The truth is re: your forward selling Q, John: NEM is said to not be hedged at all, i.e., engaged in forward selling. BUT...and it is a big but...
this Not hedged has a time frame inherent in the "definition:" even as the HUI index has a time frame SPELLED OUT in their "non-hedged definition." The HUI index definition is these companies are NOT HEDGED BEYOND 2YRS in order to be included in this index, which I understand is dying on the vine, because it never took hold like the XAU did.
OK, so there is the first answer to your first question.
The second question's answer is this:
The type of forward hedged contract was very clearly spelled out sometime back by Peter Munk, ABX's "illustrious" CEO:
It is a type of "have your cake and eat it, too" contract, frankly.
The mining company agrees to honor the hedge as long as the price stays below XYZ point...to be determined by private OTC transaction between them and their customer on the otherside of the hedge, or some other large speculator or commercial, etc.
But, and this is ABX's big but, a/w/a the other big outfits, NEM INCLUDED!!!!...
if said cash market price exceeds XYZ in the contract language, then the producer is released from the non-profitable hedge, and a new contract will be constructed at the mining companies discretion.
Slick, eh?
So, when it comes to a company talking in their annual report about whether or not they are hedged, etc., remember they are talking about the new fangled OTC derivs that they can change when it suits them irregardless of what the opposite side of the contract/option/cash customer wants.
I call it Texas Hedging in the lower 48 parlance, frankly.
Just to set the record straight.
BTW, would you please take a few and check out that other matter that concerns me so? I've had absolutely NO luck in locating that topic re: Y2K and medicine.
Thanks. |
