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

To: Enigma who wrote (85234)	5/8/2002 2:06:13 PM
From: goldsheet	Respond to of 116836

It is unfortunate I end up appearing to defend Barrick, when what I rather do is encourage a more complete analysis of hedging by ALL firms in the industry. The typical article runs through only ABX numbers, then jumps to conclusions of mass disaster. Words are manipulated, such as forward sales and short as being the same. Speculators, who have no means of production, are the one who short and expose themselves to the entire market risk, then can get really screwed if they have to cover at the full market price. Producers, who can convert reserves into gold, are the one who engage forward sales and in the worse case limit their upside to the contract price then have to mine the gold (at maybe $175 cash) to deliver the gold. Sure they lose the opportunity cost of higher prices on maybe 20% of reserves. My personal pet peeve: Barrick defends their hedging policy and is declared evil, while Newmont says they intend to close all hedges therefore they are good. Unfortunately, Newmont realized how expensive it was to buy back their forwards and now will slowly deliver into them. For those interested in the facts: Barrick is forward 18.0moz, about 20% of reserves, at $344, with a current value of +$US630M while Newmont is forward 9.9moz, about 10% of reserves, at $295, with a current value of -$US150M. I would really like someone to do a complete INDUSTRY analysis instead of just picking out selected firms.