Bill Murphy writes...........................From lemetropolecafe.com:
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:
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How desperate is The Gold Cartel? VERY! They trotted out this oldie but baddie yesterday:
IMF is urged to sell gold stock to ease African debt November 20, 2003
By Reuters
Dakar - African finance experts said the International Monetary Fund (IMF) could take more dramatic measures such as selling some of its gold reserves to ease the debt burden.
After a two-day meeting in Senegal, experts from African finance ministries and regional institutions warned that Africa risked failing to meet the millennium development goals because of crushing debt payments. The UN goals set in 2000 aim to reduce global poverty by 2015 by halving the number of people who earn less than a dollar a day and have no access to water.
The meeting suggested selling IMF resources to fund further debt reduction. "We estimated, for example, that selling half the IMF's gold reserves would amply finance all the extra reduction necessary for heavily indebted poor countries.
"The experts noted with great concern that given current trends, Africa will be the only region in the world where the number of poor people will be higher in 2015 than it was in 1990," the statement said.
– Reuters
GATA will be all over this one should this planted story gain any legs. It reminds me of the Bundesbank talking about the Washington Agreement gold sales.
Conspiracy is MUCH too tiny a word to explain attempts by The Gold Cartel and friends to keep the gold price from rising. Here is another example of what I am referring to:
Hi Bill,
I'm sure you've heard that in Bill Fleckenstein's daily rap from yesterday, he says he has heard the gold ETF is being delayed by the SEC because of concerns about "liquidity". Wonder what could cause a concern like that?
Best,
Mike
.............................
Another question on the dramatic Barrick development:
*Why would Barrick make this sort of announcement before covering more of their hedges? Something doesn’t sit right here. Gold producers normally cover hedges and then announce they have done so. Will have to monitor this one very carefully. Something seems very wrong!
Houston's Dan Norcini sees the Barrick development this way:
Bill:
I have another thought about Barrick and the reason behind Munks complete turnabout from yesterday.
WE all know that the majors are going to be looking to acquire juniors and other exploration outfits to replace their dwindling reserves. The one thing about gold is that it cannot be zipped off of some printing press at will but requires years to bring it on line. Every tell-tale sign is present that this is only the beginning of a generational bull move in gold that will take the metal to levels many of us cannot even conceive of. Anyone looking at the financial house of this nation has got to realize that the U. S. Dollar is toast and that the twin devils of the Current Account and Budget deficits are going to result in further downward pressure on the dollar for many years to come.
Barrick surely must recognize this. Perhaps they have finally realized that if they wish to add value to their company they are going to have to get into the acquisition business themselves and with a stagnant stock price that is not going to be all that easy to pull off when they are going to have some serious competition from the other Majors such as Newmont, etc. Maybe Munk, thanks to a good kick in the rear end by the institutional buyers, is doing the only thing possible for him to do, if they hope to get in on the bidding wars that are going to take place in the months and years ahead. A rising stock price for Barrick will certainly make things easier for them to compete.
Best,
Dan
Dan makes a lot of sense.
The gold shares were subdued, but closed a little higher on average. The XAU eked out a .24 gain to 104.46, while the HUI rose 1.24 to 235.96. Golden Star Resources led the way again, finishing at $7.02, up 20 cents (nearly 3%).
Curiously, Barrick only gained 18 cents to $21.69 and continues to fall further behind Newmont ($45.24, up 19 cents).
Gold remains EXPLOSIVE! With the dollar and US stock market looking so vulnerable, there is a good shot The Gold Cartel will be carried out on GATA’s stretchers in the weeks to come. They could easily lose control of their price rigging/capping operation. A move above $400 could cause a melt-up. Perhaps that is what Barrick’s bankers are worried about.
GATA BE IN IT TO WIN IT!
MIDAS
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LATE ADDITION:
Hi Bill,
This is from the GSS board today.
Dr Zs New Orleans Scoop
by: zeno451 (54/M)
11/21/03 04:14 pm
Msg: 34949 of 34973
Yesterday Munk was left to make the speech at the Euro Money conference as CEO Wilkens was called away to an emergency meeting in New Orleans. That was detailed in the press yesterday. WHAT THE HECK IS IN NEW ORLEANS. A COURT CASE? BLANCHARD?
did barrick move to establish its bona fides as an independent participant in the market. Or are they worried about minimizing the damage costs they might be facing? NEW ORLEANS IS WHERE ITS AT
****
He stepped in at short notice for Greg Wilkins, Barrick’s president, who, it was said, had to give up a trip to London in order to travel to New Orleans on urgent business.-Mine Web
**** Maybe barrick is looking to settle. JPM is part of the suit and the bankers have traditionally avoided criminal charges and just paid a fine instead. Maybe Barrick is negotiating to just pay a fine for whatever blanchard can tag them with. THE DISCOVERY PROCESS MIGHT BLOW THE TOP OFF THE CENTRAL BANK GOLD PRICE SUPPRESSION CONSPIRACY. A fine and settlement are essential to keep the lid on the intergovernmental manipulation of the market place..
Hmmm,
Verdy verdy interesting
Regan
MIDAS later edition:
The Mine Web quote from Ken Gooding's article:
"He (Munk) stepped in at short notice for Greg Wilkins, Barrick’s president, who, it was said, had to give up a trip to London in order to travel to New Orleans on urgent business."
The GSS poster is right for sure about NEW ORLEANS and BLANCHARD in the "big picture sense!" I have just learned from another source the Blanchard case, along with another Canadian one, has caused enormous stress at Barrick Gold and most likely at JP Morgan Chase. More later.
MIDAS