Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: russet who wrote (2281)	4/1/2002 2:59:56 PM
From: tyc:>	Read Replies (3) \| Respond to of 3558

If I may join the discussion.... Selling forward simply gets a miner the current spot price plus interest to the date of forward sale. For the addition of interest, the miner abandons the possible profit from an increase in the price of gold. That is why the market will continue to price hedgers lower than non- hedgers. Forward sales abandon the "option value" of hedged production. I like to think that the gold in the ground has already been sold. What the hedger has in the ground is more like a coupon-less bond.... not very exciting especially when interest rates are expected to increase.

To: russet who wrote (2281)	4/1/2002 3:06:56 PM
From: nickel61	Respond to of 3558

It wasn't posted on the website yesterday when I did this. Thanks for commenting.

To: russet who wrote (2281)	4/1/2002 3:17:58 PM
From: nickel61	Read Replies (1) \| Respond to of 3558

Actually Russett I don't disagree with much of anything you said. I do think that the only distinction that I am making by putting the write off back into the cost of the annual production for Barrick is that it is after all a cost of being in the gold mining business,and this whole discussion came about solely because we were arguing about how you could have an entire industry in a situation where demand exceeded supply by over a thousand tonnes a year and the market price stayed below the cost of even the most efficient mines ability to produce AND replace that production..... On an ongoing business basis I agree with your analysis. The point at which we part company is where you think Barrick will be totally able to adjust to a rapid and large rise in the price of gold. I am suspicious of that. But only time will tell. Good luck to you. As you well know and Arthur Anderson/ Enron have so amply displayed recently, there is little sense in arguing about the sublties of the balance sheet because in many modern companies the balance sheets are not worth the paper they are printed on. The banks Citicorp and JP Morgan/Chase among the most visible have accomodated many managements with numerous off balance sheet methods of hiding losses and debt. To argue further in Barricks case would solve little. The question remains are they as well prepared for an unwinding of their short position as they claim. I am not so sure. Time will tell.