Gold Chart Gone Hyperbolic

[Santayana]

ubuy2wron-- Twice you've mentioned that gold bugs would be unhappy if the US reverted to a gold standard by using the ratio of money in circulation to the amount of gold in Fort Knox.    With M2 currently around $9.3 Trillion and Fort Knox officially holding 147 Million ounces of gold, I think most gold holders would be quite happy if that happened.

 

Even if you were much more conservative and used M1 at $2 Trillion, and added the Federal Reserve's 225 Million ounces to the government's holdings, you would end up with gold priced at over $5000/oz. 

 

 

[Icarus]

I don't have a long or short position on gold.  Like the posters before me, I would rather invest in businesses that provide a product or service that is of value. 

 

Many people who do not invest in gold believe it is pure speculation because it is an object with no cash flows and thus unmeasurable value.  If that is the case, then wouldn't most everyday objects also be unmeasurable and speculative?  How do you know that a bottle of Coke is worth $1 and there isn't a bubble in soda prices?  If you can't place a value on a product that a company produces, how can you also place a value on the company itself? 

 

Some of you might be thinking that soda provides a benefit to the consumers who buy it and has utility.  How do you know that gold does not provide some sort of utility?  To a person who does not drink soda, Coke has no utility.  To a person who does not follow fashion, haute couture has no utility.  To a person who does not understand the internet, technology has no utility.  I might not understand why someone invests in a particular security, but that doesn't mean that person is wrong. 

 

It looks to me that moore_capital has done extensive research and is in a better position than most of us (myself included) to determine if gold is a good investment at these levels.  The good news is that we don't have to invest in gold and can just wait for investments that we do understand and are comfortable with.               

 

 

[rranjan]

I don't have a long or short position on gold.  Like the posters before me, I would rather invest in businesses that provide a product or service that is of value. 

 

Many people who do not invest in gold believe it is pure speculation because it is an object with no cash flows and thus unmeasurable value.  If that is the case, then wouldn't most everyday objects also be unmeasurable and speculative?  How do you know that a bottle of Coke is worth $1 and there isn't a bubble in soda prices?  If you can't place a value on a product that a company produces, how can you also place a value on the company itself? 

 

Some of you might be thinking that soda provides a benefit to the consumers who buy it and has utility.  How do you know that gold does not provide some sort of utility?  To a person who does not drink soda, Coke has no utility.  To a person who does not follow fashion, haute couture has no utility.  To a person who does not understand the internet, technology has no utility.  I might not understand why someone invests in a particular security, but that doesn't mean that person is wrong. 

 

It looks to me that moore_capital has done extensive research and is in a better position than most of us (myself included) to determine if gold is a good investment at these levels.  The good news is that we don't have to invest in gold and can just wait for investments that we do understand and are comfortable with.               

 

 

 

There is big difference in examples you used and buying Gold as an investment.

 

When you pay $1 for coke , you are not thinking about investment at all. Even if you are convinced that there is bubble in soda price , you will still buy Coke.

 

When you buy gold as an investment, you are thinking about it ONLY from investment perspective. If you are convinced that there is bubble in Gold price, you will not buy Gold.

 

Just some food for thought.

 

 

I don't hold any opinion on gold and good luck to anyone able to profit from it.

[seshnath]

"If someone believes 2008 was a financial collapse, I would ask them to really go a check-in at a sanitarium.  Just look at the GDP numbers to begin with.  All we have now is a media day-in-day-out crying about a percent of percent change in GDP and decide we have financial collapse.  In fact, the real economy is doing well"

 

These are not the words of someone who has any significant exposure to equity markets over the last say 3-4 years....

 

 

 

I have been in the markets since 1998 in a big way and been investing in equities since 1991 (when I was 15).  After all these years, I know that:-

1. something is not worth some because the last traded price said so.

2. something is not worth X because someone is willing to pay X.

 

I invest with this experience behind me.  Last 3-4 years don't surprise me at all.  These things happen in the market all along - I have seen it in 1992, 1995, 1997-98, 2000 and 2008.  (I am not talking about US equity markets alone).  These are opportunities to pick world class assets at bargain prices.

 

Gold simply doesn't meet the 2 criteria there.  I will say it again for the last time - the thought that gold is equivalent to currency is a big fallacy.  The world and technology has moved away from it.  And I am not new to gold as an investment - I have been reading all these arguments and more since 2004.  My investment thesis is based on it. 

 

 

[seshnath]

Until my cab driver starts chatting up gold or I walk into the bookstore and it's all "Get rich now investing in gold", I don't think we're there yet. (Yes, there are gold ATMs, etc but they are still curiosities, not ubiquitous)

 

Mark, you're in Toronto right?  I don't know about there, but it is getting crazy in Vancouver.  You can't read the paper, watch tv or listen to the radio without some ad for a gold exchange, article, story, etc.  Alnesh's brother-in-law's best friend started a gold exchange in Vancouver...had about $1M in revenues in the first 4 months!  Now all their buddies want to start one. 

 

People who were heavily into the "forex" craze a couple of years ago, have now filtered into gold, silver, precious metal exchanges, etc.  Those that lost small fortunes on forex are now into gold.  Family friends are always asking me about gold now..."Do you think it will go up more?  Should I buy some and put it away?"  Crazy!  Same sort of behavior I watched during the tech bubble.  Resource industry participants (CEO's, CFO's, directors, investors, newsletter writers, etc) all believe that it will continue to go up.  When you have such herd behavior, then it's time to completely step aside. 

 

Funny thing is, one of the smartest exploration company CEO's I know that we do some work for, has sold all of his properties or optioned them out.  He continues to hold his gold inventory, and has no intention of selling, but his company is very liquid now...perhaps ready to pick up bargains at some point.  They run their firm like a family business.  Probably one of the finest run little companies I have seen at their size, especially in the resource sector.  When a guy like him gets liquid, then things may just be getting frothy.  Cheers!

 

Sanjeev - I think the bubble is forming.  Lot of Indian channels my family watch these days (mother-in-law is visiting :-)), have discussions about gold.  Last day there was one they were watching - two sides of all women participants, one with lot of gold jewelery and other with no gold - discussing and debating for two hours prime time.

 

I am researching ways to short (initially, as a hedge against my wife's jewelery) and some time later as active position. 

[Mark Jr.]

Great thread. Moore, I salute you.

 

I know I'm a guppy among gurus of investment practitioners here, but if I may chip in with a few observations, I hope none of them are flogging a dead horse.

 

"This time is different", let's look at that one.

 

In all previous bubbles that people compare gold to, what we'll euphemistically call "The Powers that Be", namely government and central banks, had a vested interest in the perpetuation of the bubble itself. Asset bubbles are equated with healthy economies and it enables governments, and populaces to live beyond their means on mostly borrowed money and leverage.

 

From the South Sea Bubble, when the Bank of England jettisoned it's wartime debt to the South Sea Co. right on up to Greenspan's gratuitous use of "fedspeak" to allay any suspicions that housing was in a bubble (hint: it was, and it was ignited to deflect the after-effects of the Internet Bubble crash - itself actively cheerleaded by the established authority as the heralding of a new era)

 

Looked at this way, it's the government or central bankers "jawboning" the bubble (or a dutifully complicit mainstream media) where one often hears the rationalizations of "this time it's different".

 

Not so much with gold.

 

Gold is reviled by what we'll call "the powers that be" and it's lapdog media pundits. In fact there is a lot evidence which is still not prevalent in mainstream circles of active price suppression of gold, as GATA has been documenting for years. (Of course, you can't even talk about that without one's tin-foil hat on, you get the "conspiracy theorist" label just bringing it up).

 

So when housing looks frothy, or the stock market looks frothy, the Fed or somebody will put on a dog-and-pony show and using lots of opaque jargon talk up the bubble and talk down the voices of reason.

 

In gold's case, we have the precise opposite. When gold goes up, the sombre authorities rationalize it away as temporary or meaningless.

 

If anything, that's at least ....different.

 

When gold makes new highs, the mainstream media and the established experts trip over themselves to call it a "bubble top". That's different.

 

When gold flips over, finally, and instead of new highs being called "tops", pullbacks start to be heralded as "opportunities", then I'm looking to sell. Until then, I hold.

 

If there is a bubble in all this, perhaps it is not in the price of gold, but in willful aggregate credulity in an inherently flawed monetary system within the framework of unworkable welfare states running out of railway track, and this "credulity bubble" can be inversely measured by the price of gold.

 

Every single paper currency in history has gone to zero. Gold has never not been a store of value. Never.  I think anybody trying to argue that somehow, the paper currencies around today will NOT go to zero, or that they will NOT keep losing value, NOT be further debased as long as possible and that gold shouldn't or won't have any value are the ones truly saying "this time is different". Because what is happening now has played out before in history in one way or another, numerous times.

 

So yes, the price of gold may someday "crash", if you want call going from say, $5000/oz to $2000/oz or even $1000/oz a bubble "pop" but I don't think it will play out that way. Gold may somebody be back to $35/oz, of course, that'll be "new dollars" or "world dollars" or whatever the new, next currency gets called after the ones we use today are wrecked beyond usability.

 

But let's keep in mind what's really happening when that day comes: it isn't that gold has "suddenly become worth less", it'll be that a global currency "do over" has occurred.

 

Parsad: yes, I'm in Toronto and there's none of that common interest here. Every once in awhile I get a question from a friend about gold, but it's nothing like what you're describing out there in Vancouver. Maybe it's more prevalent there because that's where all the juniors are based? Just a thought.

 

 

[Parsad]

I suggest you dig into the business. The single best source of information for newbies is this:

 

It's the weekend. If you have time, I suggest you watch ALL the videos on Ore Deposits in sequence:

 

http://www.gril.net/education

 

You will understand how incredible the opportunities are in the junior space. The only downside is that they can be very illiquid at times.

 

I actually do the internal controls for a number of junior exploration companies in Vancouver, and I actually do as in-depth examination, probably more so, than most audit firms.  And I can tell you for a fact that investing in junior exploration companies is as big a crapshoot as investing in technology startups.  In fact, because so much of the junior's assets are tied up in their properties, you have a better chance of being correct on the future success of a technology venture than any junior exploration. 

 

Forget about financial fraud, egregious stock options, or deficit financing of most junior explorations companies...there are so many points in the geologic drilling and assay process where fraud could occur.  The 43-101 certification is no different than a CFA report...any geologist after becoming certified can write those reports.  The promotion and underwriting of junior exploration companies is probably the most incestuous form of underwriting you will find in the investment world.  I've seen so many companies that are outright frauds where the CEO, CFO and directors are simply running the company as their own personal piggy bank.  Where much of the capital raised is spent on "investor relations", salaries, consulting fees, travel, entertainment, etc.  Enforcement is virtually non-existent.  David Baines has been writing about so many of these companies for 20 plus years, and less than 0.5% of them have had any enforcement or sanctions.

 

There are a few mining executives who do really understand the space, and they generally work only with other people they've dealt with in the past.  That allows for a little more certainty in the assay reports, and legitimacy in the actual exploration operations.  But they are few and far between.  Many of the promoters, investment banks, geologists, executives and directors don't really give a damn as long as they have a job and are making money.  So many trade on inside information as well.  It is simply the most corrupt industry I have seen! 

 

With gold prices where they are, the money is sweet for many of these guys right now.  The easiest way to make money is buy a shell, then buy a property for a few thousand dollars, and go raise capital at any of the investment banks.  They sell the stock to their retails clients, take an 8% cut, and will raise you anywhere from $500K to $50M.  Then you just blow the money on "exploration expenses" and your operational expenses (salaries, promotion, travel, office, IR, consulting).  And don't worry, you can always find an audit firm to sign off on your financials!  When you start to run low on cash, go back to the investment bank, and they'll do it all over again.  I've seen so many shitty companies raise millions, and the CEO just keeps recycling the story over and over!  Cheers!

[Estimated Profit]

Mark,

 

Further to your post, I believe that the proof of a bubble will be when established gold miners trade at the NPV of the gold they have in the ground discounted using the spot price of gold. Many firms are using $1,200 and not $1,800+.

 

When anyalysts start to use prices closer to spot or higher, then that will be evidence that the investment community has partaken of the cool-aid and it's time to get out of Dodge.

 

At that time as well, people will start extrapolating the potentialities of juniors and they will trade at nosebleed tech like multiples. Again, time to get out of Dodge.

 

However, as long as this debate about Gold being a Hyperbolic bubble is on, the bubble hasn't yet kicked in in full.

 

That said, one caveat, most investors are more than happy to buy gold at this time... it's not a hard convestsatoin to have and that does make me nervous.

[moore_capital54]

Parsad,

 

It appears your knowledge of the junior space is very basic and while you claim to do the internal controls on some companies they most probably fall into the category of the "exploration frauds or bs companies" I mentioned in my previous posts, the ones with a geological anomaly that has yet to be drilled or had yet to reach the stage of a compliant resource estimate. And if they do host resource estimates they are most likely tiny or mostly in the "inferred" category.

 

This ties in well with your comments about David Baines who generally writes about the lowest of the low companies that 70% of the time don't even trade on the TSX or TSX V but trade on the OTC BB which well all know is the world's crappiest market, with almost no regulation.

 

Your claims about 43-101 are completely wrong and you have not taken the time to understand the difference between a 43-101 Technical Report and a 43-101 Compliant Resource Estimate, which are two different things. Before I get into that, I also take major offense to your comment about "any geologist" as someone who's father was one I know quite well the time and effort it takes to become a good geologist, My father studied at the Colorado School of Mines which is world renowned. To be a Qualified Person per 43-101 Standards is no walk in the park and you quite literally sign off and stake your name on the credibility of the report much more than any auditor on a financial statement. Have you ever even read a 43-101 Report in it's entirety? It provides  alot more information than a 10K. I urge you to read this 43-101 which includes a compliant resource estimate on the Malarctic Deposit:

 

http://osisko.com/pdfs/2010-03-22_Updated_reserve_and_resource_estimates.pdf

 

See if you still feel the same way, and you should specifically read the QA/QC section.

 

To complete a 43-101 Compliant Resource Estimate a firm must have completed enough drill holes which included an independent QA/QC program that includes blanks, inserted randomly as well as test and retest of significant assay results. Once a database is completed a geoscientist will complete a geostatistical analysis which includes Kriging, or Polyginal estimation with the help of computer modeling. The geoscientist will create a block model of the ore body and will categorize the ore body into various categories which include: Measured, Indicated, and Inferred.

 

It doesn't sound like you have ever really read a 43-101 Report or you wouldn't be saying the thing you just said. I urge you to read this report and see if you feel the same way.

 

The problem with the Junior Space is that a lot of individuals do what you just did, they just assume that all the companies are the same, which is no different than the people that think stocks are for gamblers. It sounds like you have been doing internal controls for some really crappy juniors that do not host drill defined deposits based on 43-101/JORC Standards, but are rather part of the 1,000 or so either genuinely exploring or hyping a geologic anomaly. And that makes sense as any legitimate firm would have used a Big 4 auditing firm to do their internal controls, in Vancouver Davidson & Co is OK as well.

 

I think what happened here is that you never bothered to really learn the industry, and I find that happens to a lot of people. The best returns I have ever made in my life where on the TSX and TSX V buying juniors that owned proven deposits. The first of such was Arizona Star which owned the Cerro Cassale deposit that was finally acquired by Barrick.

 

As a canadian do you not see the constant M&A activity in the Junior Space.. the GENUINE M&A activity? Have you not heard of Equinox and Barrick? Richfield and Newgold, Redback and Kinross? Do you think these are all crapshoots? All were juniors that started out with proven deposits which ended up becoming part of the supply chain.

 

Investors on this board, should easily decipher between the shells you speak up with unscrupulous CEO"S and real drill-defined deposits with reputable management teams.

 

There is a real opportunity with juniors to buy way out of the money calls on the commodities you believe in and the TSX/TSX V are responsible for 90% of the world's major mineral and hydrocarbon discoveries over the last decade.

 

So with all due respect, I believe you are dead wrong on your assessment.

 

And if you disagree, lets go through each company you do internal controls for or you speak of, one by one , on this thread. I am willing to provide everyone on this board a transparent analysis of what I think of each one.

 

Again as someone that runs a fund that specializes in these companies, I find it almost shocking at how familiar you are with the slimiest segment of this industry, which is not even taken seriously by professionals who are serious market participants such as: Sprott, Sentry Global, Salida Capital, Dundee, RBC, Cormark, GMP, Toqueville, Baupost, Greenlight, and hundreds more which have absolutely killed it in this space and continue to do so year in year out.

 

There is a whole world out there that revolves around serious value creation, and that ultimately provides the commodity producers with their future supply. I strongly suggest you take some time to balance your views with that the of the slums of howe street, and try to realize that your home nation Canada is quite the leader and innovator in this field. I am personally very proud of this.

 

 

 

 

 

[moore_capital54]

I can't seem to modify my post so I just wanted to add this:

 

While the United States has been exporting their manufacturing jobs and trying to build a utopia of service based businesses relying on consumers that are leveraged to the hilt buying crap, Canada has incubated one of the most vibrant, vivacious, and innovating industries in the world.

 

As a Canadian I am very proud of our expertise in the field of natural resources, we are world leaders. Not only are we endowed with a significant amount of mineral wealth but our nation hosts the most prestigous engineers, and geologists that have made some of the most incredible discoveries. Canadians have led the way into Latin America and Asia and Eastern Europe which have created millions of jobs and brought the world everything from oil to natural gas to copper.

 

Don't get it twisted, the Juniors, are our national treasure.

 

And don't take my word for it, every year on December 31, I urge you all to go through the list of M&A Activity that year, and you will see at least 2-3 Juniors that were acquired by Producers. Most likely the number will be quite higher.

 

There is absolutely no comparison between a reputable junior (and there are hundreds of them) and startup technology companies.

[moore_capital54]

Also Parsad, what the heck are you talking about with regards to Assay Reports?

 

Any company nowadays after the promulgation of National Instrument 43-101 has to send their assays to independendet third party labs such as ALS Chemex and has to send certain samples to several labs to be checked and retested. Every compliant resource estimate must have a serious QA/QC program which includes blanks which are sent to the labs as well and then a geoscientist will create a table checking to see if the blanks indeed showed up where they should have.

 

No credible independent consultant will sign off on a 43-101 Resource Estimate unless it has had in place a robust QA/QC program.

 

And again, I am not saying the companies you mentioned do not exist, but they are a miniscule part of the market both in terms of aggregate market cap and in terms of risk/reward. Any kid can discern between one of those shitty companies and a legitimate junior.

 

 

[Parsad]

Moore, let me ask you something.  Do you work for Moore Capital of New York?  Cheers!

[Parsad]

Hi Moore,

 

No worries on the debate.  I enjoy that aspect as do many others.  You have to tear down ideas to find out if they have value or not.

 

I was just asking because your handle has Moore Capital on it.  I was just going to make a point that if that was where you worked, your institution has numerous internal controls in place to prevent fraud, illegal trading, etc.  Yet, even then you can have fraud or unethical behavior occur there, such as the case with Christopher Pia who was fined $1M there for illegal trading activities.

 

You'd be surprised by who we work with.  In regards to 43-101 certification, all you need is five years exploration or mine development experience, and be registered as a member with any professional geology organization.  About the same as a CGA or CFA in terms of depth of study.  I know and have seen a number of geologists go through the process. 

 

In terms of auditors, I've seen every auditor in Vancouver, from small ones to the big 4, certify financials for some crappy companies.  There are a couple of firms where all they do is certify financials for shell companies and new exploration companies for large promoters.  Even the large audit firms use CA students and senior managers to do the testing, while partners review the financials, MD&A and results of testing.  There is plenty of room from the drilling stage, to the certification process, and finally the operations side for fraud to occur.  All auditors and internal control specialists can do is establish enough key controls to reduce the amount of fraud and allow it to be detected more easily.  We can't stop it.

 

My off the cuff remark about geologists, executives, etc, was a generalization, but the amount of fraud is rampant.  And that is partially due to the incestuous relationship between officers of companies, the geologists, board of directors, investment banks and promoters.  The incentives are completely misaligned, enforcement is lacklustre, and the majority (I would guess 80% or better) get the shaft. 

 

You must be relatively young, because David Baines has been covering more OTCBB companies in the last few years primarily because alot of West Coast promoters have gotten their hands more heavily involved on there.  He used to write only on TSX Venture, or what used to be the VSE, for pretty much most of his career.  He still does write regularly on TSX and TSX Venture companies, but more time is spent on OTCBB's.

 

Anyway, I've spent considerable time examining the space from the interior and the exterior, including reading plenty of 43-101 reports.  I've viewed the business from on-site drilling and exploration to the company's head office and boardroom.  I've interviewed executives, directors, geologists and administrative staff.  Examined ledgers, continuity schedules, treasury orders, inventory, asset valuations, payrolls, etc. 

 

The handful of companies you mentioned sprouted from thousands and thousands of companies that failed...partly due to unsuccessful projects, and often due to unethical conduct, incompetence and mismanagement.  Often I've seen companies that have raised financing, simply find a garbage property so they can continue to work, receive salary and options, and feed off the retail investor trough.  Are there legitimate companies...sure, plenty.  But they are outnumbered by the rubbish.  Cheers!     

[moore_capital54]

Parsad,

 

I am 56 years old, not sure how old you are sir, but in all my years of reading Baines specifically over the last decade, he has written at least two OTCBB articles for every one TSX. But that is a waste of time discussing Baines or his writing as that is besides the point.

 

Again, you keep making key assumptions like "all you need is fiver years exploration or mine development experience, and be registered as a member with any professional geology organization"... Are you serious? Have you ever been on a mine or studied geology? These are extremely intelligent and brilliant people, and what you just described is a heck of a lot harder than the condescending context.

 

Geologists spend 5-7 years learning the art, studying rocks, and understanding how the earth was formed. Its much more difficult and involves a lot more rigor than a CGA or CFA, there is no comparison, and this is evidenced by the amount of CFA's in the world vs. the amount of geologist.

 

My biggest problem is with this comment:

"The handful of companies you mentioned sprouted from thousands and thousands of companies that failed..."

 

Oh so you mean investors actually have to do their due diligence? I thought we could just throw darts :)

 

Are there legitimate companies...sure, plenty.  But they are outnumbered by the rubbish.

 

How is this any different than the US Stock Market?

 

Investing in juniors is no different than value investing, and requires an investor to complete thorough due dilligence and research. The beauty is that the junior market provides incredible risk/reward ratio's because it is so difficult to value something such as an ore body which has yet to produce any cash.

 

Here are some investors in the space that have not only had better performance than the value investors you previously mentioned (on aggregate) but are also quite richer (with the exception of Buffett) due to their risking of their own cash and the nonexistence of leverage in this industry:

 

Tom Kaplan

Robert Friedland

Robert Mcewen

Eric Sprott

Bob Buchan

Peter Munk

Ned Goodman

Bob Cross

Carl Pescio

Lucas Lundin

Andrew Forrest

Albert D. Friedberg

John Hathaway

Colin Steyn

Clay Ridell

Allan Markin

William Gallacher

Rick Rule

Murray Edwards

Robert Allen

Sheldon Inwentash

Brian Dalton

Terrence Pegula

Chris Cline

Seymour Schulich

Pierre Lassonde

Ross Beaty

Corbin Robertson

Ernesto Echavarria

Beny Steinmetz

 

 

There are many more, but this is a good list. These guys have all done just as well if not better than the list of value investors you previously presented (with the exception of Buffet). What you will find is that on average these individuals are 20-30 years younger than the individuals you mentioned which to me indicates two things:

 

1) They will most probably get richer over their lifetime.

2) This is the industry to be in right now.

 

Most of the people on this list have become billionaires or centamillionaires without the usage of 2 and 20, making it a lot more impressive as they created real value by developing natural resource assets.

 

The global population consumes commodities and requires these commodities to survive. The world's commodity production is dominated by the big 3 (Rio/BHP/Vale) this leaves a tremendous amount of value creation for juniors who know what they are doing to find, define, develop and JV/Sell quality deposits which go in the hopper until they become part of the supply mix.

 

The individuals I just mentioned have all been CEO's/Founders/or Investors in at least one TSX/TSX V company that did just that.

 

There aren't a "handful" there are hundreds that succeed. If value investors go into this space, it would be akin to Buffet's quote to Forbes in the 1970's: "I feel like an oversexed man in a harem"

 

Thats how I feel right now.

 

[Parsad]

To give you some idea of how crazy things are, the ALS Chemex Lab in North Vancouver has a massive backlog of drilling assays they have to evaluate.  That has never happened before.  They have upped their staffing by 90% according to one of the companies we do work for, and still the backlog is huge!  People are waiting months for results.  Cheers!

[ubuy2wron]

I got short gold again three days ago I am enjoying this!

[tooskinneejs]

First it was "Dow 36,000", now it's "Gold, 10,000."

 

http://www.cnbc.com/id/44891595

 

"if under this worst case scenario the solution was to return to the gold standard of the Nixon years, the price of bullion would be worth $10,000-plus, six-times the current price, according to Paul Brodsky, co-managing member of QB Asset Management company"

 

 

[PlanMaestro]

Novagold at $2.6.

[Palantir]

Gold's drop is supposed to be mirroed by dollar strengthening....that sounds like an ugly deleveraging to me....but chances are its just a correction.

[ItsAValueTrap]

NovaGold looks extremely difficult to value and it doesn't look undervalued to me.

 

Barrick doesn't think that the property is economic at the gold prices several months ago.  If the property isn't economic then it only has an option value.  If gold prices rise a lot then it will be economic and worth pursuing.

[ubuy2wron]

Moore, I hope this gets your attention. I was arguing pretty agressively a short gold stance and did in fact short both gold and silver at what looked to me to be a blow off top. Well I have switched I now have 10 percent of my portfolio in Barrick Gold which I think is as cheap as it has EVER been in relation to the price of gold and every other asset class I can think of. I am also short the US mkt as hedge against my long positions. This market is making me more nervous daily.

[Aberhound]

Ubuy2wron, I met Mr. Lopehandia and listened to his story. It is a mess of over-lapping claims which you could only sort out with a Chilean mineral claim expert. Here are some questions you might investigate. Who holds title to the Tesoros claims Mr. Lopehandia or Barrick? Has Mr. Lopehandia been the title holder of the Tesoros claims since February 1? Is there prior claims on the same ground subject to a Chilean order since 2001? Who will be the owner of the claims once the issue in that proceeding is determined? Are the prior claims on the same ground acquired by Barrick from Lac Minerals limited to salt or nitrates or do they include the rights to mine gold, silver and copper? Does Mr. Lopehandia own other overlapping claims? Does Barrick? Which take priority?

 

Mr. Lopehandia appears to be an expert on Chilean mineral claims and comes across as a credible witness. I would not want to have a claims dispute with him. I have no idea myself who owns the claims and which take priority. I was upset that the various competing competing claims and lawsuits were difficult to find or were not disclosed in Barrick's securities filings and the CFAs I deal with at my brokerage didn't know anything about the competing claims either. Read the Der Spiegel article published in December 2012. I wondered how Der Spiegel could publish without being libelous. I was upset because it should not be necessary for investors or trustees to be private investigators. I should be able to rely on the CFAs, company filings and securities regulators.

 

I suggest you do some due diligence. I placed it in the too hard pile and sold Barrick at $32. 

[ubuy2wron]

Ubuy2wron, I met Mr. Lopehandia and listened to his story. It is a mess of over-lapping claims which you could only sort out with a Chilean mineral claim expert. Here are some questions you might investigate. Who holds title to the Tesoros claims Mr. Lopehandia or Barrick? Has Mr. Lopehandia been the title holder of the Tesoros claims since February 1? Is there prior claims on the same ground subject to a Chilean order since 2001? Who will be the owner of the claims once the issue in that proceeding is determined? Are the prior claims on the same ground acquired by Barrick from Lac Minerals limited to salt or nitrates or do they include the rights to mine gold, silver and copper? Does Mr. Lopehandia own other overlapping claims? Does Barrick? Which take priority?

 

Mr. Lopehandia appears to be an expert on Chilean mineral claims and comes across as a credible witness. I would not want to have a claims dispute with him. I have no idea myself who owns the claims and which take priority. I was upset that the various competing competing claims and lawsuits were difficult to find or were not disclosed in Barrick's securities filings and the CFAs I deal with at my brokerage didn't know anything about the competing claims either. Read the Der Spiegel article published in December 2012. I wondered how Der Spiegel could publish without being libelous. I was upset because it should not be necessary for investors or trustees to be private investigators. I should be able to rely on the CFAs, company filings and securities regulators.

 

I suggest you do some due diligence. I placed it in the too hard pile and sold Barrick at $32.

Thanks for the heads up. I must admit that I am only vaugely aware of this issue. I am going to guess that these legal issues can break either way and they will win some and lose others. I could not invest in any large drug company as an example if I started to try to determine merits of pending court cases.

[moore_capital54]

Moore, I hope this gets your attention. I was arguing pretty agressively a short gold stance and did in fact short both gold and silver at what looked to me to be a blow off top. Well I have switched I now have 10 percent of my portfolio in Barrick Gold which I think is as cheap as it has EVER been in relation to the price of gold and every other asset class I can think of. I am also short the US mkt as hedge against my long positions. This market is making me more nervous daily.

 

Agreed on both. Don't see any reason why gold fundamentals have changed. On the contrary we see Soros, Societe, Goldman inducing speculative shorts in gold while hot money exits to chase equities.

 

The biggest story right now in my humble opinion is that central banks will soon have to come clean that there is no exit strategy. QE will be integral to the economy from here on out. The problem market participants have yet to factor that in. Again - in our view there is no exit strategy.

[Mark Jr.]

I took a quick look last night at ABX, GG, EGO, KGC and NEM and right now they seem cheaper now for the most part in terms of P/E, Div yield and EPS than at the lows of October 2008.

 

I'll post a summary a little later.