True, they're different, but virtually all Gold Majors (NEM, ABX, PDG, etc.) move with Spot Bullion virtually tick-for-tick. Admittedly, however, the volatility/sensitivity of Majors' stock prices to Bullion fluctuations varies with the timing within the Gold cycle.
Hedging isn't as important a function as it was even a year ago. Many millions of in-the-ground ounces have been committed through hedging but the Majors have forsworn further hedging and are now selling on the spot market - without any significant adverse effect YET. Hedge books have been hugely reduced this year.
Outstanding derivatives, however, are another matter. Gold-related derivatives represent many times the value of gold production and could unwind in a disastrous fashion if Bullion rises too quickly.
Governments are aware of this and are unlikely to let Bullion run away. Remember Long Term Capital Management?
On the other hand, if Gold becomes a fashionable target for pension funds, even a small percentage of the resources of the pension funds in the U.S. alone could eat up all the above-ground gold in the world - including everything in Fort Knox and every other Central Bank store - many times over. In this scenario Government would be powerless to stop an upward spiral in Bullion.
It's complicated - and potentially explosive.
