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Gold/Mining/Energy : Gold Price Monitor
GDXJ 96.88+0.9%Nov 18 4:00 PM EST
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To: Real Man who wrote (90084)9/27/2002 1:20:56 PM
From: Jim Willie CB  Read Replies (1) of 116762
 
Barrick is covering hedgebook, diverting cashflow
this drains capital from legitimate mining operations
derivatives are not disclosed on balance sheets
plenty of games to be played here
my guess is they are lumping sales with hedgebook
thus realizing closed out hedge losses

funny how as gold price drops, supply increases
funny how as gold price rises, supply decreases
this is a very inelastic market

part of this paradox owes to hedging
as price rises, supply is removed from fresh hedging
as price rises, hedge funds such as Barrick who are masquerading as gold miners are exposed
their cash flow is seriously disrupted, as it diverts to hedgebook covering
and usually at a loss
so a double-edged sword of seeing scarce cash vanish and reporting losses to shareholders

Barrick sucks, and is going down
for a while at least, they will simply underperform the gold indexes
later comes the derivative accident that eats their balance sheet like ACID
I find the Barrick hedging story hilarious

this company is deeply invested in a declining gold price
the transition from hedgefund masquerade to gold miner is extremely difficult and hazardous

they are deceiving their shareholders
production is down from scarce cash diversions
prices are not down, that is where they are hiding hedge losses
/ jim
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