Gold Price is Now Higher Than Inflation Adjusted 1980 Price

[anders]

@ eric50

Latest cash cost to extract the stuff is $583 per oz.  So, by buying NEM now you get an ounce for $947

 

My way of looking at the miners is to calculate TOTAL cash cost.. I think you get a much better insight of the valuation..

 

@ ericopoly

First off, my instinct is to assume gold in the ground should always be priced lower than gold on the surface.  The further into the ground, the greater I would expect the discount.  However, how great should that discount be is my question?

 

Well.. yes.. same with all businesses, a t-shirt should be priced higher than same amount cotton in the field.. but I don't think you can find out an answer on how much an irrational market should discount a product.. only your own preference for the rate of interest that makes you indifferent between present and future dollars would give the answer..

 

Rgds,

 

[Hawks]

Moore_Capital54

Really appreciate your posts and the insights you provide, especially on gold and fiat currency. Value investors need to take note imo. By the way, care to mention some junior copper miners which you find interesting?

[moore_capital54]

Hawks we have been building a position in AQM Copper recently, thats pretty much it for the Copper Basket. Great Deposit and great partner, trading at ridiculous EV. The fundamentals of copper are good long-term but tricky for the next 2 years, so we are not as overweight unless we see a very good deposit. Our last copper play was NCU which we rode very nicely. The pumpkin hollow deposit will definitely be a mine one day.

 

We have our eye on Baja Mining as well as it get's closer to production but no position yet.

 

We have also been picking at ENRC LN which has a mix of Copper and other base metals, it's getting very cheap here.

 

SCCO may be interesting as well but no position. I prefer buying MT here and gaining the Iron Ore portfolio for free.

 

 

[SmallCap]

to paraphrase Aesop

"An ounce in hand is worth two in the ground"

[Liberty]

I have a question for you Moore (and anyone else who cares to answer):

 

What are the best ways to learn more about the mining/metals sector? Any good books about the industry? Especially good annual letters? Podcasts? I've learned a fair share reading 10ks, but I'm trying to expand a bit.

[moore_capital54]

Liberty here is a primer I put together for friends/family and investors that want to get started in this space.

 

First, you need a basic understanding of geology. For this I suggest:

 

http://www.gril.net/education

 

Start with the videos on Ore Deposits. They are long and you may need to watch them twice, but if you wan't to get serious about this business, you need to have a basic understanding of geology, fluids, sulphides, and mineralization. You need to understand the basics of crustal abundance and what it takes for an economic concentration of minerals to form in the earth's crust. This is an absolute.

 

 

Next, watch the videos on the same page named "Mining Investment College". These aren't amazing, but they are very good. The problem is that they are a little outdated.

 

Next, you must understand the CIM guidelines and definitions. You need to understand the difference in resource categories: Inferred, Measured, Indicated. You need to understand the difference between Reserves and Resources, and what it takes to convert a resource into a reserve. These skills will help you assess when a company has reached that inflection point, way before an independent report confirms this to the market.

 

http://www.cim.org/committees/cimdefstds_dec11_05.pdf

 

 

Next, I suggest you watch as many videos of Brent Cook as you can. He is a skilled economic geologist and loves to share his opinions and thought process with the public. Subscribing to his newsletter would not be a bad idea either, his track record speaks for itself.

 

http://www.youtube.com/results?search_query=brent+cook&aq=f

 

The more videos you watch the more well rounded your understanding will be.

 

Next I Suggest two free websites which are very good for finding ideas, and tracking the good companies in the space:

 

1) www.resourceintelligence.net - Specifically watch the daily resource estimates and financings, these are great tools.

2) www.miningalmanac.com - The site has a great tool where you can screen based on total resources.

 

Analysts to read or Follow:

 

1) John Tumazos - http://www.veryindependentresearch.com/

2) Richard Gray - Cormark

3) Adam Graf - Dahlman Rose

 

When you start finding juniors, make sure the first thing you do is view their latest presentation. In this industry that is where most of the focus is on continually updating the public month in, month out, if a company cannot provide an update at least once every two months they are not doing a good job. Remember these companies are in a business where they are actively developing an ore body. The more communication the better. This is not Biglari holdings or Berkshire Hathaway, you want to know what is going on and as soon as it happens.

 

 

Read the Presentations of the Majors at least once a month: Barrick, Kinross, Agnico Eagle, Newmont, they are very informative and will give you an idea of the trend at the top. Everything in this business starts with the producers, the majors. Read everything you can about BHP, Rio, Vale, Norilsk Nickel, ENRC, Kazakhmys, Fortescue, Inmet, Lundin, Teck. Listen to what they are saying. They have no reason to lie. When they say they are finding less gold, that is the truth. When they say they are mining lower grades, that is the truth. When they say their costs are rising, it is the truth as well. This business is truly global, you cannot just read about what is going on in North America, demand is coming from 7 billion human beings and you need to make sure you have a good pulse on that demand.

 

The very best group for Macro Research is CPM Group (Jeffrey Christianson) and Metals Economic Group. Anything they publish even if it's delayed will educate you.

 

Conferences

 

One of my favourite things about this business, is that even retail investors have the ability to meet management face to face, almost every few months. Start learning about the conference circuit, and make it an issue to visit at least one a year. My personal favourite is the Denver Gold-Show, where a committee chooses the companies that are allowed to present. Don't waste your time on anything the Cambridge House is planning, and especially any conference in Vancouver. The Casey conference in Florida, is good. PDAC is great, and even the Hard Asset Conference is good for a new investor in the space that wants to get a feel.

 

The key is to get out there, meet management meet the geologists look at the core, learn everything you can about the deposit you are investing in. Don't leave any rocks unturned :)

 

Books - Unfortunately there are no good books describing how to invest in this business. We have thought about writing a guide, but it would take too long and nobody has the time.

 

These are Just "OK" Buy only one if you have to, you will learn more doing what I said before than reading any of these books.

 

http://www.amazon.com/Mining-Valuation-Handbook-Investors-Management/dp/0731409833/ref=pd_sim_b_1

 

http://www.amazon.com/Insiders-Guide-Mining-Sector-Depth/dp/1905641559/ref=pd_sim_b_3

 

http://www.amazon.com/Investing-Resources-Profit-Outsized-Potential/dp/0470613262/ref=pd_sim_b_4

 

http://www.amazon.com/Mining-Economics-Strategy-Ian-Runge/dp/0873351657/ref=pd_sim_b_2

 

 

In closing I have attached a pdf I already attached before on this thread but which I think is good for the beginner investor, it's from Jennings Capital and it's published once a month called "Rock Talk". Jennings isn't the best firm out there, but to their credit this is a nice report.

 

Most of the companies mentioned here are good places to start in terms of visiting their websites, reading their presentations and reading their 43-101's.

 

There are absolutely no good junior investment message boards. Don't even waste your time. The smart money in this business speak over the phone, or meet face to face at conferences. Or engage in large email chains. The posters on the boards are all novices, with very little skill.

 

 

 

 

[moore_capital54]

I must say that Mining College Video 1 starting at 58 minutes covers exactly what we do in our resource funds.

[Liberty]

Thank you! That should keep me busy for a little while  ;)

[jjsto]

Yeah, thanks a lot moore.  Very informative. 

[Mark Jr.]

 

Central Bankers in the US are elitist, it is a culture that was instilled from the GreenSpan era. Their speak is ambiguous and they genuinely think they are smarter than everyone else. They sit their in the mahogany room on the top floor of the federal reserve and get to act out g-d.

 

In reality most of them are huge narcissists with napoleon complexes that have no clue about the real world.

 

On a related quote, since central bankers are quite cozy with their career politician cousins, I have always been a big fan of the following, possibly most underrated quote in history:

 

“Too little attention has been paid to the fact that electoral politics lures disorded, messianic personalities into positions of power.”

– Davidson & Rees-Mogg in The Sovereign Individual

[meiroy]

 

moore_capital54,

 

I have no clue about gold or gold mining, other than what my wife has; I'm wondering about these two questions and hope you might be able to go over them:

 

1. Is there any possible new technology for mining gold that will become worthwhile at a certain price? What would that price be?

2. Are there any technologies that could create gold from other materials, and if so at which price would they be worthwhile?

3. The USA has USD as currency and no doubt does its best to prevent anyone else from faking or creating its currency. If it would go into gold standard, surely the USA will not be able to prevent anyone else from mining more of creating more (assuming points 1 and 2 above).

 

 

 

 

 

[twacowfca]

 

moore_capital54,

 

I have no clue about gold or gold mining, other than what my wife has; I'm wondering about these two questions and hope you might be able to go over them:

 

1. Is there any possible new technology for mining gold that will become worthwhile at a certain price? What would that price be?

2. Are there any technologies that could create gold from other materials, and if so at which price would they be worthwhile?

3. The USA has USD as currency and no doubt does its best to prevent anyone else from faking or creating its currency. If it would go into gold standard, surely the USA will not be able to prevent anyone else from mining more of creating more (assuming points 1 and 2 above).

 

The lapis philosophorum method is on the verge of a breakthrough in answer to question number two.

[Green King]

 

moore_capital54,

 

I have no clue about gold or gold mining, other than what my wife has; I'm wondering about these two questions and hope you might be able to go over them:

 

1. Is there any possible new technology for mining gold that will become worthwhile at a certain price? What would that price be?

2. Are there any technologies that could create gold from other materials, and if so at which price would they be worthwhile?

3. The USA has USD as currency and no doubt does its best to prevent anyone else from faking or creating its currency. If it would go into gold standard, surely the USA will not be able to prevent anyone else from mining more of creating more (assuming points 1 and 2 above).

 

The lapis philosophorum method is on the verge of a breakthrough in answer to question number two.

 

just give me some gold for testing and i will be able to do it in a few month. Its not hard all you need is a super nova.

[rkbabang]

 

moore_capital54,

 

I have no clue about gold or gold mining, other than what my wife has; I'm wondering about these two questions and hope you might be able to go over them:

 

1. Is there any possible new technology for mining gold that will become worthwhile at a certain price? What would that price be?

2. Are there any technologies that could create gold from other materials, and if so at which price would they be worthwhile?

3. The USA has USD as currency and no doubt does its best to prevent anyone else from faking or creating its currency. If it would go into gold standard, surely the USA will not be able to prevent anyone else from mining more of creating more (assuming points 1 and 2 above).

 

The lapis philosophorum method is on the verge of a breakthrough in answer to question number two.

 

just give me some gold for testing and i will be able to do it in a few month. Its not hard all you need is a super nova.

 

Go ahead and laugh, I've been working in my basement on a way to transmute lead into gold.  I think I'm going to figure it out soon, I'll let you know.    Isaac Newton did some work on this back in the day.

And even today there are some bright minds working on this:

Northern Ireland man tries to create gold...

 

--Eric

 

 

[meiroy]

 

moore_capital54,

 

I have no clue about gold or gold mining, other than what my wife has; I'm wondering about these two questions and hope you might be able to go over them:

 

1. Is there any possible new technology for mining gold that will become worthwhile at a certain price? What would that price be?

2. Are there any technologies that could create gold from other materials, and if so at which price would they be worthwhile?

3. The USA has USD as currency and no doubt does its best to prevent anyone else from faking or creating its currency. If it would go into gold standard, surely the USA will not be able to prevent anyone else from mining more of creating more (assuming points 1 and 2 above).

 

The lapis philosophorum method is on the verge of a breakthrough in answer to question number two.

 

If on Monday morning oil goes to 300USD, people will figure out by Monday evening how to synthesize oil from Donald Trump .  When China puts some restriction on its rare earth elements, forgotten and closed mines came back to life in a relatively short time.  I'm simply asking the same about gold.

 

Just noticed AdventuresInCapitalism has a new post which refers to this, although somewhat indirectly:

 

http://adventuresincapitalism.com/post/2011/12/04/Ride-The-Trends.aspx

 

 

Oh, an, don't try this at home:

 

Gold synthesis in a nuclear reactor

 

http://en.wikipedia.org/wiki/Synthesis_of_precious_metals#Gold_synthesis_in_a_nuclear_reactor

 

"Gold was first synthesized from mercury by neutron bombardment in 1941, but the isotopes of gold produced were all radioactive.[3]

 

Gold can currently be manufactured in a nuclear reactor by irradiation either of platinum or mercury. Since platinum is more expensive than gold, platinum is economically unsuitable as a raw material.

 

Only the mercury isotope 196Hg, which occurs with a frequency of 0.15% in natural mercury, can be converted to gold by neutron capture, and following electron capture-decay into 197Au with slow neutrons. Other mercury isotopes are converted when irradiated with slow neutrons into one another or formed mercury isotopes, which beta decay into thallium.

 

Using fast neutrons, the mercury isotope 198Hg, which composes 9.97% of natural mercury, can be converted by splitting off a neutron and becoming 197Hg, which then disintegrates to stable gold. This reaction, however, possesses a smaller activation cross-section and is feasible only with un-moderated reactors.

 

It is also possible to eject several neutrons with very high energy into the other mercury isotopes in order to form 197Hg. However such high-energy neutrons can be produced only by particle accelerators[clarification needed]."

 

[beerbaron]

We are closer to perfect synthetic diamonds then synthetic gold. It there was a commercially feasible application for nuclear gold creation there would be talk about it.

 

I vote to make a supernova, maybe MythBusters can make a special episode.

 

BeerBaron