SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Ride the Tiger with CD
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: loantech who wrote (12567)9/4/2004 2:58:06 PM
From: russet  Read Replies (1) of 312346
 
Keep in mind we are discussing two different things and unfortunately they are getting mixed together. One is the general use of hedges, and the characteristics of Barrick's type of hedges. The other is Barrick as an investment.

I have never recommended Barrick as an investment. Declining mine production, increasing costs, and the POG stagnating at current levels (which is really the 25 year average for POG) makes Barrick a poor investment at the present time. New mine production coming on stream in the next 3 years could change this if production levels rise, but new production might only replace lost production due to declining current mine production.

The only argument against Barrick's hedging that makes any sense is that they hedged too much,...but almost all of these hedges were placed when the price of gold was in free fall from $350 to $275 and central banks were shovelling the gold out the vaults as fast as they could. This may result in opportunity cost as Barrick gets US$340 for a fraction of their current production that they deliver to their hedges instead of the current spot,...but they still make a profit on each of those hedged ozs they deliver back to the bullion bank as their cost of production is less. The other 75% of the gold they produce gets spot at present and in a few years when their new mines come on stream 90% of their gold will be sold for spot. Barrick is quickly becoming an unhedged gold company.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News