Despite the fact that the gold price has now slipped to around $924, gold miners still expect the gold price to rise further. Indeed, they’ve put their money where their mouth is.

Société Générale has said that the global gold miner hedge book had shrunk to its lowest level in 16 years. This means that most miners are not hedging their positions to protect against price falls.

The hedge book stands at just 835 tonnes, which is the lowest level since 1992, and is equivalent to 34% of 2007 production levels. De-hedging in the fourth quarter was 72 tonnes. For the whole of 2007, dehedging came in at a record 446 tonnes.

It was revealed this morning that investors bought 72 tonnes of bullion through gold exchange-traded funds in the first quarter of 2008, bringing the total to 943 tonnes.

The gold price averaged $924.83 an ounce in the first quarter, around about where it is now

Gold remains a buy

Tell the truth, Mr Naimi

The oil price continues to hit highs this week on supply concerns.

WTI futures hit a new all-time high overnight of $119.90, before retreating to nearer $119. It looks like I may soon have to upgrade my view to come in line with legendary oil investor T. Boone Pickens’ prediction of $125.

Opec has said that there is no shortage of oil in the world market – but they would say that, wouldn’t they. It is becoming obvious that Opec are at the limit of their pumping ability.

Comments over the weekend for Saudi oil minister Ali Naimi were manna from heaven for the Peak Oil crowd. Apparently, Saudi Arabia has put on hold plans to increase long-term production capacity from its oil fields because there isn’t the demand.

This is patently a bunch of utter nonsense. With the oil price at a record high, surely they would want to cash in?

I reckon the main reason that they are not going to expand production from 12.5m barrels a day to 15m barrels a day is because they can’t. They don’t have the infrastructure and they don’t have the oil. Yet again we have more Opec smoke and mirrors.

You can, however, see the real situation if you looks at the futures strip price. It has now hit $114.675.

Oil is still a buy as well.

Regards,

Garry White

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