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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Tunica Albuginea who wrote (41718)	10/1/1999 5:53:00 AM
From: Alex	Read Replies (1) \| Respond to of 116779

BULLION TRADERS CAUGHT SHORT AS GOLD PRICE SURGES ASHANTI GOLDFIELDS, the giant African miner, became the first big player yesterday to reveal it had unwound most of its hedging positions this week as the gold price soared. The move came as the market was gripped by rumours that traders and hedge funds had lost millions on gambles that the gold price would fall further. The company, which runs a large hedge book, said it decided before the recent rally to buy 9 million ounces to offset 11 million ounces it had earlier borrowed or taken options to sell. Ashanti said it had acted "to remove the sensitivity of the hedge value to further rallies in the gold price". Miners use hedge contracts - such as forward sales and options - to insure against falling prices. The company added it had eliminated any exposure to floating lease rates before the rally started. This meant it had avoided the fall-out from the surge in lease rates - the cost of borrowing gold - to 10 per cent from the normal 2 per cent as investors stampeded to buy gold to cover their positions. The spot price has surged from $250 an ounce in May after the Bank of England announced its 400 tonne sell-off to peaks of $327 after Europe's central banks stunned the markets on Sunday, saying they would curb future sales. "I am very concerned we are going to see some casualties," said Jessica Cross, an analyst at Virtual Metals Research and Consulting. There were reports that traders were short on gold - selling gold they did not own on expectation of a fall in the price. Chris Elston, chief executive of the London Bullion Market Association, said: "There have been rumours that a lot of smaller, more exposed bullion traders are finding life tough. But that's life." Michael Coulson, precious metals analyst at Paribas, said there was talk of 4,000 tonnes sold short. "There are all sorts of stories going round about traders and hedge funds screaming," he said. Gold fell below $300 yesterday to $299 at the London afternoon fix from $303.75 in the morning. independent.co.uk