Below is a letter I plan to send to each producing mining company and precious metals mutual fund that I own personally. Gold and silver prices have been diluted by paper contracts to the point where no money can be made producing gold and an industry loss producing silver. Years ago, Rob McEwen of Goldcorp decided to withhold the sale of gold production to be held in their treasury until prices were higher. THIS is exactly what needs to be done now as a counterbalance to the unbacked paper contracts being sold to depress prices. The COMEX and naked shorts need to be starved for metal, the strong demand is doing this slowly while the mining industry could do this very quickly.
Please, copy and paste the below and sign with your name to any producing mining companies you have investments in. Also, do the same for any gold mutual funds you may own and ask the money manager to contact their holdings with this same letter. Government has an incentive to keep metals prices down and the lapdog regulators are allowing it to happen. Price manipulation is illegal, if the authorities will not fix it, hopefully the industry itself has sense enough to finally do something!
Dear Sirs, I am a believer in hard money and an investor in both the metals themselves and various mining shares, your company being one of them. As you well know, hard times have hit the producers of both gold and silver. Gold and silver prices have been forced down, capital, either debt or equity is very scarce for our industry and share prices are back to the levels they traded at when gold was under $400 more than 10 years ago.
Much evidence has been uncovered by GATA (Gold Anti Trust Action committee) over the last 15 years showing how gold and silver prices have been suppressed and continually manipulated yet we've heard not a sound from the industry itself. Many mining concerns pay dues each year to the World Gold Council which at the very best seems to be an antagonist to gold and silver. I know of no other industry which does not promote their own product nor protect it from outside and malicious pricing practices, this needs to change and the most logical catalyst is from within the mining industry itself.
The industry as a whole is mining gold at best at a breakeven and silver at a very substantial loss. It makes no sense at all to expend labor and capital to lose money, especially when your product is a finite resource and will not ever replenish. If working harder and digging more ore was an answer then I would be cheerleading the machines, the fact is, the more that gets dug up in the current environment the more money is lost and precious ore wasted.
The facts are well documented that global demand is and has outstripped supply of gold and silver for many years ...yet the prices are dropping. Your "product" is being diluted by paper sales of "representative metal" while the board of directors do nothing at all. Actually, the mining industry itself is aiding the suppression scheme by delivering metal. Years ago Rob McEwen of Goldcorp withheld production from the market and held gold in their treasury for use at a later date and higher price. Why doesn't the industry as a whole collectively do this? Yes I know, fixed expenses must be paid but if mining ore is done at breakeven or a loss, why not stop mining ore? Or at least only bring to market what is necessary to fund operations.
Either discontinuing operations or withholding metal from the market on an industry wide scale will break the backs of the speculators for lack of deliverable metal. This needs to be done industry wide but can only start one company at a time, why not our company? Why do we deplete our ore and not receive fair value for our capital and labor? Paper gold and silver contracts without any product behind them are "pricing" our product, the government is happy with this as it allows them to print freely and have lower interest rates than otherwise would be available. The regulators have turned a blind eye, we have only ourselves to rely on and collectively depend on.
Whether this proposed action is taken or not remains to be seen. Shortages of metal will occur sooner or later as physical demand and backwardation will eventually take the metals higher in price by multiples. Many companies will not be in existence within a couple of years unless those with the fiduciary responsibility to protect our companies and investments ...also protect our product from fraudulent dilution. It is time to stand up and be counted now, later may be too late and will carry liability with it.