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

To: SwampDogg who wrote (44860)	11/11/1999 4:22:00 PM
From: Enigma	Read Replies (2) \| Respond to of 116786

You forget that Barrick has been hedging (and lest we forget only a portion of its reserves)for many years - I can't remember when they started - and it has hedged in rising and falling markets - it makes no difference to them at all - indeed I'm sure their programme is dependent on time and not price.

To: SwampDogg who wrote (44860)	11/11/1999 5:40:00 PM
From: Ken Benes	Respond to of 116786

A careful examination of hedging and its consequences for the industry is a study of self defeat. While the concept of hedging has a history in the commodity business, its application to the gold industry was an aberration of this concept. The producers in an attempt to lock in a fair price for their product unwittingly became a retail arm for other entities with a political and economic agenda using their valuable reserves to collateralize the leasing of cb gold. Initially, the hedging was relatively benign involving small amounts over a limited period of time. As the producers relinquished the financial control of the companies to the predatory practices of the bullion banks and other participants in the gold carry trade, the hedging included synthetic positions using options to lock in prices. Unfortunately, selling calls and using the proceeds to purchase puts did little else than expose the producers to enormous risks without the protection they thought they were buying. Purchasing puts at the bottom of the market, because the bankers told them that they would be driving the prices lower was an exercise in deceit on the bankers and malfeasance by the management of the producers. The market had bottomed and the companies became vulnerable with the naked calls that were used to underwrite the downside protection against lower gold prices. The reputation of the senior producers as a hedge against financial calamity in times of turmoil has been shattered. Two years prior to this debacle, we had the collapse of the junior exploratory markets resulting from the bre-x scandal along with a multitude of lesser frauds. The decimation of the gold industry is complete. GATA continues to offer platitudes warning those short gold that this is the last chance for the producers to square there hedge books because time is running out. Time has run out and as long as the cb's have an ounce of gold to throw at the market, and the producers are managed by the equivalent of candy store operators, gold will do little or nothing and tread water in its new trading range. Ken