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Gold/Mining/Energy : Northgate Exploration Limited - TSX: NGX; AMEX: NXG
NXG 50.72+1.3%3:59 PM EST
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To: Northern Marlin who wrote (58)8/25/2004 1:44:59 PM
From: tyc:>   of 148
 
>>I don't even understand why holders of physical gold "need to hedge their holdings".

Good question worth discussing. Here's my guess. Bullion Banks (etc.) are businesses. Their shareholders look for a "steady stream" of non-volatile earnings; not up one year and down the next according to the volatility of the bank's gold holdings. My guess is that they are satisfied with a return from their gold assets consistent with a risk free return. To achieve this modest return, they hedge, transferring to speculators the risks and rewards of gold's volatility.
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