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

To: robnhood who wrote (57941)	9/7/2000 10:14:46 PM
From: long-gone	Read Replies (1) \| Respond to of 116753

So Hutch, Would you (or anyone else) care to talk about the reason for, base cause of, & effect on gold price of the higher than ever before gold derivatives positions of the 7 largest tax-payer insured banking institutions in the US over the last 4 years?

To: robnhood who wrote (57941)	9/7/2000 11:44:47 PM
From: Enigma	Respond to of 116753

You seems to be confusing hedging with derivatives trading?

To: robnhood who wrote (57941)	9/9/2000 2:48:50 AM
From: Zardoz	Read Replies (4) \| Respond to of 116753

I wasn't aware that snarkiness is now a word. {snarky reply?} If gold should shoot up in size, then one could say that your "Forward sellers" were speculating, and not investing as you seem to insinuate. Except that's not how a forward is. I'd love to debate you on how a forward is so much better for producers then futures are. But I suspect that you'd deny the truth. <<Now: explain how moving the sale price from the future to the present depresses the price when you {in the best interests of YOUR company and not gold speculator} receive a premium to the spot based on volatility and time.>> By selling gold at or below your cost, or forcing you to high-grade to deliver. Then you'd be suggesting that certain companies enter into agreements where they don't have the commodity to fulfill the requirements. Why sell GOLD below cost of production {assuming that they actually get a premium to spot via futures and forwards} when it's easier to close the mine and move on. Any mine working unprofitable mines is fighting time. <<BUT Forward selling acts to smooth out the spikes of excessive demand. AND it also acts too smooth out excessive drops due to supply.>> I'm sure that's the hue and cry of all derivatives traders... For several years now I have never seen the stock market move in any direction without being preceded by the futures. The tail surely can and does wag the dog. Derivative players don't cry, they just rebound and look for better opportunities. The stock market is TRILLIONS in dollars; the exchanges futures are small in size. It's the OTC derivatives that control the dog. I'm certainly not the expert you claim to be but your thinking and hair splitting is pushing it.. NO, this is not hair splitting. IT IS VERY VERY important to producers hedgers to know the exact difference a future and a forward have as a return... and how the contracts can be exercised early or not. This is how ABX/PDG and others make the money, and why the Cambiors and Ashanti don't. Ignorance of the derivative is a costly thing. Furthermore, if I was to invest/speculate in a gold producer because I thought that the price of gold was to rise, and if that should happen, find that the company had sold all of it's gold (forward), or got themselves into some convoluted hedge gold/currency/bond swap, I for one would be quite upset. My turn: "Why would you buy a producer if you suspect the pog to rise?" AS I said before the XAU, and for that many the gold stocks in general, don't always move with the POG. Buying say a $24 stock with a 30% margin for a $20 move in the POG is NOT the best return on your investment. Why not consider buying the options on Gold, or even the futures. Dec $260 calls are around 17 now, and should gold go to $300 then, it'll be worth at least $40... so I laugh when you say speculator or investor. BUY the gold and create a run. PS: I read my post over --You said this <and not gold speculator>> Well who buys a gold stock that is not speculating on the future/forward price of gold? Aye yeah yeah You mean this: Now: explain how moving the sale price from the future to the present depresses the price when you {in the best interests of YOUR company and not gold speculator} receive a premium to the spot based on volatility and time. This says the company is responsible to itself and it's shareholders... NOT to the POG or the other gold stock markets. Why should they worry about you, or even care? Hutch PS: Gone on holidays.