LATEST analysis of the gold mining industry's position in the derivatives market shows a sharp reduction in their hedgebook, according to Thomson Reuters GFMS.
Undertaken on behalf of French investment bank and London bullion dealer Societe Generale, the latest Global Hedge Book Analysis finds that the last 3 months of 2012 "saw a return to strong de-hedging", with what little was left of the industry's forward sales being cut by more than one fifth to equal just 32 tonnes.
Overall, the gold mining industry's hedgebook – built up by borrowing gold bullion and selling it at current prices during the long 1990s' bear market for fear of further falls ahead – peaked in 2001 at more than 2,900 tonnes.
As prices have since risen 5-fold and more, the mining industry has bought back and closed 99% of that short position.
Despite the 10% crash in world gold prices in April this year, "We expect that producer hedging/de-hedging activity will remain on the periphery of the gold market," says Thomson Reuters GFMS, "due to the persistence of shareholder pressure to remain unhedged."