re: emperors hedging Hi Acturtle...
You said :
"The reality is that at the end of the day it is cash flows or potential cash flows that drive the valuation of a mining stock. Cash flows are driven by earnings less cost outflows. Whilst earnings are affected by hedging, they are also affected by mining costs, exploration, capital, debt, etc, etc."
Yes, that's true... but you've got to look at the cost of each activity in terms of their affect on the bottom line.
Mine improvements (ie. lower future costs), are benificial, however, in most instances thay lead to savings of 20USD/oz.
Having a high level of gold hedging in a bull market will result in gold miners forfeiting ALOT more than USD20/oz.
... At a POG of $500, and hedgings at $300 (all USD), the opportunity cost to the gold miner would be $200USD/oz...
A company that's significantly hedged long term is basically forfeiting participation (not in full, but to a significant degree) in a gold bull market.
Their cash flows will not rise anywhere near the same pace as a unhedged producer in a rising POG environment.
re: emperors hedging Hi Acturtle...You said : "The reality is...
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