The gist of it is that many majors AND juniors are essentially short gold through forward sales contracts (hedges against production). Thus as gold prices rise, hedged gold companies will not have profits increasing as they would be otherwise. And if their production falls short they are really screwed.

The motivations of majors when they hedged, which was a while back, was to insure their production would sell at a known price. They obviously did not forsee the big rise in gold. The juniors had to pledge gold related to their financing activities.

If you recall, KRY was hedged in the past but we bit the bullet a while back and covered all the hedges.