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Gold/Mining/Energy : Barrick Gold (ABX)
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To: nickel61 who wrote (2819)5/18/2002 9:26:23 AM
From: tyc:>  Read Replies (5) of 3558
 
Never mind Barrick for the moment. Let's consider ALL hedged reserves of ALL mining companies.

By definition and logic, as "hedged reserves" are produced, they will NOT be sold on the spot market; they will be returned to the lender. (To the extent that production is sold on the spot market, hedges are NOT reduced, and therefore it was not production from "hedged reserves").

The existence of hedged reserves will therefore tend to bolster future prices, just as the existence of "shorts" tend to bolster stock prices.

Logically, it makes no difference whether the borrower goes into the market to buy gold to repay the lender, or simply uses his production to repay them instead of selling it.
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