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Gold/Mining/Energy : Barrick Gold (ABX)
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To: nickel61 who wrote (2834)5/18/2002 11:07:29 AM
From: Zardoz  Read Replies (2) of 3558
 
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!!!!!!!!!

You make a huge assumption there don't you? You assume they invest only in US treasuries, 5% Yeild, and that they are borrowing GOLD. They are not Borrowing gold, they are selling production years in advance via futures and swap-options. They aren't just buying US treasuries, they are buying other countries as well {some which are postive correlation to Gold such as: Canadian, Aussie and Swiss treasuries} & effectively gain leverage via currency fluctuations. And they are not getting only 5% yield, cause you assume that they are STILL adding at this yield rate in USA. How do you know that they aren't buying Equity index's. You are making assumptions on off balance sheets, you must be careful in those assumptions.
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