| Why does the obvious significance of this have no impact on you? In a direct sense they could not claim this high sale price if the gold wasn't borrowed. If they just sold their gold in the spot market they would have to report that and then if they wanted to invest in US treasury notes they would simply show that as an asset on the balance sheet and recognize the marked to market value of the interest payments and the bonds. But this way they get to claim that they have gotten a higher price for their product. Complete bullshit and nothing more then an accounting trick. Once it is exposed it is obviously nothing more then taking advantage of a loophole in the FASB accounting regulations. Much like the absurdity of being able to recognize both sides of an energy trade as "revenue" allowed Enron to rapidly inflate their reported revenue growth. This is how Enron ever got to be able to claim they were the 7th largest corporation in the United States. They were working an accounting loophole and the bankers and accountants, JP Morgan/Chase, Barrick's bankers by the way, and the now infamous Arthur Anderson, were the only ones who knew they were cooking the numbers, and they shut up about it so they could sell more bonds, stocks and whatever, or charge them 50 million a year in accounting fees. The process of accounting for both sides of an energy transaction as your revenue is analogous to a stockbroking firm trading a 1000 shares of a $100 stock and claiming not the commission as their revenue but the sum of the value of the stock sold and bought in the transaction, i.e. not $35 but rather 1000 X $100 = $100,000 for the sale and $100,000 for the buy...that is what made Enron's revenues grow so spectacularly.$200,000 or revenue on a trade that really under common sense accounting would have produced only $35 of revenue for the brokerage firm .....and it was allowed to continue for years... until it came under the light of day and collapsed taking the Enron employees and investors with it. |
