The biggest thing affecting silver is Kodak and the film market. The largest part of that is the movie industry, which is using less these days as they do so much in video. Still, silver for prints is the highest quality, and I would rather have a silver print or slide rather than the computer display-only gif/jpg/png or electronic photo as handy and versatile as they are. A child can see the difference. Paper and silver are not dead by far. The paperless office is awash in a sea of wood and has increased the use of print and ink.
Barrick had a "unique" hedge book in that it could renegotiate the price of its hedge upward with a rising POG. People have held forth in the past about Barrick's "lack" of exposure to uncertainty (risk, so-called) towards POG (price of gold rise), in that they were not downside liable. Who was? -- the question is begged, as someone has to hold the other side, or the "bag", in any transaction that bets on, or is paid in a trade.
Still the decision to unwind hedges is prophetic. Could it be that they did it not caring which way gold went? If Gold went still further down, let's say a catastrophic 100 dollars per ounce, was their money still "there". Had they bankrupted their banks? Who took the loss? Doesn't sound like business that goes on forever to me, regardless. They could have run out of bankers if gold plunged any further.
A major use for gold selling forward, that I contend too, ultimately depressed the price of gold, was to finance operations. That is what they and others used it for. To build gold mines. The gold loan. Theoretically, you sell a mill-money amount. But the gold paying off the loan to be worth the interest must be sold for less than it is eventually worth. You bank on inflation. What it does is intoduce a double gold sale into the market and a blizzard of option and other paper in order to create money for the miner. Banks loaning gold to banks loaning gold all must derivative hedge to protect their position. In the end paper gold units outnumber real physical gold by a vast margin. There should be inflation in paper gold, but paradoxically because of all this looking for buyers for the paper flurry, the price has to trundle downward. And all this suits the issuers of currency, the real iffy paper in today's trade, just fine. As long as other investments look bad, currency looks good. Bankers ultimately profit from everyone else's loss. There ought to be a law.
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