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

To: ForYourEyesOnly who wrote (1449)	10/29/1999 11:42:00 PM
From: Enigma	Read Replies (1) \| Respond to of 3558

Everything is relative - including 18 million ounces - have you calculated what percentage this is of Barrick's total reserves? 'Hefty' in absolute but not relative terms. Also - let's say the price of gold doubled - do you know by how much Barrick's (any producer's) reserves would increase, by virtue of the price increase alone? Think of the reserves of any commodity as a pyramid. At a certain price it is economic to mine (or produce) let's say the top third of the reserve pyramid. But as the price increases more of the pyramid becomes economic. I remember that Jim Gray of Canadian Hunter used this analogy with reference to oil reserves. When gold reached $800 even muck was worth mining! If 25% of Barrick's reserves are fixed at a value of $385 and the price rises to $500 not only will Barrick's remaining reserves increase in quantity - they will be worth $500/ounce. An unhedged producer will participate fully in the upside move - but most producers are aware that it is prudent to hedge. What goes up can (usually) come down. Maybe you're Ted Butler himself?!