Friday, March 22, 2013

AME.v Abacus Mining

Since I mentioned them the sp has risen. It's interesting to see people trying to sell large blocks at 17 cents. Disclaimer: This morning 200,000 shares were up for sale. 17 cents is a steal. I may start taking my position early.

Why would anyone sell? It's a funder who wants to get their cash in motion. They also think this will take till the end of the year to see real gains. They might even share my opinion of what's happening in the junior market.

Look at SPA today. WTF!? 14 cents for a producing gold mine? Yup. How can that be? The implication is that nobody wants to shelter money in a profitable gold mine. But look around at small gold for a minute. They're all under attack. From Jr to Major the share prices are skewed. So what's causing this distortion?

I think this is a systematic attack on gold. It can't be anything else. I can explain it this way. There is a battle between fiat money and real money. In the fiat system you create a FED and it prints money for the people. But, the FED prints a trillion dollars and via interest it expects 1 billion interest. The problem is that it only created the trillion so the billion can't be repaid! The FED didn't print an extra billion so where is that supposed to come from? Well, the FED has to print more and this becomes a chicken and egg thing.

At a certain point in time with all fiat money the people slowly awake to the reality that their FED has been printing funny money. One person argued with me recently that the interest is created when we dig metal out of the earth or when we grow more corn on freshly turned ground. His idea was that the earth was a resource and the FED was just monetizing it. My counter there was pretty obvious, the earth is a closed system!

From discussions and comments from around the world it is becoming much more apparent that the people are becoming aware of what a fiat money system is all about. They are feeling it at the pumps, grocery stores, basically everywhere. And, they are not happy. Many are becoming very worried and rightly so. You see, taking money off gold was a hoax played on a simpler people in a simpler time and it worked. So no more gold on demand, instead, you trust in a fictional being called a god. This way when the IMF tells your Cyprus banker to steal your money you can be mad at your god!

If money were still tied to gold there would be no more inflation of the money supply than was needed/ required by population growth. Yes, you could add oil and copper into the equation that backs a buck. Perhaps you are Greek and you want it backed in Feta Cheese, take your pick, they have a number of exports to choose from: In 2010, Greece was the European Union's largest producer of cotton (183,800 tons) and pistachios (8,000 tons)[97] and ranked second in the production of rice (229,500 tons)[97] and olives (147,500 tons),[98] third in the production of figs(11,000 tons) and [98] almonds (44,000 tons),[98] tomatoes (1,400,000 tons) [98] and watermelons (578,400 tons)[98] and fourth in the production of tobacco (22,000 tons).[97] 

What you can't do with a brick of gold is make it multiply and this is what makes it stable. The basket of goods idea to value a currency is a good idea. And, all currencies backed by physical things must be allowed to float. This way you can only print according to demand.

So here in the land of magic interest and pegged currencies examining GDP or the value of a currency is like looking through the bottom of a coke bottle after 6 beers.  But lets return to the price of gold companies.

As the fiat money loses it's grip on the people's minds you would expect a rise in gold prices. This has happened but lately the producers seem to be losing value. Now, that should not be happening. What I fear is at work are high frequency traders and large amounts of money. Before the rise of gold and all during it a huge amount of fugazi money was pumped into the system. This happened over a period of about 15 years. While the banks sold gold reserves they were busy using the fiat money to lay a long term trap.

Across the board you are seeing gold producers hit with sale after sale in what seems like an endless supply of shares. Gold producers are talking about providing a dividend just to try stop the share price slide. It won't be a total solution. It may attract new investors but the sell off is not over yet. I think this will continue for another 6-8 months. Also to take notice of, the junior sell off started early this year as predicted. It's been a sea of red out there with the exception of a bunch of plays that are nearing capitalization time.

The junior market came under attack before small gold. This sets up volatility in the explorers. Add in hft's with lots of money behind them and you can ensure there is very little outside investment happening. Now dump gold to suppress its rise. Illegally manipulate silver and gold with the blessing of your governments (who's pensions are tied to the fiat money) with the sole intent of driving the price down. Then use HFT's to skim every penny off all those shares you laid away for over a decade. Lastly, convert you fiat funny money back into gold whilst everyone else is trying to get out of the mess you made.

This discredits the value of gold and gold producers. It casts an ugly pawl over the market itself and leaves an effluvium wafting down Wall street. Toronto smells the same only with a hint of stolen Maple syrup on top. Clearly, the last thing they want you to do is to protect your wealth by hiding it in a company who's product has been the universal store of wealth for over 10,000 years, gold. Some say the idea of portable property may even be much older.

The bond market warning. The capital inflows into places like Thailand into government bonds are an example of a bubble that spans everything from housing to rice. And this morning:

U.S. government debt may continue to be a poor performer, according to investor Jim Rogers, who co-founded the Quantum Fund with George Soros. 

Rogers told Bloomberg Radio he's betting against long-term government bonds and believes the bond market is in a bubble.

The stance has Rogers joining several top investors, including Pimcomanaging director Bill Gross, who have voiced concerns about the bond market and overall debt levels in the United States. Goldman Sachs(GS) and Wells Capital Management have also expressed worry. 

"I’m short long-term government bonds,” Rogers said, referring to a short position, or a bet that an asset will lose value. "I plan to short more. That bull market, that’s a bubble."

When Pimco and the Soros of the world tell you they are shorting long term government debt you'd better listen. Yes, there are some Contrarians who want you to believe there's no bubble but I find those arguments shallow deceptions especially when measured against all of the activity. If the people who lend to governments are betting against them... seems to me that's a self fulfilling prophecy. How can the USA print 85 billion a year and not erode the value of their dollar? Don't forget the interest that has to be paid back on those dollars!

Can zero percent truly be the new norm for permanent interest rates going forward? In a word, NO! So what happens to all debt holders when the piper demands payment? If you think the current interest on USA debt is bad just try adding 1%. Now try 3%. Can you spell disaster? Yup, that's what the great fear is. So when this starts to creep in you will see a sudden interest in gold stocks. You'll see really big money trying to hide from the onslaught. But, this will be like trying to hide and elephant in a strawberry garden by painting its toe nails pink. That kind of money leaves a very large dust trail visible from space.

By May of this year we should see the bottom of the market. If you are prepared to store wealth in gold stocks and wait till 2015 you will be rewarded. This will be the Return of the Kings. Only this time it will be us.


  1. You sure have a way of explaining 'stuff'. Regardless of my education I have always been quite naive about the way the world works...find it hard to believe that the world is full of master manipulators and sociopaths. I think most of us go through life without ever knowing or comprehending the workings of the world let alone trying to 'beat them at their own game'. Thank you; your perspective and explanations are always appreciated...also love the reference to Gobekli Tepe; my daughter is an archaeologist.

  2. Dirk Gently's Holistic Detective Agency by Douglas Adams. (smiling)

  3. Holi(stic)cow! 'Water, water, everywhere...' , (also smiling)