Who sold Barrick those calls?


1a EST Tuesday, February 8, 2000

Dear Friend of GATA and Gold:

If you're not sick yet of analysis of Monday's
developments in gold, you may enjoy this interesting
post by the always interesting Ted Butler at
www.kitco.com. Butler's analysis has paralleled GATA's
for some time. Here he looks closer at Barrick's hedge
book revision than I've seen anyone do so far.

Please post this as seems useful.

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

* * *


By Ted Butler
Monday, February 7, 2000

This Barrick announcement was a stunner. I'll probably
have more to say as time goes by, but I feel like I'm
playing chess with these guys.

This was a good move, almost the best they could make
under the circumstances. They bought a chunk of short-
term calls (one to two years) for $68 million, reducing
their short exposure for the term of these calls by
about 50 percent.

They also reduced slightly their forward sales and
long-term short calls.

This is no doubt a good move for shareholders. ABX is
in a better position as a result of this move.

As an aside, I stated from the get-go that it was my
goal to force Barrick to cover its shorts. I feel that
I have accomplished that goal to a large degree. That's
the power of the Internet. That's the good news.

The bad news is that Barrick doesn't dress in drag
anymore. These guys are a pure hedge fund now. They
knew they couldn't cover their shorts on a straight
metal buyback basis without blasting the market upward,
so they bought protection in the form of the short-term

They still say they believe in hedging (for legal
purposes, what else can they say?), but their actions
indicate otherwise. They're still arrogant and try to
explain things in a schoolteacher-to-student manner,
but it remains they couldn't buy back exactly what they
sold short because the market wouldn't accommodate
them. So they put a hedge on their hedge. That's great
for a hedge fund but not for a miner.

John Hathaway asked a great question on the conference
call: Who sold them the 6.8 million calls?

Barrick's Oliphant said it was confidential, but it was
bullion banks.

Hathaway's question was good because it goes right to
the heart of the matter -- that is, that Barrick couldn't
have bought physical (which it sold short) or long-term
calls or COMEX paper without impacting the price, so
they turned to the scum at Morgan, Chase, and
Goldman to bail them out with completely non-
transparent OTC short-term calls.

All Barrick did was slip through the door first. The
other short miners have lost their hedging poster boy.
Let's see what they do now.

I said how Placer was dumb as dirt for announcing they
would be buying back before actually buying back.
Barrick ain't dumb, and didn't do that -- but this
drama ain't over for them either. It'll take a while
for it to sink in, but Barrick didn't straight-cover
their shorts cause they couldn't. That's because
leasing/forward selling is still inherently crooked.
How can you return collateral that's been sold?

All Barrick did was transfer more gold liability to
Chase, Goldman, Morgan, et al. -- the financial system
-- in an attempt to prolong the manipulation. That's
just great and what we were all hoping for.