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Barrick
Gold says the world gold supply has run out.
Wow!
Isn’t that what some have been predicting for the past 10 years?
The president of the largest gold company in the world, Barrick Gold, has
just recently announced that gold production peaked in the year
2,000.
It is
becoming increasingly more and more difficult to find significant deposits of
gold ore. And as the tide has turned the central banks have now become
serious buyers of gold and no longer sellers. China has doubled its gold
reserves these past 10 years. Asia is turning those worthless US
dollars into gold.
Will
someone please tell Sarah Palin to get a haircut and take a class in
rhetoric?
Rhetoric is simply the art of learning to speak well. Persuasive speech
without the mouthful of peanuts. And through the power of effective
speech your life begins to develop a sense of purpose and you can influence
the thoughts and dreams of a nation.
Sarah’s
recent appearance on The Oprah Winfrey Show rocketed Oprah’s show to
its best numbers in 2 years. Guess someone’s listening to
her. The world awaits your destiny, Sarah.
Ever
wonder why Adam decided to share with Eve that forbidden bite? Adam
considered Gods wrath. He considered his wife’s wrath.
It’s easy to conclude whose wrath he was most afraid of.
And
what about investing in those mining companies producing gold and exploring
for new deposits? A lot of money to be made here as long as you
remember you're dealing with speculation.
I
like that word.
Let
me say it again. Speculation. Has a soothing comfortable effect
on the tongue. Technically, there is a difference between the term
speculation and investment. Investment supposedly promises safety and
speculation in the past has always been defined as risk. If there is
any one thing investors have learned these past 10 years is that no investment
is without substantial risk.
Remember
Uncle Bernie?
Bernard
Madoff? For years known as Wall Street’s most successful money
manager. It is really best to classify any and all investing as
speculation. There are no guarantees where ever you place your money.
That’s a hard pill to swallow for 401K participants who were counting
on 30% annual returns until retirement. And back to Uncle Bernie.
I understand that about 50 billion still remains unaccounted for.
What
about speculating in mining stocks?
There
are those who promise significant profits in just a couple of weeks.
Nostradamus couldn’t do better. Somehow I feel a chapter needs to
be written about gold speculation. So here we go.
When
you hear any one touting a particular gold or silver mining company as a sure
thing then head for the hills. The following terms below are good
warnings to look for. When you hear the following terms below
run.
“the
next big thing” “elephant country” “new improvements
in mining technology” “enormous land position”
“no cash” “no permits” “may
prove up” “should”
“…quick and cheap to drill exploration holes.”
When you hear this kind of language it sure whets your greed.
And
the following crap below is a favorite.
Someone
touting an existing property having over 90 million ounces of gold before the
first drill hole has been drilled. Give me a break. Or how
about? “There's no limit to the potential size of this
deposit!” And the following is a good one. “Volume of
ore is somewhere between huge and enormous.” “Past exploration
confirms…”
And
the best probably. “A great deal can be learned with just a FEW
drill holes.”
A few
drill holes? What a load of bull. A mining company can never
drill too many holes. Who knows what’s under that ground?
That’s what determines what’s under there…lots of drill
holes.
There’s
an old saying. Know how to make a quick 20,000 dollars? Invest
50,000 in a gold mine. There’s a lot of truth in that.
Actually, a lot of truth.
If
none of this makes sense then Google Bre-X. Bre-X provides a good
education. And Bre-Ex is not a soap cleanser. The mining business
is complicated. The geology of a site is always difficult for even
professional geologists to interpret. Assay results often are not right
on the money.
Precarious
business.
The
following names below are worth following. Lot of gurus out there worth
reading. A few?
Doug
Casey. John Doody is a master craftsman. Kenneth
J.Gerbino has brains. Jon Nadler always has a grip
on reality and emotions. Kind of like Spock. You’ve never heard of
these? Well, you need to acquaint yourself with these guys. If you do
you might just make money.
The
following fellow below may just have been a successful speculator in gold
mining stocks. And maybe not. Who knows? But the story sounds good.
”We talked about Gods grace and all the hell we raised”
”Then one sunny day, I saw the old mans face” “Front page
Obituary, he was a millionaire” ”he left his fortune to some guy
he barely knew, his kids were mad as hell” ”But me, I’m
doing well” “And i drop by today, to just say thanks and
pray, i left a six-pack right there on his grave…” Billy
Currington
And
back to good analysts to follow? Don’t forget Dennis Gartman.
Brains there too and perspective and objectivity. There are others not
mentioned, but in due course they make themselves heard. Information is
always valuable. Almost forgot to mention Jim Sinclair! Been in
this business for 30 plus years. The one and only gold prophet.
Is
information important?
The
founding father of international finance, Meyer Amschel Rothschild believed
in information. Though born in a Frankfurt ghetto he had the ability to
realize the importance of information. It was Meyer who put to the test
that information can represent the difference between poverty and wealth.
What
leads to poverty or wealth is volatility. What we are seeing today.
Instability and volatility generally contribute a great deal to the direction
of a share price...whether up or down. Jesse Livermore lost more
money when the markets were “flat.” But with the depression
of 1929 and volatility that went crazy. He went on to make 100 million
dollars.
Volatility is always the friend of speculation.
Information
is proving in the world markets today that gold is being recognized as real
currency. More central banks around the world are increasing their gold
reserves. Physical gold and physical silver represent insurance and
shares in mining companies will always be speculation. Gold will
probably continue its climb. 2,000 per ounce looking more like a
reality down the road.
Let’s
change direction here and take a history lesson.
History
always repeats itself. Lot to learn from the past. A lot of
people often refer to the decline and death of the Roman Empire. Don’t
think it ever really fell. Sure, the emperors all died and civilization
collapsed. But Rome’s influence continues to endure and shapes
the very foundation upon which our civilization exits. Its
influence truly never died. Its influence still reigns today.
The
ancient Roman world began around the 8th century BC. Just a humble
little trading post that began its road to fantastic wealth by trading salt
along the Tiber River. Officially, the last vestige of Rome, Constantinople,
came to an end in 1453. What is that? From the 8th century to
1453 is over 2,000 years.
What
does this have to do with anything, especially gold and current events?
So much so that Rome created the blueprints for modern day society, modern
finance and even the futures currency.
Nothing
new under the sun.
Particularly
economics and finance. Throughout history, the ancient Egyptians,
Babylonians, Rome, the medieval era, France, Germany, the 20th century, the
21st century. Always a predictable pattern. Never ending economic cycles. A
little variation here and there. But nothing new under the sun.
Pompeii
had air conditioning…known as evaporative cooling. Modern day air
conditioning was not re-invented until 1902. Romans also invented central
heating, long forgotten, and not commonplace again until the mid 20th
century. Indoor plumbing and running water was available in every major
city in the empire. Both indoor plumbing and outside running water
became a forgotten luxury by the 6th century. Not until the 18th
century would common citizenry enjoy running water. And, oh, those
flushed toilets I like so much.
Rome
had the brains and engineering to build a great sewer system 2,600 years ago,
the Cloaco Maxima and its still in use today. Rome’s engineers
provided public toilets flushed with running water and elaborate fountains
were every where.
Rome designed horse racing stadiums called hippodromes. The one in Rome
held as many as 250,000 spectators. These hippodromes were scattered all
over every major city in the empire. Chariot racing was as popular in that
day as world soccer is today. The Blues (Venetii) and Greens (Prasinoi)
chariot racing teams raced against the Reds (Rousioi) and the Whites
(Leukoi).
Engineering
marveled the age then.
Stretching
from the Atlantic Ocean all the way to the western edge of Parthia, modern
day Iran. Rome paved over 250,000 roads all over Europe, North Africa,
and the Mid East. Just in Britain alone there were over 6,000 miles of
paved road. And many of these roads are still being used today. Roman
roads were often as straight as our modern expressways and even tunneled
through solid rock where necessary. The only difference in modern day road
systems and the Romans is that ours require more maintenance and are
constantly in a state of deterioration. Contractors have learned to
build things in our day that quickly fall apart so they can shortly be built
again. More money made this way.
The
US senate, the executive branch, all old ideas. Their Capitoline Hill
we call today the Washington DC capital. All today’s
classic buildings are patterned in the ancient Roman style. And the
major building component was concrete. The secret of making concrete
was lost and not rediscovered until 1756. Over a 1,000 years with out
concrete until just 250 years ago.
The
point in all of this?
We
can see what our past forefathers did to ruin their economy and
currency. And this understanding proves that what is happening today
was learned long, long ago.
In
an effort to attempt to deal with their increasing economic problems the
rulers gradually began to devalue the currency beginning around 60AD and
eventually became even worse when the silver content was substantially
reduced in coins. And the economy only worsened. By the 3rd AD
century the amount of silver content in a silver coin was only .02%.
One
reason the economy began to fall apart in the roman world was because the
existing currency was debased. Much as is happening again today.
As the money became worth less and less people began spending even less
money.
Always,
through the ages, the middle class is eventually squeezed out of existence,
economic opportunity ceases, and the majority becomes the poor masses
dependant on the state. And as an economy worsens the middle class
eventually became lower class.
And
inflation ensued.
And of course inflation then was caused by the creation of more and more
debased currency. Like the US pre 1964 coins made of silver and now
made of some trash metal. The phenomenal rise in prices in the later
empire followed the large increase of the amount of money in circulation just
as today.
And
in the later empire it became forbidden to hoard gold and silver coins and
the penalty became death. Sounds like the United States under FDR in
the 1930s when physical gold and silver was confiscated from the average man
in the street. Inevitably, we are all just conduits for stupidity and
avarice.
Jim
Sinclair – “Be careful as gold is going to $1224-$1278, $1650
and then on to Alf [very, very high!] Numbers. Ask yourself if you are a
speculator or an insurance holder?”
Summary
A
major cycle is unraveling in the global financial economy today. And as
this crisis cycle evolves the world as we know it will for ever change.
Every
world cycle is about freedom and security. Some will want freedom and
others will want to keep the security and the status quo. Some want to be
free while others happily will wear a golden collar of servitude provided by
a polite government.
Always
look for the gold in the ground. “Proven & Probable” is
always the superior classification for the best affirmed deposit. This
is the term the banks like best before lending money.
David Vaughn
Editor,
Gold Letter, Inc.
www.goldletterdv.com
All
articles by David Vaughn
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