Gold Hedgers - Be carefull !

AngloGold's loss trebles as bullion bets go awry
February 12, 2006

AngloGold Ashanti said its fourth-quarter loss more than trebled as bets on bullion prices went awry.

The company's net loss widened to R1.46 billion, or R5.51 a share, in the three months to December 31, from R415 million, or R1.56, in the third quarter, the company said in a statement to the JSE on Friday.

AngloGold entered contracts to sell 10.84 million ounces of gold at preset prices, much of it below the current market price. To buy back those contracts would have cost $1.94 billion (R12 billion) on December 31, compared with $1.35 billion three months earlier as the price of gold climbed 10 percent. With gold averaging $553.60 an ounce so far this year, losses on gold contracts are set to widen.

The losses "in the next quarter, if the gold price stays where it is, are going to be huge", said Wayne McCurrie, who oversees the equivalent of $6 billion at Advantage Asset Management in London. "It's a very large amount of money."
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