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

To: long-gone who wrote (82574)	2/26/2002 4:40:14 PM
From: IngotWeTrust	Read Replies (4) \| Respond to of 116768

"Naked Hedging" or Who's kiddin' who? Yes, I've been listening to some of the Enron Skillin' Grillin' today. While I didn't hear THAT phrase, I do disagree with your conclusion, i.e., that "most of the hedging in business today is naked hedging." For one thing, that is an oxymoron...hedging is not naked, that is gambling. Hedging is hedging. 1) Hedging is backed up by physical purchasing patterns if you are a manufacturer. Manufacturers who synthetically buy more than they have orders for or reasonable expectations for orders for based upon historically substantiated manufacturing schedules, ARE GAMBLING. THEY ARE NOT HEDGING! FUDGING, LYING, DECEIVING, YES! Hedging? NO DITTO ON THE SUPPLY SIDE: 2) Hedging is backed up by physical supply if you are a supplier. So, there is no such thing as "naked hedges." Let the discussion start there, shall we? SECONDLY: I disagree that most hedging in business today is naked. For starters, most business in the USA couldn't qualify for a hedging account if their "corporate" lives depended upon it. I firmly believe the high barrier to entry in a true hedgebook account at a registered brokerage house, using either physical commodity contracts, is probably one of the reasons why "creative, naked risk hedging" has poliferated like it has. For one thing, where is it written that business is supposed to be risk free? It seems to me like, in a simplier world and time, risk "mitigation" was basically approached by working longer, harder, coming up with a new product, merger and acquisition, savings, bringing children into the business, etc., etc., etc. Seems like we have a more "basic problem" than "naked hedging," which again, is an oxymoron...like kinda pregnant. Re-defining or calling speculation "hedging" doesn't cut it for me, and never has. And a follow-up question: have you been a supplier or in charge of a demand physical commodity, and needed or qualified for a commodity account? Perhaps individuals or companies starting with telling the truth on that application is a place to start...