Nice post SaturnV,Back when I worked on such things (pre 2000)...

Nice post SaturnV,

Back when I worked on such things (pre 2000) most gold producers ran margin businesses. All risks were hedged. They had a very good idea of how much gold was in the ground and before launching a mining project they would hedge the estimated production costs (as far as they could) and sell the future production (7 years was the longest deal I saw) thus locking in an annuity stream for the life of the mine. With the benefit of hindsight, this seems stupid, but at the time the predictable cash flows made it easier for them to secure project funding.

In recent years, the producers have been less inclined to hedge (which makes them both more profitable, and more risky) but there would be plenty of old contracts still live in the market. As these short derivatives are bought back, there will be a corresponding selling of physical gold.

As one nets the other I doubt that it is a factor that will drive Gold prices either up or down.