Found on the JES Mineset site tonight...
RE: JES' last week's presentation to AMEX G&S 4th Annual Conference:
Posted On: Wednesday, April 18, 2007, 2:30:00 PM EST
Jim's Mailbox
Author: Jim Sinclair
"All truth passes thru three stages: First it is ridiculed. Second it is violently opposed. Third its accepted as being self-evident."
--Arthur Schopenhauer
Dear Monty[Guild],
I took a lot of flak on the dangers of derivatives. I am sure that the junior company executives I spoke to at the Amex conference last week will pay no attention whatsoever to me.
They wouldn’t dare tell their stockholders that the percentage deal they made, reported to earn a huge gross between cash costs of mining and gold price revenue, will not drop one net penny to their bottom line.
This is more so for the property because of their inherent responsibility, having subordinated the percent of their property to the development loan with an imbedded short of gold derivative puts them in harms way of reverting the property percentage they have to 100% of their operator.
Dilution to 10% of profit by the major means you get ZERO for your efforts.
I respectfully accept your kind words as this one has cost me time, money and ridicule.
Now we have the Lahir and Ashanti case studies for dilution of the stockholder - big time. Wait until a junior loses their property to a major unable to meet a cash demand on a deep in the red, short of gold, over the counter derivative imbedded in a development non recourse loan, and then all hell will break loose.
This is for real even if no one else in the business wishes to consider it. There is no question or doubt about it.
CLOSE QUOTE
COMMENTARY:
Those of us on SI who've been around since the LTCM debacle which cost Cambior and Ashanti their autonomy when their hedgebook blew up when gold raced to above $423 several years back, know to what Mr. Sinclair is referring.
This is, in my mind, the largest single reason "it is different this time" when it comes to the beleagured G&S stocks moving significantly northward anytime soon, while physical will lead the way.
Gold is now (once again) a currency instead of bangles and baubles. The US dollar has fallen from the 160+ level on the index, and is now facing down a 50% haircut in the basket of currencies against which it is floating since 1972.
And the mortgage market is still whistling while America burns.
YUCK!
G_T |
