Global Gold Hedge Book Contracts Again – But Only by 31 Tonnes

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The latest hedge book analysis from Société Générale, using data independently compiled by GFMS Ltd., shows that the global hedge book in the gold mining industry again contracted in the third quarter of this year.

The latest hedge book analysis from Société Générale, using data independently compiled by GFMS Ltd., shows that the global hedge book in the gold mining industry again contracted in the third quarter of this year. The provisional contraction was much smaller than in recent quarters, however, at just 31 tonnes, taking the book to 32.61 million ounces or 1,014 tonnes, the smallest level since mid-1992.

This compares with forecast mine production this year of 2,485 tonnes, and means that the level of dehedging so far this year is 336 tonnes, following hefty buybacks earlier in the year from Barrick, Newmont and Lihir. Barrick did not contribute to a change in the global book during the quarter. The company did convert 1.5 million ounces (47 tonnes) of forward sales from a fixed to a floating price basis, but the company's overall position remained unchanged in terms of outstanding volume, at 9.5 million ounces (295 tonnes).

The change in the book was a function of a sizeable reduction in forward sales partially offset by an increase in the options position. The outstanding forward and gold loans position fell to 21.68 million ounces (674 tonnes), from 23.58 million ounces (733 tonnes), a drop of 59 tonnes. The options position increased from 10.02 million ounces (312 tonnes) to 10.93 million ounces (340 tonnes), a rise of 28 tonnes.

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