Barrick Completes Elimination of All Gold Hedges
By Kevin Orland and Edmond Lococo
Dec. 1 (Bloomberg) -- Barrick Gold Corp., the world’s largest gold producer, said it completed the elimination of its gold hedges, gaining full leverage to the price of the metal.
The change in the value of some gold hedges before they were eliminated will result in a $300 million charge against fourth-quarter earnings, Toronto-based Barrick said today in a statement.
Gold jumped to a record above $1,200 an ounce in New York today as declines in the dollar and higher commodity prices boosted investor demand for an inflation hedge. Barrick in September said it was eliminating fixed-price contracts to increase its bet that the metal will gain.
In the past two years, Barrick has eliminated a hedge position of 9.5 million ounces of gold at a weighted average price of $930 an ounce, by either settling fixed-price contracts or by converting them into floating contracts.
Barrick rose C$2.28, or 5.1 percent, to C$47.14 at 10:18 a.m. in Toronto Stock Exchange trading. The shares were little changed this year through yesterday.
Gold production may grow to 7.7 million to 8.1 million ounces in 2010, Barrick projected. The company said Oct. 29 that 2009 output may reach as much as 7.6 million ounces.
It seems that Barrick reads the Fed the same way I do, that they are determined to devalue (or even destroy) the dollar. Perhaps Marc Faber is correct when he says that gold will never see $1000 per ounce again.
With the relentless drop in the dollar and a competitive devaluation environment forming with other currencies, the argument for the ownership of physical gold and other precious mineral seems to be gaining momentum.