Let me make my point through an example. Suppose I'm a peanut farmer in South Carolina. One day the news reports on an unfortunate kid who died from a peanut allergy. In response, some Congressman overreacts. He wants new regulations on peanuts and educational programs to warn parents about the dangers of serving peanuts. Furthermore, he wants increased inspections of farms and records of all food manufacturers using peanuts.

Naturally, this is pretty bad news for me and my fellow peanut farmers. We have to do something to stop the wave of regulations. Unfortunately, there are only a couple thousand peanut farmers in the US. In a democracy of 300 million, a few thousand votes won't get anyone very far. But couldn't the peanut farmers organize and inform others of the problem? Sure they could; but this won't help much because voting is always a package deal.

Let's say the peanut farmers convince you of their case against the regulation. Now what? Well, there are two politicians running, and one of them has promised to protect the peanut farmers. You're going to vote for him, right? Probably not. After looking into the politician's stands, you notice that he supports a number of things that you're against, like abortion, universal health care, and the wars overseas. That's the package-deal problem. If one wants to support the peanut farmers, one's vote will support all sorts of perhaps undesirable views.

One can't vote for the peanut farmers in a vacuum. As a result, the majority of people will not change their vote to help the peanut farmer - even if they sympathize with his position.

At best, the peanut farmers may be able to convince their local Congressman to help them. The farmers could make a case for the economic interests of the community. What else could the peanut farmers do? They could create a peanut-farmer association that donates money to politicians to consider their issues. Through this method, they can influence their local Congressman as well as dozens of others across the country - particularly the ones on the appropriate agriculture committees.

As a result, the peanut farmers who previously had no voice in a democracy of 300 million can be heard regarding issues that affect them.

Here's the problem: Lobbyists are never satisfied with just defending their interests. After acquiring some friends in Congress, the farmers may ask for special favors. Why not throw in a special $10-million subsidy to the peanut farmers in the next $100-billion spending bill? The peanut farmers can get away with this subsidy for the same reason that lobbying is necessary in the first place - voters don't care enough about the subsidy. Would a $10-million subsidy to peanut farmers really change your mind about a politician who has spent billions? Probably not. The funds must get pretty large before the average voter cares (examples include the auto industry and financials). Hence, the bill passes unnoticed.

In my opinion, the anger should be focused on these special favors - not on lobbying itself. Democracy has an inherent flaw, in that it often ignores minority interests. Whether one is a peanut farmer or dentist or restaurant owner or tech worker, the majority of citizens don't care about specialty groups. If there's some major regulation affecting your industry, the rest of the population will not come to your aid. It's not their fault. One can't keep up with every regulation; and then there's the package-deal dilemma mentioned earlier.

Lobbying to defend oneself from government stupidity is not wrong. In fact, if corporations couldn't defend themselves against the government, the market would likely become much less free. I certainly wouldn't want to see a US where corporations had no defense against politicians like Barney Frank, Nanci Pelosi, and the gang. If we got rid of all the lobbyists, some things would improve and others would get worse. In short, I'm not saying that lobbying is a good thing. If anything, it has become a necessary evil for companies to protect themselves in a world where the government holds a very big stick. If the government were smaller and unable to grant special favors to companies and special interests, the number of lobbyist would naturally decrease.

Next in the issue, Andrey Dashkov will discuss recent M&A activity in the gold sector. Things have slowed down but there's still some interesting activity happening.

Weakness of this magnitude did not go unnoticed - not only by investors but by companies which had M&A plans. Two deals involving gold stocks were announced late September; let's have a look.

On September 19, Agnico-Eagle (T.AEM) announced a C$255-million (US$257.8-million) acquisition of Grayd Resources (V.GYD), a gold exploration company with its flagship La India project located 70 kilometers from Agnico's Pinos Altos mine in Mexico.

The project is not huge - at 0.5 g/t Au cutoff it hosts 665,000 ounces of gold at 1.03 g/t Au in the Indicated category and 418,000 ounces at 0.96 g/t Au Inferred. The company's mine scenario envisions 92,000-ounce/year production over nine years by the relatively cheap heap leaching method.