In MDG at 11.46 thanks
<Green: All right, Rob in Cornwall, Ontario.
Rob: Great show as always. I'd really appreciate John's views
on Merdian as a value play. I've got a couple of gold stocks
already. And it seems like everybody is passing this one over.
Your opinion, please.
Embry: That's a good question because I think they ARE
passing it over. And I really think they're wrong in the sense
that the Esquel property in Argentina, which has run into
serious permitting problems, will, I believe, ultimately be
permitted. And that's the key aspect.
Green: Is that why people have been passing it over?
Embry: Absolutely. And in my view on gold, and how this is
going to unfold in the next five or 10 years, an asset in the
ground is only going to become more valuable. So if the
Esquel property is delayed --and it IS going to be delayed
probably a couple of years anyway because of these
permitting issues -- the asset's still there. And if they
eventually get it permitted, it is going to be worth a fortune
when gold is trading at a thousand dollars. So I like Meridian
a lot. In fact, I was a buyer of the stock very recently. I think the investing public is wrong on this one. Meridian has fabulous management, a great cash cow in El Pino, a very active
exploration program, and an asset that's being severely undervalued because of the permitting issue. I'd be a buyer.
Green: All right. Kevin in Vancouver.
Kevin: A quick question on Ivanhoe Resources and mainly their Mongolian play.
Embry: If you believe Robert Friedland, this is one of the monster ore bodies in the history of the world.
Green: Do you believe him?
Embry: I would downplay it a bit. I think that it IS a major
ore body. They've got some very good results lately. The issue was grade. They've got some very high-grade results recently. So that is a big positive development. My issue would be how long it's going to take to exploit. This is a total greenfield. There is no infrastructure. There is not a great deal of water. And I think this thing won't be in production probably until the next decade.
Green: Do you own this one?
Embry: I do not own Ivanhoe. I do own QGX, which I've talked about many times on the various shows, which is my play in Mongolia. It's much much cheaper and I take the proprietor at his word.
Green: And so if you owned Ivanhoe, what would you do with it?
Embry: I would hold it because Robert Friedland is the greatest promoter on Earth. He's got a great asset but the stock is extraordinarily expensive. He's got a $2 billion market cap on something that I don't see being in production for a long time.......
Embry: Clearly I'm in the environment in which gold would take out the old high at $800. It would come, I suspect, at a period of considerable monetary debasement, which means that the values of anything you're buying would be rising. Now the rate of inflation that that would entail -- I don't know. It would be materially higher than it is now. And I suspect that long rates would be higher. Short rates, because of the debt that's all through the system, would probably be maintained at fairly low levels. We'd have a steepening yield curve in this environment.
Green: Why is there so little inflation though given that we've got so much liquidity?
Embry: It's the way inflation's measured. Very simply: Housing
is going through the roof in North America. Some of the statistics in the States recently on house price increases and volumes and everything are staggering. The stock market's recovered. Money is sort of seeking outlets. The reason you don't get high-stated inflation, like high CPI, is all these goods flooding in from China. There is this inflation/deflation battle. There are a lot of deflationary forces in the world. China, the Internet, too much debt -- and they're trying to offset this with massive injections of liquidity. It's a battle. I don't know who's going to win. Gold wins in either deflation or inflation. It doesn't win in disinflation, which we've had for 20 years.>
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