Hi terpet, Not too often I post on PGI but I do often see...

Hi terpet,

Not too often I post on PGI but I do often see exuberant references to their hedge and its worth - as if it were a liquid asset.
I do not share the view that a falling POG is good for PGI or any other goldie.
The hedge is in place because not only is it a protection (and a very welcome one, currently) for PGI but also for its lenders and is no doubt a requirement of their loans.
IF the company were able to cash in the hedge, they would then be exposed to a very depressed price for their product and even with a relatively low production cost their income stream would be significantly affected. Granted they would have a significant cash injection and/or the ability to retire a significant chunk of debt, but what then?? going forward with a significantly smaller cash flow than the already marginal scenario?
Happy that we have it - not so sure that its increasing value is better for the company than an increasing sentiment and outlook for gold .

Just another view, cheers Foyt.