I’m a hedging fan and used to do it for gold and fx for a US company owning a majority share in an AUS gold mine but 30yrs ago so things have changed.
we used to only ever hedge 30% of production.
There were Spot Deferred and Floating Forward gold hedges available.
Spot deferred allowed a reset of the hedge at maturity to the new rate at that time.
Floating forward just kept resetting according to the contango at the time.
Anyone know the detail mechanisms now?
Spot deferred was good as allowed a reset if price of spot of the day was above the hedge
Something else changed about 20yrs ago where GAAP introduced marking to market of all hedges to the balance sheet each quarter. That can create paper gains and losses and tax implications.
50% hedge seems high?
what are the possible downsides?
Updated JORC Reserves can also cause trouble in a declining gold price?
All that said the margin between AISC and hedge value seems sufficiently robust against any downside
I like spot deferred but might not be available anymore and prob would have been announced if included
I’m a hedging fan and used to do it for gold and fx for a US...
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