Pac-Man Theory Refresher

As the price of gold fell from the highs in the 70’s a great divestiture occurred. Gold Miners started having to cut back on expenses, and so they cut E & D. They had to. They needed to survive. They had plenty of resources to mine and they didn’t need new resources right then, so they essentially cut way back on exploration and development of new properties. These guys that used to do this stuff for them, essentially got laid off. Guys like Keith Barron and Rick VanNieuwenhuyse went out and started junior exploration companies. They staked claims and used their knowledge of mining to do what they knew how to do best. Why? Because they knew we were going to eventually head into a new gold bull market? Not necessarily. They did it because that’s what they knew how to do. But now, the game has changed. Gold is going up in earnest and the major miners are starting to mint money. They aren’t just trying to keep their doors open and their lights on, they are starting to think like growth companies again after this long time, and a growth company, by definition...grows. They are going to need to start doing exploration and development of new resources. This is where one, YOU, has to become a thinker of a different type. I was recently speaking to a big Tyhee investor on the phone who pointed out that no gold companies have been acquired in the past without a preliminary assessment being done first. Virgina Mines acquired by by Goldcorp was the only notable exception to this. The question came up involving whether this is a unique one time event or a seminal event beginning a trend. If the second scenario is true, then much wealth can be attained by those who can spot this as a trend before the great mass of investing humanity. I say that Gold is going to keep getting more valuable, and therefore gold companies are going to start making a lot more money. Their stocks are going to start going up and they are going to start using their stock certificates as currency to start making acquisitions of junior miners that have done and been doing the legwork for them for the past several years. This is the cheapest and smartest way for them to facilitate the growth of ounces on their balance sheets that they will need in order to remain growth companies in this next leg of the commodities bull market that will grow stronger and stronger as inflation continues to rage. When the good bull market really gets going we might see behavior on the part of big miners and even mid-tier producers that could be construed as somewhat panicky. When there is is not that much resource out there to begin with, whatever is out there, even just "potentially" out there starts to look really good. Companies with gold in the ground in safer places are going to become prime acquisition targets. It is highly likely it will happen this way. I see it now, but I didn’t see it first. Eric King did that, but then again, he’s always a few steps ahead of everyone else involving such things. That’s why he owns Kimber and why I do too. Bull