The global equities bull market prior to the October 1997 Asian Financial Crisis \u201cwas exceptional\u201d, says the US Securities and Exchange Commission (SEC), \u201cby almost any measure\u201d.<\/p>\n
\u201cIf August 1982 is used as a starting point, the [Dow Jones Industrial Average] DJIA had gained 963% when prices peaked on August 6, 1997,\u201d writes the regulator in a October 1997 post-mortem.<\/a><\/p>\n \u201cIndeed, the period from 1995 to 1997 represents the first time in history that the DJIA had experienced three back-to-back annual gains of over 20%.\u201d<\/p>\n Dow Jones Industrial Average from 1984.<\/p>\n An environment of relatively low interest rates, coupled with indications of continuing low inflation and rising corporate earnings, sparked similar gains on the TSX, as measured by the S&P\/TSX Composite index.<\/p>\n Adding fuel to the fire was a mania in junior exploration investment, arguably driven by three multi-billion dollar \u2018discovery\u2019 stories: Diamond Fields, Arequipa, and the now-infamous Bre-X.<\/p>\n A colossal nickel discovery by Robert Friedland-backed TSX speccy Diamond Fields Resources<\/a> sparked a nearology rush to the Voisey\u2019s Bay region of Canada.<\/p>\n It culminated in an April 1996 takeover of Diamond Fields by Inco (now Vale) worth US$4.5bn.<\/p>\n Great story. There\u2019s even a book about it:<\/a><\/p>\n The Big Scorehttps:\/\/t.co\/r4aYE2rOjR<\/a><\/p>\n \u201cOne of the most intriguing elements was the takeover battle for Diamond Fields that pitted the conservative management team at the world\u2019s largest nickel company, Inco Ltd., against free-wheeling stock promoter Robert Friedland.\u201d<\/p>\n \u2014 The Standard Model (@quasar_dn) July 26, 2020<\/a><\/p>\n\n In the same month, former penny stock Arequipa was bought out by Barrick Gold for CAD$1.1 billion on the strength of drill results from its Pierina gold deposit in Peru.<\/p>\n It stirred the junior investing cohort into a frenzy.<\/p>\n Then came Bre-X Minerals, which went from penny stock to peak at CAD$6bn in May 1996 when it reported it was sitting on a +70Moz gold deposit in East Kalimantan, Indonesia.<\/p>\n Bre-X turned out to be scam \u201cwithout precedent in mining history\u201d, and its failure in 1997 arguably brought a whole sector down with it.<\/p>\n \u201cThe Vancouver Composite Index fell by over 25% in less than six weeks during spring 1997 as the junior mining sector collapsed,\u201d write William Brown Jr and Richard\u00a0Burdekin<\/a>.<\/p>\n \u201cWe argue that this market collapse was triggered by the failure of Bre-X Minerals when that company\u2019s Indonesian claims, previously believed to contain the world\u2019s largest gold deposit, were shown to be pure fraud.\u201d<\/p>\n Bre-X had a spinout called Bro-X. The signs were there. Source: https:\/\/web.archive.org\/web\/20240000000000*\/bre-x.com<\/p>\n The Brown Jr & Burdekin study, based on market returns for the Vancouver Composite Index and for a portfolio of 59 gold stocks, showed the effects of the Bre-X scandal to be both sizeable and significant.<\/p>\n There is also some evidence that smaller exploration companies were hardest hit.<\/p>\n \u201cOn March 20, 1997, just prior to the first reports that independent tests did not confirm Bre-X company claims, the Vancouver Composite Index stood at 1307.99,\u201d they say.<\/p>\n \u201cBy May 5, 1997, when Strathcona Mining Services Ltd. \u2014 an independent consulting firm hired to assess the veracity of Bre-X\u2019s findings \u2014 issued its final report concluding that the Bre-X claims were a fraud \u2018without precedent in mining history\u2019, the index had fallen to 1003.53.\u201d<\/p>\n During this era of crazy speculative mania and FOMO some people made fortunes, while others were left holding the bag.<\/a><\/p>\n Just check out this collection on junior mining charts from 1995-1997:<\/p>\n Off topic\u2026Remember when resource stocks were on fire, and FOMO was real? Well, Cartaway stock pulled a 12x magic trick in a month \u2013 back in 1996! Will we see these markets again? \u2014 DrillAlert X (@DrillAlertX) January 19, 2024<\/a><\/p>\n\n \u00a0<\/p>\n The headline act was small garbage bin supplier turned Voisey Bay explorer Cartaway<\/strong>, which gained +1000% in a month \u2014 then lost it all just as quickly.<\/p>\n In 1995, a group of brokers at firm First Marathon bought control of Cartaway and vended in a group of Voisey Bay claims during the major staking rush sparked by Diamond Fields\u2019 discovery.<\/p>\n On May 8, 1996, Cartaway announced that it had hit paydirt on the claims based on a visual inspection of drilling samples.<\/p>\n The share price jumped dramatically from the mid $2\/sh range to $26, but soon fell below $1 when an analysis of the samples failed to confirm these findings.<\/p>\n First Marathon was subsequently fined $4m for dodgy dealings, but trading reports show that brokers Johnson and Hartvikson personally made more than $5.1 million by trading in Cartaway shares<\/a>.<\/p>\n \u00a0<\/p>\n Pacific Amber Resources<\/strong> was one of the many Canadian explorers which flocked to Indonesia for some of that sweet Bre-X Minerals nearology.<\/p>\n As one Indonesian mining executive said:<\/a> \u201cAll these Canadian companies have the idea that if Bre-X can find gold reserves, why can\u2019t they find them also.\u201d<\/p>\n Except Bre-X hadn\u2019t found anything. Lead geologist Mike de Guzman was salting drill samples with bits of gold, and when found out allegedly committed suicide by \u2018jumping\u2019 out of a helicopter<\/a> over Borneo.<\/p>\n The fraud took down an entire cohort of Indo explorers, with Pacific Amber Resources \u2013 which went from 20c to ~$9\/sh at its peak \u2014 soon plunging back where it came from.<\/p>\n <\/span><\/p>\n The post Canada Unearthed: The 1990s \u2013 when brokers were dodgy, FOMO ruled, and explorers gained 1000pc in a month<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nThe \ud835\udddd\ud835\ude02\ud835\uddfb\ud835\uddf6\ud835\uddfc\ud835\uddff \ud835\udde0\ud835\uddf6\ud835\uddfb\ud835\uddf6\ud835\uddfb\ud835\uddf4 \ud835\uddd5\ud835\udde8\ud835\udddf\ud835\udddf \ud835\udde0\ud835\uddee\ud835\uddff\ud835\uddf8\ud835\uddf2\ud835\ude01 of the \ud835\udfcf\ud835\udfd7\ud835\udfd7\ud835\udfce\ud835\udc22\ud835\udc1e\ud835\udc2c: pic.twitter.com\/0k6ATAa6Hx<\/a><\/p>\nWild stories, all of them.<\/h2>\n