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

To: Enigma who wrote (33726)	5/12/1999 11:11:00 AM
From: John Hunt	Respond to of 116764

Re Producer Gold Selling Hi DD, I read this posting by Goldie at 10:13 on the Gold Eagle Forum after making my post ... << At 4:20 the CEO of Barrick was interviewed on CNBC. The usual slamming of gold as an investment was done by the interviewer. When told that the POG would be much higher if not for the BOE sale he replied "that's like saying I wouldn't be wet if it hadn't rained". Barrick CEO then explained how their production is hedged for the next three years at $385/oz. He then explained that the price is not reflective of what they are actually being paid for the gold, but rather include the value added interest from shorting the gold in the first place after borrowing it from CB's. Another commentator started saying that Barrick was lucky because that strategy didn't work so well for LTCM! The original interviewer went red and immediately ended the interview stating that the CEO's microphone was clearly developing technical problems and they would have to stop the interview now before it broke down completely. An incredibly revealing interview. I wish I had a copy to see it over again! >> Goldie then corrected the time of the program << Oops ... make that 9:20 am (I live in Saudi Arabia) >> gold-eagle.com Always hard to know how much to believe in any forum's posts ... Did anyone else see this interview? ... I have been watching mostly CNN, etc recently. John PS - They may have become more aggressive in recent years ... greed can do that.

To: Enigma who wrote (33726)	5/12/1999 2:03:00 PM
From: John Hunt	Read Replies (1) \| Respond to of 116764

Barrick Premium Gold Sales Year * Spot Gold * Pemium * Recv 1994 * 384 * 18 * 402 1995 * 384 * 22 * 406 1996 * 388 * 27 * 415 1997 * 332 * 88 * 420 1998 * 294 * 106 * 400 Barrick Premium Gold Sales Program represents a $4 billion asset, which earns more than $200 million per year in interest income. Source: Barrick's site under premium gold sales barrick.com ***** Hi DD, Thanks for pointing out the $200 million was interest. Note this $200 million on $4 billion is interest at a rate of about 5%, so I would presume they are investing most of the money from the gold sold short in treasuries. IMHO, these guys are speculating big time, not hedging. They have currency risk and treasury price risk and gold price risk. They are naked short the gold until it is produced as I doubt they have 4 billion worth of current or near-term production. (Will have to dig some more to see how many months/years production $4 billion is.) John

To: Enigma who wrote (33726)	5/12/1999 3:56:00 PM
From: John Hunt	Read Replies (3) \| Respond to of 116764

Barrick's Forward Gold Sales FWIW, here are the facts from the Barrick site..... The Past Ten Years * Consistently exceeded spot gold prices * Realized price on average yielded a $56 premium over spot price * $1.1 billion in additional revenue The Present * 11.5 million ounces sold * 3 years production at $385 per ounce - minimum price locked in * Mark to market gain - $750 million (value today if we closed-out contracts) The Future * Our 11.5 million ounces sold creates a $4 billion asset (which generates $200 million per year in interest income) * Actively manage the asset to maximize interest income Barrick will continue to earn a superior return than others because: * We add to the program consistently. * We have longer and more flexible contract terms. * We actively manage the $4 billion asset to maximize interest income. (Barrick's annual revenues are 1.2 billion including the $200 million that they say they make on the forward sales) ***** It seems to me the emphasis is more on profiting from a falling gold price and earning interest than on obtaining the best price for the metal ... However, I guess it does depend on your perspective.