Q3 gold dehedging shows smallest cut since '06 - GFMS
miningweekly.com
By: Chanel Pringle
Published on 24th November 2008
JOHANNESBURG (miningweekly.com) – Gold producer dehedging slowed in the third quarter of the year, showing its smallest quarterly cut since the end of 2006, precious metals consultancy GFMS said on Monday.
Gold producers cut 2,03-million ounces during the quarter ended September, leaving the global hedge book standing at 16,92-million ounces in delta-adjusted terms.
However, the nominal hedge book stood at 21,37-million ounces, of which 11,92-million ounces comprised forward sales and the balance represented the total options positions. This equated to a decline of 3,58-million ounces for the quarter.
GFMS said in its Societé Générale gold hedge book analysis report that dehedging was seen from Avocet Mining, ARC Exploration, St Barbara Mines and OceanaGold.
Further, AngloGold Ashanti and Barrick Gold, which held the largest hedge books, had generated a combined demand of 1,76-million ounces during the quarter.
Mineral deposits also announced a 0,53-million ounces project hedge, which would consist of forward sales and bought put options, said GFMS.
Meanwhile, the consultancy reported that the marked-to-market value of the hedge book had fallen to a loss of $6,8-billion, with the gold price having fallen to about $832/oz.
Although the gold price had declined quarter-on-quarter, it was still higher year-on-year.
GFMS noted that the currencies of producing countries had showed weakness owing to a downturn in commodity prices, while those of consuming countries had climbed.
As a result of the weakness in the gold price, jewellery fabrication had increased in the quarter, with price sensitive markets taking advantage of the lower price.
Bullion imports into India, the Middle East and East Asia had increased, as the supply chain had rebuilt its depleted inventory, said GFMS.
However, jewellery consumption from the Western nations had continued to decline as a result of the worsening economic conditions.
Further, the consultancy stated that the supply of gold from scrap had declined quarter-on-quarter, but was flat year-on-year.
Meanwhile, GFMS said that while junior mining companies had come under severe pressure, given the global economic conditions, tier-one companies had “so far dismissed” acquisition opportunities.
The consultancy said that tier-one miners had rather opted to preserve their capital for existing project development. |
