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

To: Enigma who wrote (2016)	2/7/2000 8:35:00 AM
From: russwinter	Read Replies (1) \| Respond to of 3558

"mentioned Pasqua in a recent post with a cost of around $1 billion - I don't see how a project of that magnitude can fly without some sort of hedging" I think there needs to be a balanced approach. Using my Kansas wheat farmer analogy, it may make since to lock in a price and book proceeds for a year or two's worth of production once you are certain the mine will be ready at a given time. A second acceptable strategy might be to buy puts for price protection. But that's not what ABX and others do. They've effectively sold nearly five years worth of production in a risky finance mechanism. If it's necessary to do that, maybe the economics of the project don't make since. Of course, that brings up the whole question of mining finance. There's no capital available because gold prices have traded below equilibrium for too long. This is in part because of the self inflicted damage and price distortions caused by the gold industry. Thus we come full circle back to step one: the finance issue will be resolved by higher POG, which will only occur when mining companies set reasonable limits, especially in regard to their forward sale practices. Because of the message of the marketplace (rerating the stocks of excessive hedgers down), I am confident that this is in the works.