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.

Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (3272)	1/9/2003 11:14:03 AM
From: Enigma	Read Replies (1) \| Respond to of 3558

Have you seen that ad on Stockhouse for Agnico saying that it has 'Canada's largest gold deposit'? May be true for all I know.

To: russet who wrote (3272)	1/10/2003 11:44:28 AM
From: tyc:>	Read Replies (2) \| Respond to of 3558

An interesting post Russett. From the lack of response I get to my postings, I think it is safe to say that people are not interested in the message of "a few simple calculation". But I am !... This thread seems to be the thread to discuss hedging... and this posting is about hedging. From my observation, "nonsense about hedging" seems to generate replies and discussion, so perhaps this posting will generate a response. I refer to the 350,000 ounce spot-deferred contracts of an intermediate producer. First, am I correct in my belief that a "spot deferred contract" has no specific term.... that the producer has the option to deliver into the contract or to sell his production at spot prices, deferring the closure of the contracts ? If that is not what the term "spot-deferred" means, what does it mean ? Secondly, because this 350,000 ounces has already been sold.... it is as if it didn't exist any longer in the company's gold reserves. But similarly, as the cash flow from this sale, when it is eventually realised, will be sufficient to repay the project debt, it is as if the debt didn't exist either ! So you are left with a gold miner with 350,000 oz lower reserves than stated BUT essentially debt free ! Both go together; you can't have one without the other. My third point is that this miner produces gold and copper. It is "diversified". Its profits will be the total of its copper profits and its gold profits. But the volatility of these earnings will be LOWER than the volatility of a pure copper producer OR a pure gold producer simply because one product hedges the other. This says nothing about the LEVEL of profits... just that they will by less volatile. Isn't that what investors are supposed to be looking for? returns at the lowest possible volatility ?