HSBC Holdings Ord Shs HBCYF

http://www.jsmineset.com/

[zwacknbassus]

Mr Sinclair 21.8.2007 "Let's get some important and practical definitions straight before I answer you. I will take this question and expand it into a revelation of the real purpose of the short of gold over the counter hedges. 1. The primary part and cause of all episodes of price inflation is monetary inflation. 2. Monetary inflation is another way of saying monetary accommodation or can be described as liquefying the monetary system. 3. Draining monetary inflation today in a global economy is prevented by practical market considerations. 4. Please go back to my missive on the SIZE of credit derivatives time bomb. I cannot call a computer simulation deal by private treaty a market. It simply is not. 5. With all the talk about housing and mortgages it is not that which the world central banks have serious concern. The real concern is about the meltdown in credit derivatives and default swaps, another form of credit derivatives. 6. Because of the shear size of the combined credit derivatives and commercial paper arena, the degree of liquidity assuming a problem (this could be it, if not it is coming soon) that would have to be injected by all central banks is unprecedented and at a spiritual level. 7. Problems such as what we have just witnessed will not go away by bluster and PR alone as the Fed is used to. If you do not believe that try to get a modest to large mortgage without having to pledge your fist born after extreme financial requirements. 8. There is some opinion that the Fed is counting on perception to calm the market while only daily large infusions of liquidity will accomplish that. So the answer is modest monetary inflation will bring on modest price inflation given a neutral economic situation. A global economy with credit derivatives everywhere requires a degree of liquidity to ride the category 10 storm and will cause price inflation of gargantuan consequences. Adding money (liquidity) only adds to the concentration of money. The haves get it and the have-nots remain having not. Liquidity is increased globally via transactions that primarily feed through the Intervention Investment Banks. That is what the Bernanke Helicopter Drop from the Electric Printing Press made in Japan did. This liquidity just as before will seek the markets where the best returns can be found. This will build the new and inextricable to most bubbles. They will primarily be the commodity market and currencies of choice, which does not include the US dollar. Now call this what ever you want, but the die is now caste and surely will be caste to even a greater degree. Here is another ingredient to why gold is headed into four figures. Add this to the prime possibility that Barrick will not suffer from over the counter derivatives even though Barrick is the mother of all derivatives via the strongest of all funding entities. Study the Ashanti and Newmont cases in order to know what and how it is coming. Because of over the counter short of gold derivative hedges, the major international investment banks who in fact were the principles on the derivatives as the buyers will end up controlling the global gold producers via many different methods of shareholder dilution. The company who has the strongest money behind the derivative hedge program will consolidate the field prior to its dilution experience. When the international investment houses own the production of gold what way do you think gold is going? The answer is certainly not down. You have to admit banks using others greed are damn smart, and never had any real risk in this strategy, ever. Regards, Jim