-- Posted Thursday, 5 January 2006 | Digg This Article
It’s a new year and it’s time to push the refresh button. And as we push that button, I’d like you all to remember the words of someone very famous. Well, I can’t remember their name and I’ve inserted my words along with his. Perhaps I’ve jumbled it up a bit, but here’s the gist of it.
1. Find something you love to do (and hopefully the money will follow)
2. Find someone to love unconditionally (hopefully they’ll love you in return—unconditionally)
3. Find a reason for hope and a reason to help others (expecting nothing in return)
4. Treat life as a journey and treat everyone as you would like to be treated (the Golden Rule)
Well, I know I switched it around a bit and added a little here and there and, well—I can only hope we’re all so lucky.
Wishing You and Yours a Safe, Healthy and Prosperous 2006
First of all, on behalf of Peter Spina, the staff at GoldSeek.com, and myself, we’d all like to wish you the very best of 2006. We appreciate your support, loyalty, and repeated visits to the site. I know Peter is constantly working on ways to make the site more informative, more up to date, and better suited for each and every visitor. We anticipate new services and features being added this year in order to better serve your needs.
Goodbye 2005
I think many of us were only too happy to say goodbye to 2005 with its natural disasters, political disasters, financial disasters, and well 2005 seemed to be mostly a disaster. At least it felt that way.
Of course the major media loves to highlight that stuff and it would appear that we’ve become addicted to negative news. Why don’t they highlight more of the really good news that happens every day? Good people doing good things? Why? It’s because it doesn’t sell.
I think we should keep our eye out for the positive things in life and begin to create more positive news in our own daily lives; thereby creating more of that positive reality that I’ve spoken about in the past. Of course, if there are natural disasters, we all want to help, but moderation in all things would appear to be the best route to take. I think that sometimes the media just takes a story that “sells” and beats it into the ground to the point that when the next “need” presents itself, we’re still numb from the last one that was so over done.
I’m looking for my Crystal Ball
I’m going to begin 2006 by discussing (some might call it rambling) a few things that I hope will prove beneficial to you in the year to come. No one has a crystal ball, but I feel that this gold market is just beginning to heat up. For some of us, it has been six years of tortuous waiting; for others it has been sixteen or twenty years.
My beat is the junior mining sector but of course I keep an eye on all the major indexes and how they are acting and reacting to the news in the world. It is all interrelated.
As with the news, we need to find balance in the equation in order to discover why gold and gold shares are going to continue to do well in 2006. My crystal ball tells me what goes around, comes around and that no good deed goes unpunished. It also tells me that if I drop it, my big toe is going to be broken. Oh yes, it also informs me that this should be a good year for gold and gold shares, but for reasons that most of the population in the Northern Hemisphere have not a clue. I wish my ball would be more concise. Wait, what’s that? It’s mumbling something about the oil and the energy sector doing quite well this year.
A few basic Tenets of the Gold World
For just a moment, I’m going to recapitulate a few basic tenets of the Gold World; not all of them mind you, but a few of the most important.
Gold is no one else’s liability. Gold is the ultimate money and therefore it is real wealth. It has been that way for 5000 years. The Baba (bureaucracy) can yell, cajole, lie, and tell all sorts of fibs but it doesn’t alter the real truth. It never has and it never will. However, if it fits Baba’s needs, it will try.
Gold has been unmercifully attacked for over 20 years by the financial and government media as junk and as a barbaric relic. This is because it competes with their colored paper or their stock certificates. This is the same colored paper that is backed by only their promises of IOU (nothing). An entire generation has grown into adulthood believing that this paper (some called dollars, others called Euros and others called the Pound Sterling) is as good as gold. Some even go as far as to infer that their paper is still is backed by gold. Well, ladies and gentlemen that paper is not backed by gold and don’t be fooled into believing otherwise. No fiat currency in the world today is backed by gold.
It would appear that when Baba or any figure of authority says one particular thing often enough it takes on a life of its own and becomes “truth”. Historically speaking, this methodology has repeatedly been used to sway and assuage the masses. In 2006 we need to transcend that kind of thinking and begin to find our own truth. In other words we need to think for ourselves. (See Original Vs Derivative Thinking in the archives)
We all need to understand that gold is appreciating because the Central Banks of the World are absolutely decimating their fiat currencies via dilution. It would almost appear that there is an international race for the basement as to which country can make their currency worth less (worthless) first. We’ll go more into the reasons for this type of activity at a later date but think exports and world trade and you’ll be on the right track.
Gold is now taking on its traditional role of wealth preservation although it is climbing a wall of worry and fighting all of those stereotypes perpetuated by Baba that have been drilled into our heads vis a vis the barbaric relic indoctrination over the past 25 years. The funny thing about truth is that it always seems to manifest itself at some point along the continuum; be it straightforward or contorted. Sometimes it takes 25 minutes, 25 hours, 25 years, and sometimes 2500 years. But in the end, it seems to universally prevail. And guess what—we all want to know the truth; even Baba!
And finally, against all odds, and after years of suffering the travails of being a political metal, gold is reestablishing itself as a barometer and a thermometer of the real economy. It is beginning to once again reflect the inflationary and deflationary repercussions that have been unmercifully masked, diluted, deleted, and denounced by Baba. It will initially be a slow process but it will eventually pick up steam like a locomotive hurling down a winding mountain pass until it finds its own pace and comes to rest in the station we’ll call equilibrium. Get on board Brothers and Sisters because it will be the financial ride of a lifetime.
Do No Harm
There’s a Physician’s Motto that in essence says, “Do No Harm”. That is how I personally feel when contemplating readers and investors that may not have wide latitude of experience in dealing with the junior mining complex. So the first pearl of wisdom that I’d like to impart to all of us, myself included, is that we need to educate ourselves if we are going to throw hard earned dollars at a junior mining company. Information is always the name of the game. This year that concept will be taken to an entirely new level because so many of the curtains in the Land of Oz are going to be pulled down. As a nation, this process of shedding light into forbidden rooms will shake us to our very foundation. We will all be wondering which way is up and which way is down. We will all need our own very firm foundation to weather the storm.
I’m going to be suggesting junior mining exploration companies for your review again this year. What this means is that I’d like you to do your own due diligence based upon some of the parameters that I’ve put forth in the past. My first goal is to do no harm. My second goal is to make certain I achieve my first goal.
Maybe that is a way of coping out. But here is the real truth of the matter. If you blindly follow a broker or an advisor without knowing how or why they are doing what they are doing, you are setting yourself up for heartbreak. So learn how to evaluate companies—all companies in which you invest, and learn to do it in a way which will give you some sense of comfort.
When I list a company in my column, it means that I’ve done enough due diligence to believe it is a good candidate for appreciation. Almost universally, I’ve spoken to management. I have a relatively good idea that they are above board and not scam artists, and I’ve reviewed their projects and plans have some sensing of what they are endeavoring to accomplish. Sometimes I get paid by the companies and sometimes I don’t. Sometimes I like a company to a degree where I will solicit management believing that there is a really exciting story to be told and we can help. But at the end of the day, I can only offer ideas.
The rest is up to you! These are only ideas—they are only suggestions. It goes without saying that when GoldSeek.com accepts an advertiser, the same criterion has been applied. We have a degree of confidence that these are companies that have some reasonable crack at success. If it is only a one year old company in North or South America with a totally unknown management that has no track record, chances are we’re not going to be interested in accepting their advertising. Inversely, does an acceptance of a company on GoldSeek.com, indicate a de facto endorsement? Let me just say that I know GoldSeek.com does its level best to research each and every company accepted but that doesn’t mean that each and every company accepted will turn out to be a huge success. Risk is rampant in this business.
We Need to Accept Responsibility and that Means doing Our Homework
One again, it bears repeating that we need to take responsibility for our decisions. For example, one of my favorite writers who review the junior mining gold sector is Jay Tayor of Jay Taylor’s Gold and Technology Stocks. (www.miningstocks.com).
Jay is as ethical as they come. Not too long ago, a subscriber wrote to him and apparently took Mr. Taylor up one side and down the other expressing his displeasure regarding a particular stock that didn’t do well. Other sentiments of displeasure were expressed. Well, Jay being the Christian gentlemen that he is, not only reprinted this person’s letter, but answered in detail every one of the points in question. That individual had no grounds for complaint because he took ideas—suggestions as absolute fact. I can only wonder if he understood the risk and if he did his homework.
Now here is my point. Writers of Jay’s high caliber and unquestionable ethics along with many other people doing similar work are offering up ideas. They are not twisting your arm to buy or sell something nor are they representing any stock investment as a 100% secure deal. Exploration deals are risk with a Capital R and start up mines are in the same league.
Most of the seasoned, well-informed analysts-writers in this business will always tell you to diversify and most importantly, they will also suggest that you perform your own due diligence (Research—Study—Phone Calls—Sedar Documents—Stock Reports and so on and so forth.) That is due diligence and it cannot be overstated that you do yours and I do mine. I’ve said it before and I’ll say it again so might as well become accustomed to it. Perhaps that axiom of restating something enough times so it eventually becomes truth will be applicable in this particular instance.
If anyone is sitting there expecting that someone is going to pave a road in gold (pun intended) you are on the wrong planet! It is usually the opposite as in “buyers beware”.
So once again, here are some broad basic points of departure for you to do your own due diligence.
We need to understand the four basic parts of the equation of any junior mining company:
1. Management: (capable, competent, experienced, visionary, ethical)
2. Projects (have potential, secure geo-political areas, area plays, results)
3. Ability to fund (raise money (“without selling the store”), limited dilution
4. Ability to promote (a team that tells the story in an honest, timely and realistic fashion)
(5.) Ethics (addressing the best interests of all parties concerned)
I’ve covered these topics in detail in the past, and since they are rather self-evident, I shall only refer you to the archives on GoldSeek.com I have added a fifth which is Ethics because as this gold market heats up, it is going to become more and more important to be dealing with a company that possesses, demonstrates, and employs good ethics.
One last Idea!
We’ve dealt with curtains being torn down, lights coming into forbidden rooms and establishing your own firm foundation to weather the storm. Remember that owning physical gold coins (American Gold Eagles; Canadian Maple Leafs, etc) and bars and bags and bars of silver are the very safest ways to participate in this precious metals bull market. (See GoldSeek.com's Precious Metals Vault). After that, senior gold mining companies—the blue chips of the industry are the safest bet. Next in safety will be the mid-level producers. Finally, at the bottom of your inverted precious metals pyramid come the junior mining companies which are the least safe, the most risky and yet can possibly have the greatest rewards. And finally, don’t confuse gambling and investing. Even professional gamblers perform their own due diligence and attempt to learn their game to a degree where the odds are more in their favor.
The Future is Now
OK folks, time’s up. Put your pencils down and take a deep breath. You’ve all done well and I anticipate A’s for the entire class this year if you follow these simple guidelines.
In the near future I’ll be covering Klondex Mines (KDX), Trio Gold (TGK), Madison Minerals (MMR), Oromin (OLE), Geocom Resources (GOCM) to name a few. There is going to be a good deal of news coming forth from this junior mining sector and I believe it will prove to be an exciting and hopefully profitable year.
Until Next Time,
D. Stewart Armstrong
Consultant to the Junior Mining Sector
(consulting@seacoastpub.com)
-- Posted Thursday, 5 January 2006 | Digg This Article
