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

To: russet who wrote (42213)	10/5/1999 7:02:00 PM
From: goldsnow	Respond to of 116837

Wonder how many properties Rosthchilds would end-up re-pocessing....<VBG> While the news initially buoyed the sector, doubts were soon expressed about dangers to the miners, bullion houses, short sold funds and even jewellers that had bet on ever-lower prices. One area identified was the hedge strategies used by Ashanti among others, whereby the miner bought put options while selling out-of-the money calls to cover the cost. Options give their holders the right but not the obligation to buy or sell metal at a chosen price and date, a right for which they pay a premium. Those selling call options earn premium but face unlimited exposure to price rises against which they must deliver gold. Spot gold's spike to two-year highs on Tuesday exposed many of those who had sold calls to counter-party margin calls, effectively demands for cash to cover credit exposure. As a Ghanaian miner, Ashanti would face greater margin pressures than miners in North America, Australia and even South Africa because of its debt exposure and the country risk. Faced with demands for margin calls, Ashanti might have to surrender equity, dealers said. ``The banks are probably playing a bit of hardball. I think some of these miners will have to sell equity to meet margin calls and I think the banks will take some equity,' said one dealer. ((London Newsroom +44 171 542 8057. london.commodities.desk+reuters.com)) Copyright 1999 Reuters Limited. go.com