Gold: Do they Pan Out?

Bre-X Minerals, Ltd.

The Company

Over the past couple of weeks Bre-X has been embroiled in a stranger-than fiction controversy over a gold deposit in Busang, Indonesia. The soap opera quality of the whole affair has been fueled by the apparent suicide of the company's Chief Geologist Michael de Guzman. The dispute is over the size of gold reserves in Busang. The company initially reported over 70 million ounces, qualifying the site as the largest gold find of the century.

When partner Freeport McMoRan conducted similar sampling tests, the results showed very little gold, prompting a precipitous decline in Bre-X's stock (the company lost over 80% of its value in 15 minutes). Conspiracy theories have swirled for weeks concerning what's at stake and who will benefit the most. Independent tests are being conducted and will be released at the end of the month. If you have a gambling bent, the rewards of purchasing 100 shares of this depressed stock may prove to be sharp if the conclusion of the report shows any gold whatsover. A more rational stance would lead one to conclude that Bre-X stands as a golden example of a cautionary tale for investors.

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