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How Obama-Sachs Screwed Ghana
Posted By Nichole Hungerford On April 24, 2010 @ 6:00 pm In NewsReal Blog | No Comments
As you might have heard, America’s preeminent financial firm, Goldman Sachs is in some serious hot water with the US Securities and Exchange Commission. The leader in Obama-era crony-capitalism is facing daily accusations of highly unethical, and possibly illegal, business dealings. Now, the plaintiff list includes the beleaguered nation of Ghana’s once largest business operation, Ashanti Gold. Ashanti Gold, previously the 3rd largest gold mining operation in the world, hired Goldman Sachs as their “financial advisor.” Little did Ashanti Gold know that Goldman Sachs was giving them advice which would drive them into bankruptcy and bolster Goldman Sachs’ coffers.
As you read the following, ask yourself: Do you trust these people working in the highest echelons of the American government?
The story via GhanaWeb:
In 1998, Ashanti Gold was the 3rd largest Gold Mining company in the world. The first “black” company on the London Stock Exchange, Ashanti had just purchased the Geita mine in Tanzania, positioning Ashanti to become even larger. But in May 1999, the Treasury of the United Kingdom decided to sell off 415 tons of its gold reserves. With all that gold flooding the world market, the price of gold began to decline. By August 1999, the price of gold had fallen to $252/ounce, the lowest it had been in 20 years.
Ashanti turned to its Financial Advisors – Goldman Sachs – for advice. Goldman Sachs recommeded that Ashanti purchase enormous hedge contracts – “bets” on the price of gold. Simplifying this somewhat, it was similar to when a homeowner ‘locks in’ a price for heating oil months in advance. Goldman recommeded that Ashanti enter agreements to sell gold at a ‘locked-in’ price, and suggested that the price of gold would continue to fall.
But Goldman was more than just Ashanti’s advisors. They were also sellers of these Hedge contracts, and stood to make money simply by selling them. And they were also world-wide sellers of Gold itself.
In September 1999 (one month later), 15 European Banks with whom Goldman had professional relationships made a unanimous surprise announcement that all 15 would stop selling gold on world markets for 5 years. The announcement immediately drove up gold prices to $307/ounce, and by October 6, it had risen to $362/ounce.
Ashanti was in trouble. At Goldman’s advice, they had bet that gold prices would continue to drop, and had entered into contracts to sell gold at lower prices. These contracts were held by a group of 17 other world banks. Ashanti found themselves being forced to buy gold at high world prices and sell it at the low contract prices to make good on the contracts. The result? In a few weeks time, Ashanti found itself with 570 million dollars worth of losses. It had to beg the 17 banks not to force the execution of the contracts.
Who served as the negotiator for the 17 banks and Ashanti? Goldman Sachs. The same company that designed the contracts for Ashanti(making a profit in their sale.
You know, I hear Haiti is pretty desperate these days. Perhaps there are more impoverished black countries Goldman Sachs can swindle money from.
Please read the full article here. It’s a must read.
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