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Bre-X: Gold Today, Gone Tomorrow - James Whyte, Vivian Danielson


Liberty
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I had just started investing at the time.  I had read alot about Buffett by that point.

 

I worked out how much estimated gold there was, and  its toal value at $400/ounce.  Basically, the amount of gold in the ground came nowhere near covering the market cap of the company and I was being generous.  If the find had been real the price of gold might well have dropped from oversupply.  If Bre-x had mined out all of the gold that day the investors were going to be left with a huge shortfall.  My assumption of course was that this was a one off discovery.  Bre-x needed two or three of this size to pay back shareholders. 

 

It was my first introduction to a mania in real time.  It took me ten minutes of calculations to determine it was a really bad deal. 

 

So, I was well prepared to avoid the Tech runup that followed. 

 

 

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