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And I tend to agree that they are not a mining company they are a hedge fund - more so now!

Date: Mon Feb 07 2000 17:14
ted butler (Barrick - instant analysis) ID#370209:
Copyright © 1999 ted butler/Kitco Inc. All rights reserved
This Barrick announcement was a stunner. I'll probably have more to say as time goes by, but I feel like I'm playing chess with these guys. This was a good move, almost the best they could make under the circumstances. They bought a chunk of short term calls ( 1 to 2 years for $68 million ) , reducing their short exposure for the term of these short term calls by about 50%. They also reduced slightly their forward sales and long term short calls. This is no doubt a good move for shareholders. ABX is in a better position as a result of this move. As an aside, I stated from the get-go that it was my intention and goal to force Barrick to cover their shorts. I feel that I have accomplished that goal to a large degree. That's the power of the Internet. That's the good news.

The bad news is they don't dress in drag anymore. These guys are a pure hedge fund now. They knew they couldn't cover their shorts on a straight metal buyback basis without blasting the market upward, so they bought protection in the form of the short term calls. They still say they believe in hedging ( for legal purposes, what else can they say ) , but their actions indicate otherwise. They're still arrogant and try to explain things in a school teacher to student manner, but the fact remains they couldn't buy back exactly what they sold short because the market wouldn't accomodate them. So they put a hedge on their hedge. That's great for a hedge fund, but not for a miner.

John Hathaway asked a great question on the conference calL - who sold them the 6.8 million calls. Oliphant said it was confidential, but it was bullion banks. Hathaway's question was good because it goes right to the heart of the matter. That is, that Barrick couldn't have bought physical ( which it sold short ) or long term calls or COMEX paper without impacting the price, so they turned to the scum at Morgan, Chase and Goldman to bail them out with completely non-transparent OTC short term calls.. The overhang is still there jims ( I didn't hear you questioning me as the price was rising ) , all Barrick did was slip thru the door first. The other short miners have lost their hedging poster boy. Let's see what they do now.

I said how Placer was dumb as dirt for announcing they would be buying back before actually buying back. Barrick ain't dumb, and didn't do that - but this drama ain't over for them either. It'll take a while for it to sink in, but Barrick didn't straight-cover their shorts cause they couldn't. That's because leasing/forward selling is still inherently crooked. How can you return collateral that's been sold?

All Barrick did was transfer more gold liability to Chase, Goldman, Morgan, et al, aka the financial system, in an attempt to prolong the manipulation. That's just great and what we were all hoping for.

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