John, Rumor has it Barrick's ABX to change to SOS.
-
lemetropolecafe.com ... james_joyce_table
-
No matter how you look at it, Barrick’s stunning reversal of their hedging policy last Friday is very bullish for the reasons discussed in Friday’s MIDAS.
-
The buzz in the gold world is about what happened to Barrick between Thursday and Friday?
-
There is only one explanation in my book. It has to have something to do with the Blanchard & Co. case.
-
What we know:
-
Barrick’s Peter Munk unexpectedly announced a change in Barrick’s hedging policy from one day to the next, coming across like a chairman who either can’t make up his mind,
or was suddenly TOLD what to say.
-
CEO Wilkins was supposed to speak in London, but left for
New Orleans on "urgent business" according to MineWeb.
New Orleans Federal District Court is where the gold
manipulation court case has gone into the Discovery phase.
-
I have been told Barrick has learned of the expert witnesses who will be called to testify against them and they were stunned. I have also been informed there is discussion about some damning emails. This is only conjecture as I received this information second-hand, but it comes from a good source and it all fits. You don’t tell the world how great hedging is one day and then do a complete about face the next day without a compelling reason.
-
One of the objectives of the Blanchard case is to seek immediate injunctive relief from Barrick, which is a demand they lift their hedges. Perhaps Barrick and Blanchard are working on a settlement, with one of the stipulations being an immediate cessation of hedging.
-
Barrick extolled hedging at $300, but is giving it up at $400, not just now but for the next 10 years. Very strange to say the least. Something has to be wrong.
-
Barrick is cutting all non-essential spending world-wide. That screams cash flow pinch. What’s causing the cash crunch? Could scared bankers be cutting their credit lines? A fellow Café member might have an explanation:
Bill,
The following is taken from Barrick's website:
Our trading agreements with our counterparties do provide for early close out of certain transactions in the event of a material negative change in our ability to produce gold for delivery under our hedging agreements, or a lack of gold market, and for customary events of default such as covenant breaches, insolvency or bankruptcy. The significant financial covenants are:
Barrick must maintain a minimum consolidated net worth of at least US$2 billion currently, it is US$3.4 billion.
Barrick must maintain a maximum long-term debt to consolidated net worth ratio of
1.5:1 currently, it is under 0.25:1. " END
Bill, this means that if everything remained the same since June 30 except the gold price increase the current net worth of Barrick is 2.6 Billion. This means delivering of gold could be triggered at POG=$432.
Now what about if there is talk of a settlement out of court in the Blanchard case of say $600 million this would take net worth of Barrick IMMEDIATELY below 2 billion dollars and trigger gold re-payment.
~~~~~~~~~~~~~~~~~~~~~
They are on the brink.
Hence the announcement.
~~~~~~~~~~~~~~~~~~~~~
The strange thing is that they must have known the announcement would also drive up the POG and therefore push them closer to the brink, which is very odd. Does this mean they are holding some gold options?
One thing is for sure the smoke is billowing out of this one!
Cheers
Adrian
Along the same line:
Bill,
I suspect the cartel threatened to bankrupt Barrick if it did not settle with Blanchard - and keep cartel dishonesty from being exposed. I also suspect that the cartel's motivation was the list of questions Blanchard asked Barrick to answer in discovery. Most likely those questions delved into Barricks claim that it couldn't be sued because it was acting on behalf
of the federal government, collusion with cartel banks, takeover schemes, etc. Such questions could prove extremely embarrassing and might well subject Barrick and cartel members to criminal charges. Consequently, the cartel is likely to finance a huge offer to facilitate settlement.
But, look for fireworks if Barrick is unable to settle and the cartel goes after it, because Barrick could undoubtedly respond with some very damaging revelations about the cartel. If that happened, your Cartel Capitulation comments in the cafe could run for pages. Who knows? Major newspapers media might even cover the story - on page 47, Friday editions, of course....
-
I believe both Adrian and Cal have captured the essence of what’s going on here. One thing we know for sure, if there is a settlement of any kind, GATA will be proved right - not that we don’t know that already.
-
One thing for sure is we are going to hear a good deal more about the Barrick flip-flop in the months to come and it certainly is going to effect the decision making process of some of the other big hedgers.
-
Bill Murphy
owner, Le Metropole Cafe
chairman, Gold Anti-Trust Action gata.org |
