I can’t understand the fixation with hedges. If the POG holds up then by year’s end we will be drowning in cash but we have the chance to buy that cashflow now at a price that ignores it (notwithstanding that markets are supposedly forward looking). Isn’t the present situation the definition of an opportunity?
The only reason we’d be sour on it would be if we thought the gold price high was to be short-lived. But most of us profess the opposite. So why are we down-in-the-mouth?
The way I look at it I could buy WGX or BGL and hope that (setting aside movements in the price of gold) operational improvements will in due time drive improved FCF. Or I could buy VAU as a risk-free proposition (in equivalent and not absolute terms) cause management has to do nothing to achieve vastly improved FCF but wait….
Personally I am waiting on the quarterly and if everything is going ok will probably dig deeper.
VAU Price at posting:
45.0¢ Sentiment: None Disclosure: Held
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