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When gold began its run at $1,000 last year, one of Peter Munk's buddies was heard to joke: "If gold gets much higher, Peter might actually start to believe in bullion."

That playful barb is at the heart of the transformation playing out right now at Barrick Gold , the world's largest gold miner.

Mr. Munk is the founder and chairman of Barrick, and a larger-than-life leader. He is an accomplished financier, and a corporate visionary.

However, he is not a gold bug.

Under Mr. Munk's direction, Barrick became a well-run and efficiently financed company that just happened to produce more bullion than any other mining company on earth. It could have just as easily been making stereos, or owning real estate, two other ventures that Mr. Munk embraced in the past.

From his first day at the helm of Barrick, Mr. Munk didn't want to make a one-way bet on the price of gold. He didn't want to build an expensive mine that produced gold for $200 (U.S.) an ounce, only to lose bucket loads of money when bullion dropped to $100 an ounce.

So Barrick hedged its production. If its mines produced gold for $200 an ounce, and the company could lock in a $300-an-ounce price for that gold over the next decade, which struck Mr. Munk as a fabulous approach to the business. The founder wanted certainty, not speculation.

When gold prices went sideways, as they did in recent years, Barrick's strategy worked. The company coined money off its hedging strategy. Mr. Munk, to his credit, plowed cash back into operations, building better mines and consistently acquiring properties.

Along with way, Barrick developed its own culture, and an investor base that was comfortable with the company's financial engineering.

Most gold plays are staffed by executives and directors who truly believe that bullion is the single best way to create and preserve wealth. Those true believers don't tend to work at Barrick.

Instead, Mr. Munk hired fellow financiers, not geologists, to run the show. Aaron Regent, brought in last year as the CEO, was trained as an accountant.

However, Mr. Regent is a quick study. And Mr. Munk is nothing if not versatile.

When gold began to rally, smart investors dumped Barrick and its fancy hedging program. The stock underperformed peers.

For months, Mr. Regent has been talking to institutional investors, and hearing the same refrain: 'We like Barrick's collection of properties, and its status as the dominant, most liquid player in gold mining. But we hate the hedged production.'

Mr. Munk has been getting an earful on this subject for years. On Tuesday, out of the blue, Barrick made its move. The company capitulated. The hedges will be banished.

Killing the hedge book translates into a $5.6-billion accounting charge at Barrick. Most companies would be pilloried for admitting to this kind of mistake. In gold mining circles, Barrick is able to sell $4-billion of stock on this news, as investors are thrilled to pay a price in order to have their long-sought pure play on gold.

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