Here’s a zinger that might explain gold’s sudden spike since yesterday:
“Some of the State Owned Enterprises that stated their potential intentions to default were Air China. China Eastern and Cosco. Mainly in part because they took major derivatives losses over the past year but also, concerns are arising that the derivatives that they were sold by these foreign institutions are garbage, underwater and may never see the light of day. So why continue to pay for them? So the concern in the financial world is that holders of these losing products may just walk away, not unlike a home owner with a $600,000 mortgage on a home valued at $475,000 deciding to just hand in their keys. However, read on…this has nothing to do with morgtgage backed products. This time, the concern may be over Oil.
They (Reuters) cited 6 foreign banks. Where the story gets really intriguing is that among the major derivatives providers according to Reuters but also widely known in the industry, are Goldman Sachs, UBS and JP Morgan.
Here is the looming problem. These products are worth billions. One report that a good friend of mine did showed that if Goldman Sachs for example were to take this one up the rear, they could stand to lose 15 billion dollars. (This number is by no means confirmed)……. I would imagine that China, being the biggest purchaser of US debt, could surely collapse the US institutions that were at one point deemed too big to fail if they decide to go ahead with this plan.
This is why I don’t take tonight’s news that China purchased 50 billion dollars of IMF bonds lightly. In fact, I take it very seriously. This is why I take the buzz on the floor over the past two days very seriously as well as I do the incredible spike in Gold today. Most importantly, I do not take lightly the recent 25% correction we have seen in the Chinese Stock Market. Can all these events be interconnected some how? Is the Chinese stock collapse giving us a hint?”
This article… oh man, I’ve lost my opportunity to buy gold. There’s not gonna be a late Fall dip. Better go to the store and buy sugar instead.
Jon Nadler over at Kitco.com doesn’t see it that way though. People in China are different than people in India and everywhere else he says. Well, here, read this small bit from his column today:
We do note however, that China will not become a simple replay of India. China might overtake India in some aspects, but it will not behave similarly. It never has. China will not become a buy, buy, buy, and then hold and buy some more equation.
We anticipate that given the Chinese mind set, the gold and silver trading activity will turn into just that: trading. Buying, followed by selling, followed by more…of the same. Thus, those who are banking on the billion-plus Chinese potential buyers to remake the gold market in some radical way defined by incessant buying, better also prepare themselves for the waves of speculative, profit-taking selling that the Chinese will very much prove to be capable of, on occasion.
MF Global had quite a few of the smartest men in the financial industry managing their assets. They also had access to the ultimate insider info, because their CEO, Jon Corzine, was a Federal Reserve Bankster insider. So, how could so many of the nation’s brightest make such boneheaded decisions?
Once again I want to emphasize that for every loser in the financial derivatives market, there is an equal and opposite winner, making tons of cash.
Since 70% of the 1500 trillion dollar derivatives market is bets against interest rates going up or down, one would think that the former Chairman of Goldman Sachs would have some kind of clue on what the banksters were doing with interest rates. Some would argue that the loss of $40 billion dollars was a huge mistake. I would argue that there are no mistakes when it comes to the Satanic Psychopaths!