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Gold/Mining/Energy : Gold Price Monitor

GDXJ 94.04

+0.6%

Nov 21 4:00 PM EST

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To: PaulM who wrote (48730)	2/10/2000 12:19:00 AM
From: Enigma	Read Replies (2) of 116764

Paul: "Everyone must know by now that short positions can never be liquidated via actual purchase or delivery of physical gold (witness Barrick)" Q. Barrick has reduced it's hedge position - surely it did so by buying back contracts in some manner? Where does it say this has to be done with 'physical gold' - surely they simply close out positions? If I've sold forward can't I then buy the contract back. "The purchase of gold calls is not a perfect insurance policy for the shorts, but at least this way when the paper market goes bust, they will be able to justify a suspension of contractual obligations by saying "see, it's not just our fault, we're owed gold too." Q. 1.The size of the call positions Barrick has purchased would lead one to believe that it must be certain of delivery - if it wants it - that is why I am guesing the deals are with some CB, CBs, BIS, possibly through an inermediary. Maybe not. But it seems to me that the CBs have been prepared to sell gold at any price so why not $319, and $335? especially since they have held the gold for decades, or may have it values at a much lower price.. 2. I can't see how the call positions purchased by Barrick could negate in any way its obligation to deliver gold at $360. I can't see how it could invoke force majeur as a result of a contract entered into subsequent to the forward sale contracts. BTW spot now at $312 - we're getting blase here?

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