Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: terry richardson who wrote (18733)	9/12/2002 11:49:15 PM
From: terry richardson	Read Replies (2) of 36161

To the Board: This morning I posted a link to an article by a Dr. Murenbeeld on hedging in general and on Barricks hedges in particular located here: mips1.net Click on the BarrickHedge.pdf icon to download the article if you didn’t do it the first time. I thought it was worth a read especially as it explained the Spot Deferred hedges, which seem to be peculiar to Barrick alone. Anyhow David Vaughn, one of the guys at Le Metropole Café has posted a reply which is well worth a read here: lemetropolecafe.com For those who don’t have membership to LemetropoleCafe.com (Its about $150 per year but I believe there’s a trial period available) I have received permission to post the whole article here below. =========================================== Response To Murenbeeld “…Hedging” No, I could not idly sit back and allow this article to go unchallenged. I would like to humbly respond to M. Murenbeelds’ article defending the practice of hedging. I will be very short & sweet. I will respond to this article by repeating Murenbeelds’ own dialogue which I believe contradicts everything this man has said in his 22 page article. “Producers who received lower gold prices for their output because Barrick (and others) were hedging the price risk of their future output do have a point, to be sure. The price of gold would have been HIGHER had there been no hedging. But given that Barrick management believes that their hedging Program is in the best interest of the company and its shareholders, it seems to me that there could indeed be a class action suit against Barrick by its shareholders if management went against its own best judgment in this regard.” OK. Let’s look carefully at what this individual has just said. “The price of gold would have been HIGHER had there been no hedging.” There is not an industry today in any market that does not see the advantages of working together even with their competitors for the best interests of the product that they sell. The oil industry does not engage in practices that will ultimately & knowingly work toward the destruction of the price structure of oil. The milk industry works together as a whole to promote milk and its long term price structure. “The price of gold would have been HIGHER had there been no hedging.” Yes, if Barrick had not acted as the market leader in engaging in practices that were knowingly destructive to the price structure of gold the industry today would have been better off. I give M. Murenbleed credit for admitting that Barrick has succeeded in RAPING the very industry it pretends to represent. Lets’ repeat M. Murenbeelds words one more time because this is an important admission to what Barrick has knowingly schemed to accomplish: “The price of gold would have been HIGHER had there been no hedging.” OK, let’s go over another statement. But given that Barrick management believes that their hedging Program is in the best interest of the company and its shareholders, it seems to me that there could indeed be a class action suit against Barrick by its shareholders if management went against its own best judgment in this regard.” Here, Murenbeeld acknowledges that ultimately the shareholders are the appropriate arbiter & jury in JUDGING the actions of a company. Lets look at where the share price of Barrick is today in relation to its competitors. But before we do let’s read again: “…it seems to me that there could indeed be a class action suit against Barrick by its shareholders if management went against its own best judgment in this regard.” I personally monitor every single day the share price performance of close to 150 individual gold & silver mining stocks. The average performance for all of these mining companies for the past calendar year is +57.04%. Let me repeat this number again: +57.04% OK. Let’s see how individually Barrick has performed in the past year. Look reeeeeal good at the numbers below: Name Symbol Shares Paid Last Volume Value(Mkt) Gain Barrick Gold ABX 1 17.35 17.02 765,000 17.06 (-.33) -1.90% My oh my! It appears the shareholders of Barrick have judged their own stock and they have found Barrick GUILTY in the First Degree!!! I want to personally thank M. Murenbeeld for so eloquently condemning both the practice of hedging and for highlighting very well the damage that Barrick has created to the gold mining industry (& itself). THANK YOU Mr. MURENBEELD FOR WRITING AN ARTICLE THAT SO EFFECTIVELY EXPOSES THE HORRORS OF THE PRACTICE OF HEDGING AND FOR EXPOSING BARRICKS ROLE IN THIS DESTRUCTIVE PRACTISE. * * * * * David N. Vaughn Gold Letter, Inc. (864) 354-1519 (864) 329-9894 David4054@charter.net

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