Coming Week

Another shareholder meeting is being held in an out of the way golf course location this week on Tuesday.

Overall, I would say that the project has been assembled with a lot of foresight in almost totally adverse market conditions, with the disapproval of the Federal Government. The cost has been very high for the shareholder not able to compete with the relentless dilution of the shares. Just the same, going through the news releases over and again will confirm all the bases were covered.

One way this company can compete with the market darlings and the outright swindles on the garnering all the attention is to provide dividends. And, not just a paltry appeasment, but a very robust and controversial one.

This would in no way impair the ongoing development and growth in the company either, as the company is likely to insist. Gold companies during the depression never had the unique advantage and foresight to consolidate an entire gold belt prior to the onset of credit collapse, yet they were able to pay out a very robust dividend almost at the outset of mining with the tiniest of projects.

The situation is no different here. You start at the outcrop, you mine some, you find some more, then you mine some more. All the while, you pay dividends to your shareholders who have assumed the lions' share of the risk, and a coprophagic breakfast almost at every turn. And this has been going on for years now.

The formula was simple. For every dollar you put in to the project, you got two dollars out. And this was prior to the devaluation. Nowadays, there isn't a single project out there with the capability to pay out a third of their earnings in dividends. But this one can. So let the gold company with the best property live up to its name.

1/3 operations & development, 1/3 taxes and doré-bar stockpiling, 1/3 dividends. (22% - 22% - 22% - 33%) This is completely unheard of in contemporary times, as everything is judged on the basis of share price absent of dividends. Dividend payouts are a key element missing. This was why gold companies were the focus of the business press during the depression.

We may be on the cusp of a type of monetary crisis not before seen. For instance, if the U.S. dollar declines with the onset of negative nominal interest rates and chronic negative real interest rates, any declines in asset prices are deepened by currency weakness, irretrievably falling behind inflation which seems indefatigable, even in an apparent deflationary credit crisis. This makes gold all the more important.

The obvious error within the company outlook on the gold price is that its "real" price should be in the area of ~$900/oz. U.S. This blatantly ignores adjusting for inflation. Take inflation into account, and the perspective changes dramatically. The price has settled nicely ~$700/oz. U.S. above this completely arbitrary valuation pulled out of a hat.

On top of this all, the company has been very reticent and piecemeal about information. Be as secretive as you like. Wanting to keep control over the project is understandable. I have no qualms about that. But if you want that, you're going to have to start paying out dividends pronto and start competing with other companies, otherwise you lose control.

You have to compete, because this is market after all. Isn't that right? The bases are loaded here, you're going to need your best hitter to knock it out of the park.

-F6