Actually, I think Barrick is settling the hedges w/ gold, not "defaulting".

"Barrick's Gold Hedges consisted of 3.0 million ounces of fixed price contracts where Barrick does not participate in gold price movements. These contracts have a negative MTM position of $1.9 billion as of September 7, 2009. Under the terms of the Gold Hedges, Barrick could purchase gold in the open market or deliver physical gold into these contracts in order to terminate them. Within the next 12 months, Barrick expects that, on an opportunistic basis, it will purchase these ounces in the open market and/or deliver gold from its own production in a manner which will seek to minimize the cost of settlement. These ounces will then be delivered against the Gold Hedges in order to terminate them. The cost of eliminating a Gold Hedge is approximately equal to the MTM position of that contract at the time of its elimination. A $10 per ounce increase or decrease in the spot price will result in an increase or decrease in the MTM position of $30 million on 3.0 million ounces of Gold Hedges. In addition, the MTM position is also impacted by changes in US dollar interest and gold lease rates but such impact is not material when compared to the impact of the change in the gold price."

Here's an article that also mentions Barrick having already bought a significant amount of gold on the market. The author says that explains therecent puzzling rise in teh price of gold, and that the present price will be unsustainable once Barrick finishes dehedging. Typical analyst slant- not mine.

By Devon Maylie
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Dehedging by the world's largest gold producer, Barrick
Gold Corp. (ABX), has been the driving force behind gold's move above $1,000
a troy ounce this week, a price level analysts say is unsustainable.
Barrick said late Tuesday that it will close its gold hedges at a total cost
of $1.9 billion over the next 12-months.
So far the company has converted 2.4 million ounces of fixed price contracts
to floating contracts since the end of June, which required the miner to buy
that amount of gold in the market.
The company still has 3 million ounces of fixed price contracts to dehedge,
but that will take place over a longer period of time, a Barrick spokesman
told Dow Jones Newswires.
Gold hedging among producers, or the practice of selling future gold
production in advance on the belief that current prices will be better than
those in the future, is declining. Dehedging involves a company buying back
such gold in expectation of price rises.
"We have more buying to do," the Barrick spokesman said.
Traders and analysts said the dehedging done since the end of the second
quarter, before Barrick's announcement, had been a major contributor to the
nearly $100 rise in the price of gold over that period.
Barrick's announcement indicates producers are accelerating the process of
buying back hedges to get full exposure to the metal, in anticipation that
prices will rise further.
But while dehedging has driven gold prices higher, as the amount of gold
hedged shrinks, the support to prices from dehedging will begin to flag.
Barrick had 5.4 million ounces of fixed-priced contracts at the end of June.
On Tuesday the company said it now has only 3.0 million ounces remaining as
of Sept. 7. Therefore, it had already dehedged 2.4 million ounces between
July 1 and Sept. 7, said VM Group analyst Matthew Turner. That is equivalent
to a sixth of global mine production in that period.
The news is bearish for the gold price. The price rise had seen analysts
scrambling for explanations. But now there is a consensus on the cause, and
also that it isn't a cause likely to be repeated with the same intensity,
Turner said, alluding to the Barrick dehedging.
"We conclude that recent buying from Barrick probably contributed a lot to
the move in gold over the past week and that, while there may be more buying
to do, we believe their outstanding position is closer to 2 million ounces
than the 3 million ounces reported," UBS analyst John Reade said.
There have been other factors driving the gold price, which topped $1,000 an
ounce Tuesday, and these will continue to buoy the price of the precious
metal into 2010, analysts say. Such factors include U.S. dollar weakness and
investor concerns about future inflation.
"We hold our one and three month forecasts for gold at $950 an ounce and
$1,000 an ounce respectively, signaling that we expect a pullback in the
short term," Reade said.
RBS forecasts gold to peak next year in the first quarter at $1,100 an ounce
and to average $1,000 an ounce through 2010.
"Gold's long-term history as a harbinger of inflation, or gauge of inflation
expectations, is clear," said RBS analyst Stephen Briggs. Investors are
concerned about inflation and are getting into gold now to protect against
possible inflation in the future, Briggs said.
While a large portion of Barrick's dehedging is already completed, there is
some left to do, while AngloGold Ashanti Ltd. (AU) has previously said it
plans to reduce its hedge book to 4.1 million ounces by year-end.
As a result of Barrick's announcement, total dehedging this year may now be
more than expected, but the long-term pattern is still for the global hedge
book to fall to zero, said RBS' Briggs.
As of the end of the second quarter this year, the global hedge book was at
14.7 million ounces. That's down from the peak of 103 million ounces in the
third quarter of 2001.
Barrick's hedge book closure "marks the beginning of the end of the global
gold miner hedge book: once this transaction is completed, it will leave the
industry's remaining hedge book concentrated in the hand of one producer,
AngloGold Ashanti," said Reade.
Barrick's decision could pressure AngloGold to accelerate its dehedging
process, Reade said, and then there won't be much dehedging left to do.
Under the terms of the gold hedges, Barrick could purchase gold in the open
market or deliver physical gold into these contracts in order to terminate
them, the company said.
Within the next 12 months, Barrick said that, when a good opportunity
arises, it will purchase gold in the open market and/or deliver metal from
its own production to minimize the cost of settlement. These ounces will
then be delivered against the gold hedges in order to terminate them.
Barrick cited concern by shareholders and a bullish outlook for the metal as
reasons for closing the hedge book.

-By Devon Maylie; Dow Jones Newswires; (4420) 7842 9483;
devon.maylie@dowjones.com