Ann: June 2019 Quarterly Activities Report and Guidance, page-5

For the qtr we sold 46k ozs @ A$1791. 31.5k ozs into hedge at $1732. Average spot gold price for the qtr was $1860. So this 46k ozs, cost us just over A$3m because of hedge for the qtr. RMS state they try to be 40% hedged. But last qtr they sold 66% into hedge, and in the qtr hedged a further near 70k ozs ( IE. 140% of qtrly production), so we now have 240kozs hedged at $1834 a full $250 below current spot. In other words if POG was to remain at these levels we are to going to be out of pocket by $60m, or 10c/ share over the next two years.

I've never been a fan of hedging, I buy gold shares as a risk. If I wanted something safer I would buy more banks etc. RMS have stated their intentions to hedge 40%. But on current numbers are they are exceeding this. Are they getting greedy, seeing POG rise and thus increasing hedge. 240kozs over the next two years is well over 50% of production.

I've written before, Sons of Gwalia, Croesus and others were sent bankrupt thru' over hedging when POG rose too quickly. Even the mighty Barrick had to raise over US$1B to cover their hedges.

I realise that RMS is a public company, and have to do the best for the stakeholders, but I urge 'do not be greedy and overhedge'. I strongly feel gold price will rise significantly.

Here's why I think so. Reports abound that over US13T dollars worth of bonds are negative in yield, out to as far as 20 years. (Saw a report that one country, Denmark, I think, is looking into issuing 100y bonds with negative yield). Think about it for a moment. firstly what is $13T. Well if you stack $1m of $100, with no air space between, it would roughly be the height of a man. Lay it down, now $1t would be from Brisbane to Melbourne, and $13t would be half way round the equator. Next people are lending some gov'ts money, to receive less back in 20 years time. Not only that but the bond yields are still falling and for longer. So what will they do? Hold out to maturity, or sell them on. Now yield works inversely to price. So when yields rise price falls, and vice versa. So why would these pension/hedge funds etc buy these? If they hold to maturity they will receive less back. But what happens if their intentions are to sell at sometime at a profit? They can only do this if bond yields become more negative. If rates rise, new bonds will be cheaper, so these bonds will have to be sold at a discount (loss) or held. If yields keep falling the negative rate will increase, thus new bonds will be dearer and thus onselling these bonds will create a profit. But just how negative can they go? We know that Reserve Banks are now the main buyers, but ever more Foreign banks are switching their currency reserves to gold, They are starting to not trust Western Currency, even if such as SWIFT demands they hold sufficient fiat currency to meet trade. Most wealthy are seeing this and are switching to gold, even if it gives no yield. Better none than negative. This will continue till it doesn't. It the meantime hedging is fraught with danger IMO.