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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: nickel61 who wrote (1497)	12/4/1999 9:57:00 AM
From: Enigma	Read Replies (1) \| Respond to of 3558

Talk about turning a lazy mind set onto someone else!

To: nickel61 who wrote (1497)	12/4/1999 10:05:00 AM
From: nickel61	Read Replies (2) \| Respond to of 3558

The loss of control of Ashanti by the shareholders is all too prevelant in todays upside down gold market.The situation is similar to a sudden plunge in the stock market when you are on margin. Lets say you are on 50% margin and your stocks plunge for a week or so to 25% less than they were when you borrowed the margin money.You now owe your bankers(lets assume you margined a $100 stock) $50 on a stock which is now worth only $75 dollars.The lender or banker will demand you bring the collateral up to at least 50% or $37.50 since the $25 plunge in value, of course only came out of your equity ,you only have $25 dollars left of equity in the now $75 stock. So you must come up with the additional money to reduce the margin loan to no more than 50% of the now market price or you are in default. Once you are not able to do that you effectively have abndoned your equity since the margin holder has the right to sell you out to secure his loan and you have little or no negotiating power. During the first couple of months of the great crash in 1929, the market plunged 50% in about six weeks then began a six month climb that took it back up two thirds of the way back to the prior high. Stock owners that could not make the margin call in the first six weeks were sold out and missed the recovery. The loss for them was much worse than the fifty percent because of the leverage they lost 75% or all in many cases.Effectively when Ashanti was advissed to buy these "exotic hedges" they were betting that there would never again be a return to the last twenty year average price of gold.Which if you throw out the $800 ounce spike back in 1981 the average has been about $340/ounce.So a minor up move in the price of gold caused them to be unable to meet their margin calls and effectively they then had to give up control of almost all of their company. Since their banker was also their advisor and the end result was they ended up with a gold mining asset that has been a profitable mine for hundresds of years there are many questions to ask.Were these very high paid advisors really so stupid that they thought it totally impossible that gold would ever go up again at all.If so what actions of market manipulation were they priviy to that gave them that level of confidence in a supposedly free market. Or were they actively involved in setting a trap to defraud their clients interests and those of their shareholders. Only the full investigation of this situation will disclose the truth.Of course as we all have come to learn in this new world paradgim very little justice is ever achieved. But to me the situation stinks to holy hell.As shareholders we need to protect ourselves the only way we can by educating ourselves to the actions of our companies managements. Many of these so called "hedging schemes" are actually actions with much more nefarious intent designed not to protect the shareholders interests but to protect and enrich management and the investment bankers. The only possible way for the average shareholder to protect their interests is to bring the light of understanding and truth to the heavily cloaked half truths of many of these market participants. Cheers Reply \| Delete \| File