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

To: d:oug who wrote (46032)	12/16/1999 4:34:00 AM
From: d:oug	Read Replies (1) \| Respond to of 116836

(GATA News) ...focus attention on big hedgers like Barrick Gold is WORKING. Subj: Gillian O'Conner, The Financial Times, Second thoughts over derivatives Date: 12/15/99 6:12:51 PM EST From: LePatron@LeMetropoleCafe.com To: dougak Le Metropole members, The following article says it all in my book. I will have more on this soon, but GATA's efforts to focus attention on the big hedgers like Barrick Gold is WORKING. Not only has GATA influenced private investors to sell Barrick (see below), but it had some influence on one of its former 15 biggest institutional shareholders that is no more. Ms. O'Conner's article is right on the money. With more press and shareholder awareness on this issue, the Barricks of the world will eventually have to cover and that will drive up the gold price. It makes no sense to own their stock anymore unless they do cover. Second thoughts over derivatives Gillian O'Conner Financial Times December 15, 1999 Hedging has become controversial once more. For the past few years an increasing number of gold miners have relied on their portfolios of derivatives not only to protect them against the falling metal price but also to provide supplemental profits. The hedging frenzy peaked in the first half of this year, when the bullion price sank to just above $250 an ounce and raised the spectre of profitless production or mass redundancies. But this left many companies vulnerable to the price's sudden about turn in late September. Ashanti, Ghana's pride, notoriously racked up enormous paper losses on its portfolio, and teetered on the brink of default, because its banking counterparties has the right to call for substantial cash deposits which the company could not afford. International investors were understandably flabbergasted at the seeming paradox. When gold goes down, miner's suffering are understandable. When the price goes up, it must surely be good news. But the public anguish of Ashanti and the Canadian Cambior showed that this is not necessarily so. And worries that hedge problems might be lurking elsewhere mean that the FT Gold Mines index has risen only slightly more than the gold price since midsummer. This is highly unusual. Traditionally gold shares are bought as a geared play on gold itself, and exaggerate its movements in both directions. Jo Foster, of US investment managers Van Eck Associates, speaks for many when he says: "I cannot overstate my disappointment. We get a rally in the gold price and the result is two nearly bankrupt companies." In the UK, Mercury, a long-term opponent of hedging, headed a recent letter to unitholders in its Gold and General Fund "Alongside every hedge there runs a ditch." Graham Birch, manager, said that in recent weeks he had been "astonished to hear gold company executives declare that hedging 30-40 per cent of reserves and production is a low level of revenue protection. They also cling to the idea that derivative contracts with 10-15 year lives are attractive." At Mercury, he added, "we are not prepared to mandate companies to pre-sell vast proportions of the ore reserve at low prices." As a consequence Mr. Birch expects to have "near permanent big holdings in stocks such as Harmony and Gold Fields." Harmony has never hedged. Gold Fields has publicly recanted and closed out virtually the whole of its hedge book. Fringe US pro-gold action group GATA (The Gold Anti-Trust Action Committee) has been encouraging private investors to sell companies which hedge, such as Barrick, and buy those which do not, such as Gold Fields. If such an attitude spreads and deepens, companies may find themselves forced to abandon hedging in defense of their share prices. At the acceptable end of the spectrum come the ordinary forward sales required by bankers before they put up money for a new mine development. Even Gold Fields still has some forwards in place in relation to its Tarkwa project in Ghana. At the unacceptable end come some of the exotics which exploded in their buyers' faces in October: "escalating ounce" calls, where the number of ounces the miner could be asked to deliver rose with the gold price; Parisians, where the price at which it could be asked to sell fell as the market rose. Exotics were always a minor part of the market. What about the large area in between the two extremes? This is where the argument will be focused next year. But it is not just about miners who are having second thoughts about hedging. Bankers are having second thoughts, too. Most bullion banks are said to be reviewing their credit and margin requirements, and some banks for which bullion trading is a minor activity could even discreetly leave the field to their rivals. For both reasons hedging habits are set to change. For new readers, the above mention of GATA is as follows. Bill Murphy, Chairman, Gold Anti Trust Action (GATA) gata.org Also, GATA related articles can be obtained at the pay for view site. Bill Murphy, Le Patron, Le Metropole Cafe lemetropolecafe.com

To: d:oug who wrote (46032)	12/16/1999 5:40:00 AM
From: Zardoz	Read Replies (6) \| Respond to of 116836

Those who read this thread and do not post on it represent the audience I am posting to, not you. Phheewww, I thought I was going to have to listen to another Bill Murphy clone spout the same rubbish, innuendoes, and crap all over again. And you certainly don't disappoint do you. Are you Bill Murphy? I only ask, because you seem to be doing exactly what he was doing... using SI to propagate the same ideology. {Actually, I insult Bill, he's much more intelligent} Oh, I'm sure some in your audience will suggest that I'm berating the guy, and they are right. He chooses to leave SI because he, like you, can't or won't answer the hard questions. Like: "How do you value the real price of gold?" "What is the standard that you use to value the price of gold at any price other then market?" Many over the years, myself included, have set valuations methods and models that over time accurately predict the price of gold. Yet, he has been consistently wrong. Or at best attempts to take credits for things that he was not involved in. He's stated many a rumour that have not bear fruit. And then we have you acting as a puppet. Tell me; is Bill {and GATA} your puppet master? Pulling the strings from behind the scenes. Are you playing this thread as a newsstand, and attempting to gain notoriety for a cause? Or are you trying to act as a link to GATA to suck up donations for a loosing cause? Personally I believe you post far too much on GATA related information to NOT be directly working on there behave. Supply and demand dictates the price for gold, not conspiracies or cabals. Hutch Gold's only hope for the year 2ooo is M2, M3 and the ratios between. members.home.net members.home.net members.home.net M3/M2 If you look at the M3, you'd have noticed a large build up in reserves. The solution to this is the M2. WE can expect a rapid rise in M2 in early 2ooo. The FRB uses M2 and M3 to control currency and inflation. Inflation is on the downside since less spring. True inflation {not CPI} is still running around 5.25% as measure in monetary excess terms. This suggests a M2 pump, which will deflate the M3 curve. This should result in much higher earnings. But will the M2 is pumped the POG may see a rise to $290 range. But rest assured, if the M2 increases are not compounded, the POG will deteriorate to new multi decades lows. The long term POG is still in a downtrend. I suspect that come Jan 2ooo you will see a concerted effect of currencies transaction by the G7 to lower the yen, and finally bust the trend. This is what CB do, bust trends. The bull market is alive and well.