>HEDGING AND FINANCIAL GOLD REPORT (BNP PARIBAS)

The quarterly survey of global gold hedging and financial gold movements.

■ Global gold hedging resumed its trend decline in Q2 09, falling by 1.2 Moz (37t) to 14.7 Moz (458t) on a delta-adjusted basis. The decline when measured in committed ounces was a slightly larger 1.3 Moz (41t), taking that measure to 15.3 Moz (476t).

■ On a year-on-year basis, however, dehedging continues to slow, with the delta-adjusted global total down by 4.0 Moz compared with Q2 08, its lowest annual decline since we began collecting quarterly data in Q2 02.

■ AngloGold Ashanti was responsible for the largest reduction, removing 0.65 Moz from its book. It also cut another 0.74 Moz in July after our data cut-off point. Thirty-one other companies saw their positions decline, none however made a reduction greater than 0.1 Moz.

■ Only one company increased its commitments, and then by just 22,500 oz.

■ The global hedgebook is likely to continue falling in H2 09 due to AngloGold Ashanti's already announced reduction and stated plans for the rest of the year. Therefore we have slightly increased our full year forecast of dehedging to between 2-4 Moz.

■ The mark-to-market valuation of the global book (the cost to mining companies of closing out their hedge books at end Q2 09) improved to a negative $6.6bn compared with end-Q1 09’s revised negative $6.7bn, despite the gold price rising to $934.50/oz from $916.50/oz at the end of Q1 09. See p.7

Gold ETF outflows in July
■ The world’s 16 physically-backed gold ETFs saw inflows in Q2 09 of just 47.3t, much lower than Q1 09’s remarkable 458.3t. July was worse yet as - thanks mainly to the SPDR – there was an outflow of 41.0t. See p.10

Central bank sales weak; CBGA renewed with IMF key seller
■ Central banks globally are less keen on selling their gold. Net sales in the first six months of 2009 were just 60t, with 93t of net sales from advanced economies and institutions, and 33t of net purchases from emerging economies, mainly Russia. In this quarterly report our 'Focus' section takes a look at recently proposed IMF gold sales and the recent renewal of the
Central Bank Gold Agreement

To see full report: GOLD