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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: terry richardson who wrote (18768)	9/13/2002 12:49:24 AM
From: russet	Respond to of 36161

Dr. Murenbeeld on hedging ,...a balanced view! If human beings didn't covet the yellow metal to such a ridiculous extent (no other living creature bothers much with it)and hoard it away in vaults like squirrels hoard seeds, Barrick and many other miners would never have been able to forward sell the crap. Barrick has probably grown 3 times, at least, the market cap, reserve base, resource base, and rate of production of Au than they would have had had they not forward sold the yellar metal to lock in higher prices for Au production than anyone else got in the last 15 years. I think criticism of Murenbeeld's article is much ado about nothing, and a lot of sour grapes, and a big attempt to promote personal investment decisions. Barrick saw an opportunity that several others saw, but did it better. The income statement will tell the tale in the future,...and if many of the non-hedgers don't start making a lot more money soon, their recent share price gains will turn to dust. If the POG continues to rise,...Barrick will make more money per share, and will bring a lot more production on line so annual gold production, revenues, cashflows, and profits will increase considerably,... Pascua/Veladero, Tanzania, Peru, and they have over US$5 Billion to draw on should they want to buy a bunch more gold in the ground. This is not a buy recommendation for Barrick for the near term, because for a little more risk there are a lot better gold leveraged choices in a rising gold environment because companies with negative or few earnings will benefit most with percentage changes in earnings (kind of funny that the more profitable a company currently is, the less leverage it will have to the rising price of gold, but the street perceives percentage gains are more valuable than absolute ones as the POG rises),...but with the gold price there are no guarantees, and if the price stays at US$320, Barrick share price will stay stable while many other producers will sink to reflect their true earnings potential without the speculative premium they currently have built into their share prices because of what many shareholders expect to happen to the POG.