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

To: FuzzFace who wrote (2635)	5/12/2002 7:22:41 AM
From: nickel61	Respond to of 3558

Your statement pretty much sums up the entire arguement. It has been a good strategy for a declining gold price. Witness the fifteen year chart of performance. But is a losing strategy for a rising gold price witness the market performance of Barrick over the last three years. If those of us who think gold has been held down by over hedging are correct then the snap back in gold to a more "normal" price range should bury the Barrick hedge book unless they can cover before it happens. As tyke has pointed out they may not be doing that fast enough.

To: FuzzFace who wrote (2635)	5/12/2002 10:12:32 AM
From: Enigma	Read Replies (2) \| Respond to of 3558

It's as if you don't read or comprehend a thing? You have this fixation about 'hedgers' without getting into the subject. It's sort of like being a zealot in politics or religion - nothing you read (or choose not to read - more to the point) makes one iota of difference. But you know what - the stock market flat disagrees with you.

To: FuzzFace who wrote (2635)	5/12/2002 11:07:27 AM
From: Rarebird	Respond to of 3558

<I don't think HM shareholders made out so well.> I bought HM back in the days when I was stupid and ignorant about the Gold Market(back in late 98 initially and I averaged down quite a few times) and did not know how to evaluate a gold mining company. Today, I'm up a little over 27% in 3 1/2 years, which is quite poor in comparison to my tremendous gains in other gold mining stocks in a much shorter period of time. But I didn't lose on account of my stupidity and ignorance. I certainly deserved to. But life is not fair. I paid for my stupidity and ignorance by suffering deeply; but I lucked out when ABX bought HM. I said at the time of the HM/ABX merger and I'll say it again: That merger was the greatest thing that ever happened to HM shareholders: Message 16041348 Message 16105134 Listen, ABX's hedging program has generated over $2 billion in additional revenue for the company and put them in the strongest financial position in an industry rapidly consolidating. ABX's view is that companies need to generate earnings and cash flow and returns in excess of their cost of capital. Hedging allows ABX to reduce risk and improve earnings, cash flow and return on equity. ABX's treasury group is not a profit center, bonuses are not based on exceeding the spot price of gold. There responsibility is to minimize risk. Last year, Barrick was the only senior gold company to increase reserves and ABX has a number of development projects in the pipeline which could increase production substantially at lower cost than its existing production. These projects require capital and ABX prefers the certainty that it can sell about half of the next five years production at an average price of at least $340 per ounce. ABX has no margin calls at any price and can roll its hedging contracts forward for up to 15 years at its sole discretion and sell all of its gold, if prices rose above $340 per ounce. In the event that that occurred the contracts ABX rolls forward would rise in value as the funds are simply on deposit with the major Wall Street and European banks earning interest. You just don't get it FuzzFace. ABX is the greatest gold mining company in the World. You really need to read ABX's financials and 10Q's. Moreover, as a proud shareholder of ABX, ABX responds to all my Emails and questions quite promptly, which HM investor relations never did. I'm the luckiest guy in the World that ABX bought out HM. There is not a day that goes by that I don't bless ABX.

To: FuzzFace who wrote (2635)	5/12/2002 8:46:37 PM
From: goldsheet	Read Replies (2) \| Respond to of 3558

> HM hedged a little too, and so was not blameless Although HM did hedge a little gold and silver, they hedged lots of Australian and Canandian dollars. The currency hedge ended up in pretty bad shape, worse than the metal hedges, and you can find the damage buried in Barrick's annual report. > drove out or bought up much of the competition Despite all the mergers, gold is still one of the most fragmented metal sectors. In most of the base metals, one can name 5 firms who account for 70%+ of world production. The top 5 gold producers supply only 33%, and top 10 only 45%. > have enough time to close out their hedges at a reasonable price Sure they can deliver production into the hedges, which is what Newmont now plans to do. They were very proud of not being hedged, planned to close out the 10moz of forwards from Normandy, but realized how much it would cost. Delivering to close over a period of time is their current plan. This allows Gold Fields to promote themselves and their new NYSE listing "GFI" as the largest unhedged producer in the world. A great marketing opportunity !