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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Enigma who wrote (56060)	7/11/2000 9:33:40 PM
From: pater tenebrarum	Respond to of 116822

i never said the bullion banks run the companies. but there have been several instances of banks threatening to withdraw financing (some have been documented - others can be inferred) unless hedging policies were instituted. S&P's decision on credit ratings depending on hedging policies being in place is also a pressure tactic. this has plainly landed several companies in a mess. and it is not rhetoric to state that it makes no economic sense whatsoever to hedge below replacement costs. that's tantamount to throwing away capital. this btw. is also the opinion of the chairman of the third largest gold producer in the world, C. Thompson of Goldfields. so it is definitely not just 'propaganda'. i remember well how the gold price spiked when PDG announced it would reduce its hedging activities. obviously the gold market realized that if this were to become a trend, and all the producers were to cease the practice, downward pressure on prices from that particular source would be removed. a recent study shows that most first tier producers have overall production costs right at the current spot price. mid tier producers generally have higher production costs. what's the use to lock in the current price then? hedging would be an attractive option after an extended bull run, with gold prices well above production and replacement costs. but definitely not at the tail end of an aging bear market.