I understand and respect that different people will necessarily have different views about hedging. For my part, I see no benefit in hedging voluntarily in an environment where (for a range of reasons) the price of gold is likely to continue to rise significantly.
I set out my concerns about NST’s hedging policy in a number of posts on the thread relating to NST’s most recent quarterly results. I will therefore resist the temptation to repeat them here.
There is one additional concern I have about hedging which I don’t think anyone has mentioned here yet. To the extent that NST is hedging voluntarily, as opposed to hedging as a condition of finance, the hedging will obviously result in NST’s profit being materially less than it would have been had it sold all of its production at a higher spot price. However, if we experience a period of hyper-inflation during the term of the hedging program, it is conceivable that NST’s costs of production will exceed the hedging price. In that event, it will not be a case of NST’s profit being reduced, it will be a case of NST incurring a loss on the sales made under the hedging program. It is very disconcerting to me that a company with NST’s financial strength may have put itself voluntarily in that position.
I have more than a truckload of shares in NST which I have accumulated over the last decade. I am obviously keen to see the company prosper, as I am sure we all are. Unfortunately, I think the company has let itself and its shareholders down badly with its hedging policy.
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Open | High | Low | Value | Volume |
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Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 22972 | $12.82 |
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Price($) | Vol. | No. |
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$12.84 | 18029 | 4 |
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No. | Vol. | Price($) |
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3 | 2260 | 12.800 |
2 | 14232 | 12.790 |
1 | 11296 | 12.780 |
4 | 44331 | 12.770 |
Price($) | Vol. | No. |
---|---|---|
12.840 | 18029 | 4 |
12.850 | 12475 | 3 |
12.860 | 6125 | 1 |
12.870 | 11787 | 2 |
12.890 | 15324 | 4 |
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