re: resource companies and lack of hedging Hi Alan,
I read a great article in the Fin Review on this very topic......last month or so. My personal view is that companies really shouldnt hedge. It all depends what you want to do I suppose. The currency can move for and against you....so you have to ask yourself, is the company concerned about its core operations or are they currency speculators. You have to remember that about 85-90% of currency movements is based on currency speculation.....surprisingly its that high. There is an argument that when companies dont hedge and the currency moves in their favour eg....not long ago the AUD Vs USD was around 55-60c. You wont hear about companies crying foul then. What if they did lock in forward hedge positions and the dollar moved down......you just dont know do you. It can work for and against you. The article was basically saying that companies which are competitive will ride the good times when the dollar moves down and if they are good enough and competitive enough will ride those times when the currency moves up. Either way its like a natural hedge. So in that regards companies shouldnt really be hedging....they are miners not currency speculators. Its worth a thought. It was a great article and worth a read. Hindsight though Alan is a wonderful thing.
Jukes__
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