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

To: Jaakko who wrote (4118)	12/10/1997 3:44:00 PM
From: Jaakko	Respond to of 116874

Inlight of the latest posts here I realize there is a FOURTH important option that the mining companies can do in addition to the options outlined at post XYZ and that would supposedly boost the POG if exercised simultaneously by a number of very large producers. It requires a lot of CASH though!!! 4) The mining company goes and buys SAME NUMBER of gold ounzes in the spot market for which it has the forward contract for, BUT TAKES DELIVERY and KEEPS THE GOLD IN IT'S VAULT ON COMPANY PREMISES (not in trust with ANY BANK) and does NOT CLOSE OUT IT'S FORWARD CONTRACT. The company now has a neutral position as far as hedging is concerned. The company has locked in the winfall profit and can sell its future production when it comes out of the mine at what ever the spot price is at that time. Its gold hoard can then be delivered in satisfaction of the forward contract when due. One of the advantages is that the PHYSICAL GOLD removed from the market right now could affect the POG in the short run.