The Phaserl


Goldman Sachs recommends gold producers hedge their output

by Lawrence Williams,

In a final note on their latest commodities research on gold, Goldman Sachs analysts, Jeffrey Currie and Damien Courvalin suggest that gold miners should hedge their output and lock in 2013 prices and beyond, given the investment bank’s medium term forecast of gold falling further to $1,050 an ounce. But maybe producers should be wary about hedging at current levels and may recall the Goldman inspired hedging activity by Ashanti Goldfields back in 1999 which led to the miner’s demise and it being swallowed up subsequently by AngloGold when the gold price moved against it. (As Wikipedia puts it: In 1999, the company [Ashanti] succumbed to an ill-executed gold price hedge led by Goldman Sachs, which drove it to the brink of bankruptcy). Thus Goldman Sachs is not always right, although as we’ve mentioned before sometimes its analyses and subsequent recommendations move the market on their own, such is the aura surrounding the bank’s activities and advice.

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