You are here

Yes, gold dehedging will end, but central bank reserves will run out too

Section: Daily Dispatches

1:30p ET Sunday, May 18, 2008

Dear Friend of GATA and Gold:

MineWeb reports about a study that, while finding a huge reduction in gold hedging by mining companies in the first quarter of this year, predicts that dehedging will end in 2009, removing a big support for the gold price. But such warnings don't always take into account the simultaneous reduction of the Western central bank gold reserves from which market-suppressing gold sales and leasing are drawn.

The looming exhaustion of those central bank gold reserves -- already coming into view as the central banks fail to meet their sales quotas under international agreements -- could support the gold market just fine when the miners stop buying their hedged gold back.

You can find the MineWeb report here:

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=53109&sn=Detail

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:

Vancouver World Resource Investment Conference
Sunday-Monday, June 15-16, 2008
Vancouver Exhibition and Convention Centre
http://www.cambridgeconferences.com/ch_june2008.html

* * *

Help Keep GATA Going

GATA is a civil rights and educational organization
based in the United States and tax-exempt under the
U.S. Internal Revenue Code. Its e-mail dispatches are
free, and you can subscribe at http://www.gata.org/.

GATA is grateful for financial contributions, which
are federally tax-deductible in the United States.