Replies to post #85795 on Zeev's Turnips Patch-No Politics (ZEEV)

[mainehiker]

and the current admin has absolutely nothing to do with it

[Joe Stocks]

Mlsoft, What's sad is the the public is clueless about the shenanigans. I had a doctor appointment yesterday and the doctor asked what I did for a living. Then he asked about the stock market. I told him my best advice would be to get out. He said, "but everything you see on TV says that things are picking back up and the possibility of war is all that is holding us back right now".

Joe

[basserdan]

*** Gold related post ***

Gold hedging foe not friend, says Goldcorp

By: Nicole Mordant
2003/03/12 Wed 09:41

TORONTO - In one of the more controversial presentations at this year's PDAC conference, mid-tier Canadian gold producer, Goldcorp, came out blazing against the practice of gold hedging. North America's biggest non-hedger seized the opportunity presented by the annual Toronto mining talkshop to beat its well-worn anti-hedging drum, backing up its arguments with quotes from Warren Buffett -- a lately vociferous anti-hedger who has called derivative instruments "financial weapons of mass destruction".
"Hedging is a bit like fashion. It starts out as a sensible practical idea. But then it gets a little bit more interesting and ultimately evolves into something increasingly exotic. It gets increasingly unstable and can be dangerous to your health," said Chris Bradbrook, vice president of corporate development at Goldcorp.

To hedge or not to hedge has for many years been a hot potato in the gold market, with camps of ardent followers lined up on either side. Four of the world's five biggest gold companies are also the world's biggest hedgers. The "outsider" is South Africa's Goldfields, whose chief executive Ian Cockerill reiterated this week that the gold producer would remain a "hedging-free zone" over the next five years.

Reasons usually given by companies for hedging include removing gold price risk, the pursuit of predictable cash flow, the ability to finance new projects cheaply and the desire to increase returns. But the arguments against hedging are also strong: hedging removes the upside to the gold price or worse, depresses the gold price. It can also mask poor economics on projects and, in extreme cases, can risk shareholders' equity.

Bradbrook said the choice not to hedge was simple for Goldcorp. "The number one reason why investors buy gold shares is because they believe in a higher gold price. Investors want leverage to gold and they want to be able to sleep at night. They don't want the hidden liabilities the hedge books can bring," he said, pointing to the collapse of Enron in a web of derivative structures. More pertinent to the gold market was the near-bankruptcy of Ashanti in late 1999 when its hedge position got caught on the wrong side of an unexpected gold price spike.

Hedging was especially detrimental to shareholders in a gold bull market, an accurate description of the current gold market, according to Bradbrook. He said the bull run in gold had started in 2001 (according to him the current US-Iraqi stand-off was just a short-term side-show) and that since then the non-hedgers had provided rosier returns to shareholders. "The hedgers weren't the place to be," he said.

"We believe hedging is a bad thing to do in this market. It remains questionable whether you should do it at all."

http://m1.mny.co.za/mgp03.nsf/Current/80256CE100291EEB42256CE7002A8288?OpenDocument

regards,
Dan