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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ron Everest who wrote (39635)	9/1/1999 12:28:00 AM
From: d:oug	Read Replies (1) \| Respond to of 116893

Ron, is below from The Rocket <<same stuff over and over>> ? Upfront, no mining companys are named in the article, and the text presented below is my edit to make it less to read. Doug Not All Gold Stocks Are Created Equal. August 30th, 1999 Professor von Braun The Rocket School of Economics. fiendbear.com ... today's gold market is dominated by the amount of paper gold that is traded in gold markets. The paper contracts that are traded on these markets are derived from the presence of the physical metal market ... ... not clear to the average investor is the fact that the growth of this paper gold market was cultivated in part by the mining companies themselves. Success at forward sales when gold was at higher price levels than today, attracted the attention of the investment/bullion banking community and since late in 1995 we have seen a phenomenal growth in the number of these transactions ... also seen a slow but steady decline in the gold price. What is not understood is that, regardless of the numbers tossed about, a large percentage of the somewhat dubious forward sale transactions that have been executed, are secured to the lender/writer of whatever contract that has been written, by various mining companies reserves and their respective producing mines. In effect, a mortgage of these assets has been given to the bullion bank that has written the contract. The farm has been pledged, in most cases without the approval and in some cases, the knowledge of the owners, the shareholders of these companies. There exists today mining companies that run large forward sales books and produce no gold at all. They participate only in the paper gold market, which of course is not at all clearly understood by their shareholders. However the implications are very clearly understood by the people who have written these paper contracts ... what it means if things go wrong. Things have already started to go wrong in this industry and one does not have to look too hard to find evidence of this. There are holders of stock certificates that are today close to being worthless, while the bullion banks that have made loans and written contracts on a producing mine now own the mine. The shareholders own very little apart from some future collectible stock certificate. The frequently touted goldbug approach that says buy gold stocks now, is evidence of a lack of understanding as to how things could unfold, should the gold price decline further. Gold stocks are a risky business at the best of times, but at present with the trend still pointing down, with uncertainty re the cost of production, with loan covenants being broken, with forward sales taking place as a desperate measure and with certain bullion banks (usually wholly owned subsidiaries of prominent investment banks), offering gold loans to all and every taker, they represent a very high risk proposition. ... the bullion banks continue to look for takers to lend/lease/forward sell their gold reserves. Why ? If there is a squeeze to be in the gold market, are the members of the LBMA , (the dominant players in this industry) prepared to continue making loans to mining companies? Why the aggressive push ? Is it because they are stupid ? On the contrary, securing (by way of debt instrument) gold reserves and existing production, knowing that a clean out in the precious metals market is coming, maybe a very sound strategy. Especially if you hold the mortgage over the assets that were put up as security. First, you trash the market with paper, meanwhile securing existing reserves and production in the process. Then you wait until the companies are in trouble and have NO way to refinance their debt, then you call up the mortgage, take ownership of the asset and finally reverse the trend ... Understanding what security has been provided to the bullion/investment banks by your favorite mining company may be a better thing to know now, rather than later. Little has been said about the substantial (26,000 tonnes +) below ground gold reserves which, while not necessarily profitable at these levels, do constitute a known future gold supply. The question may well be, at these current prices who will eventually own these reserves ? Professor von Braun can be contacted via email at profvonb@aol.com

To: Ron Everest who wrote (39635)	9/1/1999 12:51:00 AM
From: d:oug	Read Replies (1) \| Respond to of 116893

Ron, since I now got your attention in the prior post, I hope its ok and polite to ask you to respond to another issue I'am having trouble understanding. Its the role of mining companies helping or hurting price of gold. Follows is the only reply to that article I asked you to read, and Ken comments I hope you can examine and explain to me on how you see the picture. To: Richard Harmon From: Ken Benes Your posting of this note is an acknowledgement that you have come 180 degrees and understand that the debacle in the gold market is a result of a synergy of the bullion bankers and the producers. Without the producers, there would be no action and without action, the price of gold would be considerably higher than what it is today. Your note is also a good read in how the management of gold companies know little else other than digging holes. In terms of mangerial skills, there are many sole proprietorships out their with more savy management. Ken