Looks like HSBC, a big gold shorter, is starting to buy. Any thoughts folks?

HSBC’s Absolute Return Fund Buys Gold, Seeking to Diversify

By Chanyaporn Chanjaroen

April 23 (Bloomberg) -- HSBC Investment Management’s $2 billion Absolute Return fund more than tripled its gold holdings and added platinum, seeking assets with little correlation to equities.

Physical gold investments climbed to 10 percent of the fund in January from 3 percent in December, and platinum now accounts for 3 percent of the fund, said Charles Morris, who manages Absolute Return from London. Another 2 percent is invested in companies mining precious metals, he said.

“Precious metals are diversifying,” Morris said by phone yesterday. Crude oil and other commodities are too highly correlated to equities to provide the same function, he said.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by gold, almost doubled in 12 months and overtook Switzerland as the world’s sixth-largest gold holding.

Recent blurbs of Data on HSBC

March 28, 2009 at 1:19 pm

THE 4Q 2008 GOLD DERIVATIVES NUMBERS ARE OUT:

The 3 US BANKS are now OFFICIALLY KNOWN.

1) JP MORGAN
2) HSBC
3) CITIBANK

I thought that GOLDMAN SACHS might have been one of the three, but when they became an OFFICIAL BANK, they are now registered on the BANK DERIVATIVES REPORT.

JP MORGAN….$82,465,000,000
HSBC…………$19,...
CITIBANK…….$4,372,000,000
B. of AMER…….$388,0000,000
GOLDMAN……….$0

There is a very large short position in Gold futures by the big banks such as HSBC and Deutsche bank. This has been going on for years in attempt to suppress the price of gold, which is to fool the world into believing that the value of the dollar relative to gold is stable. Now relative to the amount of open contracts on Comex gold, very few actually get delivered, and instead closed out before expiration. This is good for the banks it is doubtful they could actually deliver the enormous amounts of gold they are short. The short position in gold right now is 166,330 contracts, which is 16,630,000 ounces of gold. Converted to tonnes that is 471 Tonnes. There is no possible way these banks could make good on this position if they in fact had to deliver in the event someone wished to take delivery.

4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.

5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.

6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital!

7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!

HSBC has $3.7 Trillion in total derivatives.