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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Chisholm who wrote (1421)	10/19/1999 10:48:00 AM
From: ForYourEyesOnly	Respond to of 3558

You are right that Barrick probably has a custom package set up, the details of which are most likely not public knowledge. However, once gold goes over $400, the position (loan, calls, whatever) will most definitely be in the red.......and the higher gold goes, the more those who lent the gold will worry about getting it back (the original loans to the BB that loaned the metal to the miners are usually rather short, 1-year or less). Does it make sense to you that anyone would arrange a paper contract where: The buyer profits and the seller loses when the commodity goes down. The buyer suffers no loss and the seller enjoys no gain when the commodity goes up? Who would be a counterparty to such a contract? Either the Easter Bunny has begun selling derivatives contracts, or there must be some sort of downside for Barrick and upside for the seller of the contract. Please think about the contract from both sides (buyer/seller). I would say that Barrick is understating the risks they have taken on. Cheers, THC