"VANCOUVER -- News of an antitrust lawsuit being brought by U.S. retail gold dealer Blanchard & Co. against Barrick Gold Corp. and JP Morgan Chase & Co. 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.
The failure of ABX not fall dramatically is alarming if the legal action has merit. I guess it is the same old story--you decide it's time to buy but you cannot buy unless someone else decides to sell. Your optimism is always counterbalance by someone else's pessimism. Ha.
No doubt a marketing ploy in my opinion, but it still will focus needed attention to some of the trading activities in the gold market and that can't be bad. Once in a while, you have to turn on the light just to see where the cock roaches are.
Richard W.