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

To: Ken Benes who wrote (75984)	9/10/2001 12:53:33 PM
From: Enigma	Respond to of 116753

Ken Benes You once made the claim that you were a gold mining executive at some time, and that you had toured the world's gold properties? 'The great gold fields of the world'? Something like that. You should know then that exploration is usually paid for with equity money and development is usually funded with debt financing. When hundreds of millions of dollars are involved the lender likes to see the price assured over the project financing period. Even in the normal course of business companies with vast mining undertakings have got used to hedging production to make forecasting more predictable. What you seem to be after is either a cartel to fix the price by eliminating hedging and reducing production or a large mining company to act on its own. But the industry is not like the diamond industry. As I've pointed out so many times to you, gold is one of the most political of all commodities - in fact it is the most political because it competes with the fiat. A cartel of gold producers would find itself under attack from governments, and it would risk a re-run of the 30s all over again. I'd be interested to have a list of the erudite material which you've studied - which is, in your words, beyond the comprehension of '90 % of the population' (and 100 % of mining executives?) - who must sorely miss the advice of Ken - the ex mining executive? But spare me anything written by Ted Butler or Bill Murphy

To: Ken Benes who wrote (75984)	9/10/2001 8:56:44 PM
From: d:oug	Read Replies (1) \| Respond to of 116753

(just got this) Nosmo King = nosmoking [eom sl:ow d:oug]

To: Ken Benes who wrote (75984)	10/8/2001 3:13:54 PM
From: Alex	Read Replies (1) \| Respond to of 116753

The Thompson Dilemma ? Gold's New Politics -------------------------------------------------------------------------------- Story Filed: Monday, October 08, 2001 1:20 PM EST Oct 05, 2001 (Miningweb/All Africa Global Media via COMTEX)-- Gold Fields [GOLD] boss Chris Thompson departed from self-promotion at the Mining Investment Conference to rebuke industry stakeholders for failing their product. His excoriation is rooted in an insightful observation. Central banks have been gold's traditional custodians. Through successive versions of the gold standard, the metal was linked to all economic endeavour via a prudently managed umbilical cord to the national currencies. In latter years though, central banks relinquished their custodianship having sampled the many chaotic delights and mysteries of free-floating fiat currencies. Thompson says the industry is at fault for not accepting transfer of custodianship from the central banks. Consequently, gold producers have no substantive accumulation of knowledge that might allow them to manage their product from rock face to ring finger. That is in stark contrast to their commodity cousins who live and die by surplus-deficit cycles. Here we must coin the "Thompson Dilemma": gold cannot recover without flushing out its weakest, but biggest players ? governments. The metal price might be nearly destroyed before it can be restored. Central bankers, government treasury officials and a league of post gold window investment experts readily propagate the view that gold is not money. That is the subtext for the Thompson Dilemma. The finance-treasury complex neither wants, nor likes the yellow metal. Yet it will never surrender its tyranny over gold. That makes gold's future intensely political, especially because custodianship is vastly different from ownership and control. Gold producers must assume custodianship, but it will become another futile gesture if they do not force the transfer of ownership to the citizenry. Let citizens vote with their wallets on whether or not gold is money. Otherwise, what is the point of being the custodian of a product that is controlled by institutions whose intention is to destroy you? The word destroy is not used lightly; not in these times. Nothing less than war has been declared on the industry. The reward for gold producers' good citizenship and profound wealth creation over many decades is to be sacrificed on an altar of Monetarist experimentation that has yet to run its course. The war against gold is immoral for all the reasons that the war on drugs is right. Gold must be made free. The right to buy, hold and sell gold must be unfettered and encompass all refined forms. It requires a brutal confrontation with the great lie that gold is superfluous and heathen. If gold is of little monetary significance, then the central bankers must withdraw their support for government regulation of it. As a commodity declared irrelevant to modernity, governments and the agent provocateur central banks have no business in its market. Ounce for ounce, computer chips are more valuable than gold ? mostly because that market is blessedly unshackled from the nanny state. Let it be so with gold. Alas, there is not a single central banker or fiscal official who will agree to match gold sales with more relaxed controls over it. And that is the great deception. Propagandising its worthlessness but panicked about losing the right to dictate its terms. That is also the best point of leverage for the gold industry. Challenge the deception; don't cower in the face of it. Make a new peace or be put out of business. It must, perforce, be a guerrilla war aimed at the hearts and minds of the masses rather than a conventional one where lobbyists and politicians skirmish with no casualties. Thompson isolated three areas to tackle if the industry is to gain custodianship ? jewellery, investment demand and new applications. Investment demand is described as the "new" market opportunity. Indeed, it is the most promising means to outflank the finance-treasury complex. The industry needs to make private ownership of gold simple and affordable. There is far too much friction in the system even without regulatory obfuscation, primarily because of the absence of supporting infrastructure. As Thompson noted, it doesn't work to call up your broker and place an order for a few ounces of physical gold. It seems improbable that the large institutions can be persuaded to participate. After all, they have made more money betting against gold so there are too many vested interests to overcome. The Internet provides an alternative where secure electronic currencies backed by gold are already in circulation. The nascent industry just requires promotion, education and some infrastructure (linked credit cards) to be widely successful. There will be no shortage of squealing about the risks of money laundering. It is a red herring because the backing gold has no "velocity" because it is such an inconvenience to store and transport. With most physical gold centralised in a handful of locations, the risks of confiscation are too great for the underworld to use it. The criminal cannot hide his stash and the deposit taker has to be exceptionally careful lest the reserve base be compromised by dirty money. The World Gold Council is, as Thompson suggested, an ideal vehicle that can both promote and lend credibility. It cannot happen soon enough. And maybe we will one day talk of Thompson's Triumph. by Tim Wood Copyright Miningweb. Distributed by All Africa Global Media(AllAfrica.com) KEYWORD: South Africa Copyright © 2001, Africa News Service, all rights reserved. library.northernlight.com

To: Ken Benes who wrote (75984)	10/22/2001 3:14:59 PM
From: Alex	Read Replies (1) \| Respond to of 116753

Newcrest in hedge-book nightmare By BARRY FitzGERALD Tuesday 23 October 2001 The reason for the sharemarket's shunning of Newcrest Mining became clear yesterday when the Melbourne-based gold group revealed its gold and currency hedge book was out of the money by more than $1 billion. The nightmare hedge-book position was detailed in Newcrest's release of its production and exploration report for the September quarter. While Newcrest traded a few cents higher afterwards, the stock remains down by 25 per cent on its level of a month ago. The $300 million stock sell-off in the past month follows growing concerns about the group's net gold/dollar hedge-book position due to both the fall in the dollar and higher local dollar gold prices. The collapse of zinc producer Pasminco, with its massive dud currency position, has amplified those fears. Newcrest is no Pasminco. Nevertheless the group reported yesterday that the marked-to-market value of its net gold/foreign-exchange position at the end of the September quarter was a negative $1.08 billion. "The fall in the Australian dollar and an increase in the Australian dollar gold price increased the negative marked-to-market value," Newcrest said. The negative position compares with the group's total market capitalisation yesterday of $959 million. Newcrest said price movements since the end of the quarter had reduced the hedge book's negative position by $350 million, reducing the group's exposure to $735 million. Newcrest did its best yesterday to talk up the stock in its quarterly report. But apart from the net hedge-book shock, the report offered nothing new. That was due to widespread briefing of analysts ahead of the report. The one-on-one briefings were an attempt by Newcrest to deal with the disquiet from the September 17 resignation of its managing director of 18 months, Russell Barwick. Mr Barwick's resignation was the latest in the board's revolving-door policy towards its chief executives. Group chairman Ian Johnson has become executive chairman pending the appointment of a new managing director. Given the shock to the share price from the hedge book, some analysts are asking if the group's next move will be a takeover defence. theage.com.au

To: Ken Benes who wrote (75984)	10/26/2001 3:39:06 PM
From: Alex	Respond to of 116753

Confessions of a gold hedging convert By: Tim Wood Posted: 2001/10/26 Fri 14:06 \| © Miningweb 1997-2001 PRINCETON, NJ -- Nothing focuses the mind like tax preparation. Let's be clear, there is only one objective – I get wealthier by preventing the government leaches from pretending they can manage my money. And that got me thinking about gold in a different way. One of the ways to keep more of your money than the government wants to pilfer is to starve yourself of cash and squirrel money away in IRA vehicles; load them to the tax-deductible hilt. A consequence is long discussions with the CPA about where this money goes (memo to Paul O'Neill: I can't spend and save the economy because your taxes punish me for doing so). The CPA hates the idea of gold because he's been raised on a 20-year diet of the metal giving lousy returns. Unless you're a South African who stacked up on Krugerrands in 1982 and let inflation and a depreciating currency do all the work it looks like such a bad idea. I digress; I'm adamant that even as the Swiss abandon gold I want to follow their original advice and have at least 5 per cent of my tax avoidance investments linked to gold. My reasoning is that the Money Masters of the Universe have managed to keep the pendulum swinging for 30 years so it is not improbable that it could go on for another 30 years. If the whole portfolio was in gold I would look silly when I finally quit the day job. But if things go pear shaped for whatever reason, then I'd look even sillier pushing wheel barrow loads of 10 billion dollar denomination notes to the local Wawa Market for a loaf of bread; praying that tomorrow I don't need two wheelbarrows full. That is where the 5 per cent gold holding would gear up to cover the trashing of the rest of my investments. Ceteris Paribus. The bottom line is that I'm largely optimistic, but have a residue dread about this and that; hence a weakness for insurance products. Gold is going to be my portfolio insurance. Since it is insurance I will probably roll my eyes every year about the lost value, but I won't touch it. Then the CPA got too clever by half. "What sort of gold?" It's impractical to buy bullion and I don't like coins. Why pay a premium for artwork that is duplicated more often than the Mona Lisa? So it has to be gold equities which are a reasonable step away. "Should I just ring up one of the gold funds and check what their entry levels are (not having millions to deposit you see)?" asked the CPA. I almost said yes when I realized what a stupid idea that would be. "No, the fund has to have only unhedged holdings," I said, apparently involuntarily. But I really did hear myself say it. I have crossed to the other side. Did you hear a light saber? If I want portfolio insurance then the last thing I need is to have it diluted. I want total clarity on the gearing of my gold holdings to a financial or other disaster. I'm afraid I do not understand the gearing when you add hedging into the mix. I may as well top off the portfolio with banks if I go for heavily hedged companies. The point is not that hedged gold stocks are not worthy, just that they play a different role in terms of personal risk allocation. Many of the hedged gold producers hold their own against all comers in the S&P 500. That's fine, but then they must be prepared to show me the money by competing in the pool of investments that make up the remaining 95 per cent of the portfolio. It is personal requirements that determine just when a gold producer becomes more or less of a gold producer. For me, the only prescribed niche in my portfolio is for unhedged gold stocks. The rest is open to anything that looks inviting. If gold ever makes a serious comeback, then my view will change and I'll probably load up on resources. But until then, I am prepared to potentially sacrifice growth on 5 per cent of the total just to know that there is a hard-times parachute that doesn't need a ripcord. mips1.net

To: Ken Benes who wrote (75984)	11/14/2001 4:33:19 PM
From: Alex	Respond to of 116753

Hedging without bankers proposed By: David McKay Posted: 2001/11/14 Wed 11:00 ZE2 \| © Miningweb 1997-2001 JOHANNESBURG – Durban Roodepoort Deep's [NAS:DROOY] chairman and chief executive, Mark Wellesley-Wood, says mining companies may fund growth from the futures markets rather than through traditional debt and equity channels. This comes at a time when the cost of capital is relatively cheap, owing to the twin effects of consolidation in the world's mining industry and the decline in world interest rates. (DRD also recently concluded a three-year A$4.2 million loan with the Bank of South Pacific, aimed at funding a doubling in production at its Papua New Guinea gold mine, Tolukuma.) Speaking at the Royal School of Mines Association in London, Wellesley-Wood said the futures markets will continue to become more sophisticated such that consumers requiring a specific product will be able to pre-order at a pre-agreed price. This sounds like hedging – the finance-raising procedure from which DRD is attempting to extricate itself. Wellesley-Wood concedes there's an element of hedging in his suggestion: revenues are fixed and participation in the upside of the spot price is removed from or diluted in the company's profile. But the relationship he envisages with consumers "disintermediates" (cuts out) the middle man – i.e. the bullion bank. In any event, Wellesley-Wood says his suggestion is not specific to gold mining but to the resources field in general. Nonetheless: "Moving to such a system will enable mines to be financed increasingly by the customer rather than the debt of equity markets and will require greater flexibility in resource determination to adjust marginal pay limits based on 'future' prices," Wellesley-Wood said. DRD told Miningweb last week it would close out its entire hedge book by the middle of next year. If the company meets its June target, it will have shaken off the greatest impediment to its profitability and consequently its valuation. The hedge is underwater and costs the group about $1.47 million (R14 million) a month in hard cash and a more insidious $1.26 million (R12 million) in opportunity costs each month. One can understand Wellesley-Wood's aversion to equity financing. DRD has doubled its share capital over the last five years, issuing shares to finance projects. Shareholders who agreed to finance the company have been sadly disappointed with the results – namely, a number of investments in Australia. To be fair, Wellesley-Wood has done much to alter this strategy and clean up the company's name. But surely debt finance, such as that raised to expand Tolukuma, is an attractive financing option over equity financing and hedging? The weighted average cost of capital for South African mining companies has fallen to about 6 per cent from 9 per cent in a year as banks compete more intensively to win revenue from the consolidation-hungry mining industry. This can be seen clearly in the UK capital market, where three of the City's large mining groups – BHP Billiton, Anglo American and Rio Tinto – have been refinancing. Ken Gooding reports from London that, with interest rates at rock-bottom in the US and Europe, it is a good time to lock in better deals. The number of mining customers is shrinking fast and the banks that remain in business are offering very competitive terms. BHP Billiton was offered $3.6 billion or 30 per cent more than the $2.5 billion it was looking for with its new facility. Anglo American announced yesterday (12 November) that it had been offered $3 billion in credit, about 50 per cent more than the $2.25 billion it had requested. In June AngloGold secured a $400 million syndicated loan facility at some 75 basis points above LIBOR, a competitive interest rate. For example, the $350 million portion of the debt incurred when AngloGold bought the Minorco gold assets was completed at 90 points above LIBOR. mips1.net