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

To: goldsnow who wrote (43297)	10/18/1999 6:49:00 PM
From: Little Joe	Read Replies (1) \| Respond to of 116767

Interesting Article on Gold "Misrepresentation, or fudging the numbers? Last week we saw a number of mining companies come clean on their hedging numbers and their potential exposure to a higher POG. Cambior and Ashanti have been looked at critically by nearly everyone, but there is still a lot of what could be called misrepresentation by others. ( actually companies like Barrick would call it CYA and hope no one sees what we are really saying ) Barrick has given their hedge figures in an abstract way, saying they are not currently subject to margin calls because of the company's financial strength. Of course if and/or when POG hits $350 they may well be subject to margin calls, but whatever precipitates, we know their stock price will be restricted for years to come at any price over $350 gold as it appears they hedged all their gold for the forseeable future. One of our picks, Glamis, that we decided was a good buy at $2.45 and hit $4.45 for a 95% gain has now dropped back under $4.00 and is likely to head lower as it is strongly hedged out to 2001, unless of course they cover. They have 36,000 oz/au as puts for 1999, however, as these are out of the money, they can elect to let them expire. This is not true of the calls however, as the more in the money they become the greater the incentive of the holders of the calls is to demand gold be delivered. This can be substantial. First, assuming they have to deliver their forward sales and calls for 1999, 16,400oz forward at $288 delivered, would leave them with a loss, delivering today, at $318 POG, of $492,000. they do not state what price the calls are, but say the average of them both is $301. This would indicate the calls are for about $320. In the case of Glamis, not a big deal at the moment. What is of concern is the next year position of 82,000oz at $288. These will cost the company $2.624 million if they do not close them out and only, only, if the price stays at $320. So how many other companies are in this position? You can be sure they will be fighting to keep the price down so they do not take the proverbial bath and there will be a lot of discussion as to how they got into this position at the conference currently being held in Denver of the major gold producers. General Markets. These got really beaten up last week and we stated over a month ago to watch out for just such an event. Well weren't wrong. We said the POG had changed to an uptrend about the same time and now was the time to buy and we were not wrong then as POG jumped to up to $339 before settling down to the current $317. This has caused all kinds of excitement in the market. We certainly hope all our readers heeded our comments and participated in some of these gains. The Dow and Nasdaq are at a very precarious place and we suggested the immediate downside for the Dow was somewhere near 9,800 and we actually expect this to be broken on the downside this week. We posted an article at speculativestocks.com that showed in graphical form where we saw the trouble spots with a clear downtrend occurring. Remember, a 10% drop is a correction, anything over 20% is a disaster, as the Dow has been held up by only a few stocks, same as the Nasdaq. We have been skeptical about the strength of these markets and we have especially been skepitacl about the 'official numbers' on inflation. Well with the 30yr Bond staying stubbornly above 6.25% the rest of the market agrees with us. Which brings us back to the gold market. this is normally a hedge against inflation and while some say we do fixate on it, we acknowledge that there are so many analysts following all the other markets that any commentary we made would be superfluous. However, that being said, as we look at things in a speculative light, we see lots of short term moves that other shrug off. We do expect, after a short period, that the gold market will move up further and we are looking at a potential upside for gold of $465. Now while this may seem high to many, we have an analysis of this at speculativestocks.com We also expect the next large move to come in the silver market. We have also reposted our last year article on silver in the articles section of the website. In closing, watch our guest pick Wayside Gold IWA/VSE this next two weeks. We believe they have a mine on their hands and we have heard there are others that now believe this too. It has traded heavily up to $0.20 this past week and there still has been no news. This tells us the insiders are accumulating the stock." BJ Speculative Stocks.