Revelation waiting for me in my e-mail in-tray, and I forward to you below ...
Player One wrote:
the new Anglogold CEO is very anti-hedge book. so imo he will try to actually close it out very quickly. this should help to at least put a floor under gold on pullbacks in the near term, and it may well speed up any prospective rally.
Player Two raised an issue:
Mac's earlier question 'Will they actually close their hedge books?', begs another question : what is the actual quantity of Gold still outstanding as shorts by producers/miners ?
from what little I know about this surreptitious activity, a large part of these shorts are in off-balance sheet companies unknown to most people...the magnitude of this activity is supposedly so large that off-balance sheet activities of Enron looks pale in comparison....when I talk abt this to my market friends/brokers/analysts/etc etc I am often asked as to what is the proof that I have to validate my view !
I shall state here that as recently as a few days ago, either it was JPM or BoA (I am not 100% sure which one but it was surely 1 of them) had to write off a loan which originally was never on its books...it was booked in some off-balance sheet venture and they brought it back & wrote it off....
I therefore think that there is still vast quantities of shorts still lying out there somewhere which will be visible at some stage in future when prices are far higher and wud result in a Ashanti type debacle...
for those who have been visiting India on company visits/conferences etc, I wud strongly advise that on your next trip do try & meet up with some of the large Bullion importers/dealers/wholesalers in Mumbai and/or Ahmedabad and you wud realise the extent of Gold demand in India not just as jewelry but as investment demand in the form of coins/bars ! It wud be a eye opening experience !
Player One illuminated:
from goldensextant, BIS numbers on outstanding otc gold derivatives:
"total gold derivatives over the three-year period rose from $359 billion at end-June 2004 to $1,051 billion at end-June 2007, or in tonnes at period-end gold prices, from 28,200 to 50,250."
so in spite of de-hedging, the amount of gold derivatives outstanding keeps going up. 50,250 tonnes is about 1/3 of all the gold ever mined, and a good deal more than the central banks allegedly possess. |
