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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (3461)	5/2/2002 9:10:27 AM
From: BSGrinder	Respond to of 39344

Here is the relevant section from the GATA Midas column regarding Barrick and AngloGold: "The big gold news today has to do with Barrick and AngloGold. I was told the following last night by THE BEST OF OVERSEAS SOURCES: “Barrick at the moment has a team of 40 people working in Johannesburg. They want to take over AngloGold.” The Midas AngloGold analysis is all falling into place. AngloGold CEO Bobby Godsell has been pounding the table for months and months that Anglo has reduced its hedge book and is going to continue to do so in an aggressive manner. That is most unusual. Normally a big hedger completes a buy-back program and THEN announces what they have done. My colleagues and I have been scratching our heads as to why Anglo would announce their intentions ahead of time, which would surely result in higher buy-back prices. Now we have our answer. Anglogold wants the gold price to go much higher to stave off Barrick. Barrick remains heavily hedged. A soaring gold price is no great shakes to Barrick and could even do them in if their hedge book blows up. In addition, if AngloGold covers their hedges as fast as possible, it will add fuel to the growing gold buying power and be a factor in moving the gold price higher. The more Anglogold covers forwards and the higher their share price goes, the more difficult it will be for Barrick to take over AngloGold. Anglogold will get too expensive. Thus, Bobby Godsell wants the world to know that the world’s number one gold producer is covering hedges, so as to encourage others to cover hedges, so as to encourage hedge funds and other physical gold buyers to step up to the plate and get long. MONEYWEB produced an interview with Bobby Godsell today and one of his comments was nothing short of unprecedented and sensational: BOBBY GODSELL: No, not at all. I actually I am afraid I consider it quite an achievement. I think, in fact, the major feature of our quarterly results – which I would describe as operationally steady – the major feature is that we've indicated again that we think the gold price is firming and that we've got better prospects for the gold price than we've had certainly since 1993, maybe even since 1987. Against that background, we've been trimming back our hedge book. We also have said quite openly that we were taken by surprise, perhaps like a few other people, by the dramatic decline in the rand's value in November and December that left us with a number of rand-denominated forward sales contracts that were seriously out of the money. We've reduced our hedge book by 1.7m ounces this quarter, or a 120% of the company's production. We are now significantly less hedged than we were last quarter. That increases our participation in the firmer gold prices and, in particular, we've taken out the poorly priced rand contracts. For that we've paid a price of I think $7 in the difference between the received price and the spot price, and I think to have been able to adjust your hedge book in that way at really a comparatively small cost is a great tribute to the people who run our hedge. MONEYWEB: Now the gold price currently flirting with around the $310 level. Where do you see that by year end? BOBBY GODSELL: Byron, all we can say is – and my colleague Kelvin Williams has studied this market for seventeen years now – everything is in place for a firmer price. The only constraint on the price going up is of course physical offtake, and it is so that, if the price rises and rises rapidly, you see a fall off on jewellery demand, and we're seeing that for example in India in quite a big way. I think the prospects are for a price between $300 and $350. But we've never predicted prices, we're just not that smart. -END- ...“better prospects for the gold price than we've had certainly since 1993, maybe even since 1987.” In 1993 gold traded $400+, in 1987 $500+. Conservative gold executives like Bobby Godsell DO NOT make casual comments. There is a purpose to everything he says in a formal interview. Bobby Godsell knows GATA has been right all along; that the gold price has been rigged and kept at artificially low prices for years. He knows the rig is coming to an end and he knows the gold price is explosive for all the reasons oft-cited in Midas commentary. For those reasons Bobby G is not afraid to hint that $400 or $500 gold is possible. I can’t be the only one in gold land to understand this. A statement like this has to freak some of the big hedgers and encourage other big spec players to load the gold boat. I consider Bobby Godsell’s gold comments to be as significant a development as any since GATA began and the Café opened for business."