GATA 1 Barrick 0 / Goldman Sachs Stops Gold Rally
"All things come to him who waits - - provided he knows what he is waiting for."...
Woodrow T. Wilson
From MIDAS last night:
"While the odds are against Gold taking out $400 before the close on Monday, you never know with Gold. One day we are going to get a bullish surprise which is going to send Gold up like a volcanic eruption, probably when we least expect it."
Were it not for the corrupt Gold Cartel, we would have had that explosion today when this announcement hit the tape before Gold opened on the Comex this morning: Barrick's Munk Comments on Company Hedging Policy, Exploration
2003-11-21 07:32 (New York)
Nov. 21 (Bloomberg) -- Following are comments from Peter Munk, founder and chairman of Barrick Gold Corp., the world's third-biggest gold producer, on the
company's hedging policy and on exploration. He spoke at the Euromoney-World Gold Council Second Annual Gold Investment Summit in London. On hedging policy: ``For the next decade, we aren't going to do anymore hedging. The commitment to hedging has gone. Hedging enabled us to strengthen our balance sheet. Today, we don't need it.'' ``Our main commitment is to shareholder value.
The hedging program has delivered what we wanted - - the money we wanted to invest. Out of all the gold companies, we have the largest number of new mines coming on stream. Hedging today is not perceived by the investment community.
Being prudent in the gold market today does not carry a premium. In fact, it carries a discount. Hedging is no more a requirement. If it doesn't create shareholder value, then we as a board do not remain committed to the idea of
hedging. We have $2 billion in cash, so hedging is no longer a requirement of our business.'' ``We are committed to exploration. Hedging has allowed us to invest even in bad times, for example, when gold was at $250 a ounce to carry on with exploration. Unless you do exploration consistently, you can't suddenly say, `hey, gold is at $400, we need a new mine.' It's a four-year lead time. You need constant cash availability to keep a company going. That cash for us came from hedging but now we no longer need it.''
On possible de-hedging:
``We could well do some de-hedging. We haven't done it yet but we may consider it. Now we are cash-rich, we could de-hedge or not. We never have to roll over our hedge positions. We have the option to accelerate delivery. Our delivery obligations go out for a decade. For the next decade we won't ever have to roll
over contracts. For the next 40 quarters we will never have to deliver an ounce of gold for less than the spot price.''
--Laura Humble in the London newsroom (44) 20 7330 7727, or lhumble1@bloomberg.net. Editor: Taylor.
More on this extremely important development:
Reuters
UPDATE - Barrick changes policy, drops gold hedging Friday November 21, 8:19 am ET By Veronica Brown
LONDON, Nov 21 (Reuters) - Barrick Gold Corp (Toronto:ABX.TO - News) stunned bullion markets on Friday by saying it was changing its hedging policy, and is no longer committed to selling the metal on forward markets as it is now cash rich.
"The commitment to hedging is gone...Hedging to us is no longer a requirement for running our business as it no longer creates shareholder value," Barrick Chairman and founder Peter Munk told reporters on the sidelines of a gold investment summit in London. "Hedging was a means to overcome cyclicality.
Over the next decade, we will do no more hedging," Munk added.
Spot gold (XAU=), which had been trending lower on the back of a steadier dollar, reversed direction and jumped nearly $4.00 an ounce on the development
to around $397.00. At 1311 GMT, prices were at $396.50/397.30 an ounce,
up from Thursday's New York close of $393.30/394.00. "It's a bit of a knee-jerk reaction, but will set a good base for the New York open," a trader said. As Canada's biggest gold producer, Barrick is the world's second-largest gold miner by market value and one of the largest bullion producers.
ABOUT-TURN FROM PREVIOUS POSITION
On Thursday, Munk had extolled the virtues of hedging by Barrick, which has one of the largest gold hedgebooks in the industry. In an address to the conference Munk had said hedging via forward sales was a key factor in funding exploration and development projects. "There is no other more fundamental responsibility
on a group of people who run a mining company who every single day extract reserves, which are their only asset, than to replace them," he said on Thursday.
Last month, Barrick CEO Greg Wilkins said the hedgebook was too big, and that it wanted to cut it back by about one third to 20 percent of gold reserves. Toronto-based Barrick has one of the largest hedge books in the gold industry, which is equal to around three years of output. The book currently consists of about 16 million ounces of gold that has been sold forward. Gold's rise over the last couple of years to levels last seen in 1996 has largely followed from miners buying back previously hedged positions, although the pace of so-called de-hedging is slowing.
Earlier this week gold reached $400.25 an ounce.
-END-
Gold should have rallied $15 minimum on this news. Another blatant example of Gold price manipulation by The Gold Cartel. They continue to pick your pockets and steal your money. Meanwhile, the pathetic Gold industry remains silent.
The leaders in this industry should be ashamed of themselves for their cowardice.
Where does one start with Munk’s pronouncement? Last night I was ranting about whether Munk was retarded due to his comments Thursday at the Gold conference in London. Today was a 180 degree turn around. What happened in a day?
Could angry institutional Barrick shareholders have confronted Munk, suggesting a change in tone about hedging with the threat of massive institutional selling of the stock should he remain silent? Could Barrick’s bullion banks be cutting off their
credit lines? (IN LATE: one bullion dealer says this is the case. For every dollar gold rises, Barrick’s hedgebook goes $16 million deeper in the hole. Word is Barrick’s bullion banks have become nervous).
Is Barrick in trouble?
Why did Munk make this comment ahead of the Comex options expirations on Monday? Why a day after he praised Barrick’s hedging operation? Was he threatened with a class action lawsuit because of Barrick’s Gold Cartel affiliations?
Could Blanchard & Co.'s lawsuit be scaring Barrick all of a sudden? The Discovery process has BEGUN!!! Don’t have any answers, just more questions.
An attendee at the Gold conference called me and queried as to whether Munk had gone mad? On Thursday he was extolling Barrick’s hedging program and urging institutional investors to buy Barrick stock. Munk remarked how Barrick had never sold an ounce under the spot price for 42 quarters in a row. My source was dismayed by the fact Munk was disingenuous. He failed to tell the conference attendees Barrick’s hedgebook has gone from $1.2 billion in the black to $1.2 billion in the red, a $2.4 billion swing.
Even more strange is how this hedging policy change relates to confidential input I received many weeks ago. My source told me a senior executive at Barrick said they were going to hedge right below $400. My impeccable source explained to this Barrick senior executive it would be insane to do so in this gold environment.
The Barrick man didn’t blink. WEIRD! Regardless of what happened and why, this
IS A STUNNING development for many reasons:
*Barrick won’t be bombing the gold market for many years to come.
*This has to affect the forward selling activity of the other big hedgers. Barrick was the leader and has capitulated to those such as GATA who pointed out for years how their activity was hurting the gold price and the gold industry.
Will other gold producer CEO’s be so brazen to hedge at these prices and risk a shareholder revolt? Will they want to be known as someone who stopped Gold from rallying? The hedging camp is dwindling rapidly.
*It takes the wind out of the bear camp that have talked up increased hedging activity in the months to come, which could dampen the Gold price.
*It is a huge psychological win for the free Gold market forces including GATA.
We have been on Barrick’s case for four years.
GATA 1 Barrick 0 on this one. We prevailed. Congrats to all the GATA supporters whose sterling efforts helped to hasten this change in policy. Nevertheless, The Gold Cartel, led by Goldman Sachs, pounded Gold all day long. Each time gold made it up to the high $390’s, Goldman Sachs drilled the market. Spec funds were buyers. Word is emanating from many sources that Gold has been "capped" at $400. Could it be any more obvious? When a market receives such a bullish surprise like we were handed today by Barrick, it should have soared. In a free market, sellers would step back, especially knowing the enormous option position above $400. Not in Gold, which has been manipulated for so many years. Goldman Sachs and friends, in coordinated fashion, were there to prevent Gold from rising where it should have gone. This is illegal.
It is a violation of the anti-trust laws.
They have acted together all week long.
They have been doing so for more than five years.
It is revolting and must be stopped.
What else is new? Not a week goes by that we don’t watch another Wall Street scandal unfold. It is about time the Gold Cartel gold traders are taken out in handcuffs. Even with the Barrick news, The Gold Cartel selling was so vicious they had Gold DOWN on the day at one point. The good news is the buying was so powerful it went right back up again. Another plus, is there is no gap to fill based
on today’s action.
Anything could happen next week.
We have an option expiry and we have first notice day for December futures. We must also keep in mind the Comex will be closed on Thursday and Friday for Thanksgiving. Technically, Gold looks explosive:
Third highest gold close in 7 ½ years
http://futures.tradi...com/chart/GD/C3
The Gold open interest fell 3003 contracts to 278,433.
Silver traded up and down with Gold. It should roar too. The silver open interest fell 1160 contracts to 107,622. The GOLD derivatives are Primed-EXPLODING and we might just go^ straight to and through not only $400 ...$700 and UP... That is how it happened at the end of 1979.
(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)
