Gold dehedging is expected to slow to between 6- and 8 million ounces in 2008 compared to a reduction of 13.5 million ounces in 2007, the largest such reduction since 2004, according to a report commissioned by Fortis Bank.
“With the gold price at record highs, mining companies continue to close out their hedge positions to take advantage of further gains. There is little sign of this stopping in the near term,” said Jessica Cross, the chief executive of the VM Group, which prepared the report.
The global hedge book declined by 2.3 million ounces to 26.8 million ounces in the fourth quarter of 2007, registering the 23rd consecutive quarterly reduction, the report said. Of the 113 gold mining companies included in this survey, 47 had hedging programmes at the beginning of the quarter, and 39 or 83%, reduced their commitments. Of the other eight, six made no change in their positions, whilst only two made tiny increases.
Australian miner Newcrest was the leading dehedger for the second consecutive quarter. It cut its position by 735,355 oz in the fourth quarter, and announced it had done another 299,275 oz in the first quarter of 2008. AngloGold Ashanti and Barrick Gold also reduced their positions by more than 0.1 million ounces during the fourth quarter.
The report said gold exchange-traded funds (ETFs) continue to gain and added another 2.6 million ounces of gold in the fourth quarter of 2007, taking their collective holdings to 891 tonnes by the year-end.
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