Barrick Gold (ABX) Message Board

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Gold/Mining/Energy : Barrick Gold (ABX)

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To: russet who wrote (2366)	4/4/2002 12:42:45 PM
From: nickel61	Read Replies (1) of 3558

Once again a great post and I agree with many of your points. I also have learned some things from them. Only time will tell which interpretation of the facts proves correct. While Barrick would have fit it's maturity on it's purchased fixed income investments to coincide with it's hedges this of course doesn't stop the value of those investments from declining in a rising interest rate enviroment. The cash flows would fit but the stock market would discount the ABX share price by the decline in the relative value of the cash flows from the bond portfolios compared to the now higher cash flows that would be available in the market place. This is true of all bonds in a rising market and the discounting of the stock of the holder is what normally happens as as it does to insurance companies. There would be concurrent increase in the value of their unhedged reserves if this period also involved a rising gold price and in addittion any new unhedged production they could bring forward would be worth more and this might go a long way toward offsetting the "losses" that would be incurred at market pricing on the bonds. Hopefully we all are a little better informed for the exchange.

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