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Gold/Mining/Energy : Precious and Base Metal Investing

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To: Salt'n'Peppa who wrote (31597)	10/15/2004 6:58:39 PM
From: Taikun	Read Replies (2) of 39344

SnP, I picked up some ABX, PDG calls today. I know the ABX hedging program sucks and it may or may not come off, but here's what I think: Jan 07 US$22.5 Calls $3.20 ABX US$20.57 Assumptions: 1.CDN$ appreciates a minimum of 20% in 1 year. 2.ABX does not fall in CDN$ value. $20.57X1.2=$24.68 new USD ABX price Your calls are now in the money. Alternately, if the calls had 365 days left on them, according to ivolatility.com they'd be worth $5.80 each with ABX at $24.68. Compare these to buying CDN$ Canadian calls on the MOE and this is way cheaper. This is how I play the USD devaluation against the CDN on dual listed commodity issues. These are some of the cheapest calls I've seen. $5.80 in value, paid $3.20. You have to buy the assumption that the CDN units will not fall in price and the USD devaluates. Inco Jan 07 calls and Alcan Jan 07 calls are also doable, but a bit more expensive. David

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