...good sport, unless perhaps you are a Barrick shareholder. In that case...
Reginald H. Howe
www.GoldenSextant.com
February 14, 2000
row@ix.netcom.com
The New Dimension: Running for Cover
[Note: In preparing this commentary, I have received.....
... it is not impossible to imagine a deal where the bullion banks
get the profits from successful short sales, Barrick gets the profits
on exercise when and if the short sales are unsuccessful, and whoever
(Exchange Stabilization Fund?) is ultimately backing the calls has a
double obligation: (1) to pay Barrick in full on exercise; and (2) also
to pay the intermediary bullion banks on exercise, but subject to partial
credit for any profits they may have made on successful short sales.
In any event, the fact that Barrick bought options on paper gold --
virtual gold -- from someone who is either crazy or possessed of very
deep pockets and a strong desire to cap gold suggests: (1) that the
physical gold markets are so tight that Barrick could not cover in
physical metal; and (2) that its so-called "new dimension" -- purchased
calls -- is nothing more or less than Barrick running for cover. Market
action at its strike prices -- $319 and $335 -- could be ferocious. With
a major breach running toward $360 -- Barrick's 2000 floor price and the
level where many think the gold banking system might implode --.....
Katy bar the door.
God made gold the king of money. When He made the king of beasts,
He painted him gold. The lion's would-be victims know to run for cover,
and when none is at hand, to keep running, and to dodge, feint, bob
and weave in hopes of shaking the golden beast. Barrick's instincts
are no less sound than those of the zebra or the gazelle. And watching
Barrick run from a gold panic partly of its own making promises to be
good sport, unless perhaps you are a Barrick shareholder. In that case,
Barrick's hedging program is exactly what Randall Oliphant, its chief
executive, says: "It is not a theoretical concept, it is about real money."
But is real money something that Barrick and other heavily hedged
mining companies know anything about?
[End.]
All the best, Bill Murphy
Le Patron, Le Metropole Cafe lemetropolecafe.com
Bill Murphy, Chairman, Gold Anti Trust Action (GATA) gata.org
GATA related articles can be obtained at the pay for view site.
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