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Gold/Mining/Energy : Gold and Silver Mining Stocks

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To: Claude Cormier who wrote (2179)	9/18/2001 11:25:20 AM
From: russwinter	Read Replies (2) of 4051

<new ounces coming into production in the next 3-5 years> One of the notions that made the rounds before is that once we get a run towards 300, people like ABX will run out and start hedging again to bring a project like Veladero on line. I don't think they can do it, as the contango (only 1-2%)is now next to nothing. In fact if you look at forward futures right now they are nearly in backwardization. That means if you use a POG of 290, and look to hedge out to 2005 for this production, you would be lucky to get 310. Personally I think there is a lot of incentive for large hedgers to close out books now. Selling forward doesn't make any sense because of the scrawny returns. Look at forward rates: kitco.com

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