Given a large portion of XGD is weighted in Barrick, and Barrick has a propensity to have a different way of closing out its hedge book (I recall them saying that they would the first time 2-5 years ago). They have recently proclaimed they are doing that again.
In any case they have experienced huge losses and even many highly financial people struggle with the accounting and accompanying notes of such a set of fin'l stmts. They have borrowed and diluted share value recently without much todo.
I attach 3 articles that make you wonder if a change in accounting policy etc is responsible for some of their reductions ...
I am leery of anything Barrick since 1) they are tied into the big money 2) they attempted to claim immunity from prosecution since some of their transactions took place with the fed and other central banks 3) the cb's don't like gold so any dealings would not be in the interest in the POG 4) barrick would be the fall guy before the cb's
Hedge books in gold are a disaster ... although I support the notion of a diversified basket, those who believe in the trend away from if not the collapse of fiat currency would certainly demand a massive premium in gold hedges to go out any meaningful length of time. This is especially the case if you think the US$ is in decline.
I'm not sure what others think ... I have recently been avoiding xgd thinking it may not be as safe as other plays in which you know there is no hedge books ... futures contracts are just one form of derivative and we know how crazy and unregulated they can be.
Other thoughts??? excessive paranoia in not trusting the govt and big guys has helped me sleep nights knowing I've got the real thing ... not some shady promises from company's using an accounting system gone bad ... IMO, the move away from mark to market by FASB makes the most corrupt bunch of lawyers look like lightweights.
Please bear in mind my training is in accounting, so I apologize to any lawyer who feels I have slighted them and can demonstrate a better reason to makes accountants more loathesome than lawyers.
http://www.fgmr.com/look-beneath-the-numbers.html
http://www.reuters.com/article/companyNewsAndPR/idUSN2621656820070926
http://silverstockreport.com/2008/barrick.html
orgy
