Barrick is buying Homestake, one of the grand old names in North American mining.

"Woz goin' on?" as the ancient Klondiker inquired of his buddy.

"It's consolidation, matey. Consolidation like in all the other industries; oil, pharmaceuticals, you name it."

But is the same merger advantages applicable for firms in the gold market?

Size factor

American oil companies believe they need size to give them presence outside the US as American energy resources dwindle.

Pharms need size to absorb their huge research costs and to gain benefits of scale.

The same arguments are true for banks, the motor industry, you name it.

But mining companies cannot easily make the same claims.

There are advantages of size in firms mining many metals, but they are less obvious with single commodity producers such as gold miners.

Strategic shift

The deals can, however, be seen as representing veer away from the 1990s fashion for hedging gold production. That is, selling future output at a favourable price, effectively borrowing money against it.

Barrick believes in hedging production, but Homestake is relatively unhedged, so cuts Barrick's book post merger to about 20% of output.

Newmont is largely unhedged and says that it intends to remain that way.

Normandy, as an Australian firm, has been fully familiar with the derivatives markets.

But Newmont says it intends to unwind Normandy's hedge position when it becomes economically attractive.

This particular scotchcar could be upset if AngloGold decides to increase its offer for Normandy.

But with the South African rand still falling, such a boost could be increasingly expensive for AngloGold - and besides, rands are not as attractive as dollars.

Price rise?

Unshackled to the derivates markets, these new more venturesome gold miners are attractive to the growing army of gold bulls who believe the price of the metal is about to take off.

It would look as though Barrick, Newmont and so on are indicating that they agree with this.

Hedging works when you expect the gold price to weaken. It burns your fingers (remember Ashanti and Cambior) if the price rises.

Even at $306 an ounce, there is $6bn in uncovered hedge positions in the bullion market, says New York bear boutique Constantinople Advisers. There may be a lot of anxiety out there.

London's Biggest Bullion Bear, Andy Smith at Mitsui Metals, recently famously forecast a price of $340 an ounce by early next year.

New York bulls are forecasting $340 to $360 over the same period.

This will come as a welcome surprise to the World Gold Council, which is saying that the market relies on jewellery sales these days - and demand has fallen 10% over the year. Higher jewellery prices almost always bring a fall in demand.

The trouble with the bulls is that there is always more promise than fulfilment, certainly in recent years.

It is a brave investor who would put his money on gold in these markets. But then we do live in very uncertain times.