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Gold/Mining/Energy : ECU Silver Mining Inc -- Ignore unavailable to you. Want to Upgrade?

To: Baba 2 who wrote (419)	6/5/1999 2:27:00 PM
From: Claude Cormier	Respond to of 672

<<What affect would there be on the POG if ABX came out on Monday and proclaimed that they were not selling forward anymore and immediately canceled all forward contracts....My guess POG would move significantly higher... >> I am sure you are right. This would be a psychological boost. But the fact is that Barrick has alway used forward contracts and options in good and bad times in order to stabilize its prices. So these forward sales by the miners are not the immediate cause for the down trend in the price of gold. When a miner sells forward, and the bankers sells the gold in the market, it is not a short sale. The miner will eventually give back the gold to the bankers from future production, the gold is there, in the ground. As a matter of fact, at the same time the bankers sells gold to the market, he is probably also receiving some gold from that same producer under the terms of a previous forward contracts that is coming to maturity. As far as the physical market is concern, this is a sero sum game over the long term. The "gold carry", on the other hand, has an immediate effect on the price of the metal. This is another ball game where the bankers borrows gold and sell it short on the market. There is no "other side" in this transaction that will eventually pay back the gold. The risk here is that when the bankers decide to cover... at gold $250, $225 or lower...who knows, there will not be enough physical gold on the market.. and if I am right... this is what Gata is after.