>>>inflation will
have little effect on the cost/ounce<<<
I am afraid that such a statement is a very persuasive reason for me to keep my gold investments in GG, WHT, TVX, and some others and not Barrick. I recently went ahead and got out of my very profitable calls on NEM, however.
Inflation means higher energy costs, higher machinery costs, higher materials costs, higher labor costs--in fact, higher costs for everything. That's what inflation is. It is the loss of value of fiat currency against goods.
Therefore, in the event of inflation, Barrick's costs will go up while its return on its hedges is fixed. It will not benefit from higher gold prices on that portion of its production that is already sold.
I would rather be invested in GG, which has huge holdings of pure bullion that it has not sold. There's your inlfation hedge.
Barrick would only be a good bet in the event of stable gold prices--stable below the price that it has sold forward.
Your comment has made this clear to me, though I am sorry that this was not your intention. I was actually looking for a reason to move into ABX. |
