Thursday, 29 May 2008

Bullish De-Hedging news as Gold < $900. 2008-05-29

Thursday 29th May 2008: Bullish De-Hedging news as Gold moves under $900 again.

The first two articles on Kitco today, one is seemingly bearish on the surface and one is highly bullish.

Gold Drops Back Below $900 - NASDAQ, May 29 2008 9:10AM
Gold de-hedging could reach 10m oz in 2008 - Miningmx, May 29 2008 7:24AM

As gold moves under $900 again to $889.70, perhaps to test the previous support around 840-850 (coinciding with the former all time high from 1980), as oil slips below $130 to a new low, low price of $129.81 and the US$ rallies to 72.88 on the Dollar index, we hear from MiningMX the news that up to 10,000,000 ounces could be de-hedged in 2008.

those bearish on the gold market were calling for de-hedging to stop almost as soon as it started, way back in 2002, and many were calling for it to come to a halt and reverse to further hedging when ghold hit highs around $730 in 2006. Not so. They were completely wrong, as they have been all through this bull market in all tangible commodities.

In fact, with the price around $900, Anglo gold Ashanti, we hear on miningMX that » AngloGold raises R12bn to combat hedgebook! This may be accomplished by asset sales and the issue of around 70 million shares. However, this will still leave tnem with over 6 million ounces hedged! This gives some idea of the massive amount of hedging that took place during the gold bear market up until 2001.

Twelve billion Rand is not far off the $2bn US$ that Newmont spent to eliminate all its hedges not long ago, taking a large hit in the process. Since then, Newmont's profitability has seen an impressive increase.

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