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Gold/Mining/Energy : Barrick Gold (ABX)
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To: russet who wrote (3330)1/20/2003 3:18:55 PM
From: Ken Benes  Read Replies (3) of 3558
 
His retraction has nothing to do with your statement. He is backtracking on his thesis that barrick may experience massive losses if the price of gold moves against their hedgebook. He says nothing about barrick having little contractual exposure to the derivative positions established between the bullion banker, the central banks, and barrick. Unless you have read every line of those instruments and have sufficient legal expertise, you are not qualified to make the statement that barrick can walk away from its positions. If a bullion bank failed and its positions were seized by a creditor and a three party transaction were reduced to a two party transaction, bullion banker to central bank, relieving barrick of any obligation to the transaction, this could boarder on a malfeasance charge against the central bankers, particularly if they were to sustain a loss in the amount of gold that was repaid them. The inference of your statement is simplistic. The wording of the contractual obligations associated with the derivatives based on the leasing and forward sales of gold are very complex and beyond the discussions of this board. They are not above the markets professionals. After the debacles of this past year, the markets are leary of the derivative positions built around the forward sale of gold relative to the producers. It is going to take more than use car salesmanship to convince the markets differently.

Ken
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