Blue Scorpion

Lihir Gold: Price and Reality Part Ways

Dear Alan,

You must be a masochist to publicly flaunt your ignorance the way you do here at SA. I'll now try to shed a little light on gold, but it's up to you whether or not you keep your eyes open.

Back in the day, when gold was $35/oz., an oz. of Au would get you a well-tailored suit. Today at $730/oz., that same oz. of Au still gets you a well-tailored suit. But in dollars, that same suit has escalated in price 21 fold. Today, the tailor will make you one sleeve from the elbow to the wrist for $35. Furthermore, there is no other commodity that can make the same claim of purchasing power retention over the past 70 years.

Let me go biblical on you. Back in the time of King Nebuchadnezzar, an oz. of Au bought about 300 loaves of bread. 3000 years later, an oz still buys you those same 300 loaves.

Au has been exchanged as a currency or surrogate for currency off and on for over 6000 years. Which might explain why every central bank of any significance still retains Au in their vaults. But can you point to a single fiat currency that has lasted more than 500 years at best before ultimately collapsing into the abyss of worthlessness?

Au will get you across the border if it comes to that, Alan. And at the rate we are going, it very well may come to that. But if you ever do need to get across the border, it's highly doubtful you'll find any assistance if all you are waving in people's faces is greenbacks.

Au is money, Alan. But it's money that retains its value. Unlike your beloved dollar.

Been fun. See you around SA.

Is Gold A Sucker's Bet?

The author is a rank amateur who has no business tossing out opinions on gold. It is a myth that gold does well in inflation. In fact, hisotry shows us it does only so-so. Where gold shines brilliantly is during deflation. Think about it for a second. During high inflation, the owner of any currency spends it as fast as he receives it because he knows the object to be purchased, whether a can of soup or a new auto, will be more expensive next month than it is today. So people spend money to lock in today's lower price. Since gold is a form of money, it is no excpetion.

The opposite is true in deflation. If prices next month will be lower than they are today, then currenct will be dearer down the road. So no one spends, believing goods will be cheaper next month than they are today. Cash is hoarded, since prices of goods are falling and next month that same unit of currency will buy more cans of soup than it can today. Since gold is money, it too is hoarded. With less on the open market for coin dealers and jewelry, the price skyrockets.

The author, in his ignorance, has it azz-backwards. But I'm not surprised...not here at SA. One of these days you ppl are going to shock me and actually do your homework.

Bolivia: A Blizzard of Misinformation on Mining and Everything Else

Why do I even bother to read these useless articles? Have you taken any time to delve into the real Apex issues? The company is in default of its debt covenants and lacks the $175 million cash it needs to get through 2009. They have 2 choices: borrow more from "partner" Sumitomo at usurous rates or sell a piece of their 65% stake in San Cristobal for cash. The former is not very appetizing, as the increased debt load and high interest rates likely lead to a downward spiral. The latter could be more favorable as long as they don't have to give up an outlandish % ownership. If they can pull it off, the stock would skyrocket. The metal in the ground from this one project would conservatively put the value of the company at $25 if they could retain 40% to 50% (and that's being very conservative). Right now, the stock price is discounting them going down to around 15% ownership in the mine, a scenario that seems a bit draconian. Is it worth a speculation? Beats me. I could answer that if I knew the capital was out there at a reasonable price.

On Apex Silver's Huge Day

This is like the blind leading the blind. Andrew gets it right, but really doesn't know why. Tim, you can't be as big of a fool as you project. Do you know ANYTHING about SIL other than it's stock went up a lot in 3 days? Do you know they are shopping the company out of necessity, that the mine is the largest silver mine in the world with one of the lowest cash costs per oz. due to robust credits? An idiot and his money are soon parted.

Of Rumors and Bank Runs

You're incredibly naive. Naked short selling is a cancer in our markets. Until it gets fixed, our markets lack integrity and are stacked against the people on Main Street. Suggest deepcapture.com and thesanitycheck.com as places to start your education. The latter has a link to a Bloomberg piece on the insidiousness of NSS. Finally you can google "Bud Burrell The Greatest Crime in History" for a link to an interview he gave on the topic.

Educate yourself instead of tossing around uninformed generalizations.

Of Rumors and Bank Runs

You're incredibly naive. Naked short selling is a cancer in our markets. Until it gets fixed, our markets lack integrity and are stacked against the people on Main Street. Suggest deepcapture.com and thesanitycheck.com as places to start your education. The latter has a link to a Bloomberg piece on the insidiousness of NSS. Finally you can google "Bud Burrell The Greatest Crime in History" for a link to an interview he gave on the topic.

Educate yourself instead of tossing around uninformed generalizations.

Oilsands Quest: Looking to Break Out (Jim Cramer Edition)

What's the IV board, if I may ask. Sounds like Nirvana.

Colossus Minerals: Why I Should Have Listened

Another thing...at 100 hectares, what do you expect the annual production to be on a going basis? High grades, yes. But this is a low volume mine once it's up and running anyway you look at it just because of the small scale. I understand the hype, and the stock may do well from all the pumping, but focusing on press releases with stunning drill results can be a surefire path to losing one's hard earned dollars if you don't evaluate the whole enchilada. The term "fool's gold" may apply here.

Speculators Continue to Drive Oil Higher at Risk of Global Recession

When oil shot up by $13 per barrel in one day last week, the spike was attributed to...(drumroll)....sho... who were forced to cover. Hmmm. You mean there are speculators in the oil market who are betting that the price of oil will go DOWN? Here are thought speculators were only responsible for the oil price going UP!

As much as Uncle Sam lies to us every month with the CPI numbers, the one thing both Paulson and Bodman have gotten correct is that the rise in oil price is due to lays of supply and demand, not speculators. The other factor is the plummeting value of the dollar.

Colossus Minerals: Why I Should Have Listened

Otto, maybe you're not so dumb after all. Did you miss this little gem from the Blackmont report?

"Exploration License 850425 at Serra Pelada is valid to 2010.
Although renewable for another two years, it is under the
discretion of the Department of Mineral Production
(“DNPM”). There is a chance the DNPM will not issue
a renewal to Colossus if needed. As well, if drilling and
sampling takes longer than anticipated there is a chance
a renewal will be denied. However, given the depth of
the technical team and their Brazilian experience and
connections, this risk is minimal."

2010 isn't that far off. Too many if's. Pass.