Yes, when the price of gold was low the seniors benefited & now as the price of gold is finally heading higher there appears a concerted campaign to defame the junior & exploration sector. And the shorters & the senior mine companies will be those ultimately benefiting from this strategy. You don’t believe me? The end result today is that all investors in the gold market are beginning to question whether their investment in a junior mining company is a sound investment and whether maybe they would be better off liquidating their junior gold shares & only purchase the senior & larger company shares.
Sure, there are high risk properties out there that are very speculative. But I find it interesting that this concerted attack is being launched against some of these small exploration plays that are 80% owned by multi billion dollar senior gold companies. But this is just a coincident right?
I got involved in this market many years ago because I saw huge & powerful interests manipulating the gold market making billions of dollars engaging in practices that the common investor would never be able to participate in. I have worked as an engineer for most of my working years. Recently I have been involved with the telecommunications industry working in what is called the Central Offices where all the switching is done for fiber lines & T3 circuits. I started studying the gold markets in 1997 because it was fascinating to me that there was a carte blanche practice going on that was fleecing the small time gold company & gold investor. And no one cared.
The powers that be that control this market have lost control keeping the price of gold down & just as this occurs there begins a campaign to begin defaming the junior & exploration sector & the inevitable result are lower gold share prices. A prominent gold analyst recently surmised that the large senior gold companies share prices are priced for a 500 dollar gold price. But the fact remains that on average the junior & exploration gold shares are on average lower than when gold was 315 dollars an ounce a year ago.
And no one recognizes the peculiarity here? And again, who will be the ultimate beneficiary? Why the large senior gold companies who will be able to obtain these smaller companies & their deposits for a song.
When I began covering the gold market back in the mid 90s it astounded me that many of the old timers were predicting a time would come when the mining industry would be dominated by only a handful of gold companies & consequently these few remaining gold companies would have a monopoly on the industry & would own & control all exploration properties. I see us moving in that direction today & will not be surprised to see at the end of this decade only a handful of senior gold companies existing and no longer a general junior & exploration market.
How convenient that even as we speak the campaign continues to drive the juniors share prices lower & all in the name of benefiting the investor. And while all of this goes on the end result will be that the senior companies will be able to come in and take over these companies for pennies because of the lower driven share prices. And the rewards for those helping to achieve these goals will be the profits generated from selling short these shares as their prices head south.
David Vaughn
2-11-2003
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