History circa 1999 and Brain Fagan News Letter Info today just received, last line allows public Distribution, I only put 15% on here: He just put it out as a TRADE ALERT #1001-IAMReally thinking now, so should we all in gold.
Cm
""THE FAGAN REPORT / faganreport.com
TRADE ALERT #1001
DECEMBER 3, 2001
"Continuation of the "Conversation on Gold" through November 30, 2001
For those with an interest in gold and gold related securities - I am publishing this "Conversation on Gold" for public distribution. No copyright restrictions apply.
"CONVERSATION ON GOLD"
Updated Through November 30, 2001
Since July 2001, there has been a "Conversation on Gold" going on between various individuals and myself relating to the marketing of very small weights of gold bullion to individuals as per my 1997 Article - "Gold and Penny Mining Stocks - Is There A Future?" Rather than try to summarize these ideas each time a new person comes into the conversation, I am simply recording in this document the various communications on the subject as they occur in chronological order. In this way, each participant's feelings and ideas are presented exactly as they have been expressed. Each time an addition is added, the above noted Updated Through Date will be changed. - per Brian Fagan
Comments on the "Conversation on Gold" should be addressed to info@faganreport.com Please note that all comments will be treated as non-confidential, pre-approved by the submitter for public dissemination. If you wish to make a confidential comment, please clearly indicate that the comment is private and confidential and not for public dissemination.
PREVIOUS "Conversation on Gold" - The recent "Conversation on Gold" began in July 2001. All "Conversation on Gold" commentary from July 2001 through November 24, 2001 is posted at faganreport.com - see Trade Alert #1000 at the top of the Trade Alerts page. Today's Trade Alert #1001 contains all "Conversation on Gold" commentary from November 25, 2001 through November 30, 2001.
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November 30, 2001 - Commentary from Brian Fagan
Since publishing the initial "Conversation on Gold" last week, I have received considerable feedback. What I received, however, was just a very small fraction of the feedback received by Adam Hamilton, author of "Gold to the People." It was Adam's "Gold to the People" essay that circulated the ideas in the "Conversation on Gold" to a worldwide audience and generated the necessary critical mass to keep the Conversation alive and effective. Following a few of my own comments, you will find Adam Hamilton's latest essay, "Gold to the People Feedback," which chronicles much of the correspondence he recently received. There is little doubt that a large segment of the world's population is ready to once again embrace gold as an unofficial but internationally recognized and accepted currency. The missing link to making this a reality is the backing of one or more of the major gold producers.
I spent a lot of my time this week soliciting that support. Following is a copy of a letter I sent to Newmont Mining Corporation, Franco-Nevada Mining Corporation Limited, and Goldcorp, Inc. along with the entire "Conversation on Gold." This week, I will send it to AngloGold Limited. Gold Fields of South Africa also has all this information. Following that is a copy of a letter I sent to the president of South Africa in August 1999. I'm not sure if these letters ever get through to those they are intended for. Maybe by posting them here, someone will bring them to their attention. This is a two way street; whatever help the gold producers lend to making the ideas in the "Conversation on Gold" a reality - they will reap back many-fold! Without the support of the gold producers, this conversation will reluctantly, soon go quiet.
This week's "Conversation on Gold" concludes with Adam Hamilton's essay "Gold to the People Feedback." You can reply directly back to Mr. Hamilton through www.zealllc.com
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November 26, 2001 - Letter from Brian Fagan to Newmont Mining Corporation, Franco-Nevada Mining Corporation Limited, and Goldcorp Inc.
Mr. Ronald C. Cambre, Chairman
Mr. Wayne W. Murdy, President and CEO
Newmont Mining Corporation
Corporate Headquarters
1700 Lincoln Street
Denver, CO 80203
Mr. Seymour Schulich, Chairman
Mr. Pierre Lassonde, President
Franco-Nevada Mining Corporation Limited
20 Eglinton Avenue West
Suite 1900, Box 2005
Toronto, ON M4R 1K8
Mr. Robert R. McEwen, Chairman and CEO
Goldcorp Inc.
145 King Street West, Suite 2700
Toronto, ON M5H 1J8
Dear Sirs:
I write to you after having spent over thirty years in the gold mining industry as a mineral exploration financier, junior mineral exploration company founder / CEO / COO, financial advisor, and newsletter owner/editor specializing in mining stocks. My purpose is to solicit your participation in a well thought out and publicly popular Plan to create a much higher sustainable gold price. The broad details of this Plan are outlined in the following "Conversation on Gold."
My purpose in pursuing this activity is that I would like to be the one to head up a new organization, founded, backed, and financed by the major gold mining companies to implement this Plan. The smaller producers as well as all the supporting industries will no doubt lend their support and come on board. Since the real agenda of the World Gold Council is questionable as to purpose, a new separate organization apart from the WGC is the preferable way to proceed. Whether I get the job to head this organization or not, the Plan as presented is, in my opinion, the only way to insure the healthy survival of the gold mining industry.
Putting all modesty aside, I know that with the backing of the unhedged gold mining community, the Plan would result in a higher sustainable gold price than is possible under any other scenario. I am talking $400 within a year. Double that is possible in the years ahead.
There is no confidentiality attached to this communiqué or the information contained. I simply ask that you review the Plan in the "Conversation on Gold" and consider giving me a chance to expand on these ideas with you.
Thank you. Sincerely yours, Brian Fagan
August 10, 1999 - Letter from Brian Fagan to the Office of the President of the Republic of South Africa. Sent at the time when South Africa had a delegation of its high-ranking government officials in Europe, asking the European Central Banks to halt or curtail their gold sales. Acknowledgment of the receipt of this letter was received from the Office of the President, but no further reply was received.
To the Office of the President of the Republic of South Africa
August 10, 1999 Original transmission / August 15, 1999 Second transmission
Dear Sirs:
I do not expect this letter to show up immediately in the personal Inbox of President Thabo Mbeki. He is, however, the intended recipient - and in all due respect - I would sincerely appreciate and humbly request that whoever does receive this communication do all in their power to see that it does come to his attention. In hopes that this comes to pass, I will address my remarks directly to President Mbeki.
Dear President Mbeki:
Let me spend a few sentences introducing myself so you will know me as a very serious individual. I write to you as a fifty-six year old North American that has spent his entire business career in one way or another connected to the business of gold mining. I maintain offices in Washington State, USA and Vancouver, BC, Canada. I have been a gold prospector, gold explorationist, and gold miner, but my main occupation has been in the financing of these endeavors by public offerings through the facilities of the U.S. and Canadian stock exchanges. For the past five years, I have been the sole owner, editor, and publisher of The Fagan Report, Mining Stocks and Speculation, a mining stock advisory newsletter. I am a frequent TV, radio, newspaper, and media commentator on the subject of gold and gold mining stocks, as well as a speaker at many related conferences. I would not consider asking for even a moment of your precious time unless I thought I could provide you with a valuable idea, and hopefully, my personal services.
Being in the gold business, I have naturally always followed events in South Africa. Although I have never had the opportunity to visit your country, I have worked with and know many that come from, worked in, or were educated there. I am no stranger to your struggle! I am aware of the challenges you face, and I also know your success is assured. It is just a matter of time and money. It is the money issue I wish to address. There is always a cost to money. I take it that South Africa and its citizens would prefer to provide for their own destiny, rather than to be dependent on the politics of World Aid Organizations and the compromises that always accompany foreign investment.
My point is very simple! A higher, sustainable gold price would provide much of the needed capital for infrastructure and social programs not only in South Africa, but also the entire African continent as well as most of the developing countries worldwide. I have a marketing plan for the world's gold supply that would guarantee a minimum US$350 to US$500 gold price within a two year period. This plan can only work with your personal assistance. The G-7 nations have shown unequivocally they would much rather be the mortgagees of your assets than see you standing tall and financially independent. With your approval and the backing of the Government of South Africa, I want to be actively involved in heading up this marketing plan and implementing the program.
My idea is not new to me. I spent many years playing the devil's advocate with myself trying to answer the age-old question of what is the value of gold. What gives it that value? What determines its exchange value into other currencies and goods. Why has it been the only worldwide financial reserve for centuries in favor of all other rarities? What is the cause of its recent price decline? To quote the media, "Is it merely a financial relic of the past?" I answered all of these questions in the feature article of The Fagan Report, December 1997 issue. I ask you to read that article, reproduced here, then I will close with a brief summary and personal request.
"Gold and Penny Mining Stocks - Is There A Future?"
Is the game over on the Vancouver Stock Exchange? Is gold really a store-of-value or is it only a relic of the past? Should
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Innovation
From South Africa, "Anyway, I had much the same idea, better still I have decided to buy at least a coin a month! It works great - and best of all, I even made a profit in a very short time. Think how great it would be if goldmines could start sending you your dividend in the form of a gold coin - maybe they should give the public a choice! Best of all, cashflow is lower and the cost of the dividend is much lower than the perceived value to the investor.
From Parts Unknown, "Instead of giving dividends to stock holders, why not give stock in a subsidiary gold refining/minting company, to be redeemed at a future date in gold coin when operations are up and running. As a gold bug I would vote for it."
From Parts Unknown, "What a great idea Fagan has! I don't see why it wouldn't work. In addition the few unhedged gold companies that pay dividends could give their shareholders the option of taking the dividend in gold coinage."
From Parts Unknown, "Another idea along these lines might be GOLD BONDS. Sold directly to the public, mines could raise fiat for operations and pay the bond holder back in gold. Awhile back I called mines that I have stock in, and tried to get them interested. Most of the miners were pathetic. I think they either don't have a clue or are part of the manipulation."
From the United Kingdom, "I fully agree that the campaign to market gold as jewelry is a waste of money. Furthermore, as with most luxury items, jewelry will be hardest hit by the recession. People will focus their reduced income on more important things like food. In contrast, 'Gold as Money' or as investment is a theme worth supporting. At this moment there is no major alternative to government fiat currencies. They are all badly designed, some are just managed better than others. I am skeptical about pinning too much hope on gold coins as money because they are cumbersome for transactions other than face-to-face payment and there is always the quality control question. It is for these reasons that paper money started to circulate representing the gold rather than the gold itself. The missing element in your article is the growing group of 'Digital Gold Currencies' of which GoldMoney is, in my opinion, the best designed and managed. This is the way to get gold to the people! Mr. James Turk has done a brilliant job in designing GoldMoney. I have been using it extensively over the last 6 months without any problems. It is an 100% undiluted system. For each goldgram in the GoldMoney system there is a real gram of gold in the vault."
From Canada, "I would like to point out that fractional coins are minted for the Gold Eagle and the Gold Maple. These coins come in denominations of 1/10, 1/4, and 1/2 ounce. Additionally a 1/20th ounce Gold Maple is minted by the Canadian mint. I personally have found a company that makes it quite easy to own physical gold. This company is Kitco and has a website at www.kitco.com. I have noticed that just the past couple of days that this company is now selling the fractional gold coins. Perhaps your essay inspired them to do this, then again it may be just a coincidence. However, what I like about this company is that a person can buy into a gold pool. With the gold pool, a person buys a set amount of gold at the current trading price but does not have to take delivery. The form in which a person wants their gold can be decided at a later date. This would allow a person to accumulate gold over time to the desired quantity before taking delivery. However, a person may decide not to take delivery at all, but keep a gold account with Kitco. Unlike banks and brokerages there are no fees associated with keeping YOUR GOLD with them. This is the route I have chosen at this time. Perhaps, once I reach the desired quantity, I may take delivery. However, when a person takes delivery, the fabrication charges for the coins or bars then come due."
From Parts Unknown, "One sometimes overlooked property of gold is its malleability. That is why gold leaf has existed for ages. Gold can be beaten thinner than any other metal, so why use coins? Use a machine that will create a measured minimum thickness of gold leaf and encase it in plastic about the size of existing 'paper' currency with some kind of security (maybe a hologram or something), but the property of malleability will deter forgery. If it can't be any thinner you can't issue clipped 'bills'. Choose the plastic so if you want one ounce of gold, just get X number of bills and put it into an oven and have the plastic melt away or use the gold leaf as gold leaf. Coins could be used for larger transactions, or better, use a similar process to create credit-card sized/shaped bars. Wallet-friendly gold! It might even be divisible, cut a bill in half for change? I haven't worked out all the technical details, I only know enough chemistry and materials engineering to know it would be possible, and probably economically feasible. Also even with the attractiveness of physical gold, the mines could probably create dore vaults onsite and let people buy that. There already has to be security, and this would allow purchase before transport cost (for a discount). Were I considering a depository, having dore at the mine (with appropriate guarantees, insurance, etc., like those holding 999 fine gold bars, as well as storage fees) isn't that much different. I would get a discount, the refining fee subtracted, and I could have it coined, converted, or trade in my receipts back for whatever currency is convenient. I could buy the mine output and leave it at the mine, keeping it off the market until the price goes up (why else?), but very near the source of the supply. Of course it would be made easy via the Internet, or there are already gold dealers, whichever works best."
Action
From Parts Unknown, "Brian Fagan's excellent thoughts articulated in his newsletter BACK IN 1999 offer a couple tantalizing possibilities of new distribution channels to move physical gold from mines to the people. Yes back in 1999, but that was nearly THREE YEARS AGO. My guess is that nothing has been done and nobody has moved on this idea. Why don't these large gold companies (that are not hedged) come up with a plan, after all it's not rocket science. Others have come up with plans/ideas that do transactions in gold like E-GOLD. How much harder could it be to make Fagan's idea work? I like many, always have extra money to burn and would love to see it buying more gold."
From Parts Unknown, "It is easy to identify problems, but to propose a solution at the same time makes all the difference. I saw a bumper sticker the other day saying 'no whining', well, it's not whining when you tell people what to do, something positive for a change! The Franklin Mint may be the biggest private mint, could they be approached about this? They have the advertising and distribution channels already in place. There is a company I read about it in Jay Taylor's newsletter (www.miningstocks.com) and subsequently invested in. They already market 5 oz. silver bars, not gold, but they could be approached about something more reasonable."
From the United States, "Awesome concept! How about setting up an LLC, selling shares to the gold-related websites and PM letter writers, through their subscribers raise the necessary funds to partner with a non-hedged mine or two, then buy a refiner and let's do it! I'm ready!"
Conclusion (Adam Hamilton again)
As you can see since you've made it this far, there are legions of brilliant and far-sighted thinkers and doers around the world who are offering tons of great ideas on marketing "Gold to the People". Even though this "essay" is long, it only represents a fraction of the wonderful feedback you were gracious enough to send me. For all the contributors who had their thoughts ruthlessly expropriated and published above, I offer you a million thanks for your contributions to the ongoing debate on marketing gold. Thank you!!
Challenges certainly exist, but solutions can be found. Through old-fashioned marketing and distribution expertise, coupled with exciting innovations not possible before the wondrous Information Age, I strongly believe that there ARE actionable solutions that can be devised to get Gold to the People. I truly hope that the important debate on how to increase gold investment demand amongst normal everyday folks continues to move forward in the gold world.
Great strategies that ultimately change the world always begin their lives like helpless infants, as mere ethereal ideas. Yet, as these ideas grow and flourish, they can result in action if they are good enough. In order for an idea like "Gold to the People" to work, any action plans MUST allow for the transactions to be profitable for all participants while providing a valuable good and service to the ultimate purchaser of physical gold.
In a truly free market, ALL transactions must be mutually beneficial for both participants. If a transaction is not mutually beneficial, it is not worth doing. As more people discuss and refine ideas on how to move Gold to the People, I encourage the thinkers and the doers to focus on profitability, on creating a viable strategy that provides real benefits and gold to the consumers, and real profits to every business in the manufacturing, marketing, and distribution chain.
If the transactions are mutually beneficial for all involved, there is a very real chance of building a more efficient way to move Gold to the People! Adam Hamilton, CPA
Do you enjoy these essays? Please help support Zeal Research by subscribing to Zeal Intelligence, our acclaimed monthly intelligence briefing, today! (Please click here for a free sample.) Mr. Hamilton, a private investor and contrarian analyst, publishes Zeal Intelligence, an in-depth monthly strategic and tactical analysis of markets, geopolitics, economics, finance, and investing delivered from an explicitly pro-free market and laissez faire perspective.
Reprinted with written permission of the published, Adam Hamilton. Please visit www.zealllc.com for more information on Zeal Research.
TO BE CONTINUED - November 30, 2001
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NOTE / DISCLAIMER: All information published by The Fagan Report is for informational purposes only. As Editor, I, Brian Fagan, tell you what I am or would be doing if I had sufficient capital to do so. You read and/or subscribe to receive this information for whatever personal reasons you may have to do so. Nothing more is implied or intended. Nothing in this communication is, nor should it be construed to be an offer or solicitation for the purchase or sale of securities. Please see our complete disclaimer statement at: faganreport.com
COPYRIGHT: Fagan Report Trade Alert 1000 - "Conversation on Gold" is for public distribution. No copyright restrictions apply.
Wishing you all the best,
The Fagan Report,
Brian Fagan
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Chucka |
