The insurrection at barrick was not led by the speculators who move in and out of gold shares utilizing sophistical technical trading techniques, but rather the long term holders. Many of these shareholders have been with barrick from the early days and are incensed that the company is selling for less than it did in 1993 despite almost tripling its production and having one of the cleanest balance sheets in the industry. Using enigma's analysis of barricks efficient operation has not produced the results he claims to be inevitable nor was it likely to produce the desired results in the future. Barricks announcement on Monday was a document of deception, close out hedge positions that were not really closed out and increase production by 1.5 million ounces and using those ounces for additional forward selling. The bankers and politicians loved it, the shareholders winced, cried outrage, and threatened insurrection knowing that the price of gold was headed down under barrick leadership. The outrage was deafening, and the managers caved. The shareholders could have leaned on them years ago, but many knew little of the mechanics of hedging and believed the pr put out by barricks management. Three years of declining gold prices, declining share prices, and the proclamations by a company claiming to work for shareholder value broke the camels back. What a line of crap, they did not know shareholders existed till this week. They had red phones on there desks connected to the bankers, finance ministers, and anyone else who had the ability to send a corporate jet for them. Good ridinance to their arrogant leadership and policies that made another carry trade possible. Investors are becoming frightened of these complex financial arrangements that are providing liquidity for the equity bubbles seen around the worlds financial markets. Be aware you cannot change the stripes on a tiger, the gold market will not reach its equilibrium price until the producers have managers that recognize the interests of their shareholders are their primary responsibility.
Ken |
