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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (21695)	7/31/1999 7:09:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

TB, the success or failure of mining co's hedging strategies depend largely on whether the bear market in gold persists. a most interesting strategy is pursued by AR in the copper market. they hedge only metal which has already been contracted for delivery, leaving all future production fully exposed to copper price movements, based on their conviction that copper was trading too low in the 60 c/lb. area. of course, industrial metals are a different market and what's appropriate there may not be appropriate in the gold market. the gold mining co's whose stocks perform best when gold goes up and worst when it goes down are the marginal producers that have high costs, especially when they do little hedging. of course many of these companies are close to the edge right now - the S.A. producer ERPM e.g. recently went bankrupt - it had only recently started a modest hedging program. regards, hb