The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: Secret_Agent_Man who wrote (22661)	9/10/2009 4:32:51 AM
From: RockyBalboa	2 Recommendations Read Replies (2) of 71456

While the economic result being correctly described the basis is so utterly wrong and twists the facts. Here´s why: It is correct that barrick did not deliver gold, but rather negotiated a break up the contracts by cashing out the counterparty; and since it didn´t have that kind of money available it needed to place stock. To repeat, Barrick has not defaulted on its gold deliveries. Barricks contracts had delivery dates further out none of which was met today. So, technically there are no grounds to deliver gold today. Rather, Barrick faced an ordinary margin call where the counterparty demanded additional collateral, something which is entirely legal if a derivative contract goes underwater. This did happen earlier and nearly sank Ashanti Gold. What could barrick do? Instead of stating that it has been met with a margin call it could not meet, it tried to spin the facts into something less negative, "We want to get out of our hedges because we are so bullish"... this and that makes me even more bearish on gold since counterparties just pushed it to see some blood, i.e. cash.

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