Just last week, major gold miner Barrick Gold (ABX) announced that it had fully eliminated its hedge book, and so from here on out, its earnings would be fully exposed to the price of the metal.
When it was announced, the stock popped, since everyone’s bullish on gold. But on Friday the gold market tanked on huge volume, sending Barick shares down nearly 9%.
So was de-hedging the right move?
As it happens, on December 1, the company presented at the Scotia Capital Precious Metals Conference, during which they explained some of their rationale. Let’s hope they got their timing right.
Now look at the state of the mining industry. There's going to be less and less gold coming out of the earth.
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