Funds Holing GOLD

https://www.holdingschannel.com/funds/holding-gold/

Chile freezes Barrick’s Pascua-Lama, orders ‘urgent measures’

These incidences will increase the cost of mining and the price of gold.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/chile-blocks-pascua-lama-mine-fines-barrick-for-environmental-violations/article12129034/

The hidden crisis in the gold business

http://www.usagold.com/cpmforum/2013/05/11/the-hidden-crisis-in-the-gold-business-2/

Barrick accelerates unhedging its gold positions

Barrick Gold, the world's largest gold producer, announced last month it was removing its hedge positions over the next year, as the hedges were dampening profitability in an environment of higher gold prices. In a Bloomberg interview, Barrick's CFO said it plans to accelerate the de-hedging strategy, buying back gold bullion and closing out short positions.

http://www.reuters.com/article/basicMaterialsSector/idUSL272564320091102

Translation: one the world's biggest gold shorts (at least they produce gold, instead of naked shorting it) is not just walking away, but RUNNING FOR THE EXITS, in anticipation of higher gold prices.

I wonder what the naked shorts at JPMorgan and HSBC are thinking right now. Hint: expect open interest (new short contracts) to explode over the next several days, as the shorts double down in an attempt to surreptitiously suppress COMEX gold and silver.

Either that, or the shorts will get trampled, which is an eventuality. A COMEX "failure to deliver" will occur within the next few years, but these IMF gold sales may ultimately leak back into the open market, causing a temporary decline. But there are just too many institutional and retail buyers worldwide to sustain a meaningful correction. The secular bullish trends in gold and silver are still intact.

Good luck to all.

Barrick, the last of the gold hedgers

Barrick Gold Corporation (symbol "ABX"), the world's largest gold producer, finally removed their hedges against gold spot prices. For over a decade, ABX was one of many gold mining producers who put hedges on gold to lock in future deliveries, and in the process, protect themselves from a decline in the price of gold. In that duration, the hedges have not been profitable, as the price of gold has climbed from $250/oz. to over $1000/oz. today.

Other gold producers have slowly abandoned their hedges over the years, with ABX being the last one to participate in this elaborate gold suppression scheme between the triumvirate of central banks, bullion banks, and gold producers. With news that ABX has unwound its short positions last week, gold bugs are having their day in the sun, as ABX has finally "thrown in the towel". The days of permanent short positions on gold are over--at least for ABX and other gold mining companies. The fortunes of ABX now are completely correlated to its mining operations--and the price of gold, not a derivative financial instrument (a losing one, at that). In other words, ABX anticipates the price of gold to continue to increase going forward.

To gold bugs, this is a seminal event, a confirmation that central banks, bullion banks, and gold mining companies have conspired to suppress gold and silver prices through elaborate gold leasing schemes. I have blogged about it many times, more recently on September 4 and September 5:


http://gregnguyen.blogspot.com/2009/09/ed-steers-take-on-gold.html

http://gregnguyen.blogspot.com/2009/09/silver-futures.html

It's been a running theme, and deservedly so, as illustrated in this lawsuit against JP Morgan and Barrick:

http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf

These latest findings, along with renewed investor demand for precious metals (including new demand from the Chinese), have caused prices to soar recently.

So the predators are now the prey--the Fed and bullion banks will now attempt to short gold and silver futures contracts on their own, without the veil of gold producers protecting them. The bullion banks will continue to attempt to manipulate prices lower by increasing the number of (naked) short positions, and they will continue to have the blessing of the Federal Reserve, but the cat is out of the bag. At some point, these short positions in New York's COMEX and the London Metals Exchange will need some backing of real, physical gold bullion. A flood of demand for physical delivery in lieu of settlement via cash, will cause a run on gold and silver.

When a failure to deliver occurs, investors worldwide will discover that the Emperor has no clothes.

Gold, gold, and more gold...

I used the recent pullback in gold to purchase more Barrick Gold mining shares, albeit it at a higher entry point than my previous purchase of $19/share for ABX. I'm in at about $26/share, which is still cheaper than the $30 it touched earlier.

I also found a way to reduce future purchases to $18.90 by writing April 2009 ABX 22.50 puts, collecting $360 per contract. If ABX touches $22.50/share before the April expiration--and I get exercised, I'll pick up the shares, and since I get to keep the premiums whether I am exercised or not, my effective purchase price would be $18.90.

I also purchased rare gold coins at an auction, including the beautiful $20 St. Gaudens double eagle. I expect them to soar once inflation kicks in from the trillions of dollars of additional money flows.

I'm usually far from a gold bug--I am agnostic as far as investments go, but the inflationary scenario is too coompelling for me not to act. As long as the Fed and Treasury aim to bail out industry after industry, as long as banks and companies continue to collapse, and as long as the government continues to print money in unprecedented amounts, gold will have nowhere to go but up. There usually is a lag period before inflation accelerates, but the inflationary pressures are already starting to build. With short-term interest rates under 1%, it's only a matter of time before people figure out it's wiser to hold gold than devalued paper currency.