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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: vampire who wrote (81247)6/19/2002 3:21:41 PM
From: Mike M  Read Replies (1) of 99280
 
Ok, here is the skinny regarding hedging for NEM. The figures were somewhat deceiving. The only reason NEM isn't about 2% is because they recently purchased Normany Mng which was hedged to the tune of 7.3M oz over the next ten years. That is roughly what NEM delivers annually hence the 120%. NEM's plan is to unwind about 10% a year (albeit this year about 1M oz-roughly Normandy's output) of Normandy's commitment through delivery. Hedge is currently under water but if the price were to soften they would deliver forward in order to unwind as quickly as possible.

Those companies that are 800% are simply delivering at pre arranged prices for the next 8 to ten years and will benefit little from any price increases.

It stands to reason, if these highly hedged companies get caught up in the share price inflation they should be some of the first to implode when the pin pricks the golden balloon.
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