l'environnement de l'époque c'est la crise de LTCM..sept 1998 . et gold smatché comme jamais .
se pointe Peter Hambro de peter hambro mining ... tres au courant de ce qu'on qualifiera apres coup de gold carry trade
ce topo de l'époque est savoureux de justesse ... et d'humour !
source midas/ le métropole café
pour les anglophobes, traduction automatique, ici
When asked how GATA came into being, my standard response has been to cite the gold trading action following the blow up of Long Term Capital Management in September of 1998, coinciding with a number of other factors brought to my attention. One of them was
"Goldilocks and the Three Bears," penned by Peter Hambro and sent to me with The Café only three weeks old. Subtly this ditty helped me understand this gold market way back when.
I thought you might get a kick out of what Peter wrote … from one of the very first MIDAS commentaries…
September 23, 1998 - Spot Gold $289.60 up $2 - Spot Silver $5.04 up 15 cents
It was my hope right from the get go that we would be able to attract some of the best and brightest minds in the gold industry; the concept being that the information flow from consistent, well informed sources, the interpretation of that information and the speed of our interaction on the internet might give us an investing edge. I am well aware that your confidence in our understanding of what is going on in the gold market place is crucial to the value you place on the Midas commentary forum. The bottom line is: does the information presented here help you in your investment decision making decision process?
I am pleased to say we are making quantum leaps in that direction. First, you were able to read Blake Joyner's commentary at the Dos Passos Table and now we are fortunate to have a piece by Peter Hambro. Peter, who is very well known in the gold industry, lives in England and owns Peter Hambro & Co.
On September 7th, I posted our first thread ( you may read it in the commentary section after Midas ) called, " Gold Shortage May Trigger Price Rise ". This piece was published in the London Telegraph. In it, Peter Hambro agrees with Frank Veneroso that the hedge funds may be short 1,000 tonnes of gold ( Hello Mr. Meriwether ). In addition, Peter is also well aware that many of the Australian and South African gold producers have already sold their future gold production from 3 to 10 years forward. Those sales have hit the market place ( past tense ) and cannot be sold again. And if you read between the lines of the London Telegraph article, the very well informed Peter says that " the unprecedented bear market in gold could be coming to an end as European central banks stop selling their holdings as EMU approaches". It is in that context, and its very bullish implications, that Peter Hambro sends Le Metropole members this story:
Goldilocks and the Three Bears
Are you sitting comfortably? Then I’ll begin. I am going to tell you the new story of Goldilocks and the three bears.
Once upon a time there were three bears called Big Bear, Miner Bear and the Mother of all Bears.
The Big Bear, also known as the Central Bank Bear, has houses all over the world. He spent a lot of time in Australia a few years ago but recently has been seen most often in some of his little houses in Holland, Luxembourg and Belgium. Very soon he will go to Washington for the annual fake porridge feast given by IMF / World Bank.
There he will be welcomed by his friends, the investment bakers. These investment bakers are specialist bakers who cook up all sorts of things that look and taste like porridge but are not the real thing. In Washington they will give the Central Bank Bear a gin and tonic and tell him what a wonderful guy he is. They don’t really mean this, though. All they want is to do is get their hands on the real porridge that the Big Bear has got in his store rooms. The best way they can do this is dress up one two of their number as – well, we call them Teddy Bears for short – and get them to tell the Big Bear how nasty and old fashioned porridge is now. If he wants to have something really nice and modern in his store room, he should have some high-yielding Russian GKOs, a few Bhats and Ringits, a good helping of derivatives and a basket of promises like the ones he got in Lisbon a few years ago. In fact the investment baker is so kind that he will even offer to swap these tasty promises for porridge at a very reasonable rate.
This wheeze of the investment bakers doesn’t always work though. The careful store room clerk in the Big Bear’s Paris house said on Reuters last week that all the Euro porridge had now been swapped and that he would "oppose …in a co-operative perspective… any disruptive actions that might be planned".
What the investment bakers do with the porridge we’ll talk about later. Miner Bear also has houses all over the world and the one he has been using most recently is a big one in South Africa. Miner Bear probably will not go to Washington because he is too busy digging new holes in the ground, looking for sources of new porridge. Miner bear is more than a bit confused. No sooner has he spent millions digging holes in the hope that the price of porridge will go up than he sells yet-to-be mined porridge and drives the price down again. He ought really to consult a good veterinary psychiatrist, especially one who also understands the international porridge market. I must remember to recommend him to my friend in New York who so successfully treated the Hunt’s bull in 1979.
The Mother of all Bears, also known as Cyber Bear, mostly lives in trading rooms of hedge funds and nobody is allowed to know where these are located in case somebody realises that there are only imaginary and have no store rooms at all. Cy, as we call her, certainly won’t go to Washington. She doesn’t need to. It is she who is paying for the investment bakers’ gin and tonics and the Teddy Bear suits. That is because it is she for whom the investment bakers are borrowing the porridge.
Borrow porridge? That’s a funny thing to do. But why not? Its interest rate is very cheap, it’s a small market and a lot of Teddy Bear stories will keep the price down at bonus time. That’s a great idea! Much better than borrowing horrid old Yen, which also has a low interest rate but also has Mr. Eisuke Sakakibara to prop up its price. So Cy borrows porridge, sells it and buys Yen to repay the Yen she borrowed and sold last year. Of course Cy is a bit worried that the Dow Jones stocks, the Korean bonds and the Indonesian promissory notes that she bought when she originally sold the Yen have not done too well; but she’ll think about that when she has to. No need to worry so long as Big Bear is at the bar in Washington and does not want his real porridge back.
And then there is Goldilocks! Simple, pretty little Goldilocks who works hard every day and, rather than rely on the promises that Big Bear makes about the amount of porridge in his store room, prefers to have some of porridge of her own. So she goes out and buys it - 3,000 tons a year, some say – and wears it round her neck and on her fingers. It’s a bit sticky but has some magical properties. In India, she believes, it will even get you married.
And then what happens? Well, children, that's the point of the story. Big Bear didn’t much like the investment baker’s fake porridge in Washington this year. It tasted too thin and watery. No substance. And he’s got a terrible hangover and can’t take any more gin because the store keeper in the Moscow house gave him too much home-made vodka. "Who’s been eating my porridge?" said the Big Bear when he gets home and finds the store room empty. "Sorry, Mr. Governor Bear, it was me." says Goldilocks "But I bought it fair and square from Cyber Bear and unless she pays me a huge sum of money, you’ll have to wait until Miner Bear delivers some more from the mine".
Gosh! I wonder what will happen. Where will Cy get the money from? But I’m afraid you will have to wait until tomorrow night for the next installment.
Good night children, everywhere. ©Peter Hambro.
And good night to you too, Peter