SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Gold Price Monitor
GDXJ 94.04+0.6%Nov 21 4:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: russet who wrote (38442)8/6/1999 11:41:00 PM
From: Exsrch  Read Replies (1) of 116764
 
Tia,

Your concern with respect to what ABX does with its off balance sheet asset is VERY relevent. Most people tend to become pro or con ABX and don't adequately assess the risk and return and the composite value it represent to investors (over short, medium and long term).

The mechanics according to SEC filings, annual reports, annual meetings and my research confirm the following:

1. Gold borrowed from CBs via bullion banks
2. Gold sold at spot (irrespective of spot price)
3. Proceeds invested in US Treasuries
4. (Interest earned-management costs)=Net Cantango
5. Divide total net cantango earned by total ounces sold (same time periods for both cantango and average ounces sold) and this should equal $105 over the average spot price for Q2.

ABX goes to pains at all of the annual meetings to make clear that the off balance sheet is invested conservatively in US treasuries; however, if the funds are invested or risked on higher beta instruments or asymetrical hedges exposing ABX to uncovered derivative risks this would support your concerns of "neat things".

But your concern seems to be nothing but speculation. Do you have anything to support your concern? I have extensively followed ABX and looked at all sources (which are also freely available to you also) and find no "neat things".

If ABX is lying on SEC filings, annual reports, annual meetings than I will be one of the many investors who would end up being duped. Unfortunately if management criminally mislead the public I can't do much to defend myself; however, I have no indication of this and also more importantly ABX need not engage in "neat things" because it would simply increase risks (by an order of magnitude) without commensurate returns.

I would suggest reading every publicly available information source and make a determination for yourself. You'll find pretty much the same thing:

1. ABX engages in a symetrical hedge with the off balance sheet assets invested conservatively in US treasuries (self managed by ABX earning 7.5% gross and netting 5%).

2. Effectively ABX earns the 5% interest on gold reserves still in the ground (the 13.3 million ounces sold forward).

3. ABX if they really wanted to could sell their total reserve forward and increase their off balance sheet asset to almost 50 million ounces

4. This method adds $105 more to averages ounces sold beating everyone else in the gold market. They really have no reason to take on greater risk. I believe ABX to be extremely disciplined in the efforts (to minimize risks by investing US treasuries which they take great pains to make clear).

Hope that is helpful.

Cheers,

Exsrch
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News