As if gold investors didn’t have enough to worry about, now comes the possibility that gold mining companies, by putting on hedges, will bet against investors’ hopes of recovering this year’s losses.
Gold producers are under pressure to hedge against potential further declines in gold prices, according to recent news reports. That action in itself, which involves pre-selling gold at a set price now, by its nature is rarely conducive to pushing prices higher. But after watching gold plunge some 17% this year alone, some miners want to reduce the risk that prices will be even lower later this year. For example, Petropavlovsk PLC, a Russian-based FTSE-250 miner, is hedging half of its second quarter 2014 production at $1,408 an ounce, according to The Telegraph newspaper.
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