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.

Today's screw up

I purchased shares of a biopharmaceutical company this morning, hoping to capitalize on the positive results of an upcoming Phase III trial. It's been trending up, but sure enough, as soon as I purchased some, it dropped in price. Fine by me--hopefully the news is good next month and I should profit if the results are positive.

I also got greedy, hoping to buy some out of the money call options at $0.40, with the bid at $0.35 and ask at $0.45. My limit order never hit, as I was looking to buy many options, all or nothing, as I didn't want to incur unnecessary transactional costs (multiple buying units). I realize this illiquid market would have inefficient pricing and wide spreads, but my order never got filled. I was a enraged initially, until I figured out there weren't enough sellers out there to fill my buy order. And that anger turned to relief when the underlying stock priced dropped even more. Had my order been filled, I'd be down over 60% right now!

That's why trading illiquid markets is so treacherous--you can guess right, do everything right, and still lose money--or miss out on a big opportunity. Or in my case, you could save a lot of money, even if you're wrong.

Obviously, I have to change my strategy tomorrow because I'm still bullish on the company. I just have to analyze the open interest and volume better, and hope someone takes my bid. I'll probably have to raise my bid at the market opening, but the funny thing is that today, even tho my bid ended up being high--the all-or-nothing bid was never filled.

Live another day to do it again tomorrow.