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Gold/Mining/Energy : Barrick Gold (ABX)
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To: russet who wrote (2974)5/21/2002 6:00:37 PM
From: nickel61  Read Replies (1) of 3558
 
It has nothing to do with the reserve calculations or the cost projections. It has to do with the fact that they are not doing anything except buying US treasury bonds with the proceeds of a short sale of their own commodity. I sell anything short and put the proceeds in a US treasury bond and then hope that the price goes down so that the 5% interest I make on the bond allows me to claim a "profit" when I close the short by delivering into the contract. WHen you say it like that it is clear that the projecting of this future projection of proceeds earned is ridiculous. THE price of gold goes up as it did from 1970 through 1975 and gold in the US dollar price is $1200/ounce and then what does Barrick do? If it is not already bankrupt it is going to have to deliver all of it's production into it's foolish hedges for the next three and three quarters years.
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