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

To: Cascade Berry who wrote (1609)	12/18/1999 3:04:00 PM
From: nickel61	Read Replies (3) \| Respond to of 3558

Look, if you still think you are in a gold bear Barrick is the perfect stock for you. If you don't think gold is going to get to $600 /ounce for twenty years I wonder why in the world you would want to own any gold stock. I don't know the other index you are referring to but I assume it is the Canadian version of the XAU. It should not be surprising that an index of gold stocks correlates very tightly with the movement in the price of gold. And it should not be surprising that ABX correlates with the XAU index since the index is market capitalization weighted and I believe ABX is over twenty percent of the total weighting. The point is that the price of gold has been artificially lowered by a tremendous amount of gold that has not yet been mined being sold into the spot price and therefore forcing the spot price artificially down. This is done by borrowing gold from the Central Banks that hold it and selling it into the spot market and telling the central banks that ABX and the other producers who borrowed the gold will replace the borrowed and sold gold with the mined gold when the end of the "lease" comes. This has caused gold to go from $415/ounce in 1996 to around $280/ounce today. When the European Central banks announced that they would no longer "lease" or lend any more gold for the next five years the ability to continue to depress gold went away. Since that time in late September you have a new bull market in gold and ABX is the worse performer in the group, As my friend Mr.DoubleD pointed out in such a superb fashion only a few days ago. If you are happy with your investment none of this is important to you. If you want to make money with a rise in the gold price perhaps it is important.