Re: What is happening with Kimber?
in response to
by
posted on
Jan 05, 2009 05:11AM
Creating value through Exploration and Development in the Sierra Madre of Mexico
Robert, Of course everything depends on the price of gold. Where gold goes will determine what Kimber will ultimately do. My models that put Kimber up at around $100 a share are based on performance of internet or rather certain dot-com stocks during the 1999-2000 period. An example would be something like PMC Sierra. Take a look at the chart. This was and still is a viable company, but was driven to stratospheric levels during a mania phase of the bull market. Granted, this involves a lot of variable falling into place, but that's why it's such a big and unimaginable number for most. It also depends to a great deal on a rush back into gold, a hidden human tendency that I believe will become prominent in the next 24-36 months or so.
Ten dollars a share is a much saner number to many and could easily be reachable with gold at $1650 an ounce even if the entire financial system doesn't go into the toilet which is where I think it is headed. I am having a hard time imagining, how gold will not keep rising, even with all the manipulation. I agree with Jim and Mike Maloney. If the people trying to stop it had the power to stop it, it would be at $200 an ounce right now. Its price demonstrates that something has fundamentally changed in the precious metals markets. Something like $10 a share is based on studies two members of my group have done based on fuel costs and ounces in the ground, prices others have paid for ounces in the ground. These are all very interesting, but are static types of analyses. Everything is changing very rapidly right now. The economy is falling apart right in front of our eyes. In other words, I can't be too worried about my gas mileage as I am jamming on my brakes to keep from slamming into a semi in front of me.
Many of my personal models are based on certain assumptions that you may or may not agree with.
1. The dollar is unstable and will be devalued.
2. Gold and silver will reestablish themselves as common money.
3. Paper assets have been corrupted and are not suitable means of storing wealth.
If gold reclaims its traditional place as money. The masters of the universe will be people who own gold mines that can be mined. Also, keep in mind. $100 a share means a lot if you have to pay off your mortgage but not too much if gas is $25 a gallon.
Gold will reclaim its place as money. History tells us this. The pattern has repeated itself many, many times. This time will be no different. Unfortunately that means many people are going to get hurt. I can envision a scenario where no one will even have a 401K in about 5 years. We will be reading articles entitled, "The Great 401K rip-off. How greedy Wall Streeters robbed Americans of billions of Dollars in Savings." Most will feel very outraged, but they will still be broke.
In closing, $10,000 gold is not as wacky as you might think. The dollar is unstable right now. Some things Eric Janszen said in his 2006 interview got me to thinking. The dollar is not primarily money anymore to international traders. It is more like a ticket to get into an amusement park. It's the price of doing business. AS LONG AS THERE IS NO RECOGNIZED SUITABLE ALTERNATIVE. After Bretton-Woods essentially replaced gold's old function with the dollar, everyone needed to purchase dollars to play any financial game anywhere. This is why the dollar has lasted so long. If Disneyland outlawed dollars and said you could only use Disneyland Dollars, people would still go, and go for a long time, even after they started ripping you off, which, of course, they eventually would start doing. It would work at the carnival down the street too as long as the exchange rate was pretty good, but if they started screwing you over, you'd go to the movies instead, because who gives a crap about the carnival down the street? But Disneyland is the place where dreams come true. So what if the exchange rate is criminal, after all its Disneyland. What are you a party-pooper? A Commie?
Sorry for the long answer. I sometimes use these to think. Just remember. We are heading into hyper-inflation. There is no stopping it now. Your gold will be mined in Mexico and your earnings will be made in Canadian dollars. Canada, 30 million people and very abundant natural resources. It's easy to see how Kimber could go to $100 or even $200 an ounce in such a situation. Remember in Germany in 1915 50,000 marks was enough for a pensioner to live comfortably for life. By 1923 50,000 marks was not enough to buy the postage stamp to pay to mail the letter from the bank to say that ones account has been closed due to insufficient funds. A lot of people are going to be hurt very badly by what the U.S. Government is doing right now. It will be harsh. Bull