>>Barrick is a fine company. About a year ago, I had a very substantial position in Trizec-Hahn (then Horsham,) a holding company that is ABX's parent, in a way. I have not been following ABX of late, but I do not think they have changed their basic approach to the mining business in the last year.
As I recall, ABX was *completely* hedged against adverse movements in the price of gold for the next *several years.* Using forward contracts, ABX locked in a number of years of anticipated output, at a price of $400 - $425 per ounce (the numbers are from memory, but I'm pretty sure that is the range.) Additionally, ABX is a low cost producer, with costs of $225 - $250 per ounce (again, from memory.)<<
ABX is probably a good company, the following comments are in order:
-A short sale is not always established because the company management is bad, it is but one of the reasons
-A short sale may be established if the sector itself is in a bad shape with no hope of recovery in near future, as gold currently is; and if ABX is a great company as you say its performance only confirms
that the gold stocks are in a bad shape
-Recent news coming out of Europe Australia and other central banks indicate they have no interest in gold and may likely try to sell their holdings
-ABX may have been hedged, but that does not look "complete" to me now, a look at its chart will confirm that
-Just because a company is well managed and that one had good experience with it in the past should not prevent one from shorting it in the future
-With short positions and options usually a short to medium time span is desirable (because so many things can go against you over a long period) so the short term future for gold does not look very appealing to me
-I have not shorted it and will do so only if it gets a bounce, if you want to go long with gold stocks at this point, I hope you have a good justification other than the company has done well in the past and is well hedged (all such companies dealing in commodities need to hedge themselves); good luck |
