"...According to a Hungarian proverb, dead fish stink because of the head. This can
be readily applied to the gold mining industry which obviously stinks. Senior gold producers
pretend that it is, once again, business as usual.
It is not.
The same executives responsible for
the rip-off are still in charge. They are not to be trusted. The hedging fiasco was bad because
it accelerated the aging process of producing gold mines. It was a case of wasteful
exploitation of a world resource. It was a case of robbing shareholders.
Forward selling
may
be gone, but wasteful exploitation is still very much with us. It will be, until a new generation
of managers is brought in to initiate a new program of
forward buying
. This means that at
every major decline in the gold price (such as the latest, for example), the gold mines should
step into the breach and buy gold forward with the same
élan
as they were selling it short
under their hare-brained scheme of hedging. This strategy would accomplish three things: (1)
it would slow down the aging process of their producing gold properties; (2) it would
facilitate locking in a good price for new gold properties the purchase of which the
management may be in the process of negotiating; (3) it would be the first step in replacing
the obsolete marketing model of selling output hot from the mine, by the up-to-date marketing
model of
trading the basis."
http://www.professorfekete.com/artic...
