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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ken Benes who wrote (38209)	8/2/1999 2:11:00 PM
From: Bobby Yellin	Read Replies (1) \| Respond to of 116753

great post..I was confused in that I didn't realize you were talking about the now..sorry

To: Ken Benes who wrote (38209)	8/2/1999 3:59:00 PM
From: Enigma	Respond to of 116753

<<Being in business, you have to be able to spot the bottom of a market>> This is the whole point of hedging - nobody can spot the bottom of a market - whether they're in business or not. This thread is a good example - it looks like a bottom right now - but who can say? As regards forward sales - there is always a large forward position among the producers - as you pointed out NEM (or was it HM?) recently added to this total position - but others have dropped out - so the total position is probably much the same. Forward sales have been a fact of life for some time now - so forward selling by itself is not changing the market picture. If you sell forward, at some point you cover the contract and sell into the spot market. One thing the forward selling had done it seems is to buy the producers some lead time - particularly with marginal mines. People talk about x # of producers being unprofitable at $254 gold - it seems that they should be considering the average forward price when they make this sort of statement. So instead of 40% of mines being unprofitable, maybe the figure is only 10-15%? This is a guess of course - but isn't Barrick's average forward price $385/oz? Something like that. Mind you Barrick has already mothballed some large unprofitable mines in South America. It will catch up with the marginal producers eventually of course - but they have to produce the gold to have it to deliver against the forward contract, although I guess they can close out the contracts and shut down. But I sometimes think you don't realise that the decision to shut down a mine is not one which is taken lightly - particularly with large underground mines. In underground mines there is automatic highgrading when prices are low - just the opposite occurs with high prices - with gold at $850/oz 'muck' was suddenly ore. d

To: Ken Benes who wrote (38209)	8/2/1999 5:28:00 PM
From: Rarebird	Read Replies (3) \| Respond to of 116753

< When the producers sell forward, they short circuit any kind of rally as it materializes...> It certainly does delay a rally, Yes.

To: Ken Benes who wrote (38209)	8/2/1999 11:43:00 PM
From: Enigma	Respond to of 116753

Forward sales. You have been saying in your posts for some time that it is forward sales by the producers which are hurting the POG. It is my contention that it is spot sales which effect the price. You ignore the forward purchases which are part of the hedging package - the purchases which close out futures contracts. You can't have it both ways - if forward sales depress the (futures)price - the covering forward purchases increase the (futures) price - as the sales and purchases are a wash (more or less) there is little or no effect on the price.