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Gold/Mining/Energy : Gold Price Monitor

GDXJ 97.44

-1.2%

Nov 14 4:00 PM EST

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To: Zardoz who wrote (44423)	11/2/1999 5:48:00 AM
From: tyc:>	Read Replies (1) of 116762

A forward sale IS a short in the spot market You said "First off. Barrick is not short 14 MTOz, it is sold forward; call this a propagated Ted Butler fallacy." It seems to me that your statement begs the question. When a mining company makes a forward sales, its banker short- sells the gold on the spot market delivering gold leased from the central banks. The forward sale price is nothing more than the proceeds of the short sale plus interest to the date of the forward sale minus the gold lease rate. The only reason this has been profitable is that the price of gold has declined; OF COURSE a short sale is profitable if the price of the commodity declines. But perhaps the price declned BECAUSE of the short selling. The proceeds of the short sale were placed on deposit at the bank to earn interest until the date of the forward sale. To close the hedge all that is necessary is to take those funds and buy gold on the spot market with it, returning the gold to the central bank. In other words just be satisfied with the profits that the original short sale has already produced (by driving down the price of gold).

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