Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (11748)	2/6/2000 5:42:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Placer Dome's Jay Taylor on Suspension of Gold Hedging: Comment Vancouver, Feb. 4 (Bloomberg) -- Jay Taylor, president of Placer Dome Inc., comments on the company's decision to suspend its gold hedging program. Vancouver-based Placer Dome is the world's No. 5 gold producer. ''There's a number of reasons (for today's announcement.) First of all, we're optimistic that the price is going to go up, and I don't think you want to hedge at today's prices if you think price is going up. Most people hedge because they think prices are going down and they want to protect against that event.'' ''Secondly, my view is that, at these kinds of price levels, US$280 or US$290 an ounce range, this is far too low. The average cash cost of a producer in the world today is around US$200 an ounce and they have non-cash costs of another US$50 or US$60 an ounce for an end of US$250 or US$260 an ounce. There just isn't enough margin between US$250 and today's prices to justify spending the money to find these deposits or acquire them. There isn't enough there to service debt, it's just not enough of a yield.'' ''That's one of the reasons why there's been so little investor interest in the gold market is, they just don't see the financial returns. So anytime you get into that kind of a situation for an extended period of time, something's got to give. In this case, I think the price is going to move upward and it looks like it's already starting to do so.'' ''Hedging is coming under increasing scrutiny and criticism today and I think a lot of people are realizing that there is significant investor risk in investing in some companies with their aggressive hedge programs and the whole market is really questioning whether or not there's enough economic merit in doing so. We've looked at it and we've got one of the best hedge books in the business -- but we think the time is now to suspend hedging and watch the price move up.'' ''Other companies will do what they will, but my feeling is that there's far too much producer hedging. We have about 4,000 tons, which is really one full year of the gold mining industry, being hedged by the producers alone and there's thought to be almost an equivalent amount by the hedge funds and other speculators that are tracking what we're doing. So there's an awful lot of gold production that's being sold short today. I'm hoping that that situation is going to turn around, that the producers will stop hedging and I believe that the speculators will step out of the business once they see the producers are not hedging.'' ''A reasonable level for gold to me would be up in the US$350 an ounce range.''