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Yes, gold dehedging will end, but central bank reserves will run out too
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:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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