re: why - ncm down ? Well I thought that these numbers should be of concern:
The mark to market position at quarter end totalled approximately negative $939M ($933M) which comprised negative $633M ($550M) for gold, $247M ($336M) for currency and $59M ($47M) for copper.
A contingent loss of around $1 billion for a $2 billion cap company. With the recent increases in the gold price these numbers are almost certainly higher.
You can argue that hedges struck at lower prices are only foregone profit that could have been made if you were unhedged.
However, as the gold price moves higher counterparties have to consider their exposure as no financial institution such as a bullion bank can carry a naked short position indefinitely against a rising market.
Moreover, the granted call options to counterparties at about 3.5 million ounces look a potentially nasty area. We are talking about $US1.3 billion worth of gold.
The long bear market for gold and the availibility of the contango [interest rate differential between US treasuries and gold lease rate] has drawn miners into these financial plays with gold. The miners have be willing partners in keeping the gold price down seduced by the bullion banks into financial arrangements whose risks were not covered.
If the gold price goes above $400 there will be intense pressure on hedged positions. In fact I am sure that is one reason why the funds are now on the long side of Comex - the trend is your friend - and you can pop shorts on a stop loss.
You may even pop a big miner [Australian miners - excluding Barrick - are the most heavily hedged so one of them would be a warm favourite] and then see the gold price run.
There are big plays in motion but at their core are the miners that have shorted gold.
LHG
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