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Gold/Mining/Energy : Gold Price Monitor

GDXJ 94.04

+0.6%

Nov 21 4:00 PM EST

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To: Enigma who wrote (38383)	8/5/1999 8:04:00 PM
From: Exsrch	Read Replies (1) of 116764

D, I call it a money market fund; however, it really is a collection of US treasuries that (from a return perspective) act as a ABX US treasury money market fund that produces the cantango. And please don't take my word for it. I think it is important for you to have a look at ABX's web site and read the Premium Gold Sales Program. It will help you a great deal in knowing how they make the Cantango. You asked the following: <<.Another question I have is this - Barrick says from time to time that it has x ounces of gold sold forward at $x/ounce. The results on its internal money market fund will vary according to the interest actually obtained - so this statement must be based on an estimate? If they were using futures contracts (forward sales, whatever) they could give an exact figure - being the sum of all futures contracts..> Yes, it is an estimate; however, you'll note that ABX quotes a minium forward sale averaging $385. That means if they earn higher interest or produce gold at lower cost they could have more earnings or higher average sales or both. <<..what you are saying I think is that Barrick is running it's own forward sale programme - thus avoiding the external market, the contango being the return it makes on it's internally managed money market fund? The borrowed gold is sold at spot - and the leases are repaid on a continuing basis from actual production?..> Yes, ABX runs it own sale program and the answer to your question would be yes and yes. <<..In summary the use of hedging is to secure the price of the product - to take the price variable out of the question. Barrick appears to have gone a step beyond this..> Yes, Barrick has gone one step beyond. And for everyones benefit what that means to shareholders is that Barrick effectively earns interest on Gold reserves currently in the ground. Cheers, Exsrch

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