Whereas DoubleD is convinced there is no conspiracy, Arthur Hailey believes there is!
Barrick's hedging program is the envy of the
industry. Its "premium gold sales program"
has generated more than $1-billion (all figures
in U.S. dollars) in additional revenue over the
past 11 years.
To protect themselves against declines in gold
prices, Barrick and other producers borrow gold
from central banks at low interest rates, then
use the money to acquire better performing bonds.
In theory, the "contango," the spread between
bond yields and the leasing price of gold,
provides a risk-free growth strategy.
The problem is some producers were caught off
guard when gold unexpectedly surged to $339
an ounce in October.
The jump has left Ghana's Ashanti Goldfields
Co. Ltd. and Cambior Inc. of Montreal
struggling to cover millions in creditor's claims.
Gold has since slumped to the $285 level.
Nevertheless, many hedgers and short-sellers
remain "in a bind," said Mr. Hailey. "The
price going up has made life very
difficult," he said.
The assurances have failed to convince
Mr. Hailey, whose 1997 urban thriller
Detective sold millions.
So will he be turning his writing talents
to the murky gold trade?
"The answer is no. I'm sure there's a story
there, but I won't be the one to write it."
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