Summary and thoughts - development of global crisis yesterday and overnight

2 major developments yesterday that was close to initiating a complete collapse of the global financial system, with it leading into the general population:

1) there was almost a complete standstill with big commercial banks refusing to lend money to other big commercial banks - interbank loans dried up almost completely

2) $180 billion were withdrawn alone from Money Markets Funds yeterday - there was fear that the next step would be for people to line up (stepping over one another) at the ATMs to remove their cash

There was major panic in the world by early afternoon yesterday, hence gold jumped to around $920 per oz. Mid to late afternoon word got out that the US Fed/Government were about to roll out a major package to remove (buy) the illiquid assets/debt from many of the financial companies. This resulted in a major reversal in global stocks, and a subsequent sell off of gold.

Gold continued with a major sell off overnight (in the Asian and Euro markets), but it has bounced back decently this morning. I will explain my thoughts on the bounce back in a minute.

The US is racking up a major bill in trying to contain this problem. Here is how much money they have committed to initiatives just over the past 2 weeks (and earlier in the year in the case of Bear Sterns), but it doesn't even include the massive stimulus package for to the general public earlier in the year:

*$200 billion to save Freddie and Fannie

*$29 billion to enable Bear Sterns to be purchased

*$85 billion to save AIG (although, some of this should be paid back by selling assets, plus the government gets 80% ownership of what remains of the company)

*$500 billion fund created to buy out bad debts (illiquid debts/assets) from certain struggling (major) financial companies - this is a key part of the plan they are currently working on rolling out - it could end up being higher once the plan is presented

*$XX billion will be set aside to guarantee a greater number of market funds (I think it is at least $50 billion, but I can't remember - it might need to be much higher, as I think there are like $4 trillion in Money Market Funds

*No shorting (in the market) at all is allowed (not just naked short selling) effective today and until Oct 2nd (but it could be extended for 30 more days) - this applies to 799 financial type companies in the US (they have a list)

The UK eliminated all short selling effective last night and their bank stocks moved up between 30% to 70% (part of that of course were shorts scrambing to cover). The UK's rule will be in effect at least until the end of 2008.

Anyway, as you can see, the US government has committed over $1 trillion just in last few weeks, and they are already in major deficit positions to begin with. It looks like they will have to print an awful lot of dollars here, as most of this $1 trillion may not be recoverable.

This is why I think that gold hasn't totally fallen off. I think a lot of people that there is a long term price to be paid, and that price might be in the form on inflation. By the way, the fundamental problems in the world and the economy still exist.

Anyway, if there are able to ease up the credit crisis over the next few months then this might actually help to kick start investment dollars back into the juniors, as investors will start believing that these companies finally will have a chance to raise cash. It may not happen right away, but it increases the possibilities of available liquidity for small cap juniors.

With regards to Century Mining, the increase debt liquidity (if sustained) hopefully increases our changes of the bridge loan closing in 3 weeks, but also the Fortis debt closing in late November. By the way, I believe the Fortis stock price was up something like 15% early on, but it might have closed higher. The better shape Fortis is in then the better chance we have of closing off our debt with them.