Some of the brokerages had large short positions. For example, one was short 2.9 million shares. Also, the fiscal year end was only 3 days away. It was in their best interest to let Bre-X trade (not just money from short positions, but from the volume of trading that would take place). They make the decisions and thus did what was best for them.
By the way, I am one newsletter writer that believes Bre-X has significant amounts of gold. In a Situation Alert issued on March 27, 1997 (the day of the announcement), I wrote "I do not believe that the Busang deposit is a fabrication but may well have been ignorantly overestimated while senior management was busy fighting off the Indonesian government and the majors. We will not get a definite answer for another four weeks. In the meantime, I hope John Felderhof will find it in his best interest to make a statement concerning drilling, sampling and assaying procedures. This may help the market shed some light into the matter." By overestimation, I meant that no infill drillig had taken place, crucial in a complex geology.
Would someone smart enough to salt 100 miles of core, over 2 years, in a ruthless country like Indonesia, be too dumb to make the quick money and run? Besides, in a country like Indonesia, its very hard to keep local secrets.
I just read through some comments from the last two days (where does everyone get the time?) and I hope I have not just repeated what others have already said.
General comment: You should NEVER rely on the general media for your information. Use it only to judge the mood of the market. Go to the source and develop long term relationships with the right people. Its the only way to invest.
Sudhir Khanna, P.Eng.
Editor, The Resource Indicator
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