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Gold/Mining/Energy : Barrick Gold (ABX)
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To: Tommaso who wrote (3288)1/16/2003 5:19:29 PM
From: Elizabeth Andrews  Read Replies (1) of 3558
 
Owning a gold producer in a rising gold price environment with a lot of debt is good. Goldcorp's investment rational is very contradictory and makes no sense. If there's inflation and money is getting more worthless, debt is a good thing, especially if you're investing in productive capital that can improve efficiency. For them to proclaim being debt free and having an inventory of gold bullion makes no economic sense in an inflationary environment. And paying the dividend six times a year only increases its admin costs and also makes no sense. This is a promotion with lots of fluff. And, where is the exploration strategy that's badly needed as a lot of the ounces claimed are very marginal in my view. Inflation will cause prices of production to rise but also the price of the produce will be effected. This is the only industry that has pricing power right now and Golcorp is being very conservative, which is going to hurt soon.
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