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Gold/Mining/Energy : Barrick Gold (ABX)
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To: nickel61 who wrote (2819)5/18/2002 9:15:40 AM
From: nickel61   of 3558
 
And what except a bet on gold continuing to fall would you call a gold mining company who borrowed gold from a central bank and sold it short in the spot market with a promise to replace it later? It is an 18 million ounce bet that shows clearly that even today the Barrick management think that the price of gold will not appreciate faster than the computer determined interest returns that they get on the proceeds from their short sale. That is an amazing statement to say that Barrick really thinks that the price of gold will not be able to appreciate over the next three to five years at more than 5-6% compounded per annum. I wouldn't want to make that bet if I really believed that the concerted disgourging of central bank gold over the last six years had depressed the spot price to any degree.

And who better then Barrick would understand the impact the short selling of all of their last fourteen years of gold production has had in the decline of the spot gold price? What if as all the other hedgers start to withdraw from additional hedges and indeed start buying gold in the spot market to reduce their existing hedges, ala Newmont, AngloGold, Kinross et all. then where will the spot market go? And how will this change the willingness of Barrick's shareholders to stay with this flawed and outdated financial scheme?
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