AngloGold Running Down Of Hedge Book Is Very Bullish
Gold was trading in the weeds when a colleague of mine and I suspected a hedge buyback was in play. Part of the reason for our suspicions was the intense volume in the pre-Comex trading session. Gold was still down on the day at the time, but it had the feel something was, up as The Gold Cartel could not take gold seriously below $300, no matter how hard they tried. All attempts at smashing it lower were failing.
Sure enough, some thing was up and it is very significant:
JOHANNESBURG, April 10 (Reuters) – South Africa’s largest gold producer AngloGold said on Wednesday it was "aggressively" running down its hedge book because of market conditions and a strong bullion price.
"We’ve continued to manage our hedge book aggressively and we are taking out the weaker positions in the hedge book right now so that going forward we don’t have a long period when we will be receiving lower prices, or incurring an opportunity loss," said AngloGold Financial Director Jonathon Best.
"We haven’t changed our hedging policy per se, but market conditions at the moment dictate that we are running down our hedge book and we have been for a little while," Best told Reuters.
AngloGold closed 1.7 million ounces in its hedge book in the last quarter of 2001, leaving it with 14.6 million ounces.
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AngloGold is as clued in as it gets in the gold producer world. Frank Arisman of J.P. Morgan Chase is on Anglo’s Board. Gold producers, in general, do not cover on gold price strength. They do so on weakness. In other words, Anglo feels that this gold price area is one that will be considered low as weeks and months go by.
Clearly, The Gold Cartel has lost an ally in AngloGold. They have been running for the hills and are now running a bit faster. They realize the gold game is changing dramatically and what is coming in terms of future gold prices. I know one thing for sure. AngloGold CEO, Bobby Godsell, has paid close attention to what GATA has had to say, the evidence we have produced of gold price manipulation and to the Frank Veneroso supply/demand analysis, accompanied with Frank’s lofty gold price predictions.
I cannot say whether GATA has influenced AngloGold’s hedging policy decisions in any way, but the public pronouncements of AngloGold compared to Barrick Gold are startling. Barrick continues to hedge with full fervor. Both are close to Morgan. This is remarkable. Barrick must have sold their soul to The Gold Cartel way back when, as I suggested long ago, and is not allowed to lift their hedges. If the suckered Barrick shareholders ONLY KNEW!
I REPEAT: For AngloGold to make this type of announcement at the top end of the gold price range for the past 4 years is a very bullish development.
Technically gold put in an outside day to the upside, which is bullish technically, as is the fact that gold has popped above $300 again. In years gone by, this never was the case. Once the cabal was able to turn gold below $300, it stayed that way for a long time.
If silver breaches $4.75 on the upside, look out – the silver price could move violently higher!
The John Brimelow Report for Monday:
Indian ex duty premiums: AM $2.64, PM $2.50, with world gold at $299.60 and $299.50. A story in India's Economic Times reveals that the state in which Bombay is located has cut taxes on gold trading:
India Times
This does not mean a great deal about India's propensity to buy gold, since metal was smuggled from cheaper import points within the country into Bombay, but it does mean the import point formula has to be revised to: World Gold +R25 per g + (.0087x gold), which currently works out to about $2.61. On this basis gold is approximately at import point, and this explains both the recent reports of Indian activity, and the apparent sluggishness of the Indian premiums on the recent decline.
A slightly weaker yen and news of Japan's 13th listed company bankruptcy this year (Niko Niko Do, a regional supermarket operator, with some $740 Mm in liabilities) backgrounded a modest Tocom gold upswing. On light volume of 17,800 Comex equivalent contracts, (NY yesterday was 15,741), the active contract rose 5 yen. News of the massive computer glitch afflicting the newly merged operations of Japan's biggest bank, Mizuho - large enough to effect money supply statistics- cannot have increased the public's confidence either. But if one really is sympathetic to the Bank problem = Public fear = gold buying theorem, the this information is essential reading. Headlines on this Financial Services Agency survey, that Bad loan estimates had to be raised some 1.9T yen ( $14.5B) 29% above previous estimates, actually caused a rally in major banks, probably on short covering. But in fact this Government Agency report appears to have been a whitewash. Only 4% of major bank loans to large borrowers were examined, triggered by external indicators like share price declines or credit rating reductions.
JB
Today’s John Brimelow Report:
Indian ex duty premiums: AM $2.59, PM $2.11, with world gold at$298.15 and $297.60. Slightly below and above legal import point.
Japan experienced a sharp rise in the yen, briefly passing 130, which triggered some Tocom liquidation. The active contract fell 22 yen, overall volume was 37,500 Comex equivalent, but open interest fell only 609 equivalent contracts. (v. 15051 and +1434 yesterday in NY).World gold itself dipped a dollar, but then, in Mitsui-HK's words, "thudded into layer of decent buying below $297.50...shorts struggled to cover." Dow Jones ran a useful article on Japanese bullion buying, quoting Tanaka continuing to express optimism for its' business. Stories in the Japanese press report continued scepticism on the FSA bank survey and outrage at the Argentine default.
Goldman Sachs attracted some attention today by raising this year's gold price estimate to $300, and then proceeding to nominate as top choices Newcrest and Sons of Gwalia, arguably the two most dangerously hedged companies. A seasoned gold observer remarked that corporate finance business, doubtless to buy back the hedges, must be in the offing.
JB
Earth Shattering News:
– US investment bank Goldman Sachs is the first in what is likely to become a stream of institutions taking a more bullish stance on gold.
JOHANNESBURG - Goldman's said yesterday it had upgraded its price expectations for this year from $285 to $300 an ounce.
As John Brimelow noted, Goldman Sach's two favorite gold companies are two of the biggest hedgers, Newcrest and Ashanti. Goldman's clients are going to be thrilled when these two companies blow up because of those hedge books - ones that Goldman Sachs were instrumental in structuring. On their latest financial statement, Newcrest shows a loss of 485 million on its gold, copper, and currency positions. That is more than their sales volume for a year.
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The gold industry analysts continue to have as much credibility as the Enron ones.
CARTEL CAPITULATION WATCH
This would have been unthinkable two years ago:
Nortel Draws Down Entire Bank Line
"Nortel (NT:NYSE) once again trimmed its first-quarter financial guidance Tuesday morning, but the real news was at the bank. The Toronto telecom gear maker drew down its entire $1.75 billion bank line after it couldn't get its lending syndicate to agree to roll the loan over."
ENRON LAWSUIT PORTRAYS RUBIN PUSHING BAILOUT
Patrice Hill
THE WASHINGTON TIMES
Robert E. Rubin, the former Treasury secretary and current vice chairman of Citigroup Inc., is portrayed in the latest Enron lawsuit as trying to protect the bank’s extensive investments in Enron Corp. by orchestrating a bailout for the energy giant in the fall.
Mr. Rubin, who was lauded as one of the best Treasury secretaries in history when he left the Clinton administration in May 1999, first tried to get the Treasury Department to intervene in early November to prevent a devastating downgrade of Enron by Wall Street’s credit-rating agencies.
His overture to Treasury Undersecretary Peter Fisher to mediate a creditor bailout, perhaps like the one Mr. Rubin and Mr. Fisher helped engineer for the failing Long Term Capital Management hedge fund in 1998, was spurned, Treasury officials said. |
