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Gold/Mining/Energy : Gold Price Monitor
GDXJ 99.85+6.2%Nov 24 4:00 PM EST
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To: goldsheet who wrote (60452)11/3/2000 8:55:21 AM
From: tyc:>  Read Replies (1) of 116764
 
I suppose it would be more profitable to look ahead rather than backwards.... It would appear that the $A is moving up now. If this is so, what the Aussie miners lost when the A$ fell is now being regained.

The losses you refer to would apply equally whether the currency risk was covered by separate hedges on gold and currency, or whether the risk was covered by simply a forward sale of gold in Australian dollars.

What it means is that the companies would have been better off without the hedge. They chalk up what their profits would have been without the hedging and then offset it with the loss (or the gain) on the hedge(s).

Here, for example, is a brief extract from the annual report of a Canadian base metal mine.

"Revenues from copper hedging gains of $0.3million and $3.3million in 1999 and 1998 respectively. Although the average copper price was lower in 1999, copper hedge gains were lower than in 1998 as the company had only 900 tonnes of production hedged in 1999 compared to 8,400 tonnes hedged in 1998. Losses from currency hedges decreased to $1.4 million in 1999 from $2.6 million in 1998 due to smaller differences between the actual exchange rate and the hedged exchange rate. There are no copper or currency hedges in place for the year 2,000"
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