Barrick Gold (ABX) Message Board

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Gold/Mining/Energy : Barrick Gold (ABX)

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To: russet who wrote (2281)	4/1/2002 2:59:56 PM
From: tyc:>	Read Replies (3) of 3558

If I may join the discussion.... Selling forward simply gets a miner the current spot price plus interest to the date of forward sale. For the addition of interest, the miner abandons the possible profit from an increase in the price of gold. That is why the market will continue to price hedgers lower than non- hedgers. Forward sales abandon the "option value" of hedged production. I like to think that the gold in the ground has already been sold. What the hedger has in the ground is more like a coupon-less bond.... not very exciting especially when interest rates are expected to increase.

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