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Gold & hedging - FWIW

  1. dub

    27,967 Posts.

    I've been a gold bug for at least the last 5 years.

    Over the last 5 years I've lost a lot of money (mainly through gold warrants and options) because of my beliefs. But I've learnt.

    I really do believe this time it's the real deal.

    I see today people are talking about LHG and CRS prices dropping. While that is being blamed on the POG, I think there is more to it.

    Among the things I've learnt is the doubled edged nature of hedging. It's fine when the POG stays low. If (when) the POG takes off - and I believe it will within the next 12 months, and sooner rather than later - , the hedged companies, share price will not.

    And as far as I can see, most of the Oz goldies are fairly substantially hedged.

    What follows is, I understand to be quite true, but do your own DD.

    The AGCMacquarie Gold Index lists 19 stocks. I looked at them all, then ruled most of them out from my Oz gold interest list. Why?

    ABX - too new for me.
    AOR - cash problems.
    CRS - hedging
    EMP - hedging
    GBG - don't like financials
    GMS - high debt, low asset/liabilities ratios
    GRD -doubtful (buggered if I can remember why)
    KCN - debt, ratios, hedged
    NFM - ?
    RSG - hedged
    TRY - hedged.

    I believe LHG is hedged, and NDY certainly was.

    GCR - I can't find out, and therefore am not comfortable.

    At the moment, the only Australian golds that I am comfortable with are DRD, TKR, SBM and LSG (but LSG is a Pooled Development Fund investing in junior explorers/producers. Currently 2 of LSG's 16 interests carry some hedging).

    I use TA at the moment on just these four to buy/sell. (and currently hold 2 of them.)

    I'm sure there are a few more Oz golds that are good re financial resources, production, locality, cashflow,costs, hedging etc. I'm simply not yet aware them to date.

    I've made this post in an attempt to help - but each person should do their own DD and take full responsibility for their own action. eh.

    (Cheers to Chuck.)

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