BARRICK / PLACER - HEDGE / J.P. MORGANWhat do these proposed dealings mean?
1. The first thing to do is discount much of the pundit analysis of what is going on here. The mainstream gold analysts will come up with their standard pabulum. If they are going to let Barrick get away with saying their hedge book is down to 6.6 million ounces if you don’t count their Pascua-Lama mine in South America, Barrick must realize they can say anything and get away with it from the lightweight mainstream gold pundits. These obsequious folks refuse to challenge anything really worth getting into. I say that because Barrick’s hedge book is actually around 13 million ounces, not the 6.6 million ounces CEO Wilkins says it is. When Barrick blows up some day, this disinformation should be used against them in another lawsuit.
2. No matter what the spin, it is bullish for the gold price. The proposed merger tells us The Gold Cartel (Barrick) believes the price of gold is going much higher and is scrambling to secure more supply.
3. Many of us on Planet GATA will spin the takeover as a desperate move by Barrick to secure more gold supply to balance out its hedgebook which is going further and further underwater as the price of gold readies to take out $500 per ounce. The general commentary from the mainstream gold pundit should spin this announcement as a bullish development for the gold market, but will not delve into the hedge book issue.
4. What doesn’t quite fit is Placer’s hedge book is very large, not in great shape, and probably toxic. This bid is in contrast with Barrick taking over Homestake years ago with all its unhedged ounces.
5. Goldcorp’s interplay in this takeover bid explains why their CEO Ian Telfer won’t give GATA the time of day. His interplay is with The Gold Cartel’s Barrick Gold….
6. Ah Ha! I think I’ve got it. Been scratching my head here to figure out what is actually developing behind the scenes. The light bulb just went off.
Barrick is in bed with JP Morgan Chase which is the US Government’s/Fed’s principal bank. Barrick’s hedge book has been structured so that it can be rolled over ad infinitum. Barrick delights in this fact and doesn’t mention its growing hedgebook liability in its public commentaries about the firm.
As we all know, Barrick is politically connected at the highest levels of government. Former President Bush, former Clinton power broker Vernon Jordon, former Canadian Prime Minister Brian Mulroney, Germany’s former President Helmut Kohl, etc., have all been on one of its Board of Directors at various times ... and some of them still are. When you mention Barrick Gold, you can include the US Government policy towards gold and those assigned to carry out that policy, such as JP Morgan Chase. It is one vast, insidious money/power/political club.
The Gold Cartel knows their ill-conceived scheme to manipulate and suppress the price of gold is going down. The price of gold is going to take off in the months and years ahead. While Barrick’s hedge book may have been given immunity from blowing up and causing gold derivatives problems, other large hedgers have not been accorded this luxury. Placer Doom’s significant hedge book is potentially one of the most problematic in that sense. By bringing Placer under the auspices of the protection of The Gold Cartel (Barrick), they are reducing the coming derivatives problems associated with toxic hedges. It also will give Barrick more maneuverability and clout as time goes on.
This is just a guesstimate on my part. However, it all makes sense to me now.
The PM London Fix just came in at $470.75. This is impressive as gold is under fire…
Not so fast. Right on cue, The Gold Cartel has made its move minutes after the PM Fix. Gold was just nailed for another $7 to the downside. Once again The Gold Cartel pulls off a blatant raid on the price after the physical market pricing was concluded for the day. Perhaps newer Café members will understand why I have such contempt for the mainstream gold world pundits who are so negligent about reporting what is actually going on and when.
The Barrick/Placer Dome news can only be analyzed as bullish for the gold price. MIDAS recently reported how even a former Gold Cartel bullion dealer has admitted the bullion banks will go all out to diminish excitement over the gold price and the shares … and do so all the time. Despite gold being $2 lower this morning, the shares were mostly higher as a result of the Barrick announcement. Not for long. They were just knocked for a loop when gold was sent to the dumpster. This is beyond sickening.
The intrigue grows that all is not kosher regarding this Barrick/Placer/Goldcorp deal:
NEW YORK, Oct 31 (Reuters) - Goldcorp Inc. on Monday said Robert McEwen resigned as chairman and a director, effective Saturday, and named director Doug Holtby as its new chairman.
Holtby has been a director of miner Goldcorp and predecessor company Wheaton River since June 2003, and has served as the chair of the audit committee of Goldcorp and Wheaton River.
Holtby is president and chief executive of two private investment companies, Arbutus Road and MKC Capital.
McEwen said in a statement that since giving up the chief executive officer role in February 2005 following Goldcorp's merger with Wheaton River, he has been seeking new business endeavours.
McEwen said he has assumed the role of chairman and CEO of two junior energy exploration companies.
-END-
As CEO of Goldcorp, McEwen actually was a financial supporter of GATA, and wished us well. Rob McEwen attended our cocktail party at Hy’s Steak House in Toronto a year ago.
This is all very fishy. Can’t see any way all of this proposed deal will not be approved and go though, not with the Canadian and US money and political power behind the proposed merger.
JUST IN – 10:30 AM EST
The Comex floor reported they have rarely ever seen anything like it. GOLDMAN SACHS has been bombing every bid in sight and burying the price. It is not the rest of the "trade" doing the damage. They are actually sitting on the bids. It is almost exclusively GOLDMAN SACHS doing the major selling. Never received such a definitive, exclamatory report like this from the Comex floor before re a lone seller ... not one other time as emphatic as this in the last 7 years.
Our veteran floor source relayed that the GOLDMAN SACHS bombing of the gold price was related to the Barrick/Placer announcement. The nefarious side to this besides my earlier MIDAS thoughts is that The Gold Cartel wants to keep the price as low as they can to demoralize the gold players/industry to make it easier for this deal to go through. This line of thinking (from another Café source) fits in perfectly with the rest of the thinking of many of us on Planet GATA.
Not only was it unusual for Goldman Sachs to stand out SO MUCH as the noted single-handed bomber of the gold price today, it was accompanied by the change of the trading pattern mentioned to you in this column these past many weeks. It was like the old days going into the close. No late rallies at all. The Goldman Sachs induced price butchering was followed by selling into the closes.
From a fellow Café member:
Well now didn't I say this to you last year ?
.........
"In that regard you have to wonder if The Gold Cartel and PPT read the MIDAS commentary for their clues when to attack?"
Well of course they read you! The PPT guys are cheaters and you are right at the front of the Gold crowd so what else would the PPT do?......in fact your site is probably one of the best indicators for them!
Paul
Perhaps so Paul.
The gold open interest fell 433 contracts to 346,308, while the silver open interest rose 1088 contracts to 142,778. The dichotomy of the two OI patterns continues.
Hudson River and Saban went after silver when gold was attacked. There were no bids. Morgan Stanley, a huge silver bull, was nowhere to be found.
** Keep an eye out for some possible significant management changes this week at a well known international bank, one which is also a bullion dealer.
The John Brimelow Report
Happy Diwali, & Eid - Happier TOCOM?
Monday, October 31, 2005