Reply #5: here is an explanation of "hedging"

[UpInArms]

http://www.usagold.com/gildedopinion/HedgingHathaway.html

excerpt:

Hedging limits the upside price swings that the mining industry once depended upon to offset these risk factors. Positioning a risky, capital-intensive endeavor such as gold mining as a spread business, similar to a bank or insurance business model, is ludicrous. In so doing, many producers, and especially the financially weaker ones, have taken on a form of hidden financial leverage due to their inability to generate capital internally or enjoy normal access to capital markets. For them hedging was a bargain with the devil that allowed deferral of difficult operating decisions, thus prolonging a state of limbo which precluded prosperity by diminishing the single variable which could restore financial health, a much higher gold price.