Hutch:
Yes, the balance sheet looks wonderful, at least for the accountants, management, and the wall st analyst. Unfortunately, what matters more for the owners(euphormism for shareholder, not management, etc)is their investment has an annualized gain of zero despite the hedging. Homestake, which is largely unhedged is also selling for its 1993 price.
The majority of central bank gold activities during this period was in leasing gold, not outright sales. Had barrick and the other producers not been engaged in the gold hedging/derivatives market, there is a good possibility that the price of gold would never have slipped to 250.00. As has been noted, leasing has added to the supply in two ways. First more central bank gold became available, allowing the bankers to retain the gold on their balance sheets as a receiveab le, and secondly, a portion of the proceeds of forward sales was used to develop new mines. I know it is progress, however, in any commodity based business, supply is a central issue. Over supply equals low prices. Barrick was one of the instrumental forces in creating a flourishing environment for the gold carry trade.
Ken
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