Ron, is below more <<... GATA ... credibility ... false reporting...>>
Its gibberish to my uneducated knowledge of this area, so to you is it
hog wash or more lies or half truths ? Doug
( from Le Metropole Cafe, lemetropolecafe.com )
... is interesting to note that Barrick Gold, the icon of all hedging,
is largely unprotected on its funding costs. The average duration of
Barrick's gold lease agreements is six months. The $4 billion off
balance sheet asset, a hedge fund in the estimation of some, is invested
in long term financial instruments. The mismatch is essential in order
to earn the contango, which is the positive carry between the cost of
borrowing gold and the returns from investing the proceeds of gold sold
short. Barrick, and most other hedgers, face the risk that a prolonged
upturn in lease rates will erase all the benefits of hedging. We would
not be surprised if increased focus and concern arises over this issue
from both shareholders and corporate directors...
(I do not know if the next paragraph is related to the above. doug)
Only gold leased from central banks can provide liquidity in a short
covering rally. With physical gold owed to the central banks by bullion
dealers no longer in deliverable form, the short sellers' only
alternative will be to borrow additional gold. The short will remain
short, a situation that can only cause great discomfort to the central
banks. At current market prices, the aggregate short position represents
$40 to $80 billion of capital at risk. A short covering rally of $50 to
$100/oz would cost $8 to $16 billion, enough to make the problems of
Long Term Capital Management seem insignificant. |
