Wednesday, 23 January 2013

Global Hedge Book Analysis - GFMS

Quarterly Reports on Hedging and De-hedging amongst the miners. .....more .....

Hedging is often a requirement of mine financing, companies which are hedged secure the finance to get into production and are protected from the downside in metal prices, selling at fixed or minimum/maximum prices.
During a bull run for gold however their leverage to the upside in metal prices is limited and investors may stay away from the stock.
Hedges can often be bought out so company sentiment can be changed as companies work through or pay off hedges.
I suspect at some point it will become very attractive for miners and developers to "guarantee" a return and progress certain projects, these may become "utility" return stocks. Clearly the guarantee requires that prices fixed for metals income are not eroded by inflation in input prices.

GFMS provide a quarterly survey of hedging activities
                 2012 Q3     2012 Q2    2012 Q1     
2011 Q4    2011 Q3     2011 Q2     2011 Q1

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