Thanks, John, for that fascinating review. I hadn't seen it before.
You know, John, one of the reasons I've been like a dog w/a bone on this Ashanti story is simply this: it is the blue print for other "troubled" hedgebook cases dead ahead.
As I pointed out in my commentary yesterday, here we have a "throng of 6" that's 5 digits on one hand plus the reader's choice of an additional digit on the other<g> beginning to reverse the 18 year trend in this obscene paper game of leasing gold.
And ONE of them, made TWO panic buys near the top of the September POG rally.
Now logic dictates: ALL of the mines in the world can't be too big to fail and end up being rescued by AG and the F/R in cohoots with World Bank's Volcker...he can't print money or new margin call free contracts fast enough at that printing office of his.
So, all the mining world is watching how this one is going to be resolved, just like all eyes were on the LTCM debauched debacle yet to be unravelled, and then there was that mess in Orange county that Merrill Lynch and Charlie Clough swept under the rug...(yes, and before that the Chicago bank that went tits up...you know, the one on LaSalle street that was our first inkling of "too big to fail..."
Looks like a couple observations give us POG clues...
1) Hedgebooks ARE under pressure to be unraveled by outfits who have had notice served on them that the bigger vultures are circling and eyeing their reserves b/c the price of gold is going up...and consolidation is the next "phase" as far as big fish swallowing little fish. Good Arb plays herein.
2) Said poorly advised hedge/leasors are poorly managed companies as well when the price of gold spikes and they make panic buys because the CB's who got them into the deals aren't answering their phones or holding their hands and the little managements get the idea their golden goose is quite literally cooked.
3) I guess my biggest concern is that some kind of message to all the gold speculators is going to be swallowed to the effect that:
"Relax, Boys! We're here for you...you can have the money interest free for 3 years and have 8 years to pay us back what you owe us on all those underwater calls..OH, and DON'T BUY BACK ANY of those 3:1 deriv strategies we sold you!!!! We like you owing us big time just the way you are!...Oh, btw, you wouldn't mind selling off your crown jewel would you...you know that little one over there in Tanzania or in Mali or in Zimbawe or the "Western Areas"..."
4) I'm afraid the following fact will be lost on the patient speculator/investor which I perceive you to be, and I quote:
A research paper by Mark Tayor for a Sydney-based stock brokerage firm makes some important observatons about gold's long term potential:
1)CB holdings, as a percentage of all gold held, peaked in 1946 to over 60%. Since then central bank holdings as a percentage of all gold held has fallen to 24%
CB gold holdings are a diminishing factor relative to the market and represent less than 9 yrs of industrial demand.
2) There is an increasing shortage of minied gold relative to demand.
3) Mined production is slowing down, and the closing of higher cost mines suggests the gap between mine supply and fabrication demand could continue to grow.
END QUOTE
Yes, John, that 12 mil oz Geita reserve, if NOT calculated by the same outfit that calculated Bre-X's reserves, is a fascinating "birdie" to keep one's eye upon.
In my humble opinion, hanging onto 30% of it AFTER being pillaged by the new BoD under the golden veto vote of the Ghanian govt to ANY healthy plan will make Ashanti vulnerable to a takeover in and of itself, and should make Ashanti one of the better short plays...that is if there is anything left after the $100m loan is spent<ggg>
O/49r |
