The firm said perceptions that the gold price would improve throughout 2001 meant producers wanted full exposure to the potential upside. “Miners therefore saw little reason to protect themselves against falling prices, as well as less opportunity to enhance their revenue by locking in a contango,” said GFMS.
Hester le Roux, a director at GFMS, added: “All indications are that the trend to lower hedging has continued into the first months of this year, and while short-term rates remain low and price prospects remain positive, we would expect to see another significant fall in the global hedge book in coming months.”
Gold hedging has been controversial since 1999, when Ghana’s Ashanti Goldfields suffered large losses by making major bets against a rise in gold prices.
The week on Risk.net, November 25-December 1, 2016Receive this by email