You have a good vision of the cycles. With these knowledge, one can take actions to trade/invest in securities for great profits.
I have rotated out most of my S. A. golds into silver stocks and BGEIX gold mutual funds. I'll wait for a better signal of rand-gold to develop.
There are several interesting news from ABX:
biz.yahoo.com
UPDATE - Barrick lives up to hedge-cut pledge, despite cost
Friday February 13, 12:59 pm ET
By Nicole Mordant
(Recasts with conference call, share price. Changes dateline previous NEW YORK. Amounts in U.S. dollars unless noted)
VANCOUVER, British Columbia, Feb 13 (Reuters) - Barrick Gold Corp. (Toronto:ABX.TO - News) said on Friday it was prepared to lose out on higher gold prices on a third of its output this year as it lives up to a promise to wipe out its bulky hedge book.
The Toronto-based miner, the world's third-largest bullion producer, owns the gold industry's biggest hedge book, a thick pile of contracts it entered into over many years to lock in prices for its as yet unmined gold.
Barrick scored when the gold price was weak but the metal's 65 percent gain in the past three years to over $400 an ounce has overtaken the price it has pre-sold much of 15.5 million ounces of its production.
Hedging has become unpopular with investors, who want to see the full benefit of today's high gold prices.
Chief executive Greg Wilkins said on Friday the company would deliver at least 1.5 million ounces out of anticipated production of 4.9 million to 5.0 million ounces in 2004 into hedge contracts, even if it means losing money on sales.
"We will accept the opportunity cost of managing the book down," Wilkins said in a conference call with analysts to discuss Barrick's fourth quarter and 2003 results.
"(1.5 million ounces) is a minimum amount and could perhaps be higher, depending on what happens in the gold market," said Wilkins, who was appointed Barrick's head a year ago after his predecessor was sacked.
Asked if Barrick, whose hedge contracts do not have to be closed out this year, would sell its gold into lower-priced contracts even if bullion jumped to $500, Wilkins said:
"We have set a target to manage the book down. But we will then be benefiting substantially from the higher gold prices (on unhedged production)." About 82 percent of Barrick's gold reserves in the ground are not hedged.
Wilkins said Barrick had already reduced its hedge book by 300,000 ounces since Jan. 1, selling the gold at prices about $50 an ounce below the spot market price.
EARNINGS IN LINE
Barrick reported fourth quarter earnings of $77 million, or 14 cents a share, late on Thursday, up from the $54 million or 10 cents per share in the same period a year ago.
But Wilkins said if one-off items such as a derivative and tax gain were stripped out of earnings, the per share figure would have been 8 cents. This was bang on analysts' expectations as polled by Reuters Research.
Barrick said its gold reserves, the amount of gold in the ground it can mine profitably, dropped to 86 million ounces at the end of 2003 calculated at a price of $325 per ounce.
This compares with 86.9 million ounces a year ago, when Barrick calculated reserves using a $300 price. At the less economic price of $300 an ounce, current reserves would be 82 million ounces.
Gold miners update their reserve holdings once a year, adding ounces acquired through exploration or acquisition, and subtracting those mined out.
Barrick said its cash cost to produce an ounce of gold was $199 in the December quarter.
Barrick reported fourth quarter production figures last month. The firm, which has gold mines on five continents, said then it had produced 1.3 million ounces of gold in the three months, for a total of 5.51 million ounces in 2003.
In the same release, Barrick said it had reduced its hedge book by 600,000 ounces to 15.5 million ounces.
The firm repeated its expectation to produce between 4.9 million and 5 million ounces of gold this year at a cash cost of between $205 and $215 an ounce.
See the next post for the second news. |
