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Gold/Mining/Energy : Gold Price Monitor

GDXJ 94.04

+0.6%

Nov 21 4:00 PM EST

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To: Enigma who wrote (33761)	5/13/1999 8:14:00 AM
From: David R. Schaller	Read Replies (1) of 116764

DoubleD, Kitco has the one year lease rate @ 1.54% & the one year forward rate at 3.70%. Does anyone know the difference? Do either of them imply taking physical delivery? Barrick has sold several years of production forward. I assume that the rates 3yrs out are even higher than the 1yr. When Barrick's CFO was asked who was stupid enough to pay $400 for a commodity that they could buy on the spot market for $280, he replied that it doesn't work that way. They borrow the gold from the central banks and then sell it into the spot market and invest the proceeds in treasuries. Well, I'll be dipped if I can see how that secures them $400/oz gold. If they were to net 5% for 4 yrs on $300/oz it would bring in interest of about $60/oz over the 4 yrs but is this really $360 gold? Or $300 gold & $60 interest income? I think the interesting question is what investments they are collateralizing with the effectively borrowed treasuries. I think that was what the point Gabelli made about LTCM was related to. Barrick seems to have found a win-win investment strategy. I wonder if it's as bullet proof as they would have us believe? Dave

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