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Gold/Mining/Energy : Barrick Gold (ABX)

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To: loantech who wrote (2832)	5/18/2002 10:24:40 AM
From: nickel61	Read Replies (2) of 3558

Just to clarify what I just said. Barrick sells an ounce of borrowed gold today at $312 and invests in a five year US treasury note yeilding 5% to maturity in May of 2007. That is 5% compounded for five years which allows them to claim a "sale" price of $398/ounce!!!!!!!!! Yes that is as simple as it is...The whole process is bullshit unless you somehow think they are doing something else for you...they aren't it is just they are more aggressive about dressing it up...PERIOD. The plan looked somewhat feasible in a constantly declining market but is absurd in a rising gold market...It is market manipulation (through the selling of additional gold into the spot market when the short is established) and then just plain bs when the books claim that they got a "premium" which is nothing more then the compounding of the proceeds they got from shorting their own product. The game came about because they wanted to push the spot price of gold lower to take out the other competitors and it happened to work with the big picture financial interests of the world financial community. Namely a lower gold price meant that the US Treasury could inflate the value of the US dollar and our trading partners went along with it because it allowed them to export to the US market with a low currency price for their production and stimulate economic activity in their domestic markets. The US gets to print money with no perception in the financial markets of the amount being excessive because the US dollar is able to show a rising trend against it's historical benchmark of gold and therefore there is no inflation, and we can continue to inflate the US dollar money supply almost without check. Nice game if you can pull it off. Barrick of course is just a minor player in this drama, but their participation is critical if you wanted to ensure that the price of gold would continue under pressure.

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