SOURCE: The Bedford Report

The Bedford Report

October 10, 2011 08:16 ET

Miners Take More Conservative Stance Towards Gold Prices

The Bedford Report Provides Equity Research on Paramount Gold & Silver and Yamana Gold

NEW YORK, NY--(Marketwire - Oct 10, 2011) - Gold miners from across the globe have been feverishly boosting production to match high demand for the precious metal. World Gold Council (WGC) officials argued last month that Gold demand, which dropped in the second quarter of this year, is expected to strengthen by the end of 2011, driven by strong jewelry buying in China and India. The Bedford Report examines investing opportunities in the precious metals sector and provides stock research on Paramount Gold & Silver Corporation (NYSE Amex: PZG) (TSX: PZG) and Yamana Gold, Inc. (NYSE: AUY) (TSX: YRI). Access to the full company reports can be found at:

Credit Suisse raised its 2012 gold price forecast, saying the save haven metal is a clear beneficiary of the uncertainty and dislocations in financial markets, and has further upside with the crises set to continue. "Given that many of the factors that have underpinned the rapid increase -- most importantly, fears of a global meltdown -- remain in place, we expect gold prices to continue to recover over the balance of 2011," analyst Tom Kendall said in a note.

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Gold miners have taken a more conservative stance. According to the French bank Societe Generale, gold mining companies in the second quarter reported their first consecutive quarterly net hedging in 10 years, driven by new hedges by small producers. The second quarter saw 0.19 million ounces (6 tonnes) added to the global hedge book, which stood at 5.07 million ounces (158 tonnes) at the end of June.

Hedging helps producers lock in prices for future output. The strategy can backfire if spot metal prices rise above the hedged price. The buying back of outstanding hedge positions was a key element in gold's rally over the past decade.

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