Gold soars when bullion dealers get into trouble

11:25p EST Thursday, February 3, 2000

Dear Friend of GATA and Gold:

GATA can't say much more about the following Reuters
story than quot;Amen!quot;

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

GOLD FIELDS SLAMS INDUSTRY HEDGE ADDICTION

By Darren Schuettler

JOHANNESBURG, Feb. 3 (Reuters) -- Gold Fields Ltd, the
world's second biggest gold producer, said on Thursday
it was insane for companies to keep major hedge books
that had depressed gold prices and made new projects
uneconomic.

Gold Fields, which bought back the bulk of its hedges
last year, also urged institutional investors to pressure
companies to ween themselves off hedging.

quot;I don't think hedging is appropriate at the level and
the scale it has developed in the mining industry,quot;
Gold Fields Chairman and Chief Executive Chris
Thompson told analysts after releasing the company's
quarterly results.

quot;To sell ounces in the ground at $270-$280 (an ounce)
when the price of replacing them is $350 (an ounce) or
better is just insane.quot;

Thompson has publicly criticised the industry's hedging
practices since Gold Fields repurchased most of the 1.8
million ounces committed to forward sales and call
options.

The company still has about 200,000 ounces of forward
sales required for its Tarkwa gold project in Ghana.

Thompson said he was not opposed to hedging to protect
particular assets or if it was required by lenders to
fund a project. But the industry's level of hedging was
out of control.

quot;When it gets to a scale where the top 10 mining
companies in the world have over 70 million ounces
hedged ... it has led to a lower and lower gold price.

quot;If we collectively continue to do that, we're going to
ensure that no new mines are developed and...you
actually have to write down reserves.quot;

Gold Fields had seen its mineral reserves fall to about
74 million ounces from more than 90 million due to the
lower gold price, he said.

quot;I think it's time the institutional investment
community point that out to the mines, that they
shouldn't do it. It's not in our interest.quot;

Thompson said the industry should take a broader view
of the market. quot;It involves looking at overall industry
and community attitudes to gold and the image of gold.quot;

He said it was still very difficult for the public to
buy gold, noting that the recent UK gold auction was
largely restricted to institutions.

quot;There is a lot we need to do as an industry to start
to look at making gold available to the public and
create a market for it,quot; he said.