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Tickers in this Article: ABX, AU, KGC, HL, SVM
Barrick Gold (NYSE:ABX) turned gold's heady prices into strong profit numbers, exclusive of charges, in the last quarter. The company took charges for removing its gold hedge contracts and raised its gold production outlook for the year. It also announced the spin-off of some of its African operations.

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Some Golden Numbers
Barrick, the world's largest gold producer, reported $2.4 billion in revenue in the fourth quarter, up from $2.1 billion last year's quarter. Net income, exclusive of charges, was $604 million, or 61 cents a share, compared with a loss of $468 million or minus 53 cents a share last year. The charges were $241 million, or 24 cents a share to eliminate gold hedges.

Gold hedges are contracts to sell gold at a fixed price in the future, and are employed as downside protection by gold producers. Like any hedging instrument, it is designed to limit downside risk but can also dampen the upside. Rival gold producer Anglo Ashanti Gold (NYSE:AU) has also been reducing its hedge book, by two-thirds, to allow greater exposure to the gold price. The company also reported record profits.

Barrick's Spin Off, Developments And Outlook
Barrick will have an IPO for a spin off of its bundled African gold mines. The public offering will consist of 25 per cent of the properties with Barrick continuing to hold the remaining 75 per cent. The company will also buy additional interest from Kinross Gold Corp (NYSE:KGC) in the Cero Casale project in Chile. Barrick is also trying to further develop its Cortez Hills Mine in Nevada, where the Shoshone Indians and environmentalists have attempted to block operations via lawsuits.

Barrick still expects its cash-cost figure the amount spent to mine each ounce of gold to fall to $425 to $455 from $466 an ounce in 2009. The company sold gold at an average of $1,119 per ounce in 2009, and plans production increases for this year.

Silver Also Strong
Perhaps overlooked by many investors in the gold price run up has been silver. Silver mining has been lucrative, also. Hecla Mining (NYSE:HL) turned in record profits and completely paid off its bank debt from its cash. Hecla also boosted its considerable silver reserves by 77% at the Lucky Friday mine, and remains an efficient, cost-containing producer.

Silvercorp Metals (NYSE:SVM) reported an amazing negative production cost figure for its fiscal third quarter. The precious metal markets have been blazing.

Will Metals Burst?
The "B" word, "bubble," is in the air around gold. Billionaire investor George Soros was famously quoted in Davos in January as saying that gold was "the ultimate asset bubble." He might have added that in the fourth quarter he doubled his investment on the metal, according to Dow Jones. Also, hedge fund manager John Paulson was holding the largest percentage of his fund, 17% of his Paulson & Co.'s portfolio, in gold as of the fourth quarter.

Soros and Paulson of course are not infallible, but their gold play is worth noting. And while many observers expect gold prices to break severely downward, if the pending IMF sale of gold is snapped up by eager sovereign investors, gold could shoot upwards again.

Barrick Stock
If you're a fundamental long-term investor, neither nimble nor perhaps even brave or foolish enough to speculate heavily on gold futures, don't lose sight of the fact that Barrick and these other mining producers are actually profitable businesses digging something out of the ground that other people want.

Barrick is a solid way to play gold, and despite the gold mania, was trading about 17% off its 52-week high, at just under $40 a share. If you can wait and buy shares in the mid or low-thirties or even less, you will get Barrick at a very good price. (For additional reading, take a look at Does It Still Pay To Invest In Gold?)

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