Barrick has about all of its 2001 and 2002 production hedged at $340, with smaller amounts of future production at even higher prices. Barrick has enough call options in 2001 at $335 that gold could go to just about any price with little impact. If gold goes above $340 in 2002, Barrick will not lose any money, just miss the opportunity cost above $340.
> is it possible to produce a table to show say, the top ten hedgers with the amount and the prices they are hedged at?
It is probably too complicated, because there are too many ways to hedge (forwards, calls sold, calls bought, puts sold, etc.. ) that are spread over various time frames. How would you come up with a single hedge number ? In the annual report, Barrick had 14.9 forward, 3.7 calls purchased, and 2.7 calls sold, at various prices and times. Would 13.9 net be a "correct" number ?
Then you have to put the entire thing in context, comparing the hedge to either production, reserves, resources, market caps, etc.. Barrick has 58.51 ounces of reserves, so are they 23.7% hedged ? or with 84.592 in resources are they 16.4% hedged ? Does their market cap, $600M in cash, and A credit rating make them less likely to fall in a "booby trap" than a firms with the exact same percentages ?
I think one would need to do a multidimensional analysis using Game Theory Simulation to get a real answer to "what is the booby trap?" Is it the type of hedge used, the price points, the timing, the market liquidity, the production, reserves, resources, credit quality, etc... |
