The Shanghai Gold Exchange is reportedly working with gold producers and banks to develop new gold market debt derivatives, and because of their potential structure, the move could ultimately put downward pressure on the precious metal.
While at first blush it may seem to be a benign undertaking, it might in fact mark the start of a worrying trend -- the return of producer hedging.
Hedging is where miners enter into contracts to sell the metal they mine at a predetermined price, which doesn't vary from day-to-day as it does in the spot market.
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