"Hedging is merely a risk management tool...."
I agree. And a business would typically want the certainty you get from being on the short side of something your inherently long on (in this case gold).
I'm no expert, but I know that what is called hedging is a lot of things. Dependiing on the exact vehicle, the "the risk management tool" can itself be a source of trouble, as when the short end of the transaction may require metal payment NOW, whereas metal production is in teh future.
And, jelousy aside, maybe some miners and speculators are coming to th conclusion that the short side of the hedge is ultimately doomed to failure, and that the risk of staying a pure long is now worth taking.
That argument would run: the metal loaned into the market to make the short end of the transaction possible doesn't just stick around. It's not like shorting stock, where stock sold ends up in someone's account, waiting to be re-sold at the right price.
Metals are CONSUMED. Gold becomes jewelry, or gold plate, or electronic leads. Because the metal sold short is used up, a short squeeze becomes ultimately inevitable.
Look at recent lease rates for palladium, platinum and silver. Look at the Bank of England wondering whether gold loaned will be returned.
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