Barrick Gold Corp. (NYSE: ABX) announced that it would begin eliminating its hedges against a collapse in gold prices.
In so doing, the company is raising some $3 billion with the sale of stock that will dilute current shareholders.
While the gold hedges may have acted as a brake on revenues and profits in a rising gold price environment, the strategy was prudent.
To eliminate the hedge now when gold hits $1,000 is either a sign of the apocalypse or an incredibly stupid thing to do.
Since I don't believe in the apocalypse, I will say that the covering of the hedge is incredibly stupid. To me, it is a sure sign that gold prices have peaked. This move by management does not give one confidence in its ability to run the company.
I would sell ABX for this reason alone.
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Reader Comments (Page 1 of 1)
9-14-2009 @ 11:22AM
tommy said...
I believe gold at 1000.00 dollars an ounce has peaked and only will move down from here. I actually am shorting gold right now. Also just liquidated all my physical gold to an online refrinery called http://empiregoldbuyers.com . Hope this info helps someone. Thnaks
11-10-2009 @ 8:09AM
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