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Gold/Mining/Energy : Barrick Gold (ABX)
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To: nickel61 who wrote (2336)4/3/2002 5:50:03 PM
From: tyc:>  Read Replies (2) of 3558
 
Perhaps it is YOU who doesn't get it.

Why should Barrick buy back its hedges ? It seems that you delude yourself into believing that there will be some dire consequences if they do not do so. The only consequence is that it will receive for its future hedged production the pre-arranged price, instead of the spot price which might be considerably higher.

You talk about co-party risk. I know nothing about Barrick's dealings and it is quite clear that you don't either. Logic tells me however, that in the remote possibility of a failure of the co-party to a hedge, the hedge would simply collapse. A hedger would have to sell its production on the spot market instead of delivering into the hedge for a price higher than spot.... it would have to be satisfied with the same spot price as the non-hedgers are receiving. So what's the big deal ? What is your agenda ?
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