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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Hawkmoon who wrote (5547)2/10/2002 2:02:28 PM
From: Henry Volquardsen  Read Replies (2) of 33421
 
Hi Hawk,

a couple of observations.

Gold producers have been nimble with their hedges in the past. This is not the first time we have seen them buy back hedges and won't be the last. A good number of them look at near term market conditions and will lift or reduce hedges. So there is nothing unusual or long term about them buying back hedges. (fwiw I have had some professional involvment with gold trading so I have seen hedgers in practice.) I have little doubt that at some point we will see them reinstitute their hedges. Thats been their routine in the past.

What is the $12 trillion in cash referencing? From the context of your post I assume it is related to Japanese retail holdings. If so I doubt more than a small percentage would find its way to gold. There have been flurries of Japanese buying in gold in the past but it never develops into the wave the gold bugs hope for. I personally doubt it will now.

But you are right about the potential for the miners. If central bank sales of excess reserves has slowed down sufficiently it will allow increased mine prodcution to meet demand and a more stable trading range. Given how beaten down the industry has been they can prosper in a stable price environment.
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