-->Gold producer dehedging seen rising in 2004 - GFMS
Reuters, 03.22.04, 3:01 PM ET


VANCOUVER, British Columbia, March 22 (Reuters) - De-hedging by gold producers could this year outstrip levels reached in 2003, boosted by world No. 2 producer AngloGold Ltd. <ANGJ.J> as it unwinds contracts to sell unmined metal forward, a leading mine research group said on Monday.

London-based GFMS said in a report it expected de-hedging of between 11 million ounces and 13 million ounces of gold this year, compared to nearly 10 million ounces last year.

To protect against future weakness in the gold price, producers enter into hedging transactions, which include selling gold forward at set prices and other more complicated derivative transactions.

With the gold price surging from near $250 an ounce in early 2001 to above $400 last year, many producers who are locked into contracts to sell gold at lower-than-market prices are unwinding these positions -- dehedging -- through various mechanisms to increase their exposure to spot prices.

Hedging is blamed for stunting demand as gold purchasers have already bought unmined metal for future delivery, so depressing the bullion price. Conversely, de-hedging stimulates demand and the gold price.

GFMS said that South Africa's AngloGold, following its recent merger with Ashanti Goldfields Co Ltd. <AGC.GH>, has said it will bring the amalgamated companies' hedge book down to a maximum of 30 percent of the merged group's output over the next five years.

"(This) would suggest a target hedge level for the combined entity at around 11 million ounces, or some 3.1 million ounces lower than the reported delta-adjusted position in December," GFMS said in a report prepared for banking group Investec.

"The rate at which Anglo unwinds this"excess" hedge cover could be an important factor in the scale of de-hedging in 2004."

GFMS said that just over 70 percent of the de-hedging measured last year came at the hands of four producers: Newmont Mining Corp. (nyse: NEM - news - people), Anglogold, Barrick Gold Corp. <ABX.TO> and Placer Dome Inc. <PDG.TO>.

In 2003, a key driver behind the high levels of de-hedging were buybacks triggered by mergers and acquisitions.

GFMS said levels of project hedging -- where producers are required by financiers to lock in a price for a portion of production -- are expected to be less over the next two years than the 3.5 million ounces added to the global book in 2003.

Based on projects in place, GFMS said this type of hedging could add roughly 2 million ounces to the global hedge book this year and 1 million ounces in 2005.

Copyright 2004, Reuters News Service

...das Spiel geht also weiter,kommt noch die Politik dazwischen,wird´s teuerer
als geplant bei Anglo u. Co.

Comment:...Just like back in the 70'S the smart money came first...then the man
on the street because it always takes so long for old wounds to heal
from the last burns....what we are seeing is another Great Commodities
Rally only this one will be alot bigger....due to China and India..and
many other factors....we have a long way to go...

von einem Bullmarket kann noch keine Rede sein:

http://trinity.mips1.net/mggw.nsf/WebWatchlist?OpenForm

mfg
Nickelman


<ul> ~ http://www.forbes.com/markets/commodities/newswire/2004/03/22/rtr1307454.html</ul>