Once in Morgan's hands, Amaranth's losing trades became winners overnight


How the Wreck
From Amaranth
Was Contained

J.P. Morgan and Citadel
Swooped In, Assumed Risk,
Proving Markets' Resilience

* * *

By Gregory Zuckerman
The Wall Street Journal
Thursday, October 5, 2006

As Amaranth Advisors scrambled to unload its sinking energy investments last month, here is what potential bidders saw:

There were thousands of complicated contracts at the Connecticut hedge fund to buy and sell natural gas, power generation and oil in increasingly jittery markets across the globe. Though some were regulated by futures exchanges, others were one-on-one deals with two dozen or so banks and other investors. Some were in markets with relatively few buyers and sellers, making them vulnerable to big price moves.

The money isn't as good as the coffee anymore


5:36p ET Wednesday, October 4, 2006

Dear Friend of GATA and Gold:

Who says there's no inflation?

Maybe only Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. Certainly not the makers of Chock Full of Nuts coffee, whose jingle used to proclaim, "Better coffee a millionaire's money can't buy."

But those were the old days ... like a few months ago. The coffee company has updated its advertising to fit the age of infinite money. Now the company sings of its product, "Better coffee a BILLIONAIRE'S money can't buy."

Europe's central banks sell less gold than target


So where did all the metal dumped over the last week come from? Would you happen to know, Secretary Paulsen?

* * *

From Reuters
Wednesday, October 4, 2006


LONDON -- Europe's central banks sold just 393 tonnes of gold against the full quota of 500 tonnes in the second year of an agreement that regulates bullion sales, precious metals consultancy GFMS Ltd said on Wednesday.

Turk interviewed on strange selloff; new Grandich Letter


11a ET Wednesday, October 4, 2006

Dear Friend of GATA and Gold:

GoldMoney's James Turk, editor of the Freemarket Gold and Money Report and consultant to GATA, is interviewed by Resource Investor's Jon A. Nones about gold's strange selloff on news of North Korea's plan to begin nuclear testing. You can find the interview here:


And in his latest letter, Peter Grandich argues that nothing about the fundamentals of the precious metals has changed, even as there is likely to be a lot of tax-loss selling of mining shares. You can find the new issue of the Grandich Letter here:

Michael Nystrom: The Dow's phony new high


11:57p ET Tuesday, October 3, 2006

Dear Friend of GATA and Gold:

In a new essay market analyst Michael Nystrom elaborates wonderfully on a point made earlier today on ROB-TV by Jeffrey Saut of Raymond James Associates. Nystrom shows how the new high recorded today by the Dow Jones Industrial Average is more than misleading; it is active disinformation. Nystrom's essay is headlined "The Dow's Phony New High" and you can find it at Nystrom's Internet site, BullNotBull.com, here:

Despite blue-chip gains, hedge funds are faltering and closing


As Jim Sinclair was saying....

* * *

Despite Blue-Chip Gains, Hedge Funds
Increasingly Are Faltering and Closing

By Anita Raghavan,
Ianthe Jeanne Dugan,
and Gregory Zuckerman
The Wall Street Journal
Wednesday, October 4, 2006

As the Dow Jones Industrial Average climbs to record heights, many hedge funds are stumbling and more than ever are closing shop.

The latest to falter: Vega Asset Management. One of the world's largest hedge funds a few years ago, Vega has suffered losses from a bad bet against U.S. bonds, and is now down roughly 75% from its peak two years ago to about $3 billion in assets. The firm says it has no plans to cease operations.

More notice for U.S. government's political intervention in markets


9:47p ET Tuesday, October 3, 2006

Dear Friend of GATA and Gold:

More financial market participants are sensing or even recognizing the increasing intervention in the markets by the U.S. government and its agents. Today's most telling observations on this score may have come from Jeffrey Saut, chief investment strategist for Raymond James Associates in St. Petersburg, Florida, as he was interviewed by (who else?) Jim O'Connell on the "Market Wrap" program on ROB-TV in Canada.

Ted Butler: Extreme liquidation


8:27p ET Tuesday, October 3, 2006

Dear Friend of GATA and Gold:

Silver market analyst and GATA consultant Ted Butler argues in his new commentary that there never really was a "bubble" in commodities and there sure isn't one after the market action of the last few days, now that most speculative positions have been wiped out and the prospects for long positions are excellent. Butler's commentary is headlined "Extreme Liquidation" and you can find it at GoldSeek's companion site, SilverSeek, here:

Jim Sinclair: Politically inspired market intervention may break the bank


Black Boxes and Dead Hedge Funds

By Jim Sinclair
Tuesday, October 3, 2006

The action in the marketplace speaks to bankruptcies among hedge funds that are not evident to the public or even to those professional traders I know.

Sure, those in gold and energy on margin beyond their capacity are being liquidated into the marketplace. But it is the hedge fund managers with their damn algorithms who have hit the fan hard -- and you can guess what is flying all over the place.

Asian Development Bank economist urges big exchange rate deal


By Shamim Adam
Bloomberg News Service
Tuesday, October 3, 2006


SINGAPORE -- Global leaders must find a way to unravel lopsided trade and investment flows or risk a slump in the U.S. dollar that would create havoc for the world economy, Asian Development Bank Chief Economist Ifzal Ali said.

An international agreement along the lines of the 1985 Plaza Accord "on a bigger scale" is needed to unwind the imbalances that have resulted in the U.S. current account deficit swelling to a record $805 billion and surpluses in China, the rest of Asia, and Europe, Ali said in an interview in Tokyo.