We are to blame for hedging

In an ideal world, gold miners would hedge their production following a big rise in the gold price and avow hedging following a price slump. In practice, they do exactly the opposite. As gold prices slumped in the late 1990’s miners rushed to lock in prices via hedging. Aggregated global hedging peaked at 2,900 tonnes in 2001, almost the exact nadir in the gold price. As gold prices rose from 2003, gold miners gradually unwound their hedge books and boasted of being fully exposed to gold prices. By the end of 2012, global hedges outstanding were just 123 tonnes, the...

In an ideal world, gold miners would hedge their production following a big rise in the gold price and avow hedging following a price slump. In practice, they do exactly the opposite.

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