the
dollar will lose their shirts, unless they are only interested in making
small change in day trading.



Sharefin wrote:
> The below is posted for interest and discussion. Accuracy is un-known, and
> source in also un-known, but interesting in view of the JPM-Newmont
> situation.
> ^^^^^^^^^^^^^^^^^^^^
> Sent: Friday, May 23, 2003 12:09 PM
> Subject: shares in hand? ///bgm
>
> [ECON] Rumors of TEOTWAWKI
>
> There are rumors (with some legs and truth to them) that Newmont Mining
> told
> JPMorgan/Chase (the govt's banker and illegal activities agent) to go
> 'fukthemselves' when JPM informed Newmont that it was raising margin
> requirements on a
> hedged gold operation that Newmont acquired when it took over another gold
> company.
>
> The gold mine in question has 3 million ounces of gold estimated to be
> in the
> ground. They sold, under contract, years ago, before being acquired by
> Newmont, 3.7 million ounces of gold at a specific price which allowed
> JPM to use the
> paper ownership of that gold to supress the price of gold during 2000 -
> 2002.
>
> Now, JPM has told Newmont that they want more money for the 'hedge' on that
> property. (as they are desperately trying to force the price of gold
> down below
> certain levels.)
>
> Newmont is playing hardball and told JPM, 'you want it, well, you got
> it.....the property is yours.....have a good time trying to recover the
> gold in the
> ground.'
>
> This is significant in two ways:
> 1) the mere fact that JPM has initiated higher margin requirements on its
> gold hedges shows how desperate they are (i.e. the gold price supression
> scheme
> is collapsing around their ears).
> 2) that Newmont told them to go 'shitgoldbricks for all the money you'll
> get
> out of us' means that the power that JPM had had in the past to intimidate
> (mafia style) the gold industry has evaporated.
>
> Further, for those who read French and German, the newsletters in Europe
> today are making a huge deal about this as proof that JPM/Chase (and by
> extention,
> Citi and BoA) are broke and underwater on 44 trillion dollars of
> derivatives
> mostly keyed to the price of gold and interest rates. These various
> newsletter
> writers are advising their readers to demand physical delivery of any
> shares
> in any company which they bought through the
> brokerages of these banks. Why? Well, so that they will actually be able to
> sell the shares. They (newsletter writers) a re saying that once it becomes
> known that the biggest bankruptcy in history is going to occur in June
> (JPM/Chase
> is expected to start a cascading counterparty failure among the top 15
> banks
> in the US in derivatives based collapse), that any shares held 'in the
> trader's name' will not be available for those who actually own them.
> The rumor being
> that the bank is using those shares it holds in your name for their own
> loans, shorting activities, and as collateral on other loans.
>
> Be warned, TEOTWAWKI starts in June.
>
> Look to Argentina to see what we face in the US of A.
>
> Yahoo! Groups Sponsor
> ADVERTISEMENT
> Click Here!
> <http://rd.yahoo.com/M=244522.3313099.4604523.1261774/D=egroupweb/S=1705015594:HM/A=1595053/R=0/*http://ashnin.com/clk/muryutaitakenattogyo?YH=3313099&yhad=1595053>
>
>
> TNF has two guidelines designed to maintain a positive tone.
>
> (1) If you take offense at another member's message, write to that
> person privately; if you think the moderators should be informed, CC
> your private message to thenewforum-owner@xxxxxxxxxxxxxxxx
>
> (2) Avoid on-list meta-discussions or co-moderation; address such
> matters to the individuals involved and/or to the moderators.
>
>
>
> Address to unsubscribe: TheNewForum-unsubscribe@xxxxxxxxxxxxxxx
>
>
>
>
>
> Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service
> <http://docs.yahoo.com/info/terms/>.