Gold will be around $1200 / oz by this time next year. Anyone short gold now has a few screws missing.
LOL!!! Most people dream of hot MOTOS (members of the other sex), but not trefoil....no....trefoil dreams of gold bug arguments Just kidding trefoil -gastropod
Okay your highness lol. I do agree with some things you said, though. But I take it as Barrick knowing they better cut their losses because we are coming upon a critical point with the POG. Looks like they no longer want to hedge and see that it is time to go/stay long while the POG is likely to double, triple, or more from this pivotal point. Looks like a good business move to me, and one more sign that the writing is on the wall. I think the top is in when everybody you know...not necessarily the last of the bears, but the last of the everyday working stiffs that don't know shit about investing or trading have bought toward the end of or right after that last extremely overextended parabolic ride of a bull market. Seems like right now is more of a time of anticipation. Market participants have been waiting for the leg up above 1035. Most people are not aware of anything that's happening with Gold. They think it's overpriced because it is 150 bucks above it's nominal high, they have no idea what 1000. POG is in 2009 vs. 1980. But they'll learn soon enough. So just like with the tech bubble and the RE bubble, precious metals will come down hard and fast from stupefying heights, taking down all the suckers that bought at the precipice. IMO we are still at the bottom of the mountain...fundamentally, I don't see how you can say this smacks of toppiness, unless you are a swing trader. JMO, GLTA
When stop selling their jewellery for cash (it seems every TV channel has the ads) but rather start buying for investment then you know it is a bull market.
As usual, John Dizard got it right: In the financial markets, those of us who've been around the block a few times know, things aren't always what they seem.
Look guys -- all the gold-loving dipshits that write bad things about Barrick are missing one big thing -- they are *not* speculating in the price of gold, upwards or downwards by selling contracts into the future. They were hedging the output of their mines, to lower their financing costs to that of a non-cylical company. Obviously it worked fairly well, as Barrick is the largest producer of gold in the world, and has been able to swallow up an enormous number of other players in the industry with their superior balance sheet. Barrick is *not*, and was not engaged in a conspiracy to lower the price of gold by shorting contracts. They were doing what every mining company rationally does in the market -- sells their production. The shorted contracts were backed by physical production of gold, so the non-cyclical income of the firm was not at risk. Barrick also had, and continues to have a robust upside and robust leverage to gold, if, at some point, the price of gold goes up substantially (relative to production costs). I'm personally getting a little sick of reading about all the goldbugs railing against Barrick every chance they get, even though Barrick would be *nothing* without the hedging strategies that they've used over the years to get large. And the cost of exiting the hedges has not been very onerous in the whole scheme of things. And even if gold skyrocketed to $5000 tomorrow -- Barrick would still do extremely well. Maybe not as well as a high-cost gold producing firm that is extremely leveraged to the price of gold -- but most certainly, better than going bankrupt like all of those high-cost producers went in the 80s and 90s. I mean, think of it like this -- PG makes tampons and razors (among other things). Do they hoard their tampons and razors in warehouses, hoping the price goes up? No. They sell their production to customers based on short and long-term contracts. What's so 'wrong' with a gold mining company doing this? Nobody runs around like a ranting lunatic accusing PG of trying to distort the price of razors and tampons. Why would the goldbug looney's do the same about Barrick and gold?
Good post. Business is business, and it's all about making that buck, regardless of whether you're selling widgets at 10 cents a pop or gold at several orders of magnitude higher per pop.