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Gold/Mining/Energy : Barrick Gold (ABX)

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To: re3 who wrote (1535)	12/11/1999 10:40:00 AM
From: nickel61	Read Replies (1) of 3558

Who said I'm worried about them?I'm trying to give them equal access to information. Period.They want to do nothing or shoot themselves in the head ,that is fine with me. But hopefully someone reads this thread who actually wants to know what is really going on with their investments and the economic factors that effect it. Then again maybe I'm wrong. By the way if you are unaware of it there is a massive short squeeze going on in the gold market right now and Barrick and other over hedged producers are trying desperately to cover their short position.If you don't know that you are not paying attention. The URL below shows the total gold holdings of all the worlds Central Banks and breaks it down into the 85% of the gold that has either signed the Washington Agreement or agreed to go along. The remaining 15% is spread among some fifty countries several of the largest of which(as far as gold bullion reserves are concerned) have already been coerced into selling or "leasing" all or substantially all of their gold to take the presure off the short squeeze and allow the paper price of gold to be manipulated lower to provide an opportunity to cover the so called "hedges" or forward sales of gold that does not currently exist.From various industry sources Ashanti and Cambior have been agressively trying to cover their respective short positions in the last several days. URL for World Gold Council Sitehttp://www.gold.org/Gra/Statistics/Holdings.pdf Notice how small the various countries holdings are in relation to the size of ABX's hedge book of 500 tonnes. THIS IS ONLY ABX'S FORWARD SALES.NORMANDY AND ANGLOGOLD and Placer and most of the Austrailians HAVE SIMILAR POSITIONS. For those of you who don't want to understand what is happening ,now is the time to turn off the set and go back to bed. For the others that have some inkling that maybe what they are looking at is not a hedged industry but rather an industry that produces 2550 tonnes of gold world wide in one year(1998)and has scrap of about 600 tonnes(that as the price starts to rise like now ,declines dramatially) and is running fabrication demand of 4900 tonnes per year. The only means to fill this shortfall without a dramatically higher price(to stimulate higher gold production)is to "borrow the gold or lease it" from the central banks and then use it in fabrication.Cummulatively this leasing( which is really selling and melting with a hope of being able to buy it back later)has brought forward 5000-10,000 tonnes of future production,borrowed from CB stocks and now around the necks of someones wife.This crowding forward 3 to 4 years of total world wide production caused the spot price to collapse over the last 4 years. Bankrupting many of the gold producers.Who in order to avoid being destroyed by a falling gold price those producter that could sold forward there gold and "borrowed" more from the Central Banks,putting even more pressure on the spot price of gold. Now gold is well below the average full cost (not cash cost) of production for world wide producers and The Washington Agreement states as of Sept. 25,1999 no additional gold leasing. Bang! Short Squeeze begins.Without additional leasing the Bullion Banks and the shorts can not force the spot market any lower and the natural price ajustment process begins to squeeze the gold price higher. As the various over hedged miners and hedge funds realized they are trapped the squeeze accelerates as the rats turn and start covering their own position to get out before the others try to cover. As I said in an earlier post Anglogold bought 40% of the last BOE auction and covered less than 2% of its forward sales. Take a look at the 15% of total bullion holdings of CEntral Banks on the above URL and decide for yourselves whether or not there is enough gold to hold the price down or even to role over the already existing forward sales.What does that portend for the future lease rate on gold leasing which on average have a six month length while the borrowings ore often in ABX's case for as long as ten to fifteen years with them holding the lease rate exposure. Hey !nobody ever said Goldman Sachs was stupid. If no one on this thread cares about this stuff, why not speak out and either contradict my arguement or tell me why you don't want to hear any more.Meanwhile ,have a nice day.

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