Joltin,

That last post of yours was much more clear and while I disagree with some of it from just my opinion there are other parts of it that are just mistaken.

First, for the most part, I do look at nothing but the big picture. It is a fundimental part of being an investor who invests with fundimentals as I have stated I do.

No where have I said gold has peaked. I was pointing out reasons for its latest downturn which was due to manipulation. Manipulation is a short term effect that only delays the inevitable.

Gold is the ultimate form of money, it can never comprise too large a percentage of a nations reserves. It does not belong to the central bank, as you state, but to the people of that nation, thus no central bank should be aloud to sell it off.

If the central banks of the world had not been suppressing the price of gold by heavily selling then it would be worth far more today. Thus creating and preserving the nations wealth, which is the function they were supposed to fullfill. Not the opposite, selling the nations wealth off, which is what they do.

Now to get to the part of your post that is really mistaken.

When a bullion bank or large institution goes to a reserve bank to LEASE gold, it does not have to put down margin or pay the full amount of the borrowed gold. All it does is request to borrow X number of ounces for which it agree's to pay the supposed market gold LEASE RATE or more legally, the gold BORROWING RATE. It is given this gold if the institution is deamed credit worthy. At the end of the lease period the institution agree's to return the LEASED or BORROWED gold plus the applicable interest on the lease. This is how the FED banks and US Treasury where supposed to make interest on their gold asset.

In the case of the US, I stated US Treasury because the US FED is a private institution, comprised up of a number of banks who own voting shares in it. It is actually the US Treasury that owns the gold and not the US FED.

In the case of the 1 month gold lease rate, which is negative now, the US Treasury and other central banks are actually paying investors to borrow gold.

They would not call it LEASING or BORROWING if an institution had to put up the total amount of faux currency plus margin to get it in the first place. That kinda defeats the purpose of LEASING and BORROWING.

Now this bullion bank or other large institution, who has BORROWED the gold and sold it on the spot market to raise cash, is free to invest this cash in a much higher yielding instrument. This would not be hard to do since the gold BORROWING rates have traditionally been very low compared to other borrowing costs of money.

This strategy is the little as yet known, GOLD CARRY TRADE. On top of the much higher interest rate this institution received from the cash it raised from it's sale of BORROWED bullion that it subsequently relent out. It also had the bonus as long as the price of bullion went down of being able to replace that bullion to the central bank at a much lower cost. It thus pocketed the profit derived from the difference in selling price and rebuying price, a perfect short.

Now with regards to your very last line. Me arbitraging differential interest rate charges, between money borrowed on my margin line of credit vs another higher yielding instrument, is certainly not them giving me a negative interest rate. In simpler terms for you to understand, it is not them giving me money to borrow from them.

There is no risk involved if they are going to give me money to borrow money from them. Even if I lost it all, I would never have to repay it. Eventually the interest they give me would cover the amount of the initial loan.

This certainly cannot be said for arbitraging differential interest rates where there is plenty of risk. Especially in todays market.

I hope this post has corrected the misconceptions you had on LEASING & BORROWING.

Now perhaps you can go out and apply yourself correctly.

regards,

F.F.