Commentary - 11/18/2007

Caution For Gold Miners and Investors

Today, I have received several emails announcing the posting this article:
A perfect storm for gold as mines left empty
By Ambrose Evans-Pritchard, International Business Editor,
There are several quotes of interest here. Here's the first:

"Try as they might, miners cannot find enough ore at viable costs to replace their fast-depleting reserves, even if they dig miles into the centre of the earth.

"There's not much gold out there," said Gregory Wilkins, chief executive of top producer Barrick Gold.

Here's the caution message from 1889, that's pertinent to the above article on gold mining and investing:
"The Money Power Is Devouring Our Gold and Silver Mines
As a rule, persons having gold or silver mines to develop always go to the Money Kings or their agents for the capital to develop them. And the Money Kings never put any money into a mine without having a majority of the stock given them, so as to secure to them its absolute control. They must have the lion's share in any enterprise before they will invest in it. They usually put in one of the original stockholders as their agent and manager; and generally the mine is so managed as to freeze out the other stockholders.

A shaft is sunk down upon the "lead;" if it proves to be rich, only the poorer levels nearer the surface are worked, till the outside stockholders become discouraged and sell out their stock cheap: then the mine is worked efficiently. But if, on the other hand, the mine proves to be a pocket, like the Emma Mine in Utah, [today we would think of BRE-X] it is puffed in the papers until outsiders have bought the stock; then the true state of things is revealed. Having full control of the mine, they are able, with their agent, to manipulate it as they please; and finally they thus get control of all valuable mines."

Perhaps the CEOs are not telling the whole truth.
Perhaps they're only bringing up the hardest-to-get gold at the moment to keep shares cheap.
I simply do not know. This is just being passed on as something to chew on.

The "Perfect Storm" article also mentioned this:

"You don't put yourself in harm's way. It's a non-starter to invest in a country that takes your mine away from you," said Mr Wilkins.

"The list of countries where we won't go is getting longer. There's Venezuela, and all the countries in Latin America that are influenced by (Hugo) Chavez.
So, who maybe influences (Hugo) Chavez?"
This tombstone ad appeared 10/2/06 in the Wall Street Journal on page C6. Before Chavez was a strong as he is now.
There was no story about this in the WSJ, no stories on the Web, so I wonder who they were notifying.
Talk about financing all sides of all battles. A billion here, a billion there, pretty soon you control the country.
Pakistan comes to mind at the moment.  Only 10 or 11 billion to secure the eastern edge of Iran.

So just who are the Major Holders in Barrick?

And who are the Major Holders in JPMorgan Chase?

It's interesting how Barclays (London) and AXA (Paris) keeps showing up as Major Holders.

Now here's one more place that Barclays (London) shows up. This article details the ritual, that dates back to 1919, of fixing the price of gold.

Twice a day, representatives of five banks pick up the phone to trade physical gold and arrive at the London "fixing" price, which then becomes a benchmark for gold around the world.

As the clock in the vast Barclays Capital trading room in London ticks towards 3 p.m., attention turns to Marc Booker, the bank's head of spot gold trading.

Booker joins a conference call with the four other banks who take part in the fixing.

Need I say anything more?

2007 by Edward Ulysses Cate
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