LONDON (Commodity Online): Gold deheding activity has increased in the third quarter of 2009 and going ahead de-hedging will remain on the demand side of the market in 2010, according to an analysis by GFMS Ltd. Global de-hedge volume will be pushed lower to 8.00 Moz or 249 tonnes. De-hedging activity increased in the third quarter, with the most prominent (and well publicised) announcement in recent months being Barrick Gold’s intention to eliminate its f xed price gold sales contracts. During the third quarter, Barrick reported a reduction of 2.50 Moz (78 t) to its fixed price gold sales contracts (closure of the company’s floating priced contracts has no market impact), GFMS said. The company outlined a plan to eliminate the entirety of its fixed price hedges within a 12-month period, and completed the reduction in the fourth quarter, removing the balance of 2.90 Moz (90 t) within three months of the initial announcement. AngloGold Ashanti continued the active management of its hedge book, removing the accumulated long bullion position, a large portion of which was accrued in the second quarter. Several tranches of US dollar-denominated forward sales contracts were reduced and reductions were also effected to the US dollar denominated sold call and sold put positions. These combinedactions resulted in a net reduction to the deltaadjusted volume of AngloGold’s book of 0.48 Moz (15 t), and left the company’s hedge book standing at 3.93 Moz (122 t) at end-September. Learn about Commodity Online Data Services Third quarter witnessed an episode of strategic options hedging by Sumitomo Metals & Mining. The company secured collar options positions, covering half its projected production from the Hishikari and Pogo mines, out to 2012 and 2014. These options do, however, carry low delta, resulting in only a 0.27 Moz (8 t) addition to the delta-adjusted hedge book. As a consequence, the actual number of contracts on the book, expressed as the nominal hedge book volume, contracted by a lesser amount, as an increase in the number of recorded options contracts dampened the overall cut to the forward sales position. At end-September there were more options contracts recorded on the book than forward sales and gold loans. The marked-to-market value of the book improved by $1.7 billion during the quarter, attributable to the reasonable reduction in the delta-adjusted book volume, while producers’ weighted average realised prices rose by $40.22, closely in line with the rise in the period average spot gold price, GFMS said. Given the activity seen in the first nine months of the year, and currently available information regarding the fourth quarter, GFMS estimates that during the fourth quarter the global hedge book volume will continue to be pushed lower, towards the 8.00 Moz (249 t) level. We caution, however, that even though the ever-decreasing volume of the book makes sustained strong de-hedging increasingly unlikely, it currently does not render it impossible, and we expect de-hedging to remain on the demand side of the market in 2010. At end-September the nominal (not adjusted for option delta) hedge book volume stood at 16.21Moz (504 t), representing a reduction of 1.36 Moz (42 t) from the prior quarter. Of this total, 7.16 Moz (223 t) were forward sales and gold loans, while the net options position totalled 9.05 Moz(282 t). I

Source