Oldtent Archives 2007 - 2008

Some talk here awhile back about a change in metrics…..About the only metric I see changing is volatility….You remember when we would wet our pants over a $10 move in gold??? Now we have to have $100 moves to cause the same reaction…We were told years ago to expect moves like this…..both up and down…..the days have seemed to have arrived……If our teachers were correct…..we’ll have many more days like the last couple to deal with…..Raging bulls appear one minute…..bears the next. Bears may win some battles but…..the bull will win the war.

All the best.—–aggie.

I am just catching up here. Yes I wholheartedly agree with you last post. And on top of that I would not be down here establishing a base without many of our great tenters ..no way no how. We will be fine here…hold your heads up high ..your tenters!

Excellent piece from Midas tonight. Thank you.

Just a thought here.
Don’t worry so much about the Dow rising so much and us having a pennant wave. I think most of us want some semblance of sanity to prevail. Today was as good a day as any to start the rise of the Dow to Zimbabwe proportions. Let em go….let them destroy the currency ..we can’t stop them. But we have seen what gold can and will do many more times in the future. Hell I hope sand gets to 100 dollars a ton HAAAA

Goldrunner, Ment17, or Grin needs to remember…it was to a large extent their efforts that built this place and to a large extent their efforts that gave goldeagle credibility……You see without their efforts…..none of us would be at his place talking today…..These guys have been true believers in and advocates of real money gold and silver for many years…..Without their direction and vision…..I would have shitcanned any investment in this sector long ago.

All the best.—–aggie.

– right on options expiration–  as the SEC and TREASURY bought the friggin market this evening–

 THAT’s MANIPULATION! 

but no conspiracy — just a bunch of greedy politicians and government officials continuing to make stupid decisions

As DG would say, I got small my SM puts today.  I can’t hold bearish positions right now with that type of news.  I still don’t see how every country’s CB is going to back these bad business dealings done by banks and insurance cies, but for now I’ll step aside.  Clearly the SM almost fell into the soup today.  VIX spiked!

Now as the title suggests, we are having a bank run in the money markets. I believe it was Monday [so much has happened so fast that I can’t keep my days straight] we saw a large money market fund “break the buck” and trade down to .97 cents. Today Putnam has closed its institutional MM fund to redemptions [$15 Billion], Bank of New York Mellon has followed suit with their institutional fund, [State Street bank has chimed in with all is well, so why chime in?]. Now we know why T-Bill rates went NEGATIVE yesterday, that’s right NEGATIVE! Huh? How can that be? The only time in history that rates were negative in the US was just before the “bank holiday” in 1932. People were so scared that they would lose their monies held in banks that they invested in T-Bills and paid more than par. Par is 100, you pay a discount at purchase and your T-Bill matures at 100, the difference is your interest rate. Yesterday T-Bills traded over par, these investors are willing to park money at a guaranteed LOSS. They just want to guarantee how much the loss will be! Money is being pulled out of money market funds out of fear, fear of big losses and lack of liquidity. This capital has massively flowed into short term Treasuries to the point where rates are 0% or negative. This IS a bank run by institutions, Joe sixpack will eventually see this, does history repeat itself? Bank holiday? I think it is obvious.

Let’s go one step further in the logic department. OK, I’ll admit I thought Gold was a good investment prior to the convulsions we are now seeing BUT, if an institution can only get 0% or has to “lock in a loss” in a T-Bill, wouldn’t an ounce of Gold that pays no interest be a better investment than a piece of paper that pays no interest? Especially since that piece of paper is only redeemable in more paper? Besides, what will this new paper be worth when received? Ahhhhhhh that is why very little Gold or Silver stands available for sale anywhere on the planet, it won’t come out of hiding for pieces of paper! Now I get it! It looks like investors are now getting it in a big way based on the action of the last two days.

The last two days in the metals were nothing, NOTHING! [now I sound like Cramer]. No really, the last two days were only tremors, little ones. When it becomes obvious that the monetary system must change, it will also be obvious which asset class alone benefits. In the past when a currency failed, or a monetary system changed there would be huge losses by some and huge gains by those who foresaw it coming. These were always on a country by country or regional basis. This time it is on a GLOBAL BASIS. This will affect everyone on the planet. This will be the biggest redistribution of wealth in the history of history. This is for ALL THE MARBLES! This will make those with modest means and the correct investments, KINGS. This will make those with millions or billions and the wrong investments, PAUPERS. The coming moves up in metals will make the last two days look like flatlines on a chart. Regards, Bill H.

Just keep it real — as I be white trash from the sticks of missouri

….and what about Elvis ?

;0

U.S. government bailout tally tops $900 bln

Sept 16 (Reuters) - The U.S. Federal Reserve stepped in to rescue insurance giant American International Group from bankruptcy with an $85 billion loan on Tuesday, the latest in a series of bailouts and loans for the financial and housing sectors.

The action brings the total tab for government rescues and special loan facilities this year to more than $900 billion.

Following are details of actions and amounts.

* $200 billion for Fannie Mae and Freddie Mac . The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.

* $300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.

* $4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.

* $85 billion loan for AIG, which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.

* At least $87 billion in repayments to JPMorgan Chase & Co for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers . U.S. Treasury Secretary Henry Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.

* $29 billion in financing for JPMorgan Chase’s government-brokered buyout of Bear Stearns & Co in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.

* At least $200 billion of currently outstanding loans to banks issued through the Fed’s Term Auction Facility, which was recently expanded to allow

-END-

Jesse:

The US Dollar Will Require a Bailout of Epic Proportions

jessescrossroadscafe.blogspot.com/2008/09/dollar-and-its-dominance-is-upper-limit.html

***

Overall, I really enjoyed your level headed post.

Sure the world is not free of conspiracy, but to push it out to every possible action in the world is not healthy thinking.

CT are easy to buy into b/c they require no proof and are almost impossible to disprove.

The challenge is to figure what was the real explanation, which unfortunately, is also nearly impossible.

Crosby Capital Bids A$182 Million for Medusa Mining (Update1)
By Jesse Riseborough

Sept. 19 (Bloomberg) — Crosby Capital Ltd., a Hong Kong- based investment bank, offered a A$182 million ($146 million) in cash for Medusa Mining Ltd. to gain control of a gold mine in the Philippines.

The offer of A$1.15 a share is 21 percent more than Perth- based Medusa’s closing price yesterday, Crosby said today in a statement to the Australian stock exchange. The offer is subject to Medusa allowing Crosby to study its finances, it said.

Medusa owns the Co-O gold mine in the Philippines where it’s seeking to produce about 60,000 ounces of gold a year from mid next year. Gold posted a record two-day rally yesterday on surging investor demand for a haven from credit-market turmoil.

Medusa jumped 12 percent to 95 cents yesterday on the exchange. The stock has dropped 35 percent this year.

The company wants to boost output to more than 100,000 ounces annually by 2010. It produced 19,000 ounces in the 12 months ended June 30.

Crosby owns 0.3 percent of Medusa, it said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net

Special Status and the $138 Billion Riddle?

by Rob Kirby

We are living in heady times. On Monday morning, something VERY strange occurred:
$138 Billion Post-Bankruptcy JP Morgan Advance to Lehman; At Least $87 B Repaid by Fed

Twp readers, Steve and Julian e-mailed us about the Bloomberg story below, that the Fed repaid JP Morgan for an advance made to Lehman after its bankruptcy filing:

Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to settle Lehman trades and keep financial markets stable, according to a court filing.

One advance of $87 billion was made on Sept. 15 after the pre-dawn filing, and another of $51 billion was made the following day, according to a bankruptcy court documents posted today. Both were made to settle securities transactions with customers of Lehman and its clearance parties, the filings said.

The advances were necessary “to avoid a disruption of the financial markets,’ Lehman said in the filing.

The first advance was repaid by the Federal Reserve Bank of New York, Lehman said. The bank didn’t say if the second amount was repaid. Both advances were “guaranteed by Lehman’ through collateral of the firm’s holding company, the filing said. The advances were made at the request of Lehman and the Federal Reserve, according to the filing.

Lehman disclosed the advances in a motion seeking court permission to give JPMorgan’s claims special status in its attempts to recover any advances. Lehman said that if that status isn’t granted, JPMorgan may not be able to make future advances needed to clear and settle trades.

“The granting of the relief requested is in the best interests of the estate and its stakeholders and the public markets,’ Lehman said, adding the advances would be “essential to Lehman’s customers.’

JPMorgan may make future advances at its sole discretion, all of which would be guaranteed by Lehman under its agreement to pledge collateral, Lehman said.

JPMorgan said in a statement in court documents that it has had a clearing agreement with Lehman since June 2000, and had pledged its collateral under an Aug. 26 guarantee.

Since the Federal Reserve reimbursed J.P. Morgan, presumably and ostensibly, with public monies [that taxpayers will be on the hook for] – doesn’t the public have the right to know what that 138 billion was spent on?

Investment banks are dropping like flies, owing to their involvement in credit derivatives – this is a fact.

J. P. Morgan is – HANDS DOWN – the largest derivatives player in the world with a book of 90 Trillion in notional value at March 31, 2008 – with 9% of the book composed of Credit Derivatives. That amounts to a cool 8.1 Trillion worth of Credit Derivatives. We know this from the Office of the Comptroller of the Currency’s Quarterly Derivatives Report – pg. 24

Wouldn’t you suppose that would be enough to bury any institution?

Who knows, maybe it did. We only learned about the 138 billion advance from a court document where Lehman was seeking to give claims of J.P. Morgan “special status”.

I must admit, this looks special indeed:

It’s only one generation. That’s recent in my books.

financial stocks now.  I just wanted to clarify that my Goldtent postings of 16:07 and 18:14 on 15 September were not about buying into “the financials” - it was  more specifically about buying into dividend-yielding and dividend-growing stocks of one or more of Canada’s chartered banks, as per the Rob Carrick article linked below.

If one talks about “the financials” in an international sense they are, in my opinion, a bunch of rotten apples.  But actually there is one thing I like about the international financial rotten apples now and that is that their rottenness is helping the price of gold rise.  For that I love those financials.

But I was talking about something different at 16:07 and 18:14 on 15 September.  I was talking about dividend-paying Canadian bank stocks which I expected to get beaten down in share price in the next few days because of the negative psychology associated with the rotten financial entities which tend to be located around Wall street rather than Bay Street.  As the Canadian bank stocks got beaten down because of ripple waves out of Wall Street, I thought they could be a good buy, in addition to the fundamental reasons that Rob Carrick describes in the link below.

Remember too that I may be older than you, so I may be more attracted than you to having one small segment of our portfolio devoted to some stable conservative dividend-yielding equities, like Canadian bank stocks, to complement the more Las Vegas-like PM portions of our family portfolio.  That’s why I related to the Carrick article.

Yesterday we bought some more shares in a PM junior (VGQ.TO), and we also want to buy more Paramount Energy Trust (a pure natural gas play), but in addition to these temporary priorities, I still have  some Canadian bank stocks on our buy list for the “widows and orphans” objectives of our portfolio mix.  I’m not promoting Canadian bank stocks - just promoting portfolio diversification (beyond being solely in PM-related entities)  for someone of our age.  Cheers.  Equiz.

http://tinyurl.com/5dlw28