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

To: Terry Swift who wrote (1587)	12/17/1999 11:50:00 AM
From: Enigma	Read Replies (1) \| Respond to of 3558

So if I enter into a forward sale contact I simple agree to deliver gold at a future date - surely there's more to it than that? I enter into a contract and my account gets credited now with the proceeds. I either put up margin or I put up gold. Barrick puts up gold which it borrows. Let's take it step by step, and others - investor-ex, Hutch etc., please join in. I think Barrick then sells the gold it has borrowed into the spot market and invests the proceeds into its internal money market fund. The difference in return on the MM fund and the lease rate it refers to as its contango. Question: If Barrick has sold the gold, what security is it now giving to cover the forward sale contract? Stop me if I'm wrong and then deal with the next steps. This is a complex issue involving the sale of calls, etc. - so maybe we can cover all the bases in due course.