The gold mining industry is increasing its net hedged position for the first time since 2011 after a plunge in gold prices worried creditors, but a return to selling forward masses of bullion is a distant prospect.
At its peak in 1999, the volume of the gold hedges - future output sold forward to guarantee revenue streams - reached more than 3,000 tonnes. By the end of last year, that outstanding hedge book had dwindled to just 78 tonnes.
Last week GFMS analysts at Thomson Reuters predicted a return to net hedging this year after a 9 tonne rise in outstanding hedges in the first quarter, as miners' hedging outweigh their de-hedging.
Russia's Polyus Gold recently put in place the biggest hedge seen in the gold market in years.
But while the idea of hedging a small amount of production for a limited period is gaining some support, the change in trend comes with stiff conditions.
"When companies do it, they have to do it for some pretty good reasons, and it has to be case-specific," Scott Winship, portfolio manager at Investec Asset Management, said.
"For, say, a single miner bringing a mine into production, which is typically a very high risk period of time for a company, it is prudent to hedge some production. But we're talking about 10 to 20 percent for a fairly short period of time."
Hedging is designed to guarantee revenue streams by protecting mining companies from falling prices. Some lenders require companies to provide a certain level of price protection before they agree to fund new projects.
The limitations of hedging were starkly illustrated in the last decade's gold price rally, however, with big miners such as Barrick Gold and AngloGold Ashanti spending billions of dollars to close hedges that were preventing them from capitalising on the bull run.
The rally ended dramatically last year with a 28 percent slide. In the current environment, smaller producers using short-term, flexible structures on individual projects can satisfy their creditors while not turning off their investors.
"Gold companies need to prove to investors that they can manage their balance sheets," Clive Burstow, investment manager at Baring Global Resources, said. "If used prudently and wisely, hedging is a very good tool for miners to use. Junior miners can use hedging when developing an individual mine, for instance."
MEANS TO AN END
That's not to say that the industry is embracing hedging wholeheartedly.
Randgold Chief Executive Mark Bristow said while he is