The outstanding volume of gold sold forward by mining companies fell to its lowest level in at least 11 years during the third quarter of 2013. The global hedge book decreased by six tons to 92 tons, SociÉtÉ GÉnÉrale and Thomson Reuters GFMS said in a report. That is the lowest level since 2002, when the quarterly hedge reporting series began, ft.com wrote. The marked-to-market value of the hedge book also fell, by $248 million , to $174 million , in the three months to the end of September. Some 25 companies saw reductions in their hedge positions over the quarter, mainly due to deliveries into maturing contracts. The pace of de-hedging slowed compared with the second quarter of last year. But while the gold price rose from July to the end of September, this did not motivate widespread producer hedging, despite the fact that the opportunity existed for hedging at higher prices, the report noted. Evolution Mining , Regis Resources and Dundee Precious Metals were among the companies that did forward selling, collectively increasing their hedge books by 11 tons. There is not yet any evidence to suggest that producers are returning to large-scale hedging, with limited reports of new hedge positions since the end of Q3, SociÉtÉ GÉnÉrale and Thomson Reuters GFMS said. By selling their production forward, gold miners can guarantee future revenues and guard against a falling price. But if prices rise, they lose out. Investors are generally opposed to hedging, since they want exposure to movements in the gold price. Barrick Gold said last year that it might consider returning to a hedging strategy because of the volatility in the gold price. The yellow metal tumbled 28 percent in 2013-the largest fall for 32 years-as western investors dumped gold-backed exchange traded funds. Even so, none of the big miners has committed to locking in profits. "There is some talk, but no action," said Philip Klapwijk , managing director of Precious Metals Insights, a consultancy. The report noted that the global gold producer all-in-cost, excluding asset write-downs, was close to $1,200 a troy ounce-near to gold's current spot price of $1,252 . For many producers, hedging now would mean be securing revenues at a point when margins are already severely tightened. This strategy would likely not be well received by shareholders, the report said.
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