that vola spike is quite something! if and when you find the time, could you please pm me about the application process? doesn't have to be right away..anytime you feel like it.
i've seen the 'producers return to hedging with a vengeance' article and think it's propagandistic baloney...for the simple reason that those that DO engage in the practice are already up to their eyeballs in hedges, and furthermore it makes zero business sense to enter into forwards when lease rates spike...if you do it, you do it while they're low.
the hedged producers could run into big trouble, unless they have very large reserves and the capability to quickly increase production to close out positions and participate in the upside.
the Australian producers are imo dead meat in a big rally...their hedge books are simply the pinnacle of irresponsibility. an added twist is that the Ozzie peso seems to have stopped following the Euro, and is instead now following the Yen down into the abyss. as a result the gold price is already running away from them.
if one thinks about it, this is truly ultra-perverse...the heavy hedgers are the only producers in the world that must be afraid of their product increasing in price...it's too stupid for words. btw, shareholders have seen no benefit from the practice. when the PoG goes down, the hedgers shares plunge just as quickly as those of the non-hedgers (that loosely includes light hedgers, since there is now only ONE, a single one, company left that really has no hedge at all), and we'll see what happens to them in a real bull phase...considering ASL's and CBJ's fate, i can already see the shareholder law suits piling up.
and if CMB/JPM is short, i just wish it blows up on them...they're among the banksters that increased their derivatives exposure by several orders of magnitude after the WAG, and Howe rightly suspects imo that that was done to stop the nascent rally dead in its tracks and save the carry from the threat of oblivion. |
