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Stephan Bogner is mining analyst at Rockstone Research, he has independently analyzed capital markets and resource stocks for more than 11 years. He is also CEO at Elementum International AG of Switzerland trading precious metals and storing them in a high-security vaulting facility within the... More
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  • While Potash Market In Shock, Focus On Explorers With Brazilian Advantage

    "Pacific Potash Corp. - Ready to Drill, Set to Discover, Going Up Matchless"

    Rockstone Research Ltd. comments on the recent developments in the potash market and initiated coverage on Pacific Potash Corp.

    The full analysis can be viewed as a PDF using this link:


    Over the next decade, Brazil is expected to become an agricultural super power making it one of the largest users of potash fertilizers on the planet. While potash consumption seems to have peaked in India and China as currently declining, the opposite is true in Brazil with a potash consumption showing steady long-term growth potential. It is forecasted that Brazil becomes the biggest importer of potash globally by the year 2020.

    Over the last 15 years, the total value of Brazil's crop rose from $23 billion to $126 billion and it is estimated to increase a further 40% between 2010 and 2019. Additional data by SOBER suggests substantial increases of agricultural production for commodities that consume most of the potash. Brazil owns 30% of the world's arable farmland and it is projected that the country will have the world's fastest growing agribusiness economy over the next 50-100 years.

    Brazil has 500 million hectares of potentially arable land of which 100 million are currently under cultivation. This compares with the United States' 350 million, Russia's 300 million, and China's 200 million if they used every hectare available. Brazil imports more than 90% of its potash requirements with imports mainly from Saskatchewan and the Ural region incurring total delivered transport and import costs into Brazil of around $90 per ton. The Brazilian government is not sitting around waiting for this, as it has made it a goal to financially back domestic projects in order for the country to become fertilizer independent. The Brazilian government has decided to use all powers to become potash-independet in the next decades. This will put the exploration and development of Brazilian potash desposit on the fast-track.

    Pacific Potash is an early entrant into a brand new world-class potash basin that has the potential to rival or surpass some of the great producing basins worldwide. What makes this even more exciting is the fact that being located in the middle of the new breadbasket of the world gives the company a unique Brazilian advantage:

    • Low-cost production,
    • world's fastest growing agro economy,
    • almost zero domestic production and
    • potentially billions in logistical cost advantage.

    (click to enlarge)

    Live Chart:

    The full analysis can be viewed as a PDF using this link:

    Please read the disclaimer within the report.

    Rockstone Research Ltd.

    Analyst: Stephan Bogner (Dipl. Kfm., FH)

    Disclosure: I am long OTCPK:PPOTF.

    Tags: PPOTF
    Aug 13 6:37 AM | Link | Comment!
  • Why Stephan Bogner Believes You Should Be 100% Invested In Precious Metals

    Now is the time to be brave, to buy when everyone else is selling, advises Stephan Bogner, analyst with Rockstone Research and CEO of bullion dealer Elementum International. Content to go against the grain, Bogner believes investors should be 100% invested in precious metals, both in physical metals and equities. He is interested not only in companies that are profitable now but also in ones that will someday be in the black again. In this interview with The Gold Report, he describes his ideal portfolio, which includes companies operating in far-flung places.

    Companies Mentioned:
    Alacer Gold Corp. : Alkane Resources Ltd. : Ampella Mining Ltd. : Anglo-Canadian Mining Corp. : Aurcana Corporation : Avino Silver & Gold Mines Ltd. : Brazil Resources Inc. :Colossus Minerals Inc. : Comstock Metals Ltd. : Copper Mountain Mining Corp. : Endeavour Mining Corp. : First Majestic Silver Corp. : Fortuna Silver Mines Inc. : Gold Reach Resources Ltd. : Gold Standard Ventures Corp. : Golden Arrow Resources Corp. : Great Panther Silver Ltd. :IMPACT Silver Corp. : La Ronge Gold Corp. : Levon Resources Ltd. : Luna Gold Corp. : Lydian International Ltd. : MAG Silver Corp. : Meadow Bay Gold Corp. : Monument Mining Ltd. :NOVAGOLD : Orezone Gold Corporation : Prophecy Platinum Corp. : Rare Element Resources Ltd. : Rio Alto Mining Ltd. : Roxgold Inc. : Rubicon Minerals Corp. : Santacruz Silver Mining Ltd. : Silver Bull Resources Inc. : Silver Standard Resources Inc. : Silver Wheaton Corp. : SilverCrest Mines Inc. :Sulliden Gold Corp. : Sunridge Gold Corp. : Tahoe Resources Inc. : Tiger Resources Ltd. : Vendome Resources Corp. : Western Potash Corp. : Woulfe Mining Corp.

    The Gold Report: You are more bullish on gold and silver now than when the bull market started in precious metals nearly 13 years ago. Yet Swiss bank UBS says the commodities super cycle is over.

    Stephan Bogner: I was pretty bullish on gold and silver in 2002 when I completed my university diploma thesis on the exotic topic Gold in a Macroeconomic Context. Im even more bullish today because the macroeconomics did not change; it got worse.

    The fundamentals for gold and silver have never been as bullish as they are today. Money is much more likely to flow into the sector, as theres no other place to hide from the increasing uncertainty and excesses of our financial and economic system. The recent crisis in Cyprus has shown that money in a bank account is not safe anymore and yet this does not even take inflation into account.

    TGR: Have gold bulls like yourself underestimated the ability of the worlds largest banks and most powerful governments to control the gold price?

    SB: Gold and silver are the only barometers of the health of our monetary system. Those who want to maintain the current system may try to manipulate the barometers so that the masses misinterpret the situation as long as possible. But prices will not remain low for long; the fundamentals of supply and demand will cause them to appreciate. Professor Dr. Hans Bocker, my diploma thesis supervisor and a renowned economics expert in Europe, emphasizes that nothing and no one are stronger than the market.

    TGR: How should investors break down their portfolios for this new world order?

    SB: Liquidate all available assets and move at least 70% out of the banking system by purchasing physical gold and silver bullion and storing it in an independent vault within a free zone of a safe country.

    I do not recommend that anyone buy paper gold and silver in the form of certificates, options or futures. These are the most dangerous markets and the most manipulated. This includes exchange-traded funds (ETFs). You cant be certain that they are really buying physical gold and silver with all the money you put into ETFs or that you will get the physical bullion when you want to sell. Professor Bocker, who is also the chairman of Elementum, emphasizes that its crucial to physically hold bullion in order to survive the upcoming financial crisis.

    Mining equities fit very well into a portfolio consisting of physical bullion. You can pour some 70% of your funds into bullion as a crucial life insurance or security deposit and invest 30% of your total assets in mining equities, vehicles that typically generate exorbitant profits during a bull market in gold and silver.

    TGR: What about cash? That leaves you with almost no liquidity in your portfolio.

    SB: I consider investments in mining equities as cash equivalents. You can sell part of your holdings anytime and use that cash immediately.

    TGR: Doesnt the size of the precious metals equities market make it difficult to get in and out and reduce the markets liquidity?

    SB: You should diversify and focus on stocks that are liquid so you can get out quickly without much "noise." Have a healthy diversification between junior and senior mining stocks and trade frequently within your core portfolio.

    TGR: What are the basics of your thesis for precious metals equities?

    SB: At Rockstone Research I not only analyze the general markets, I analyze junior and senior mining stocks. Mining provides unique possibilities for great profits. If you know a bit about geology, chemistry, metallurgy, technology and the general mining business, you can identify mining stocks on the verge of rising, regardless of the underlying metal prices.

    The share price for a small exploration company with great drill results will rise even if gold is in a bear market. Keep in mind that increasingly fewer stocks will appreciate through the next collective upswing; many projects and management teams have not proven to be viable. These companies will go out of business and make the market a better, more consolidated place than it was during the last decade.

    From an investor perspective, you can view the current temporary bear market as a good thing because only the best companies will survive. Finding these companies before other investors find them can be the chance of a lifetime. Now is the time to start buying mining equities when they are heavily discounted and priced down. Take all your courage, go out there and buy when everyone else is selling as if there was no tomorrow.

    TGR: What do you think is an effective approach to buying these equities? Should investors buy on drops and pullbacks?

    SB: Yes, buying on dips and pullbacks is a good way to get into an investment. If you are in the red with an investment, you can either try to be patient and wait for a general recovery or you can sell and buy different mining stocks now because the market has changed severely in the last seven months. It has created ridiculously low valuations of certain mining stocks that I would not have bought seven months ago. I am no fan of strict "buy and hold" approaches as whole markets, expectations and single opportunities change over time. Selling some positions even with a loss to buy others that appear to be much more of a bargain can be very lucrative.

    TGR: What stories are you following?

    SB: In a depressed mining market such as todays with low metals prices and most producers operating unprofitably, investors already, and will increasingly, favor not only the few profitable mining companies that are left but also mining equities with the following six characteristics: 1) have experienced management, 2) are cashed-up, 3) have an advanced-stage exploration and/or mine development project, 4) have low capital expenditures (capex) to achieve high internal rates of return, 5) have high-grade deposits, 6) are operating in a stable mining jurisdiction.

    Miners that meet all these premises in an outstanding way are First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), Avino Silver & Gold Mines Ltd. (ASM:TSX.V; ASM:NYSE.MKT; GV6:FSE), Great Panther Silver Ltd. (GPR:TSX; GPL:NYSE.MKT), Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE), Silver Wheaton Corp. (SLW:TSX; SLW:NYSE), SilverCrest Mines Inc. (SVL:TSX.V; SVLC:NYSE.MKT) and Silver Standard Resources Inc. (SSO:TSX; SSRI:NASDAQ). They all are mining companies that are flexible enough in size, operations design and corporate politics to steer through the extreme market phases we are currently experiencing. These companies are currently producing silver more or less profitably in resource-rich and underexplored regions of Latin America, enjoying some of the lowest production costs in the sector.

    A Mexican silver producer that meets all of the above criteria, and is a prime example of how to do it right in todays difficult mining environment, is Santacruz Silver Mining Ltd. (SCZ:TSX.V; 1SZ:FSE), which has succeeded in bringing into production a mine during the period of low metal prices in Q2/13. Average mill throughput currently "only" stands at around 120 tonnes per day (120 tpd), ramping up to 200 tpd in Q4/13 and 500 tpd in 2014 to achieve an output of around 2 million ounces (2 Moz) silver equivalent per year. When Rosario starts running at full capacity in 2014, silver prices may have recovered to higher levels. This could provide huge leverage on the share price because the company is currently producing relatively few ounces during this period of low silver prices, an estimated 2013 output of around 400,000-500,000 ounces (400-500 Koz) silver equivalent. Normally, a comparable 2 Moz per year silver mine requires $60-80 million ($60-80M) capex, but Santacruz only spent $10M to construct Rosario, and Santacruz is ready to do it again with its San Felipe project, for which a capex of only around $20M is anticipated.

    San Felipe will be at feasibility stage by late 2013; three rigs are drilling as we speak. The initial drilling exceeds all expectations, exhibiting higher grades than historic drill results and superb core recoveries of around 95%, compared to historic records that show poor core recoveries of around 70%. Santacruz is getting the picture now, exploring and developing another world-class deposit that is easy to mine and highly profitable even during these depressed times.

    Imagine how such a business will do during high silver prices and then try to imagine how the share price will develop from its current low levels. For the upcoming weeks and months, we anticipate an increased newsflow on San Felipe: the reporting of assays from around 10,000 meters (10,000m) of drilling. We expect San Felipe to start production in 2014, and it being much larger in scale than Rosario because Santacruz plans a 700 tpd mill throughput for its second mine.

    The third mine on Santacruzs agenda is Gavilanes, which is even higher grade than the average 200-250 grams/ton (200-250 g/t) silver at Rosario and San Felipe. Gavilanes has a historic Inferred resource of 1.2 million tons ore averaging 420 g/t silver, representing some 15+ Moz silver. However, this historic resource calculation is based only on 500m of the known 1,000m strike length of the single GSA vein that was drilled for only 3,200m in 1990. Santacruz has already successfully identified six other veins on Gavilanes with the Descubridora vein being the most promising one right now.

    I speculate that Tahoe Resources Inc. (THO:TSX; TAHO:NYSE) will also become an exciting story; its world-class Escobal deposit in Guatemala is averaging around 490 g/t silver equivalent, resulting in fantastic all-in production costs estimated to be below $15/oz. That is quite remarkable considering that Hecla Mining Co. (HL:NYSE) is now pretty much underwater at $26/oz and Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ) at $22/oz. Santacruz is set to achieve all-in production costs of an estimated $11/oz by 2014 with its Rosario mine, and its two other silver deposits are ready to follow an even larger path into highly profitable and low-risk silver mining. Cash is king, even more notably in tough times, so I now look for newborn cash-flow machines that are poised to grow big during the next few years as I bet on much higher gold and silver prices.

    While Santacruz, a profitable producer with huge growth potential, has a current market cap of only $85M, there are also very attractive undeveloped projects like those of MAG Silver Corp. (MAG:TSX; MVG:NYSE). The company has a market cap of only $350M but is sitting on a large, 100+ Moz high-grade silver deposit that may to turn out to become Mexicos largest silver mine. MAG Silver is also in great shape to put into production other properties during the upcoming years. You want to look out for companies that right now are successfully developing world-class deposits; when production kicks off in a few years, metal prices are expected to be much higher than today.

    TGR: What other companies are you following?

    SB: Other stocks that I like in this respect are Roxgold Inc. (ROG:TSX.V) and Orezone Gold Corporation (ORE:TSX), with their high-grade and large gold deposits both located in Burkina Faso, as well as ASX-listed Ampella Mining Ltd. (AMX;ASX), which has the 3+ Moz Batie West Gold deposit, Burkina Fasos largest undeveloped gold resource at a 1 g/t cut-off.

    I also follow Central African low-cost gold producer Endeavour Mining Corp. (EDV:TSX; EVR:ASX) in Ghana and ASX-listed Tiger Resources Ltd. (TGS:TSX; TGS:ASX), which has an excellent exploration and production portfolio of properties strategically located on the world-renowned Katanga Copper Belt in the Democratic Republic of the Congo (NYSE:DRC). Tiger is a well-run company with experienced and well-connected management successful in the highly lucrative but somewhat risky-appearing regions of the world where others fail on a regular basis. Tigers Kipoi stockpiles of high-grade copper have a market value of $500M+ with production costs in the area of only $0.30/pound targeted for 2014; the companys other properties enjoy extremely good exploration potential.

    Alacer Gold Corp. (ASR:TSX: AQG:ASX), with its gold operation in Turkey, is also an interesting story to follow. Management is working successfully on cutting costs on all fronts.

    I am certain that these companies will not only survive the current slaughtering of mining equities but will also evolve into better and much more profitable companies than they would have been without this crash, thus maximizing shareholder value even more if metal prices recover substantially.

    I also like Levon Resources Ltd. (LVN:TSX.V; L09:FSE; LVNVF:OTC), with its 400+ Moz Cordero silver deposit in Mexico; Silver Bull Resources Inc. (SVB:TSX; SVBL:NYSE.MKT) and Golden Arrow Resources Corp. (GRG:TSX.V; GAC:FSE; GARWF:OTCPK), with their 100+ Moz silver equivalent deposits; NOVAGOLD (NG:TSX; NG:NYSE.MKT), with its 40+ Moz Donlin gold deposit in Alaska; Prophecy Platinum Corp. (NKL:TSX.V; PNIKF:OTCPK; P94P:FSE), with its multimillion ounce platinum group metals deposit in the Yukon; and Western Potash Corp. (WPX:TSX.V), with Milestone being developed into a modern, cost-effective mine in Saskatchewan.

    I also follow closely with great interest the development of Sunridge Gold Corp. (SGC:TSX.V), Sulliden Gold Corp. (SUE:TSX; SDDDF:OTCQX; SUE:BVL), Aurcana Corporation (AUN:TSX.V; AUNFF:OTCQX) and IMPACT Silver Corp. (IPT:TSX.V), and prospective juniors like Vendome Resources Corp. (VDR:TSX.V), Meadow Bay Gold Corp. (MAY:TSX.V; MAYGF:OTCQX), La Ronge Gold Corp. (LAR:TSX.V) and Comstock Metals Ltd. (CSL:TSX.V).

    Comstock recently made a promising discovery in the prolific White Gold district in the Yukon. The area has very similar geology and mineralization with Kinross Gold Corp.s (K:TSX; KGC:NYSE) Golden Saddle deposit, which is just 10 kilometers (10km) to the northwest, as well with Kaminak Gold Corp.s (KAM:TSX.V) Coffee project 40km to the south. Comstocks initial drill results of grades of 1+ g/t gold over 80m+ exceeded all expectations.

    Comstock just announced the assays of two stepout drillings: Hole 12 returned 2.1 g/t gold over 36m starting right at surface at 9m depth including an 11m interval averaging 3.2 g/t at 22m depth below surface. Hole 11 returned 43m averaging 1.4 g/t gold including an 13m intercept averaging 3.4 g/t. Both drill holes will increase the NI 43-101 resource base significantly as the footprint of the VG Zone has now been extended by some 350x350m, whereas the zone remains open in all directions. The results of five other drill holes will be released shortly.

    I highly respect Comstocks CEO, Rasool Mohammad, who is also the driving force behind La Ronge. La Ronge is exploring its Preview SW property in the prolific La Ronge Gold Belt of Saskatchewan. With an NI 43-101 Indicated and Inferred gold resource of nearly 400 Koz with an average grade of 2+ g/t and a 0.5 g/t cut-off, La Ronge is in a great position to expand the resource base of this deposit in the upcoming months. I am confident that Rasool will produce loads of positive drill reports that I anticipate will affect both stocks greatly in the near future.

    TGR: Are there other companies you would like to talk about?

    SB: Rubicon Minerals Corp. (RBY:NYSE.MKT; RMX:TSX) has successfully developed the highly interesting 3+ Moz Phoenix gold deposit toward the preliminary economic assessment level. The deposit is located in Red Lake, Ontario. Production can commence as soon as 2014 or whenever the gold price has recovered.

    Another advanced gold project in its final permitting stage is Lydian International Ltd.s (LYD:TSX) flagship Amulsar gold deposit in Armenia. It looks remarkable: simple and easy to mine, having a low capex of only $250M, yet valued at $1+ billion in the latest feasibility study.

    Colossus Minerals Inc. (CSI:TSX; COLUF:OTCQX) owns an advanced-stage gold project in Brazil that may go into production at the right time within the next few years when metal prices have recovered, making such a large gold deposit increase in value even more.

    Luna Gold Corp. (LGC:TSX) also has a well-advanced deposit in Brazil with great NI 43-101 upside potential targeting gold production starting at 125 Koz in 2014.

    I follow Brazil Resources Inc. (BRI:TSX.V; BRIZF:OTCQX) closely because I like the management team around Chairman Amir Adnani and his well-established contacts around the world.

    TGR: Do you follow rare earths?

    SB: Yes. I am positive that Australia-based Alkane Resources Ltd. (ANLKY:OTCQX; ALK:ASX) will bring into production its Dubbo rare earths project in New South Wales in early 2016. Management is right on track demonstrating how to successfully develop a large deposit into a profitable mine quickly, namely with memorandums of understanding, agreements and strategic alliances. Dubbo represents a world-class deposit enriched with zirconium, hafnium, niobium, tantalum, yttrium, as well as light and heavy rare earths elements (REEs). Chinese production dominates these materials, providing over 90% of yearly supply and it is increasingly limiting its exports. Alkane already seems to have found the right partners to advance this project. The financing of around $1 billion is planned to be arranged by Sumitomo Mitsui Bank of Japan, Credit Suisse Australia and Sydney-based Petra Capital, and is expected to coincide with the final project approvals, allowing mine construction to commence in Q2/14.

    Alkanes Definite Feasibility Study of April 2013 shows Dubbo being a "technically and financially robust project." A base case of a 20-year mine life gave a net present value of $1.23 billion, yet mine life is likely to be in excess of 70 years, which makes this deposit an important strategic asset for REE world supply. What makes Alkane a great investment today is that shareholders do not have to wait two or three years until REE production at Dubbo starts; shareholder value is likely to be increased substantially within the next few months as construction on the companys Tomingley gold mine is underway and commissioning is anticipated in late 2013. With a resource of 800+ Koz, a head-grade of 2 g/t, a yearly gold production of around 50 Koz for a minimum of eight years and operating costs at only $1,000/oz, this project is set to generate important cash flow in the near future to advance the Dubbo project successfully without the need for excessive dilution.

    Strategically, I also like Rare Element Resources Ltd. (RES:TSX; REE:NYSE.MKT), which has a 100% interest in the Bear Lodge property in Wyoming, U.S. This is one of the largest disseminated REE deposits in North America; it is high grade with favorable metallurgy and excellent infrastructure within one of the worlds best mining jurisdictions. When the time is right, it will most certainly be put into production.

    Woulfe Mining Corp. (WOF:TSX.V) owns a large tungsten-molybdenum deposit in South Korea; I like these metals thanks to their great price appreciation potential in this decade.

    I also like companies such as Rio Alto Mining Ltd. (RIO:TSX.V; RIO:BVL), whose stock experienced heavy selloffs during the last months, trading at around $2/share down from $6/share, and Monument Mining Ltd. (MMY:TSX.V), whose stock has been holding remarkably stable at the $0.30/share level assuming that strong hands try to not let the price go below this level. Both operators own world-class gold mines and infrastructure plus offer great growth potential for the upcoming years.

    Rio Alto is reporting higher than expected head grades, which is a rare trend in todays mining business-most seniors like BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK), Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and Newmont Mining Corp. (NEM:NYSE) are struggling as their grades decrease more than expected and they are unable to keep up production levels while costs rise. Their only chance of maintaining market value is to acquire other resources, properties and companies. Rio Alto does not have such problems and stands well even in todays depressed markets, thanks to the superb management around CEO Alex Black. The company has developed the La Arena deposit in Peru into a world-class gold mine with production costs well below $1,000/oz and an output of around 200 Koz/year. Rio Alto at $2/share seems like a great bargain and not only for the short term.

    Monument plans to bring into production a second, polymetallic mine shortly, Mengapur, which I anticipate to emerge as a much larger than expected mine that may be ramped up with a strategic partner. I hope the partner is no one less than the government of Malaysia; management has established respectable relationships with high-ranking officials over the last years. A successful model would be Australia-based Tiger Resources 60/40%-partnership with the DRC government.

    Golden Arrow is another company with great management relationships with governmental officials. Joe Grosso is doing it again big with this latest Argentinian success story that may become in the foreseeable future a very large and easily mineable resource of 100+ Moz silver equivalent with outstanding NI 43-101 upgrade potential. Thats the sort of junior mining stock with a $10-50M market cap that you want to be involved with from an early stage.

    TGR: Do you want to talk about any other companies?

    SB: Another great management story may be Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE), whose chief geologist, Dave Mathewson, explained to me in an interview in 2011 the background and geological settings of the Railroad property. Railroad is located just south of the productive Rain mine operated by Newmont in Nevada. Dave Mathewson discovered the Rain deposit when working for Newmont. This is the kind of unique management story that can be decisive when looking out for the right people who made the right choices at the right time. I am optimistic that Railroad eventually will turn out to be a larger gold deposit than Rain, which itself contains 6+ Moz. No one knows the rich but tough Carlin Trend better than Dave Mathewson.

    Another deposit I value highly-in addition to being a potential takeover candidate-is Gold Reach Resources Ltd. (GRV:TSX.V). The companys copper-gold-molybdenum deposit is adjacent to the renowned Huckleberry copper-molybdenum mine in British Columbia. Copper Mountain Mining Corp. (CUM:TSX) restarted a large copper mine near Princeton, 250km northeast of Vancouver, in 2011, producing some 80 million pounds per year. Mitsubishi Materials Corp. (MMC:FSE) has a 25% stake and mining giants like Xstrata Plc (XTA:LSE) are potentially looking for companies like these to take over, especially during times of ridiculously low market valuations that we have at the moment.

    Some 3km south of the Copper Mountain mine and mill lies a large and quite prospective property that belongs to junior explorer Anglo-Canadian Mining Corp. (URA:TSX.V). I have been following this company for years, eagerly waiting to find out that it is actually sitting on a mineable porphyry copper gold deposit (or skarn) right on trend and right next to the prolific Copper Mountain porphyry plug.

    Another such small junior mining stock that we followed was Urastar Gold Corp., which was active in Mexico where it held a highly prospective property adjacent to mining, infrastructure and large seniors. Urastar was acquired a few months ago by Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE).

    The following is mining news wording I believe we are about to see increase notably with so many highly undervalued but highly prospective junior mining stocks being acquired basically for peanuts. This is sad but true in terms of shareholder value, yet still worth an investment nonetheless if you discover the ones to target at the right time:

    "Under the terms of the Agreement, each Urastar shareholder will receive in exchange for each Urastar Share held, C$0.25 in cash. The cash consideration offered represents a premium of approximately 42.9% based on the closing price of the Urastar Shares on the TSX Venture Exchange ("TSXV") of C$0.175 on March 25, 2013 and a premium of approximately 46.8% over the 20-day volume weighted average price of the Urastar Shares on the TSXV for the period ending March 25, 2013. The transaction value on a basic shares outstanding basis, and assuming exercise of in-the-money share purchase warrants, is approximately C$10.70 million."

    TGR: Thank you for speaking with us today.

    Stephan Bogner is a mining analyst at Rockstone Research, where he has independently analyzed capital markets and resource stocks for more than 11 years. He is also CEO of Elementum International AG of Switzerland. Bogner earned his degree in economics in 2004 at the International School of Management in Dortmund, Germany. He spent five years in Dubai brokering and reselling physical commodities and now resides in Zurich, Switzerland.


    1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

    2) The following companies mentioned in the interview are sponsors of The Gold Report: Santacruz Silver Mining Ltd., Colossus Minerals Inc., Golden Arrow Resources Corp., Gold Standard Ventures Corp., Sunridge Gold Corp., Rubicon Minerals Corp., MAG Silver Corp., Tahoe Resources Inc., Roxgold Inc., Silver Bull Resources Inc. NOVAGOLD, Prophecy Platinum Corp., Sulliden Gold Corp., IMPACT Silver Corp., Lydian International Ltd., Brazil Resources Inc., Alkane Resources Ltd., Silver Standard Resources Inc., Fortuna Silver Mines Inc., SilverCrest Mines Inc., Comstock Metals Ltd. and Great Panther Silver Ltd. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

    3) Stephan Bogner: I or my family own shares of the following companies mentioned in this interview: All except Credit Suisse, Mitsubishi Materials Corp., Sumitomo Mitsui Bank of Japan, Xstrata Plc, BHP Billiton Ltd., Barrick Gold Corp., Newmont Mining Corp., Hecla Mining Corp. and Urastar Gold Corp. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts statements without their consent.

    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

    Jul 16 9:03 AM | Link | Comment!
  • Gold & Silver – The Best Protection Against Modern Alchemy

    Gold & Silver - The Best Protection Against Modern Alchemy

    (click to enlarge)

    By Stephan Bogner, Rockstone Research (06/23/2013)


    Paper money was invented when payments were done in gold and silver. Instead of carrying the heavy and precious metals around, one could store them in a warehouse. In return, a piece of paper was handed out whose owner was entitled to pick up the stored metals. Since the paper was backed in earnest with real valuables and thus being effectively redeemable, it was accepted everywhere - just like physical gold and silver - as a common means of payment.

    The banker was born when it was noticed that relatively few came to actually pick up their metals (thanks to trust in a completely backed paper money system). Instead of hoarding the metals like "dead capital" in vaults, it offered itself to work with them and bring into circulation more paper money than real assets actually in stock.

    As a matter of fact, the price for such monetary politics still is and remains inflation; respectively, the "missing amount" is collected/encashed practically from all paper money owners even-handedly over time automatically in a creeping to galloping manner, temporarily even hyperactively.

    In September 2012, the German newspaper Bild headlined, typically rather big, on its cover "Bank Notes are Printed Paper", quoting the recent statements from German central bank's president, Jens Weidmann, who even blew this gaff:

    "Today's paper money is no longer backed

    by any kinds of material/real assets…

    The connoisseurs among you know that

    the Euro actually constitutes cotton."

    Our paper money system today is not based on gold and silver anymore, but solely on trust.

    If trust fades away or threats of inflation appear on the horizon, only real ("intrinsic") assets, like gold and silver, provide effective protection.

    (click to enlarge)

    How to best buy, store and sell your precious metals

    If you decide in favor of gold and silver, firstly the questions about purchasing, storing, security and sale arise. Some answers:

    · Due to the risk of the theft or seizure, storing metals physically at home or at a bank is not recommended as a matter of principle.

    · Store your wealth, poured into precious metals, only at a secure, independent and easily accessible place outside the banking system (ideally far away from urban agglomerations, city centers and airports).

    · Make inquiries about the security level of the vaulting facility. For example, the high-security vaulting facility within the St. Gotthard Mountain-Massif in central Swiss Alps offers the highest possible security level 13 and hence belongs to the most secure vaults in the world with only Fort Knox having the reputation of being even more secure.

    Without fail, find about if the physical inventory (that should take place multiple times during the year) is based on the so-called "Six-Eye-Principle":

    · Not only the operator of the vaulting facility and a trustee certify your holdings, but these are also certificated by an independent and renowned auditing firm.

    · Most importantly, this certification must be on your name (only chance to make sure that you are the actual and sole owner).

    · Explicitly, your metals should not be loanable (leasing) or used as collateral - nobody should be allowed to use ("work with") your metals without your knowledge and written consent.

    Tax-free profits can be realized already after a minimum holding period of 12 months (e.g. Germans), however only if you are the sole owner of the metals.

    · In contrast to gold, there is VAT on silver in many countries (e.g. 19% in Germany) - duty-free warehouses and zones offer to avoid this tax hence enabling you to purchase 19% more silver on which price profits are realizable additionally.

    · The bigger the bullion bar, the more metal you (should) get for your money; around 10% price advantage with 15 kg silver bars against small bars.

    · In order to eliminate the risk of counterfeit, the bars must be of highest quality standard respectively with an internationally accepted hallmark ("Good Delivery") originating from a renowned refinery (e.g.Umicore, Degussa).

    Pay attention forcefully that it is possible without much hassle to physically inspect and pick up your belongings within the vault in case you want to stop the storage.

    · Furthermore, the custodian should also offer to deliver your metals to a worldwide locality as per your demand taking care of the full organizational process, such as documentation, customs clearance, insurance, and logistics.

    · Hence, the storage should be cancelable anytime and with immediate effect.

    It would be a great advantage if you are not only able to buy and store precious metals low-priced directly from the operator of the high-security storing facility, but as well enjoy their guarantee of buying your metals anytime at current metals prices plus a low commission - so that you do not have to look for a buyer yourself in case you want to sell and convert back into paper money that will be wire-transferred to any bank account in the world.

    · This is a very important point as if you were to take out the metals from the duty-freezone, you not only must pay VAT on silver, but more crucially you must take into account that your buyer may charge high melting costs to make sure genuineness.

    · Metals that are stored in a high-security vaulting facility in a duty-freezone can be sold much closer to the actual metals spot price, because the authenticity of the metals has been certified as not having left "the circle of trust".

    Thus, it is much cheaper to buy and sell physical metals in a trading freezone outside the banking system.

    · The storage fees must be transparent and in step-like arrangement with stored quantities or values. Also, the fees that are based on the market value of your holdings should not be oriented on a single due/ effective/ valuation date, but calculated according to the average market price during time of storage.

    · When buying and selling your metals, you should be included into the price fixing process thus enabling you to fix spot prices precisely.

    (click to enlarge)

    While central banks worldwide have not stopped to print more unbacked paper money, Germany`s central bank, the Deutsche Bundesbank, already gave an official buy recommendation for gold in late 2012 via its President Jens Weidmann.

    If you also buy, store, take delivery or sell physical gold and especially silver, do so correctly.


    Dr. Jens Weidmann, President of the German central bank, in a welcome speech (title "Paper Money - Government Financing - Inflation") on the occasion of the 18th Colloquium by the IBF (Institute für bankhistorische Forschung; Institute for Bank-historic Research) on September 18, 2012:

    "To bring back memories, the money creation scene in the first act of (J. W. Goethe`s) Faust II is recalled briefly.

    Mephisto, disguised as a jester, speaks with the Kaiser/emperor who is bedeviled by acute shortage of money and states:

    „Where in the world we do not miss anything? One lacks this, another that, but here money is absent."

    Eventually, the Kaiser responds back to Mephisto`s astute persuasion efforts:

    „I am fed up with the perpetual How and When; Money is missing, well, go ahead and create it."

    Mephisto answers:

    „I create what you want and I create more."

    He succeeds in making the Kaiser sign a certificate in midst the hustle and bustle of the nightly masked ball which he duplicates overnight and subsequently spreading them as paper money.

    The involved parties are enamored by the initial success of this course of action. The chancellor announces in full of joy:

    „Listen and look at this fateful piece of paper (meaning the newly created paper money) - that has transformed all woes into weal."

    He reads:

    "´Everybody has to know who wants it:

    This paper here is worth a thousand Kronen.´"

    Mephisto further fans the joyousness when saying shortly thereafter:

    "Such a paper, instead of gold and pearls,

    Is so comfortable, one knows for sure what one has;

    One does not need to first market nor trade,

    One can inebriate as per gusto in love and wine."

    The involved parties are so delighted about the assumed benefaction that they do not suspect the development to slip out of their hands losing control:

    Yet the country in Faust II was able to get rid of its debts in a first step, while private consumption rose strongly powering a boom and economic revival.

    In due course, however, the goings-on get out of hand and into inflation, and the money system gets destroyed in consequence to the rapid depreciation of money.

    It is awe-inspiring that and how Goethe in Faust II illuminates the potentially dangerous connection between money creation, government financing and inflation - and thus a core problem of unbacked currency regimes. This is true even if against fact that, as a general rule, Faust and Goethe are not associated directly with economic contexts, especially not with such an area of conflict in monetary politics.

    That Faust can very well be interpreted economically, Prof. Adolf Hüttl has shown among others. He is the former Vice-President of the Federal Reserve Bank of Hessen (Germany) and to my great joy among us here today. As early as 1965, he wrote in the employee-magazine of the Bundesbank a quite insightful text under the headline "The Money in Goethe`s Faust II" ("Das Geld in Goethes Faust II").

    Prof. Hans Christoph Binswanger, who is among us here today as well to my great joy and who was teaching in Sankt Gallen (Switzerland), undertook a similar approach and published a book with the title "Money and Magic - Interpretation and Critics of modern economy based on Goethe`s Faust" ("Geld und Magie - Deutung und Kritik der modernen Wirtschaft anhand von Goethes Faust").

    The key assumption of Binswanger was that Goethe portrayed modern economy, including money creation, as a continuation of alchemy with different means. While classic alchemist tried to make gold out of lead, money is made of paper in modern economics.

    Indeed, the circumstance that central banks can effectively create money out of nothing may appear to many observers as something surprising, peculiar, may be even mystical, dreamlike - or also nightmarish.

    Because when central banks virtually can create unlimited money out of nothing, how can be made sure that money is sufficiently scarce and thus holds value?

    Does the possibility of creating money more or less freely not bring along the temptation to misuse this instrument and to create additional maneuvering room for the short-term, even if long-term damage is very likely?

    Yes, this temptation exists very well, and many gave in to this temptation in the history of money. When looking back in history, national banks were created oftentimes for the purpose to give rulers as much free access as possible to seemingly unlimited financial resources.

    Due to the governmental access on central banks in connection with large governmental financial demand, the money supply was expanded oftentimes too strongly, with the result of depreciation of money via inflation. In light of this experience, central banks were created as independent institutions during the last decades and were obligated to protect monetary value in order to explicitly prevent governmental usurpation of monetary politics.

    The independence of central banks is an extraordinary privilege - it is not a self-purpose however.

    Rather, it serves in its core to credibly make sure that monetary politics can focus without hindrance on keeping the value of money stable.

    Independence from monetary politics, and a well-functioning compass of fiscal decision making that is oriented towards stable value of money, are necessary… requirements to preserve the purchasing power of money and thus the trust of the people.

    However, in order to accomplish such trust central bankers who administer a public good - stable money - must explain themselves also in public.

    The best protection against the temptations in monetary politics is a well-informed society that is oriented in favor of stability." (1)

    (click to enlarge)


    (1) Freely translated from German into English:

    (2) Other Sources:

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Jun 26 11:11 AM | Link | Comment!
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