<< We have to remember that ABX does not actually sell their gold above spot. >>
Correct me if I'm wrong, but when they borrow the gold, isn't ABX short-selling the gold at the given price, in this case $385. Thus, if the current market is $285 and ABX returns x ounces of gold to the CB/GB, didn't they just Short at $385 and Cover at $285 for a profit of $100 per ounce above spot?
This may or may not be good for the price of gold, etc., but it sure looks like a good trade to me.
Regarding the risk of higher gold prices, POG would need to increase over 35% from present levels just to make this a scratch trade for ABX. If gold does jump that much (or more), then ABX could increase production on higher cost reserves and make a killing with everyone else. Meanwhile, the extra $100 per ounce is not a bad little bonus.
Forward-selling may be bad for the market, but it sure seems to have been good for ABX.
Am I missing something? |
