are us banks shorting ozzie goldies - (boa), page-26

Rowingboat

I am having a hard time getting my head around these things to feel sure what is actually happening.

However, when a large foreign bank is involved in shorting small Australian companies then questions have to be asked. The power of these banks with their sources of relatively free money is so vast that there is no possibility of there being a level playing field in the market place. The information asymmetry between the banks and the market place is massively loaded on the side of the bank.

Is this why we have an open border to foreign capital? So that they can short our companies? What tax do they pay on the gains? Probably nothing. This is another con, like the foreign takeover of Myers and the subsequent transfer of $1.5 billion tax free overseas in one swoop.

I really think this is an issue that needs urgent addressing by the government. The companies being shorted are pretty small, so there is no way the small investor has any idea what is going on to base their decisions. What they are seeing is falling share prices and general panic. I wonder who has been buying these shares at the peak of the panic, whose timing is known to only one party, which is BOA?

I do, however, take note that some smart money was leaving our goldie market prior to this general selldown, namely Sprott and Baker Steel. There has been a recognition that Canadian goldies were over-valued for a number of reasons, one of which related to the high premium paid for Red Back Mining which subsequently got passed into the share prices of other potential takeover candidates in Canada and overseas. In Australia the high prices went to the west African juniors (such as GRY, and AMX especially).

The other chief reasons for a pullback of Canadian miners are the high CAD, and higher input costs (especially oil) which has lowered their profitability in CAD terms.

Perhaps shorters recognised similar factors in the Australian goldies and did a co-ordinated raid on our market, despite the fact that we have lower PE ratios applying to our goldies to what is the case in Canada.

While I do not generally like conspiracy stories, I think that one way of somewhat keeping the gold price down is by under-valuing the goldies since there is a degree of relationship between gold and gold production companies.

Gold is money and by lowering the return on gold money printing (ie gold mining) you could attempt to influence negatively the perceived value of gold money. In doing this governments would be making their paper money more attractive relative to where they might have been compared to gold money. The extent to which this is so needs some more thought.

I think our government and newspapers ought to be informed about this co-ordinated shorting of our goldies by a major international bank, and the creation of what is clearly near panic conditions. I have no idea why there should be a panic selldown of the overall market today. Europe, US, Japan and Chinese market were all up (but not HK). The one negative was the appreciation of the AUD which makes our exporters and import competing industries less competitive.

So, after all this rambling it is off to zzzzzzzzzzz I go, probably more confused than ever, when USD POG is "only" 1549 (AUD1413.97 at AUD/USD 1.0955).

loki