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

To: Claude Cormier who wrote (1942)	1/16/2000 8:07:00 PM
From: Exsrch	Read Replies (2) \| Respond to of 3558

Claude, <<ABX would be best to transfer their hedge into a separate entity, issue shares, and appease the anti-hedge neophytes. By Hutch>> <<Something probably not possible. They couldn't transfer the collaterals. reply by Claude>> Let me first say that Hutch's hypothesis seems an unlikely event but possible (do you have any sources Hutch?); howeever, ABX wouldn't need to transfer the collaterals to make something like this work. Example: - there would be two companies 1. ABX 2. ABX hedging - ABX hedging could show a track record of earning 6-7% on more than US$4 billion in assets consistently for 10 years (with it credibility) - ABX could borrow gold from CBs and than sell gold at spot. Turn over cash to ABX hedging at predetermined low rates (slightly above leasing rates). But none of this convolution would make sense even if it is doable. - ABX could not make a profit at current prices after separating (shareholder value would tank). Market would not benefit because ABX hedging would continue to hedge via ABX. - ABX hedging would continue to profit but be exposed to tremendous risks (because ABX hedging would be separated from the collateral). Share prices for ABX hedging would be larger than Beta. - if things went sour (AU prices launches skyward) for ABX hedging, ABX would have to cover the losses of debtor and both would lose. However, as one entity they mutually support and cover each others risk. Claude and Hutch, Let me know what you think. Exsrch P.S. This is just a quick thought. My speculations.