Barrick Gold (ABX) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Barrick Gold (ABX)

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: goldsheet who wrote (2123)	9/26/2000 11:50:32 AM
From: nickel61	of 3558

Many who doubt the manipulation of the gold market through the use of derivatives call into question how the creation of paper gold can possible depress the price of the actual commodity in the spot market. Here are a few minor but fairly straight forward examples. The sale of gold bars into the spot market while they are still carried on the inventory of the Central Bank that lent them is one small example. The gold is physically lent to a bullion bank who sells it in the spot market and establishes a loan to repay the Central Bank the "borrowed gold plus 1% or so per year more for the lease rate" and with the proceeds from the sale of the gold into the spot market then invests in a US Treasury Note at 6% and earns the difference 6% - 1% or 5% on maybe a hundred million dollars. NOT bad. If the spot price of gold goes down before the gold has to be paid back the gains are many fold this number so the motivation is to convince others to do the same and force the spot price lower through all the selling. NOw all this time the Central Banks expect to get this "lent" gold back so it is still physically recorded as an asset on their balance sheet even though it is long gone and probably melted down and used to make earings hanging on the ear of some trader. So "paper has replaced real by subsituting a computer entry on the balance sheet of the Central Bank that such and such bullion bank will replace our gold on such and such a date with what was before the physical gold bar. Another way this happens is a financially savey market player who happens to be a gold producer like Barrick knows that it will be producing a certain number of tonnes of gold each of the next ten years from its Goldstrike mine and in order to put additional supply into the market today to make the price of gold go to an even lower level so the gold loans will be all the more profitable the future production can be brought forward and sold into the spot and future markets even though it is not to be actually dug and processed for many years. THis happens all the time and for the very reasons that I point out. It is theoretical gold production that is brought forward in a derived form and sold to make the spot price go where the market manipulators want it to go

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next