greyhoundtrainer - good observation. Most of the biggest gold...

greyhoundtrainer - good observation. Most of the biggest gold miners are unhedged too. So you would think they would be vulnerable. I think Gold is so volatile that many investors might just think yeah yeah - it'll bounce back. Possibly they could be right.

However the amazing or scary thing to note I think is to look at the biggest gold miners and their forward looking output. (I've actually been looking over their hedging/risk management or lack thereof). Some of the biggies will be double their current output by 2015 or so. Really not looking good if you are hoping for a lack of supply to constrain the Gold price. Many of the smaller gold stocks are hedged, as their bankers insist upon it if they are providing project finance. Here we have a dilemma. The big companies can afford to be the last man standing. Many of the smaller ones are able to keep going as they are hedged. So there could be conditions in place for sustained high level output for five or six years. Some Gold stocks that are unhedged and high cost will be mothballing or going broke if the price keeps retreating.

I think the herding instinct of management of the big gold miners to be unhedged is going to be a whopping error. In ten year hedging might be the fashion again. Can't say I can see that management and directors are earning their money by just doing what everybody else is doing, and focusing on how they got their fingers burned in the 2000s by burning hedges. I got scalded (luckily not harmed) by pouring boiling hot water on myself as a child - however I still prefer to drink hot tea over iced.