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

To: long-gone who wrote (42151)	10/6/1999 7:49:00 AM
From: FuzzFace	Read Replies (2) \| Respond to of 116789

Cambior (CBJ:Amex)for one: thestreet.com All That Glitters Now I know why Ashanti Goldfields (ASL:NYSE) didn't return my phone calls yesterday. Today, the stock tumbled 41.3% to 5 1/2 on word Lonmin is in talks to buy the two-thirds of Ashanti it doesn't already own. Goldman Sachs is advising Ashanti, while Morgan Stanley Dean Witter is in Lonmin's corner. The development comes after Ashanti disclosed it may face margin calls because lease rates have risen markedly. Since the European central banks' Sept. 26 announcement regarding future gold sales, the rates on one-month gold loans have climbed to 5.17% from an average of 1.6% over the past four years, according to Bloomberg. The increase has tripped margin calls for some of Ashanti's hedged positions. Reached today at Ashanti's headquarters in Accra, Ghana, James Anaman, the firm's corporate affairs manager, said rising lease rates caused the company to "restructure" its hedged book. However, that occurrence and the merger talks with Lonmin are "separate developments," he declared. Umm, right. Now what's that old line about everybody having "coincidences" and they all stink? Meanwhile, the price of gold rose $8.50, or 2.7%, to $326.50 today amid reports of additional short-covering by those previously betting against the metal. "There were a lot of uncovered short positions in options and a lot of those uncovered options were covered at the beginning of the session," said Gregg Schreiber, a vice president in institutional futures sales at Bear Stearns. "A lot [of positions] were covered last week, but those uncovered were covered this morning." Producers were selling at the market's high today -- at $338 on the Comex December futures contract, Schreiber said, suggesting mining companies will continue to sell forward their future production "if the market ratchets higher" in order to "lock in" these higher prices. Today's highs might prove to be a "balancing point" for gold prices, the trader said, noting "good selling" at that $338 level, which wasn't subsequently revisited. But "the market is still in play," he added. "It's just a question of where equilibrium comes in." Another source said at least three other producers have hedged positions similar to Ashanti, including Cambior (CBJ:Amex), which fell 20.3% to 3 3/16 today. Cambior's investor relations department referred me to the firm's CFO, who was unavailable. Meanwhile, rumors continue to circulate about bullion banks facing potential losses with their own hedged positions and other participants in the options market losing their jobs as well as their shirts (although not necessarily in that order). I don't have enough detail or evidence to name names at this juncture, but the scuttlebutt suggests the gold market remains far from equilibrium. -------------------------------------------------------------------------------- Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at taskmaster@thestreet.com . --------------------------------------------------------------------------------