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Zero-cost collars make zero sense

In the last GFMS Survey of the Global Gold Hedge Book (for the 2014 fourth quarter) the stand-out feature is how an increasing amount of the growth in hedging over 2014 was by way of “zero-cost collars”, or more exotic option structures.

In the 12 months ended December 2014, the total ounces hedged (covered and/or committed) in the global gold hedge book grew 300%, from 4.1 million ounces to 12.5Moz.