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

To: Crimson Ghost who wrote (49428)	2/21/2000 6:48:00 PM
From: Ken Benes	Read Replies (3) \| Respond to of 116770

George: A very good note. A number of years ago I took a much more active role in investing in the gold market. At the time there was an element of excitement and the underlying appeal to raw greed that fueled my enthusiasim for the sector. As the novelty wore off, it was becoming very clear that the little intangible, greed, had an enormous impact on the gold market as it does today. I was able to meet some high level managers during that period and all of them were bubbling over with excitement at the prospect of finding and developing a gold mine. More than once I trudged over huge holes in the ground viewing rocks that the mining officials were gloating over. Unfortunately many obstacles had to be overcome for the successful development of a mine, including dealing with banana republics, corrupt foreign governments, and ore bodies in remote areas. Towards that development of a mine the companies would do anything, beg, borrow, or steal to dig their holes. I quickly began to question some of the decisions that were being made, float more stock, unlimited issuance of options and warrants, enlisting the services of a corrupt analyst to trump up the properties and when a mine was finally built, the incredible demands placed on the companies by the banks and the resulting forward selling that exponentially increased supply to the spot market, driving the price of gold down. So intent were the corporate officials in bringing a mine home that they had abandoned the principles of responsible finance. Ultimately, this led to the bre x scandal, and the implosion of the gold price as one mining company after another could not throw gold at the market fast enough. Unbelieveably this continued throughout 1999 and culminated with many producers selling calls with the price of gold nearing 250.00. With the industry in terrible condition, as you pointed out, many of the producers are no wiser today than they were three years ago. They may be forsaking forward selling at the moment, but that could change in a minute. It is the vigilance of the shareholder that will be needed to monitor and cajole the low quality managers of gold producers to act in a more prudent manner. What will be the outcome, it is difficult to say, but if the people who have been the advisors of the producers have their way, I have little doubt as to what they want the outcome to be and will do anything to get. Let the gold price level off at 300.00, quiet down those third world producers who are applying the grease for those screaming manipulation. Once those relative unsophisticated producers are pacified, lets take down those arrogant senior producers who had the balls to rock our boat. It is going to take an enormous amount of discipline and guts to overcome the onslaught that is just over the horizon. One mistep in the current rally, the emergence of one rogue company selling sizeable amounts of gold forward, or a retracement of gold below 300.00 will set off the counter attack. It will be a coordinated blitzkreig that will include reports of defections in the cb agreement to sell gold, other cb's that have never sold gold will not reportedly be considering selling, the dramatic decrease in demand, and of course the old standby, gold has had it. Push the metal thru those stops and thru support, denigrate and degrade and then send the jet for the gold producers to meet at some elaborate resort to discuss ways to salvage the industry. Build more mines, sell forward, and roll over existing hedges all in the name of responsible management and consolidation of senior producers. Ken