Good Bye Bear Stearns !

What happened ?
Bear Stearns probably lost A LOT of money in derivatives, probably Credit Default Swaps especially (but we won't know how much) and was on its way to bankrupcy.Then it was purchased by JP Morgan last Sunday for 2$ a share while it quoted 30$ on friday's close.The whole deal was encouraged and financed by the FED.At the same time it annouced a 25bps cut in the discount rate.
This is getting weirder and weirder.
It's becoming obvious that the public is not told the whole story about this Wall Street mess.
But Gold broke the 1000$ level on Friday even before this announcement.
Gold is definitely telling its own story.
on Sunday night (european time), when the deal was announced and Asia opened, Gold even 1025$, but then there was strong selling.Today it's at 1005$
But something definitely happened this week, and it has even reached the headlines of mainstream newspaper, and television broadcast.
They have noticed, but from what I see they have not really understood what is going on.
Now we're waiting for the FED decision concerning rates, in 1 hour.

Stocks in Asia and Europe took a pounding on Monday, but recovered on Tuesday.

I took a small bearish position and apart from that, I stick with the gold stocks

BNP Paribas comes in

Gold ended down 2% today. It fell along with the rest of the stock market. The Dow was especially hit, finishing at the lowest point of the day and continuing the trend seen in Europe earlier. BNP Paribas made the news by announcing that it would suspend two funds made up of obligations affected by the US subprime mortgage market.

This is funny for me because I used to work for BNP Paribas in Paris, and it was not a very happy experience.

Meanwhile, it was announced that the ECB was injecting a record amount of liquidity in the money market. The highest since septembre 11.
This mortage crisis is turning into the beginning of a panic. But we will have to wait to see how it all turns out.

But I am convinced that in the medium term it will be good for Gold.
The Central banks will do anything to avoid a depression because this one would be a disaster.
They will have to relax their monetary policy further, until inflation becomes a real problem and at this point in a few years, Gold price will be much higher.
Right now , the FED, in particular onlly talks about fighting inflation, but won't be able to follow suit.
It talks the talk, but doesn't walk the walk.

In the short run, Gold suffers, but we've seen this before in May 2006 ane February 2007, and it doesn't contradict the long term bullish trend for gold.

Right now with the panic that we see in the Stock Market, many forecasts emanating from the Gold bugs camp are realized and it can only reassure us of this investment in Gold.