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The Allure of Gold

greed

Weekly Impact is written for leaders by our Executive Director, Garth Jestley, who has decades of experience in senior leadership roles in the financial services sector. Each week he will share insights on life, leadership and faith.

It seems every time I turn around these days, I bump into gold! On January 27th, an article appeared in the Financial Post entitled “Gold: The movie about the Bre-X mining scandal that ‘isn’t about Bre-X’”. Starring Matthew McConaughey, the movie opened that day in theatres across Canada. The writer opines that “‘Gold’ has all of the elements befitting a classic Hollywood tale: mystery, adventure, treasure, greed, corruption, betrayal, exotic locales, plot twists and … gold.”

In fact, the movie is based upon the true tale of Bre-X, a Canadian mining company, that fooled a large number of analysts and investors into believing it had discovered a massive gold deposit in the jungles of Borneo. The claim ultimately proved fraudulent but not before the price of the stock spiked sharply. After peaking at $4.4 billion (US), the market value of Bre-X collapsed to zero in May 1997.

Many investors, including individuals and large, sophisticated pension funds, were burned. Lawsuits flew. Ultimately, the Bre-X affair resulted in a significant tightening of securities regulations governing public resource companies.

Fear, greed and pride often lead to ruin.

While one can correctly point a finger of blame at company management, other stakeholders including investment banks, mining consultants, securities analysts, securities regulators and the investors themselves also share significant blame. In the words of John Zinman, the producer and co-writer of the screenplay,

“When it’s too good to be true, no one wants to look that close at the details because no one wants it not to be true. Even though the answer was right in front of everybody’s face — it was the wrong gold, the find was not right — no one really wanted to look, so there was a wilful ignorance that happened. We’ve all participated in that in one way or the other — not wanting to see the truth.

I vividly recall many conversations regarding Bre-X’s meteoric rise and fall. Once when I was in Edmonton on business, an investment advisor told me about a client who parlayed a few thousand dollar investment in Bre-X into well over $1 million (on paper). He refused sound advice to harvest a portion of the gain, choosing instead to stay fully invested. Unfortunately, his investment turned worthless shortly thereafter.

The reality is that fear, greed and pride are the norm rather than the exception. While I do not know this particular investor, I have run into many over the years who have refused to follow wise counsel because of (1) concern that they would leave something on the table by exiting too early (fear); or (2) a deep, untamable desire for more gain (greed); or (3) bragging rights about their investment prowess (pride) (or all of the above!).

It seems that no matter how hard we try, we cannot fix ourselves. The Christian faith affirms this sobering (and obvious) reality check while at the same time dealing decisively with the root problem. If you are not in a LeaderImpact group, I encourage you to join one to explore the root problem and how Jesus addresses it.

Garth Jestley is a husband, father, grandfather, leader and business executive. Most importantly, he is a follower of Jesus Christ.