Barrick Gold (ABX) Message Board

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Gold/Mining/Energy : Barrick Gold (ABX)

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To: FuzzFace who wrote (2634)	5/13/2002 2:39:47 AM
From: russet	of 3558

Sorry, first reply was in error,... "Actually writing a covered call for Barrick ensures they get a certain price for their gold production." Should have said, writing a covered call for Barrick ensures they get more for their gold in a declining or stagnate POG environment than they would normally get, as the calls they write were expected to expire unexercised but they get to keep the premium. Many of these calls commanded a premium of $10-$30 per oz depending on the strike price, so it ain't peanuts. They could do this over and over again for the same oz. If the others would read the financial statements,...you would find Barricks philosophy was that they wouldn't write a call, unless they were fully prepared to cover by leasing the gold, or as they may now be doing, committing production to cover the written call.

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