huge sellers, page-31

re: huge sellers..pas? Pas was hedged against a rising $ and in such a way that they were hugely exposed when the AUD fell instead.

Goldminers who hedge do so to quarantee themselves a minimum price for at least part of their output. The potential risk is that:

a. they can find themselves delivering gold at a price far below what they could get on the open market.

b. they hedge in such a way that they create a debt as the price moves against them. That was PAS's problem.

The beauty of hedging is that you can lose an enormous amount of money very quckly with a minimum of effort.

Of course that's not the intention but in the past it has often been the bitter reality.