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Gold/Mining/Energy : Gold Price Monitor

GDXJ 93.63

-1.4%

Oct 31 5:00 PM EST

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To: David R. Schaller who wrote (36037)	6/28/1999 10:12:00 AM
From: Claude Cormier	Read Replies (2) of 116741

<<To the extent that their forward selling and gold leasing has depressed the spot gold price..they have hurt their own shareholders >> First, Barrick is not leasing gold. They merely enter spot deferred contracts. The bullion banker who is on the other side of the contract is going long with this contract and is likely to sell from its inventory between the signature of the contract and the delivery date. The timing is not obvious and is to the discretion of the banker. Obviously, the sell by the banker will have some effects on gold which is hard to measure. SOme experts on derivatives claims that this effect is somewhat nullify because the hedged production never makes it to the market as it must be delivered to the bullion bankers who needs to replenish his inventory. IMO, there are big difference between hedging transaction and "gold carry" trades as far as the impact on gold prices is concerned.

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