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<p>[QUOTE=&quot;sodude, post: 2072626, member: 30828&quot;]Sure, their inventory would increase in value if silver rises. That&#039;s a windfall for them. If it falls, the hedge protects against losses.</p><p><br /></p><p><br /></p><p><br /></p><p>Silver is down 86 cents today. If they have 1M ounces inventory, they would be down $860,000 today. If it drops $1 tomorrow, that&#039;s another $1M unless they can raise premiums. Why wouldn&#039;t they hedge against such a loss?</p><p><br /></p><p><br /></p><p><br /></p><p>Hedging would be done to avoid speculating on the price of silver. You take a small expense to open the hedge and then you don&#039;t care if the price of silver drops. Not hedging is speculating on the price.</p><p><br /></p><p>And the price of silver does exhibit sharp drops, quite often over the past few years in fact.[/QUOTE]</p><p><br /></p>

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