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

To: Exsrch who wrote (1252)	6/5/1999 6:20:00 PM
From: Ron Everest	Respond to of 3558

What originally sent me to find out exactly what ABX was doing with their forward selling was my assumption: "ABX would not jeopardize their entity". This was at first my assumption, now the proof: - The gold has already been sold forward by the Gold Bank - The GB is looking to gain interest from the cantango arrangement - The GB has set times to repay the gold to the CB - The GB looks for an arrangement to guarantee the supply on time to the CB when the return is required. - Out come the approaches to the most solid producers to guarantee gold is returned to the GB and hence to the CBs. - In ABXs case, they are a significantly secure counter party. Just what a GB and CB would want. ABX negotiates and sets the terms of the deal. I'll bet in advance of the deal taking place when it was originally presented. This is not collusion, simply a way for each party to make a return on the sale of the CB gold into the marketplace. My conclusion is that the deal is structured throughout by the CB - GB - Gold Producer so that the Producer, in this case ABX sets the terms they desire and the CB and GB agree. Thus, this is why there are favourable terms to this producer. Everyone makes something. As I have previously postulated, there are losers. These are the small gold producers and exploration companies that cannot participate in this type of dealing because of their relative small size and lack of sufficient credit rating. ABX has an excellent rating, thus, they can dictate their terms. In any negotiated deal, strength comes from fundamentals and being able to offer what the others require. These forward sales have what it takes to complete the deal. Unfortunately for the small companies, a spin off effect is that they cannot really compete in the current environment and have to find a way to raise cash and idle for a time. There will be absorption of the small by the larger entities. In time the REALLY BIG winners will be the investors in companies such as ABX which have the structural capacity to weather the storm, the smarts to hedge their margins and the expertise to sniff out the good deals.