Cross said the recent bull run in gold has helped clarify the strategies of gold producers. “Concurrent with the recent dollar price strength of gold, gold mining companies have been unwinding their hedge books. This in turn has helped convince Western-based investors that the bull run may be more than a flash in the pan,” Cross said.
According to the hedging survey, the international gold hedge book, which tracks the hedging activities of 84 gold producers - accounting for 66% of global output - now stands at a total of 80.9 million ounces. The total fall in 2002 was 14.8 million ounces, or 459 tonnes.
The report attributed the fall in hedging to a decline in call option positions and a reduction in net forward positions. The recent strong climb in the gold price and low interest rates have considerably weakened the propensity of gold producers to lock in prices through hedging.