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Gold shenannigans

  1. Chuck

    11,381 posts.
    Dear Friend of GATA and Gold:


    GATA Chairman Bill Murphy's "Midas"
    commentary tonight at www.LeMetropoleCafe.com
    breaks what may prove to be the story of the
    year in the gold world: Barrick Gold's plan
    to acquire AngloGold.


    "Midas" fits this in with AngloGold CEO
    Bobby Godsell's promoting the gold price's
    prospects even as AngloGold was beginning to
    close its hedges. Ordinarily AngloGold might
    be expected NOT to talk up the gold price
    while the company was trying to buy back gold
    and buy back its promises to sell gold.
    AngloGold's talking up the gold price when
    the company was trying to buy might seem as
    strange as the Bank of England's warning the
    world about its gold sales and thereby
    driving the price down, and, with the price,
    the bank's own receipts.


    Of course the Bank of England's behavior
    made sense if the bank actually wanted a
    lower gold price for surreptitious
    political reasons. And AngloGold's announcing
    its plans to reduce its hedging, driving up
    the cost of its own plans, may make sense too,
    as Murphy writes -- in the context of
    AngloGold's fending off acquisition by the
    super-hedged Barrick, for whom a higher gold
    price is death.


    Anyway, the relevant excerpt from tonight's
    "Midas" is appended with permission because
    its author hopes that readers who do not
    subscribe to his Internet site will consider
    taking a free trial subscription. Just go to:


    http://www.LeMetropoleCafe.com


    Tell them that Bobby G. sent you!


    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.


    * * *


    Copyright 2002, www.LeMetropoleCafe.com
    From "Midas" commentary for May 1, 2002


    By BILL MURPHY
    www.LeMetropoleCafe.com


    The big gold news today has to do with
    Barrick and AngloGold. I was told the
    following last night by the best of overseas
    sources:


    "Barrick at the moment has a team of 40
    people working in Johannesburg. They want to
    take over AngloGold."


    The "Midas" analysis of AngloGold is all
    falling into place. AngloGold CEO Bobby
    Godsell has been pounding the table for
    months and months that Anglo has reduced its
    hedge book and is going to continue to do so
    in an aggressive manner.


    That is most unusual. Normally a big hedger
    completes a buyback program and THEN
    announces what its has done. My colleagues
    and I have been scratching our heads as to
    why Anglo would announce its intentions ahead
    of time, which would surely result in higher
    buyback prices. Now we have our answer.


    Anglogold wants the gold price to go much
    higher to stave off Barrick. Barrick remains
    heavily hedged. A soaring gold price is no
    great shakes to Barrick and could even do the
    company in if their hedge book blows up. In
    addition, if AngloGold covers its hedges as
    fast as possible, it will add fuel to the
    growing gold-buying power and be a factor in
    moving the gold price higher. The more
    Anglogold covers forwards and the higher its
    share price goes, the more difficult it will
    be for Barrick to take over AngloGold. For
    Anglogold will get too expensive.


    Thus Bobby Godsell wants the world to know
    that the world's No. 1 gold producer is
    covering hedges, so as to encourage others to
    cover hedges, so as to encourage hedge funds
    and other physical gold buyers to step up to
    the plate and get long.


    Moneyweb produced an interview with Godsell
    today and one of his comments was
    unprecedented and sensational:


    * * *


    BOBBY GODSELL: I think, in fact, the major
    feature of our quarterly results -- which I
    would describe as operationally steady -- is
    that we've indicated again that we think the
    gold price is firming and that we've got
    better prospects for the gold price than
    we've had certainly since 1993, maybe even
    since 1987. Against that background, we've
    been trimming back our hedge book. We also
    have said quite openly that we were taken by
    surprise, perhaps like a few other people, by
    the dramatic decline in the rand's value in
    November and December that left us with a
    number of rand-denominated forward sales
    contracts that were seriously out of the
    money. We've reduced our hedge book by 1.7
    million ounces this quarter, or 120 percent
    of the company's production. We are now
    significantly less hedged than we were last
    quarter. That increases our participation in
    the firmer gold prices and, in particular,
    we've taken out the poorly priced rand
    contracts. For that we've paid a price of I
    think $7 in the difference between the
    received price and the spot price, and I
    think to have been able to adjust your hedge
    book in that way at really a comparatively
    small cost is a great tribute to the people
    who run our hedge.


    MONEYWEB: Now the gold price is flirting with
    around the $310 level. Where do you see that
    by year-end?


    BOBBY GODSELL: Byron, all we can say is --
    and my colleague Kelvin Williams has studied
    this market for 17 years now -- everything is
    in place for a firmer price. The only
    constraint on the price going up is of course
    physical offtake, and it is so that, if the
    price rises and rises rapidly, you see a
    falloff on jewelery demand, and we're seeing
    that, for example, in India in quite a big
    way. I think the prospects are for a price
    between $300 and $350. But we've never
    predicted prices; we're just not that smart.


    * * *


    "Better prospects for the gold price than
    we've had certainly since 1993, maybe even
    since 1987."


    In 1993 gold traded at $400+; in 1987 $500+.


    Conservative gold executives like Bobby
    Godsell do NOT make casual comments such as
    this. There is a purpose to everything he
    says in a formal interview. Godsell knows
    that GATA has been right all along; that the
    gold price has been rigged and kept at
    artificially low prices for years. He knows
    the rig is coming to an end and he knows the
    gold price is explosive for all the reasons
    often cited in "Midas" commentary. For those
    reasons Godsell is not afraid to hint that
    $400 or $500 gold is possible.


    I can't be the only one in Gold Land to
    understand this. A statement like this has to
    freak some of the big hedgers and encourage
    other big spec players to load the gold boat.


    I consider Godsell's gold comments to be as
    significant a development as any since GATA
    began and the Cafe opened for business.


    It is only a matter of time before the gold
    derivative bomb goes off and sinks the evil
    cabal forces.


    Meanwhile, Barrick Gold continues to stink up
    the place. From the Globe and Mail in Canada:


    * * *


    Barrick misses forecasts


    Wednesday, May 01, 2002


    Barrick Gold Corp. posted weaker first-
    quarter earnings Wednesday as lower gold
    sales offset gains from higher average prices
    and the company put more of its production
    for sale on the spot market.


    For the quarter, Toronto-based Barrick -- the
    world's second biggest gold producer -- had
    net income of $46-million (U.S.) or 9 cents a
    share, down from $87-million or 16 cents in
    the same period a year earlier.


    The latest results came in behind analysts'
    expectations. Analysts polled by Thomson
    Financial/First Call had been forecasting
    earnings of 12 cents a share on average.


    During the first three months of the year,
    total production was 1.37 million ounces at a
    cash cost of an ounce, compared with 1.49
    million ounces at a cost of $161 per ounce in
    last year's first quarter.


    The 8-percent decline in production, Barrick
    said, was the result of two mine shutdowns in
    late 2001 as well as another closing in the
    first quarter and the winding down of four
    other operations, which are scheduled to
    close throughout the year.


    The higher cash costs in the latest quarter
    stemmed mainly from higher power costs and
    lower grades at its Goldstrike property.


    * * *


    Once again we have more evidence that gold
    supply is going down and will continue to do
    so even as the price of gold goes much
    higher. Many gold producers have been high-
    grading for years, and that is coming to an
    end.


    Thom Calandra of CBS MarketWatch touched on
    Barrick in his column today:


    "Barrick failed to meet Wall Street earnings
    expectations Wednesday. In their conference
    call, Barrick executives fielded numerous
    analysts' questions about the company's
    hedged sales of gold, a strategy seen by some
    as risky if bullion prices rise sharply.
    Those questions, from JP Morgan, Goldman
    Sachs, and others, were met by Barrick
    executives, who assured investors they were
    monitoring the situation."


    Monitoring the situation? What does that
    mean? The arrogant meatheads at Barrick
    continue to doubletalk. They are going to get
    their hat handed to them. AngloGold has
    outfoxed them and Barrick is stuck sucking up
    to the Gold Cartel. Hedge book blowups are
    coming. Will Barrick be one of them?

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