Posted on 12/18/2002 9:53:28 AM PST by LSUfan
An anti-trust lawsuit filed today accuses Barrick Gold Corp., Toronto, and J.P. Morgan Chase & Co., New York City, of "unlawfully combining to actively manipulate the price of gold" and making (US) $2 billion in short-selling profits by suppressing the price of gold at the expense of individual investors.
(Excerpt) Read more at savegold.com ...
that's just not true. When you go to buy gold, you get it. How could they sell you what they don't have? The answer is that when they sell forward, they sell to people who are buying gold in the future, not gold in the present.
Also "the people they sell it to" is you and me.
That's not true, as explained above.
They have sold our gold into the market (with the theoretical expectation of getting it back) and we will never get it back.
Your gold? How did they sell your gold? Did they break into your house and steal it?
The government has changed the definition of gold held in storage and has lied about how much physical gold is in the vaults.
Not sure about that.
Do a little research, please...
LOL. You gold bugs are one bizarre bunch. I like gold, and if I had extra cash would buy some. But believe me, you can't sell more gold than exists. When they sell future production, they sell future production. It's not a tough concept. Oil companies do it too.
I have nothing against gold. And I do think it has been suppressed for the last 5 years by all of the government selling, but there is no conspiracy here, and contrary to a certain poster here, Barrick doesn't somehow take your gold and sell it.
Everyone knows that they can't...
Maybe they can't. Maybe they sold more forward then it turns out they are able to produce. Maybe they thought they would sell it long, but buy it short - and perhaps that has not worked out. But it doesn't cost you or me. It costs whoever assessed Barrick's risk, and perhaps make a mistake. Bad credit (or in this case counterparty) risk is innante to every industry. Just because some people are obsessed with gold does not make this any different.
Dow Jones, Wednesday, December 18, 2002 at 18:22
By Lynne Olver
Dow Jones Newswires
VANCOUVER -- News of an antitrust lawsuit being brought by U.S. retail gold dealer Blanchard&Co. against Barrick Gold Corp. (ABX) and JP Morgan Chase&Co. (JPM) is being dismissed by some equity analysts as a publicity gimmick.
Shares of Barrick fell in Toronto and New York early Wednesday afternoon after Blanchard&Co. announced its legal action. Barrick recovered from an intraday low of C$23.46 to close at C$24.45, down 0.8%. The Toronto market's gold index was up 2.8%.
"The market impact you already saw,"Barry Allan of Research Capital said, adding that he believes the stock market will come to view the lawsuit as opportunistic."Why now? Why now, if this has been going on for so long? It's only now that hedging has become unpopular,"because the gold price is rising, Mr. Allen said."It just strikes me as being very sensationalistic.
"As reported, Blanchard&Co. claims that the Toronto-based gold producer and JP Morgan teamed up to manipulate the price of gold. Blanchard, which deals in coins and gold bars, claims that the gold price should actually be at about US$740 an ounce -- or US$760 counting inflation -- if the market had been able to respond to the"normal laws of supply and demand.
"In a statement, Barrick called Blanchard's allegations"ludicrous"and"totally without merit."JP Morgan Chase hasn't commented on the lawsuit.
Doug Pollitt, an analyst with Toronto brokerage Pollitt&Co., hasn't seen the complaint filed by Blanchard, but said he doesn't expect it to be a major irritant for Barrick."We don't think this is foremost among their problems,"he said."It seems to be a bit of a publicity stunt,"Mr. Pollitt added, pointing out that there are few rules in the commodity markets, especially rules about protecting hedging positions.
Another mining analyst, Chad Williams of Westwind Partners in Toronto, said he believes the lawsuit is a marketing ploy, but one that has added to the"aura of uncertainty"around Barrick and its hedging program."Our view is that this (suit) is a blatant illustration of a group that really doesn't understand the fundamentals of gold"and its relationship to the U.S. dollar, Mr. Williams said.
Mr. Williams said that anyone who bothered to investigate the publicly available information about Barrick's hedgebook wouldn't come to the same conclusion as Blanchard&Co. apparently did.
Mr. Williams just completed a study of gold hedging, in which he delved into Barrick's hedges as a case study. He concluded that Barrick's hedgebook is"very straightforward"although investors may be turned off by some complex language."For example, there are no instruments that we consider exotic or deceptive,"he said. Mining companies face a low level of financial risk in hedging, as long as their mining operations are dependable, while bullion banks shoulder the greatest proportion of financial risk involved in gold hedging, he concluded.
Conspiracy theories about the gold market abound and are nothing new, others noted, pointing to the Gold Anti-Trust Action group or GATA, which has complained for several years about a global price-fixing scheme.
Kerry Smith, an analyst with Haywood Securities, said a lack of disclosure by gold producers about their hedging contracts, and a lack of investor knowledge about how they work, may help fuel speculation about market manipulation."It's all confidential,"he said of various producers' hedgebooks."It's just a big black hole."In an afternoon research note, BMO Nesbitt Burns said that gold companies, bullion banks and other counterparties have followed the same practices as Barrick and JP Morgan. BMO Nesbitt said it expects the Blanchard lawsuit to amount to nothing in the end.
In September, consultant Martin Murenbeeld, president of M. Murenbeeld&Associates Inc. in Victoria, B.C., wrote an article defending Barrick's hedge program. He concluded that Barrick's intent is to manage price risk, and the program benefits were self-evident, as it insulated Barrick"more than adequately"against the risk of a sharp gold price decline.
The accelerated selling of gold by hedgers may lower the spot price of gold"somewhat,"Mr. Murenbeeld stated. But there is more to the issue, he noted, including central banks selling gold, and actual production levels from gold companies.
-Lynne Olver, Dow Jones Newswires; 416-306-2028
lynne.olver@dowjones.com
(END) Dow Jones Newswires
12-18-02 1822ET
O.K., yeah, so? How are they selling your gold?
What you are saying is a good case to buy gold. It does not mean there are any conspiracies. So some people made a bad debt. What's the problem? Commodities trading is a zero sum game to begin with, you should be happy to be able to buy now and profit.
Fortunately, I made a killing on my Homestake :-)
Did they get a good bump when Tommy boy foisted their SD environmental liabilities on the other 49 states?
Answer: "It's about how the investment banks are rigging the gold market, but it's going to fail and the dollar collapse when the price of gold hits $280 $300 $325 $340 $350 an ounce on the spot market, which it's going to do Real Soon Now."
Item #2: "That seems kinda questionable, because that number keeps moving up and staying just ahead of the spot market price."
Answer: "You're obviously a shill for JP Morgan! True American Patriots will overthrow your Mammon-worshipping cult! Yada yada yada..."
Of course not, they need a bullion bank and a central bank to do this. JPM has a forward sale contract and approaches a central bank (not necessarily the Fed). The central bank lends the gold to JPM for about 1% per annum or so and JPM sells the gold in the open market. JPM invests the proceeds in Treasuries yielding 5% (at the time) and pockets the difference all fat and happy. Until......the price of gold starts rising instead of falling.
So what happens if JPM fails and can't purchase gold to return to the Fed? Well, in that case, our gold (or whoever's gold was in the central bank) has essentially been stolen.
If the central banks, the BIS or the bullion banks have lent gold out at 1% interest, those borrowing must do two things --sell the gold and get an interest multiple of at least four. They should also delta hedge in case gold soars. For the last 5 years gold has been going down or down often enough to buy back the gold at a lower price. No doubt some of these people probably didn't hedge.
The big problem as I see it is if they sold the gold it was not put in a vault (at least not a large part) since we have been consuming more gold than we produce in a given year. This means a good deal of the gold has gone into jewelry, computers or whatever. Now to get that gold back is not going to be easy as its price rises. Further, there can be no doubt there a great many naked shorts out there that further complicate matters --sometimes these are actual miners who know they can eventually deliver gold to avoid bankruptcy; however, what happens when gold soars, delivery is demanded and your mining supply doesn't cover for five or six years?
In any case the chart tonight is a nice steady slope up with no gaps. As I said befoe, big dollars are changing hands tonight and by morning the whole world will either have to be put at ease with an easing of gold prices or a potential melt-up with financial uncertainty and worry will occur. Will see in the morning.
Well, you don't have to be a shill for JP Morgan, you can also be one of the eevil short sellers who is all over the internet posting lies. It's people like you who ruined my investment in highflyer.com which I bought at 10,000 times earnings. It would have kept going up if people like you didn't post on the yahoo message boards. Now you are trying to do the same thing to gold. But this time it won't work. Our paper money is worthless (but don't try to offer me an ounce of gold for $50,000 of my worthless money) and all the fiat money systems of the world are going to collapse because the Fed which is run by the Rothschilds has looted all of our money.
No, you need to get educated. NOBODY was investing in stocks in 1982. Does that mean that nobody should have bought stocks in 1982? Of course not. Gold is the new bull market. Since you didn't read the whole thread I guess I have to post this again:
The Dow fell about 35% from its peak to its low (10/9/2002). The bulls have been crowing that “the bottom has been reached and we are in a new bull market.” It has risen 15% (and currently declining) since its low.
The S&P 500 fell 45% from its peak to its low (10/9/2002). The bulls have been crowing that “the bottom has been reached and we are in a new bull market.” It has risen 15% (and currently declining) since its low.
Gold fell about 70% from its peak (Jan 1980) to its low ($253 in 7/1999). The yellow metal has since risen over 30% since then. The bulls have been crowing that “the bottom has been reached and we are in a new bull market.” Which of these bulls is more likely to be right?
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