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Gold/Mining/Energy : Barrick Gold (ABX)
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To: nickel61 who wrote (2368)4/4/2002 1:00:11 PM
From: russet  Read Replies (1) of 3558
 
While Barrick would have fit it's maturity on it's purchased fixed income investments to coincide with it's hedges this of course doesn't stop the value of those investments from declining in a rising interest rate enviroment. The cash flows would fit but the stock market would discount the ABX share price by the decline in the relative value of the cash flows from the bond portfolios compared to the now higher cash flows that would be available in the market place. This is true of all bonds in a rising market and the discounting of the stock of the holder is what normally happens as as it does to insurance companies.

This is only true if you don't hold the bonds to maturity. If you do hold to maturity as Barrick does, you get the full face value of the bond at maturity, plus all the interest payments. There is no discount.
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