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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (1367)	9/13/2002 2:22:10 PM
From: russet	Read Replies (2) \| Respond to of 5423

The problem with theses like Seville's, is they assume that Barrick will continue to roll over hedges in a rising gold market. The evidence suggests that they won't,...they have been covering or allowing the derivative based hedges to expire lately. The above statement is probably enough to torpedo Seville's thesis, but I will continue with another point (ggggggggggggggggg) 80% of Barrick's reserves are unhedged and free to get the spot price of gold when produced. An even higher percentage of their resources are unhedged. In a rising POG environment, Barrick will do quite well in the income department, and their resource base and production will climb. And finally, I always wonder why people think Barrick will not deliver into their hedges, after all the real purpose of the hedge was to guarantee a price floor for the gold they produced so they could guarantee themselves a certain profit per oz Au. As long as their cost of production is below the price floor they established, they make profits. They cover their hedges with their production, and only a couple million oz Au contracts come due in any year, so if they keep their costs low they cannot lose no matter how high the POG goes. I said finally, but here goes another (ggggggggg), Barrick has a habit of appointing ex Presidents and Prime Ministers to their boards. These people get very well connected in financial and political circles, and I would guess know what Central Bankers etc., are thinking and doing before they even know it. If Central Bankers decided to change their gold reserves policies and start accumulating gold again, I think Barrick would have erased a large number of their hedges previous to any of us being aware of the change in policy. In other words, watch Barrick to see if Central Bankers are about to change their policy,...they won't tell us, but Barrick's actions will. Just a squished hamster thesis, to go with all the other hot air circulating around out there (ggggggggggggggggg)