It is now July 2005. A mining company has just discovered a small deposit of gold. It will take 6 months to construct the mine. The gold will then be extracted on a more or less continuous basis for 1 year. Futures contracts on gold are available on the New York Commodity Exchange. There are delivery months every 2 months from August 2005 to December 2006. Each contract is for the delivery of 100 ounces. Discuss how the mining company might use futures markets for hedging.

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