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Gold/Mining/Energy : Gold Price Monitor

GDXJ 108.28

-0.9%

Dec 1 4:00 PM EST

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To: Alex who wrote (47142)	1/16/2000 3:31:00 PM
From: Crimson Ghost	Read Replies (3) of 116791

My take on hedging is different than most here. Nothing wrong with it when done when POG is high and covered when POG is low. But the ABX philosophy of having a a huge hedge position outstanding at all times no matter how low POG sinks smacks of a hidden agenda not in the best interest of its shareholders or the gold industry as such. Another problem with hedging in my view is that it has provided a false sense of security to gold miners and has helped prevent them for doing what really needs to be done - namely taking a page out of the OPEC book and CUTTING PRODUCTION AFTER CONSOLIDATING BIG TIME. This industry does not seem to know the meaning of the phrase "creating shareholder value". Now that ABX shareholders are starting to realize that the company's hedging program cannot spare them from the severe stock price drops experienced by other miners -- perhaps they will force a change. ABX stock would almost certainly rise sharply along with POG if the company announced a less agressive hedging strategy or, heaven forbid, decided to cover some of its hedges.

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