And then there is just a little more to brighten your day........Let'm trash these things and then snap'um..............
Gold Stocks -2: Hedging Seen Helping Maintain Profits
Hinrichs, of ABN AMRO Chicago Corp., said he expects the average price of gold to rise to $325 an ounce for 1998.
Peter Ward, an analyst at Lehman Brothers Inc., has a more bearish view. He said he set a 1998 gold price estimate three weeks ago of $300 an ounce.
"That (estimate) was certainly the most bearish estimate then," he said. "Now it looks optimistic."
Ward said he fears that even if gold recovers slightly in the near term, the longer outlook for the sector is still weak.
"My concern is that the equities have not discounted enough ... in terms of
cash flow," he said.
He acknowledged that certain stocks, such as Barrick Gold, which are fully hedged, could "survive a terrible environment in the near term."
Hedging, a common industry practice, locks in a price for the mining companies' gold production.
Analysts said those companies who are hedged, or partially hedged, will not see much of an effect on their 1997 earnings from the weakness in gold prices.
Newmont Mining is one example. According to Jack Morris, vice president of corporate relations, the company benefits from hedging about one-third of its production.
"And we expect to report solid earnings for the quarter and for the year," Morris said.
- Rebecca Wolf; 201-938-5166
"Dow Jones News Service"
"Copyright(c) 1997, Dow Jones & Company, Inc." |
