Has Hedging Killed The Goose That Was To Lay The Golden Egg? - Part 2
Has Hedging Killed The Goose That Was To Lay The Golden Egg? - Part 2
September 16, 2008
Professor Antal E. Fekete
The Professor tells the gold mining industry how to treat shareholders. Will they listen?
The challenge to the gold mining industry is enormous, but there are no signs that it is up to it. In retrospect, the industry has been selling gold for the past sixty years at ridiculous prices. It has frittered away the patrimony of shareholders, the top brass has been lining its own pockets and helping government profligacy. Shareholders are confused. They were hoping against hope that higher gold prices would ultimately change all that. Well, higher gold prices have come, but the wasteful exploitation and the rip-off continues. There is no noticeable change in the pittance gold executives dish out as dividends.
Tom,
Does the Professor just changed the definition of Basis?
It makes more sense now as the spot price (used in the earlier definition) doesn’t make much sense in the case of precious metals. Which one do you prefer? Price fix or coin stores, it depends on your taste and affiliation.
Unfortunately, using the miners sale price makes the basis very subjective in the absence of a real spot market. I think, although the miners can use basis trading with this new definition, the plain field trader is still stuck at how to define basis.