Fundamental change in the gold carry trade

Section:

10:30p EST Tuesday, February 8, 2000

Dear Friend of GATA and Gold:

Here's a follow-up from GATA Chairman Bill "Midas"
Murphy to his commentary of earlier tonight about
Barrick Gold.

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

* * *

By Bill Murphy
www.LeMetropleCafe.com
February 8, 2000

I have been besieged with copies of emails sent to
Barrick Gold by disgruntled shareholders.

If JUST these samples of what has come in to me are
any indication of what Barrick has been hit with, you will
have a better idea of how the gold game is changing --
FOR GOOD.

---

Dear Ms. Mulligan:

I sent an email last week explaining that I would like
a response as soon as possible as I need to make a
decision to sell or keep my Barrick shares. One of the
companies I am considering is Placer Dome.

Unfortunately, as I waited for your company response,
their stock soared 25% Friday on their news to
discontinue hedging because they see the price of gold
rising over the years. To date, I have not so much as
received a simple reply from Barrick.

I am considering selling all shares tomorrow unless I
receive a well deserved response to my original email
immediately.

Disappointed,

Jack R.

---

Dear Mr. Oliphant:

Since attending the Denver Gold Group Conference held
at the Westin Hotel in Denver and meeting with IR
representatives, I have been waiting to make a decision
on what to do with my primary stock holding in Barrick.
Because it represents my largest holding, approximately
18,000 shares, I have been very disappointed with the
recent low share price - it has been going down since
gold has risen to stabilize in the $280 price range. I
hate to sell at this recent low price, but I do not see
anything changing with management's direction on its
hedging policy.

Management seems to defend their practice in light of a
growing awareness of the dangerous position it is
placing the company and investors in. I have included
the email you sent me before attending the conference
for your perusal. Also I am including a well written
essay related to your practice of hedging. The more I
discover, the more I am alarmed at management's risky
hedging policy.

Furthermore, I am adverse to maintaining an investment
in any company that hurts the industry it represents. I
eagerly await a response on your most current plans on
your hedging policy. I will not sell if you can assure
me you are planning or in the process of covering your
hedged position. Please respond as soon as possible.

Thank you.

George M.

---

To Randall Oliphant:

I along with three other employees of Johnson
Marketing, all Barrick shareholders, have sent numerous
emails to Investor Relations and not one of you have
bothered to respond to any of our concerns! To say the
least, we are offended and have now formed the
impression that management could care less about its
shareholders.

I guess it comes as no surprise to you that as a result
of your negligent behavior towards the shareholders of
whom you serve, we have all made the decision to sell
our shares of Barrick if we do not receive some answers
fast! We were all very disappointed the Barrick did not
announce their intentions to cease all hedging
activities!

Instead, they further hurt the stock price and gold
price by claiming to have covered a large position of
their forward sales in the last quarter. On the Barrick
conference call, you were quite specific in saying that
the 6.8 million calls you bought would be settled for
cash, if in the money at expiration - a cash
settlement. Even without seeing the contract and what
exclusions may apply - cash settlement is suspect. When
you give up the settlement demand of actual delivery in
metal, you are leaving yourself wide-open for
unexpected surprises. That's because someone can always
play games with prices on any given day or period, a
delivery demand in physical metal really cuts down the
wiggle room.

What Barrick bought on paper looks less and less like
real bullion, which is what you owe. Maybe it will work
out for shareholders, but your hedge position is
starting to look like a Rube Goldberg contraption. I
would like this cleared up immediately!

In fact, we're so upset, that we may be joining a
movement under way to bring legal action against
Barrick management to have all of you removed from your
positions and held accountable for your misleading
information given to us over the years! Barrick
shareholders have begun to contact Milberg Weiss
Bershad Hynes & Lerach Law Firm to file a lawsuit
against Barrick management. All 4 of us have been
contacted to join the movement by other Barrick
shareholders. They are in the process of contacting the
law firm to relate our experiences over the years in
dealing with Investor Relations and the misleading,
vague information we have received in regards to the
nature of your hedging practices. As I stated in
earlier emails, I do not want to be invested in a
company that is not only hurting the gold industry
through its practices, but more importantly putting
investors at risk in the reasonable event that gold
will rise to the level many such as John Hathaway
believe it will.

Mr. Peter Munk of Barrick Gold has some gall to blame
World Central Banks for the horror story unfolding in
the gold mining industry. In fact, he is one of the
leading contributors to the malaise afflicting the
precious metal. Barrick's shareholders ought to fire
him summarily along with his entire executive board of
sycophantic ducks.

Yes, it's true that, owing to forward hedging, he
locked in most of Barrick's production at $410 an
ounce. Most uninformed observers would consider that a
shrewd tactic. However, it is a Pyrrhic victory at
best. In reality, forward sales of gold by self-serving
mining companies like Barrick contributed to the over-
supply of gold in the market. When gold reached $410 an
ounce and the world's largest mining company sold
forward such a huge position in gold, is it any wonder
that Central Banks decided they ought to follow a
similar course...especially given gold's stagnant price
over the last decade?

Mr. Munk further feigns concern about the possible
social disruptions that might unfold in a major gold-
producing country such as South Africa. When he dumped
Barrick's gold supply upon the market at $410 announce,
was that an act of social conscience where South Africa
is concerned? Of course not...it was Barrick acting out
of ignorance and myopic objectives, oblivious to the
perceptions and ramifications this huge forward sale
would have on the world gold market.

If gold mining companies really wish to convince
Central Banks that gold stands any chance of future
appreciation, then they better skip the hot air and
pursue immediate, tangible strategies in addressing the
over-supply problem.

First, they must immediately cease all forward sales of
gold. Secondly, they must announce to the world that
all future exploration of gold is ending today and they
will only work the existing mines. Third, they must
consolidate their industry so that it is similar
structurally to other major oligopolistic/monopolistic
commodity suppliers (such as OPEC). Fourth, they must
mount a concerted propaganda campaign to convince
Central Banks and major global financial institutions
that gold truly is a financial reserve and not merely
another commodity. In otherwords, they must shift their
focus from supply to demand. It seems every time we
open a newspaper or turn on the TV today, we see a
constant assault on the value of gold mounted by
disciples of the so-called "New Paradigm." It would
make a great deal more sense to forego opening a single
gold mine and use the monies saved to finance pro-gold
lobbyists and media exponents who can reverse the
negative psychology that's developed around the metal.

The most unnerving aspect of the current gold crisis is
its potential spillover effects. Weakness in gold is
spilling over onto other metals such as silver and
copper. In effect, if counter-measures are not enacted
swiftly, we soon might witness numerous mine closures
in virtually every metal industry. Can you just imagine
the devastation this phenomenon would wreak upon the
resource-dependent Canadian economy? Already, various
financial analysts are attributing unusual weakness in
the Canadian dollar to currency speculator concerns
over future, pandemic weakness in Canada's resource
sector.

In conclusion, I would ask Mr. Munk one final question:
if he is truly bullish on gold as he claims, then why
the hell is he shifting significant amounts of assets
into Trizec-Hahn, the commercial property developer? If
he truly believes in the gold mining industry, then he
is sending the wrong message by simply buying back his
own company's shares. The only message the buyback
sends to the world is that Peter Munk believes in Peter
Munk. Instead, he should acquire another major gold
mining company (like Battle Mountain, Placer Dome, TVX,
Homestake, Royal Oak, or Kinross). In doing so, he will
put the entire gold market on notice that short sellers
best beware because mining consolidation is in the
works.

Charles V.

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To Whom It May Concern?

I have held Barrick stock for a number of years
and have lost a substantial amount of money. I
purchased the stock as a hedge because I felt that
gold was undervalued relative to the DOW. Barrick
Investor Relations assured me they were committed
to seeing a higher price of gold and would only
hedge as necessary when prudent to do so.

After years of communicating with Investor Relations by
phone and more recently by email, I was not made aware
of the extent to which management had hedged. Only
until recently did I learn of their huge hedged
position. Had Investor Relations told me the truth
about the extent and nature of their hedging, I would
have sold the stock several years ago.

I have expressed my feelings to management by email
several times over the past several months and have yet
to receive a response from them. I feel that Barrick
management has acted irresponsibly and done a great
disservice to its shareholders by not being honest
about the nature and extent of their hedging, options
selling and buying, and other investment practices.

I believe that Barrick management should be held
accountable for their actions, shareholders should be
compensated for losses as a result of Barrick's
vague and misleading hedging practices, and a full
disclosure as to the real nature of their
financial practices be made.

Sincerely,
Donald Bain, Barrick Shareholder