Posted by: samhenry | September 14, 2009


editor’s choice from SamHenry

The summary endgame of the buyback of hedge gold is this:

Hedging loses its lustre for gold

By Javier Blas in London

Published: September 13 2009 19:26 | Last updated: September 13 2009 19:26

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The gold industry’s legacy of forward sales is set to all but disappear by next year following the decision by the largest gold miner to buy back its hedges.

The size of the industry’s hedge book is set to drop to a residual of less than 200 tonnes by the end of 2010, the lowest in almost 25 years, according to industry estimates.


Lex: Gold – Sep-09

Greenback fall pushes gold to $1,000 – Sep-08

The bottom line in this hedge gold buyback:

Barrick said it had decided to buy back its forward sales because of “an increasingly positive outlook on the gold price”. It added: “Global monetary and fiscal reflation will be necessary for years to come, resulting in an increased risk of higher inflation and a future negative impact on the value of global currencies.”

The reduction is a 95 per cent drop from 3,000 tonnes a decade ago.

The mining hedge book is important for gold prices. Bullion rose above $1,000 a troy ounce last week as investors sought refuge from dollar weakness.

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