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To: maceng2 who wrote (290)	8/11/2003 3:28:21 AM
From: maceng2	Respond to of 1417

Producers continue to unwind hedge positions By Kevin Morrison Published: August 8 2003 5:00 \| Last Updated: August 8 2003 5:00 The amount of gold "short" positions remaining on producer hedge books showed a significant decline in the second quarter of this year, a trend that is one of the main factors supporting bullion prices. The closure or buy-back by gold producers of their hedge positions shows no sign of abating, despite some analysts predicting it would slow in the second half of the year. Hedging typically takes the form of forward sales that enable the producer to lock in a price in the future. This effectively accelerates supply of the metal to the market and can put downward pressure on the price. Unwinding those short positions tends to push the price back up. Gold miners bought back or closed out 5m ounces, or 156 tonnes, of gold in the three months to June, bringing the total amount unwound to 8.77m ounces so far this year, according to the latest quarterly survey by Virtual Metals and Haliburton Mineral Services. Gold miners had a total of 73.2m ounces remaining on their hedge books at the end of June, or 28 per cent below the peak of 101.8m ounces in September 2001, according to the report. Over this 23-month period, the gold price has risen about 30 per cent to about $350. Matthew Turner, commodities analyst at Virtual Metals, said: "At some stage, the decline is going to have to stop and the book flatten out because, otherwise, producers will be breaking mine finance deals backed by forward sales." Mr Turner said much of the reduction in the hedge book related to the recent consolidation in the sector where new owners were unwinding positions of the previous mine owners. Newmont Mining, the world's largest gold miner, has been actively reducing the pre-sales of Normandy Mining, the Australian-based producer it bought last year. AngloGold said it would accelerate the reduction of Ashanti Goldfields' hedge book, which stood at 6.4m ounces at the end of June, after unveiling the terms of its proposed merger with the Ghanaian miner on Monday. news.ft.com