Gold miners cut back global hedge book in second quarter
Thu Sep 24, 2015 2:12pm GMT
af.reuters.com
LONDON, Sept 24 (Reuters) - Gold mining companies trimmed their outstanding global hedge book by 17 tonnes in the second quarter, an industry report showed on Thursday, as two of last year's biggest hedgers, Fresnillo and Polyus Gold, closed out positions.
In their quarterly Global Hedge Book Analysis, Societe Generale and GFMS analysts at Thomson Reuters said the global producer hedge book stood at 177 tonnes at the end of June, down 9 percent from the quarter before.
"Polyus Gold and Fresnillo, holders of the two largest hedge books, were the largest contributors to the de-hedging activity, on a combination of scheduled deliveries into forward sales contracts, and options reaching maturity," the report said.
"Significant de-hedging was also seen from Detour Gold, Northern Star Resources and St. Barbara. In total, 30 companies reduced their delta-adjusted hedge books during the period. This activity was only partially countered by new hedges from other gold miners."
Hedging, usually by selling future gold production forward, allows miners of the metal to lock in prices for their output. While it can protect producers when prices are falling, it can also stop them capitalising on a rising market.
It became an unfashionable strategy during gold's 12-year bull run, which took prices to a record $1,920.30 an ounce in 2011. The mining industry returned to net hedging last year for only the second time in 15 years as prices fell.
The outstanding global hedge book has shrunk from 57.2 million ounces at the end of March 2005 to 5.69 million ounces at the end of June. |
