Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: LLCF who wrote (43826)	1/4/2006 3:42:53 PM
From: mishedlo	Read Replies (2) of 116555

The article is crap but not total crap. Barrick is not losing billions as the author suggests it is losing billions in potential profit. There is a huge difference. That said, Barrick can indeed get in trouble if mining costs rise above prices they forward sold at. That is not inconceivable. Furthermore, I agree that Barrick was stupid in not massively covering their hedges at numerous opportunities. Barrick might have the best forward contract in the business, but at some point they still have to deliver. What will their production costs be at that point in time? That article way overplayed the hype, while missing what I feel is the big issue totally (not the POG itself but rising production costs). I have little respect for Barrick and at some point they may go under because of what they did but for far different reasons than the price of gold went up costing them billions of dollars. Mish

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