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Gold/Mining/Energy : Gold Price Monitor
GDXJ 93.98+0.6%Nov 21 4:00 PM EST
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To: Exsrch who wrote (38258)8/3/1999 6:10:00 PM
From: Enigma  Read Replies (1) of 116764
 
Exsrch - Thanks for your response and help - and I'm interested that you say that Barrick is engaged in #3 - if this is correct how is there any future premium in the transaction? I have followed Barrick for many years - used to work for the company which really got them into mining and have attended their annual meetings and been to broker presentations put on by them - including the one where they announced 'Goldstrike' to the world. In almost all instances Barrick would say that they have sold gold forward for x nunmber of years - sometimes it would be three, sometimes five, and I can recall when they had some sort of vehicle where gold was sold forward 10 years.

This simply does not gel with simply (i.e only) borrowing gold and selling it into the spot market and investing the money in their T.Bill fund and getting 7 1/2% (see your posting on the ABX thread). I think you will find that they sell the spot gold in this way (I'm not questioning that they make a sale and invest the proceeds) - but this doesn't explain the price leverage that can only be gained from entering into a futures contract i.e the sale of gold for delivery at a future date. How else can you explain Barrick's claim that they have sold so many millon ounces forward at $300 ++ per ounce?

Regards,

d
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