Butler piece - 'fraud' - he doesn't understand Barrick's programme
<<Barrick - it's programme is difficult to understand, contains 'trade secrets',
in a sense which has given it a competetive edge, and is difficult to explain. d>>
But d you seem to understand Barrick's programme enough to determine that
what Butler wrote was false and untrue and misleading, aka fraud.
Please let this thread know where you obtained your information to understand
Barrick's programme, not for my read as I am not learned in this stuff,
but for example Ole49r would be able to absorbe it and understand it.
It cannot be Insider info, so please identify those releases by the Barrick
company that explains in enough detail to allow you to determine that
Butler's article is a fraud.
Now d, you can again point to Barrick's official company web site and
contained news releases, but you have already done that, and not only
has Mr. Butler "been there, done that" but its up to you to stop the
cheese & wine'ing and put forth more of an effort than "fraud".
PANDORA'S BOX - gold-eagle.com
..... the past six months, I have written a good number of articles whose
central theme was the distortions caused in the gold and silver market
by the practice of leasing/forward selling.....
... past six months, I embarked upon a campaign of specificity in the
hope of terminating the decade-old downward price manipulation of gold
and silver. I figured that if I could narrow the discussion down to a
specific manipulator, I would stand a better chance of exposing and
proving the fraud, than if I continued to analyze on a broad and general
level. For the manipulator I chose Barrick Gold Corp.....
........... my central theme with the CFTC was that leasing/forward
selling was manipulating the market and simultaneously, destroying the
legitimate practice of hedging. In particular, I charged that the
selling of more than one year's production was a specific violation of
the Commodity Exchange Act.....
... the mining companies were doing was certainly not hedging.....
two mining companies, Ashanti and Cambior, effectively go bankrupt
... "screw the shareholder", a.k.a., bankruptcy.....
... miners brought to their knees by shorting will not see their
reserves in the ground disappear, but the inevitable restructuring will
strip existing shareholders of ownership going forward. What a rotten
deal - management and their bankers blunder badly, and the innocent
shareholders are turned into bagholders.....
If the miners were truly hedging, as they contend, and as the CFTC pretends,
you wouldn't see bankruptcies on the first two-week rally.....
..... not the time to hold mining companies with open gold short liabilities.
Puts, no problem. Forward sales and short call options, big problem.....
Nowhere is the problem bigger, ... , than it is at Barrick Gold.....
... third quarter earnings report and conference call, they confirmed that
not only had they not covered any shorts during the 20 year low prices
of the entire quarter, they actually added substantially to their short
position. ... As of 9/30, Barrick is up to 18 million ounces
of gold sold short (14 million ozs forward, 4 million calls). That is
the equivalent of 5 full year's production and 22 per cent of annual
world production. They've increased their short position by almost 50%
during the first 9 months of this year.....
What I did was publicly accuse Barrick of manipulation and fraud.....
I petitioned the SEC, CFTC, Barrick's auditors (Price Waterhouse Coopers),
Barrick management, and Barrick shareholders and employees.....
... To this day, I am amazed they haven't moved against me for libel -
but they do know that the truth is not on their side.
What I said clearly was that Barrick wasn't hedging.
Selling short five years worth of production is not hedging.....
... That Barrick's outsized short was held and added to at 20 year
unadjusted price lows, denotes lunacy. Out of concern to innocent
employees and shareholders, I offered the only possible solution -
convince management to immediately cover the short and restore Barrick
to the world-class gold producer it is capable of being.
... they are reduced to defending their position by claiming Barrick's
shorts are somehow different than those of other miners. Folks, a short
is a short. A naked call is a naked call. Gold in the ground that will
take years to extract, does not convert a naked call into a covered one,
no matter how many times Barrick, or their crooked bankers, proclaim it.
They are trapped in what increasingly looks to be the commodity blunder
of all time. Having missed the bottom by a billion dollars, Barrick.....
... all because of Pandora and her box.
Pandora is the joint announcement by the 15 Central Banks on Sep 26
to curb the leasing of gold.....
... the $60 price explosion in gold that resulted from the announcement
was not in the CB's game plan ... Using as a naked short position
an amount of 500 million ounces (I think conservative when
including leasing/forward selling, COMEX futures and calls, the much
bigger OTC, the LBMA, and all the gold bank certificates worldwide,
etc.), the math isn't complicated. For the $60 move, a resultant
loss/gain of $30 billion was created ... Losses of hundreds of millions
and billions of dollars are littered among the bullion banks, mines
and other counterparties ... That someone is keeping a lid on this news
is disturbing ... Major defaults on physical metal commitments exist just
below the surface. You can rest assured this was not what the Central
Banks had in mind when they made their announcement.
What the central banks had in mind was sending a clear signal to the
bullion banks and the metal world that leasing's time was up. It was not
physically possible for them to extend leasing indefinitely, so they
thought their disclosure would guide the market accordingly. But what
the central bankers misjudged was the fact that there could be no soft
landing at the true end of leasing/forward selling. It either existed,
or didn't exist - you're either pregnant or you're not. There are no
degrees in leasing, there are net new leasing supplies coming to market
on a daily basis, or there are no net new supplies coming to market. For
a few days after the announcement, there were no new net supplies of
metal coming to market via leasing. That's why the price exploded $60.....
Afterwards, in a panic, the central bankers drew back from the precipice
and released more leasing supplies, lest the market start running $60
everyday. So, now we are at a temporary stalemate. But the key word is
temporary. For fifteen years, demons and serpents and vermin in the form
of massive gold short positions by the thousands were stuffed into the box.
One or two escaped when the lid was briefly lifted by the CB announcement,
before being shut again. The lid on Pandora's Box, hastily repositioned,
is no permanent fix. After all, how many Kuwait's are out there?
How many national treasures can be sacrificed to the leasing gods?
In spite of vicious engineered selloffs, the lid is on for only
a short while, not just because the central banks don't have the
ability or the will to continue this stupid and manipulative practice.
There's even a better reason why it's all over.....
The unreported key aspect of the announcement was to render
leasing/forward selling as non-viable to the other participants in the
leasing daisy chain - the miners, bullion banks and other short selling
speculators. It did this in two ways. One, the announcement was a clear
indication that leasing supplies going forward were not available. With
the long-term prospect of supplies turned off, plans for new forward and
other short selling were abandoned. Two, the sudden price increase and
disasters in the mining world, proved overnight that the one way short
sell bet was the wrong bet. Believe me, of the hundreds of mining
companies who hold an open short exposure (maybe 95% of the mining
community), there is not one who's prime current focus is not on their
short sale. Right now, and for the immediate future the hedge book will
be the only concern. Over night, the perception of what a hedge book is,
has done an about face in every miner's mind. As well it should. Only
those miners who move aggressively to close any and all short exposure
will be spared the coming short inferno. Forget about Barrick and any
other stubborn shorts, they're toast. Only a fool will not see that the
leasing handwriting is on the wall.....
In closing, I would like to announce the launch of my new advisory
service - Butler Research - butlerresearch.com It's a
twice-monthly newsletter and daily commentary on the issues I've
discussed on these pages.....
... I would like to thank Vronsky and Westerman for the opportunity
of presenting my opinions here, and intend to continue to submit
articles in conjunction with my new service.....
Ted Butler, October 24, 1999
For more information on Ted Butler - butlerresearch.com |
