Barrick Shareholders go Berserk Compelling Barrick to make Another Press Release

*Barrick Gold: The negative shareholder reaction to Barrick Gold's press commentary yesterday on its hedging policies was so extreme that they just issued a press release:

Toronto, Feb 8 /CNW/ - "Barrick Gold Corporation announced today that it would not increase its hedging from the level outlined in its annual outlook presentation yesterday......

"The significant 9 million ounce reduction in the committed forward-sale position reflects Barricks's confidence in the gold price. It is approximately two-thirds of the entire amount of gold supply from producer hedging in the world last year, or two-thirds of all the gold to be sold by the Bank of England."

This is a significant development. Rarely does a corporation of the stature of Barrick NEED to come out with a clarification after a major presentation. The tone of the press release is very bullish and they eliminate the possibility of adding to their hedges in the future.

Shareholder people power has spoken and been heard.

While still early in the Australian trading period, the price of gold just popped $3.00 in access trading and the volume is VERY HEAVY for so early in the evening. A 500 lot offer was just taken at the market.

The irony is Barrick's forward gold hedge reduction was rather dramatic. They really did take a big step in cutting back their forward sale program. When the price of gold rises above $319 this year, the writers of the gold calls have to be able to make delivery. That could cause the gold market to go bonkers to the upside.

Gold traders responded so poorly to their announcement because these supposed masters of PR blew it big time as they led of their press release with statements like Barrick committed to hedging followed by a comment that they did not intend to deliver into their forward sales like Placer, Normandy and Anglogold are doing. Then, they touched on their increasing gold mine production.

Moans were heard all over the place.

One of the worst PR snafus I can ever remember. I was told Peter Munk was going to be on CNBC this morning. He ran for the hills and sent Randall Oliphant into the fray to take the heat. I thought he made a very good presentation, by the way. The market did not think so. The shares of Barrick plummeted and closed today at 17 1/4, down almost 2 full points from its high on Monday and only about 1 point off 52 week lows.

Barrick led the XAU into abysmal territory.

Just from the emails I received both yesterday and today, I know that their shareholders (the institutional crowd included) went BERSERK and that is why they were compelled to release this statement tonight.

They are on a road show to present their case to investors and needed a fast damage control statement- thus, this bullish gold press release.

* Comex Exchange Regulators were all over the floor today. Word to me is that Goldman Sachs and associates bought heavy into the Placer and Barrick announcements (as they knew what was coming) gunning to touch off delta hedged written call options that had to be covered as strike prices were breached.

They then sold into those buy stops as panic buying kicked in. The market then collapsed as they drove it down.

This morning about 7:30 gold was trading higher, having been $1.90 higher for some time. Then, all at the same time, Goldman Sachs, Morgan Stanley, AIG, and Societe Generale started posting low bids to create a much softer opening (according to bullion dealers that watched them do it).

Clear collusion, that even other bullion dealers are now witnessing.

It will not be long before their A is grass. Pardon my Cafi French.

I received word today that Congressman Jack Metcalf has joined our camp looking for answers from the U.S. Treasury about the spreading talk that the gold market is being manipulated.

The pressure is growing on Secretary Summers to fess up.

Hang in there!

KEEP THE FAITH

Bill Murphy

Barrick Shareholders Update:

Date: Tue, 08 Feb 00 19:53PM MST From: LePatron@LeMetropoleCafe.com Subject: Examples of the Extraordinary Barrick Gold Shareholder OUTRAGE !!! Le Metropole members,

After my "beserk Barrick gold shareholder MINI MIDAS," 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 w/ 3 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

Le Metropole Cafe

All the best,

Bill Murphy Le Patron www.LeMetropoleCafe.com

-- Zdude (zdude777@hotmail.com), February 09, 2000

Answers

Zdude - thanks for the information. It looks like the market insiders are having a hard time keeping the POG under $300. With this news, I would expect to see gold regain some of the strength it lost the past couple of days.

-- Teague Harper (tharper@cyberhighway.net), February 09, 2000.