Jocko,
I am getting behind Mirandor in a very public way and thought this forum might like to see my commentary on the company.
My Cafe address is lemetropolecafe.com
Hope you enjoy it,
Best regards,
bill murphy
Midas du Metropole
"The Gold Market and Precious Metals Commentary"
November 6, 1998 - Spot Gold $292.80 down 80 cents - Spot Silver $5.013 down 2 cents
Technicals -
Steady as she goes. While gold set back a bit today, it is running away from its $290 support level, basis Dec. All the important moving averages are coagulating around this area and may influence the day to day trading. The CFTC Commitments of Trader report, released after the close, was constructive. The big specs went from around 16,000 long to 18,000 contracts short as of last Tuesday. The little guys reduced their longs and the commercials went from 30,000 contracts short to 13,000 contracts long. No change here for us. We are bullish and continue to watch the base build. $335 is our first objective.
The price of silver has roared back from its trashing earlier in the week and the fact that it closed above $5 puts a smile on our face for the weekend. The premiums in India are still firm and are ample to draw supply into the country. We look for new highs in the recovery move to light up the scoreboard in the near future.
Fundamentals -
Rueters headline ( Nov. 5 ) - Japan sees biggest gold boom since 1995.
"Japan is now seeing something similar to its "gold rush" of bullion buying in 1995 against a backdrop of unrest after an earthquake devastated Kobe in January and a nerve gas attack by cult members on the Tokyo metropolitan subway system in March.
This time, traders said, the backdrop is global financial turmoil, Japan's worst banking crises in postwar history and the nation's "Big Bang" financial deregulation, all of which have made people think about the necessity of protecting their assets.
And in both cases what triggered the buying was the yen's surge against the dollar, as a stronger yen brought about lower retail gold prices on the local currency base, they said. "
As you know, we have reported that one of our sources has alerted us to consistent Asian central bank buying. That information was corroborated from a different source yesterday. It appears Goldman Sachs, good ole Goldman again, is going around to various producers telling them that gold is going to $260. At the same time, we understand that they are holding a big buy order from an Asian central bank. Even the news services know it. Reuters ( Nov.4 ) gold…." only recovered some ground today because of further heavy buying by one investment bank."
Times are changing. It looks like American Gold Eagle coin sales will be the best in 11 years in the U.S.
Bill O'Neill, the well known, Merrill Lynch precious metals specialist, and oft seen as a commentator on CNBC, called yesterday to say that I had left the wrong impression in my last Midas du Metropole commentary about their position on the central bank sale issue. I saw his point and told him I would let our members know that, indeed, they ( Merrill ) have been very correct on this issue. I was referring to a specific sale which is not worth going into. I also told him that in previous Midas commentary, we had given them credit for being the most right over the past two years.
Here, forward is another matter. Since I had the opportunity to chat with him, I asked Bill for his views. He said that he felt that the worst was over for the gold market, but that he was only neutral for the future price of gold. I told him that I saw $400 gold in the cards and explained the reasons for my view.
It is his opinion that a bull move is not in those cards for gold, unless gold becomes monetized again. His view is that they ( the central banks ) do not want the stuff anymore and will continue to sell. If that were to change, he would change his mind and told me he would rather be bullish, but he just cannot see the case at this point in time. This is no surprise coming from Merrill, but it appears New York, Merrill is not as bearish as London Merrill.
London ( Reuters ) Nov. 4, - Merrill Lynch sees 5-year gold range of $200-$300. "Mine and central bank sales plus Asian dishoarding set against likely dollar weakness will confine gold to a $100 range an ounce for the next five years, Merrill Lynch said in a report seen on Wednesday. Capping the price would be sales, or feared sales ,by euro-zone national central banks, the International Monetary Fund, and Switzerland. " It would clearly appear that his associate in London, Ted Arnold, does not share Bill's view that the worst is over for gold.
We take a different view, are very bullish, and you know our reasons for disagreeing with the Merrill people. A big one is that we believe central banks do want gold. They are just Asian in origin. For example, we reported that Canada just reported selling about two tonnes of gold, but Mongolia just announced it has bought seven tonnes of gold so far in 1998.
We also have stressed that we believe gold WILL retain its safe haven role in the years to come while Merrill does not see that. "Economic dream team" member and widely followed banking specialist, Charles Peabody agrees with the Midas view. Last night, I drove down to Boston to visit with Charles, who was in town for a banking convention and we hit Beantown for some very good chow. After enjoying some fun family talk about his 5 kids, realizing we are both Merrill Lynch and Drexel Burnham alums and learning of his former stint in Europe as a professional soccer player, I pummeled Charles for his opinions on all that was going on in the banking world ( his pieces will be posted shortly ) and what effect it all might have on the price of gold in the future.
It is Charles's opinion that the well educated bankers of the modern generation have used every derivative play in the books and, in many cases, have used those derivatives to supplant the role of gold. He also believes more derivative blow ups are coming ( possibly this spring ) and that when it is all said and done, that it will be the excessive use of the derivatives that will go into disfavor and the role of gold will come back into favor as the safe haven place to be among the banking community. So, Charles sees a healthy bull move in gold on the horizon. (P.S. Announced today- Nov.4 - Bloomberg - "Long- Term Capital Management,.., may sell about $1.5 billion of German government bonds as part of a planned reduction of its investment portfolio. Gerd Neitzel, German money manager," They're saying to the banks, bid for our bonds and we'll pay back on our loans, eventually.")
Then we touched on the Department of Labor's leaking of the U.S. non-farm payroll number that showed more weakness in the employment front than was anticipated. It is Charles's opinion that it was flagrant manipulation of the market place as the 5 and 10 year note auctions went poorly and the 30 year auction did look too good. The government was concerned that if the triple bottom at 126.02 ( about the 100 day moving average too ) was broken, the market could dive, so they leaked some bullish news for the market to absorb. It just so happens that their maneuver worked but today the bond market swooned down to 125 before rallying a bit.
. How much do you think it saved our government to keep the price up higher for that one extra day?
Charles thinks, like we do, that our government is manipulating the markets ( including gold ) and that history will show this. It his is opinion that some day in the future we will have another Pecora Commission. Back in the 30's Ferdinand Pecora presided over the financial tycoons of the day and sent some of them to jail for manipulating the markets.
Potpourri and the Gold Shares -
The XAU has had a meteoric thrust to the upside to 85 yesterday before setting back today to close at 79.28 down 3.78 as it held its 50 day and 200 day moving average points ( a divergence from the bullion which did not ) and its up trend line. A move above the 86.5 area will break a 1 1/2 year down trend. This is not unusual action ( the XAU move up ) prior to a big gold move.
As we have said before, the so called smart money, smelling a gold move parks some big dough with the well capitalized gold companies. They do so because of the liquidity, safety, ability to buy ( and sell ) and the fact that an investment in the shares does not have the time constraint, or contango issues, that options and futures have.
The next ones to move ( in general ) should be the juniors that have production, then the exploration firms that have found resources, and finally those looking for the resources. There are many good precious metals companies out there and we will be talking about a lot of them in the Café in the months and years to come. We will try and present the ones that we like, and are investing our own money in, to you. A good many of them will be brought to our attention by you, the Café members. I am no rockhound, but we have access to, and are utilyzing, one of the best in the business to assist us in making the best judgement calls that we can. We are running out many ground balls on various companies. It takes time to do the due diligence ( for our own investment purposes ). At the same time we stress that we are not investment advisors. This is a Café. We will evaluate companies ourselves and continue to present appropriate commentary from the members, so that we can all try and tell it as we see it. We believe that, in the giant precious metals bull move to come, there is much money on the table, if one bets on the right horses. The Café search for thoroughbreds is on.
Thus far we are in:
Golden Star Resources - 1 1/2
Canarc Resource Corp - 30 cents Cdn.
Durban Deep - 3 1/16
Greenstone Resources - $2 Cdn.
We have an outstanding silver play ( they are hard to find ) that we will be bringing to your attention shortly, as we wait to learn if a financing package goes through that will allow the company to go to commercial silver production by the end of the first quarter in 1999.
Today, we bring on a pure exploration play, a bit ahead of schedule. Mainly because they just saw their highest volume the other day ( 1.84 million shares ) in two years, so we are going to touch on it now, so that you can follow it. Something may be up.
One of the first Le Metropole members was Brandon. We have interracted over the internet for some time and I was impressed with his acumen. Many months ago he began to pound away to me about Exploration Mirandor Inc. I had heard of the company through gold aficionado and highly regarded brain surgeon, Dr. James Wood, who also happens to be a vice president of the company.
It so happened that Mirandor President Jim Sperros was attending an internet show in New York a few weeks back so I drove down to New York and back in a driving rainstorm. Took me 14 hours, but it was worth it. Jim Sperros is a winner and is well known in social and business circles in Montreal and Washington. It does not hurt that he coached on two Super Bowl Washington Redskin teams and was the owner of the only US team ( Baltimore Stallions ) in history to win the CFL Grey Cup.
On the same trip I met George Tsiolis, an attorney and President of Agora International Enterprises Corp, a firm, that among other things, produces a splendid and successful investment internet publication. George is a big supporter of Mirandor and the meeting convinced me that I should continue Midas interest. When I saw the extremely heavy volume in the shares on the Montreal Exchange the other day, I decided to pluck down some bucks and bring this to your attention. I will plunk down some more bucks in the future.
Le Metropole member, Brandon, is more eloquent about the appropriate positives about Mirandor than I could ever be, so I am presenting his communique to the membership. In addition, you can go to the thread commentary section ( after the Midas commentary ) to review his thread, "MIQ on Montreal, My Junior Pick", which was posted in the Café two months ago. I would like to add that the Carlin Trend produces about 65% of the gold produced in North America.
1) The Gold Window on Mirandor's Railroad Project Property in the Carlin Trend.
Mirandor's Railroad Property in Nevada has the 2nd largest Gold Window in the Carlin Trend. A Gold Window is an anomoly where platlettes have been pushed up within the earth and mineralization is evident at shallow depths. The 1st largest gold window in the Carlin Trend is owned by Barrick Gold within their Goldstrike property just north of Mirandor's Railroad project, it contains 25 million plus ounces and counting. The 3rd largest Gold window is Newmont's property just north of Mirandor's and sandwiched between Barrick and Mirandor's property, this gold window to-date has resulted in a reserve of 8 million ounces plus.
The "2nd largest" gold window in the Carlin Trend is located on MIQ's Railroad Property in the Carlin Trend. It is in the initial stages of exploration with approximatly 20-30 holes drilled in various zones of the property at shallow depths. All zones have returned significant to great mineralization, with the POD zone and the Bunker Hill zone show the strongest results and essentially being in the middle of the Gold window.
2) The Location of Mirandor's Railroad Project being in the Carlin Trend in Nevada.
This is significant because this is one of the most prolific area's in the world to mine gold at shallow depths and low cost's. The Railroad Project contains 15 past producing mines (copper, lead, gold, silver) all located within a Carlin Window of lower plate sedementary rocks outcropping along the Pinon/Anticle structure. The majority of the gold deposits are contained within Carlin Window's of lower plate sedementary rocks. This description identifies MIQ's property the best.
3) Drill Results prior to the Kinross Deal being signed were "Significant"
The drill results (1996 & 1997) prior to the Kinross Deal were exceptional. It included significant results from a number of zones and the discovery of additional shallow mineralization in other zones. These zones include, POD, Bunker Hill, LT East, Elliott High Ranch and Dark Star. There are still other zones that are wildcat deposit's showing strong potential that haven't even been explored.
The best results were from the POD zone, where drilling in January 1997 intersected 3 holes with significant gold mineralization with the best hole averaging close to .07 oz/ton over 170 feet. POD had never been drilled at depth, but one hole close to a fault structure 200 feet below surface intersected .54 oz/ton over 18 feet. Additional drilling in the POD zone continued to come up with great results. It is expected that additional results will be coming out this year from the POD zone.
POD .101 oz/ton gold over 55 feet
The Bunker Hill zone intersected even better results than the POD zone, including a polymetalic gold discovery (coverage provided in the Northern Miner). With some of the following significant results prior to the Kinross Deal signed:
Among the results announced prior to the Kinross deal
Bunker Hill .44 oz/ton gold over 20 feet .35 copper .555 zinc
2nd Hole. 165 oz/ton gold over 45 feet .7615 copper .155 zinc
4) The Kinross Deal
In November of 1997, at the depths of this Gold Bear and based on approximatly only 20 holes drilled on the Railroad Project, 6 majors approached MIQ to do a joint venture on the property. The final choice was to go with Kinross because part of the deal was that the project would not be shelved until a better Gold market was evident, so that exploration would be immediate. Kinross has committed to putting 17 million US$ into the property for exploration and a full feasibility study.
5) Recent Trading
The latest trading in MIQ and BX (BREX, not to be confused with BRE-X) has been volatile and heavy. This appears to be due to the expectation of results. Brex owns 25% of the POD zone which has had the strongest results to-date. It appears that the insider's are positioning for some good results again to be expected.
6) The Carlin Trend has numerous shallow deposit's, which are the most economical. It costs anywhere from $90 to $140 per ounce to mine gold in this prolific area of the world for gold. Even in today's market this is very profitable at shallow depths. While result's to-date are already showing that there is a strong possibility of a shallow open pit mine. The kicker will be when drilling goes down to over 1000 feet, traditionally in the Carlin Trend this is where the highest grades are found and from all other indication so far this could be similar to Barrick and Newmont's property and depths.
7) Management
The management is a number of rock hounds in general with their President James Speros, being the deal maker and promotional wing of the company. The company is very cost conscious and will not promote too much in this gold environment until they have more concrete results.
James Speros, was the driving force behind the Kinross Deal which essentially has provided the company with the means to continue to drill without raising additional cash and having any dillution of shares while having the integrity of Kinross behind them when results are released.
Brandon
Mirandor ( MIQ ) trades on the Montreal Exchange and closed today at 35 cents Cdn. up 9 cents
Midas
Bill Murphy ( Midas )
After graduating from Cornell University, Bill was a starting wide receiver with the Patriots of the old American Football League and has been around the financial and commodities markets ever since. He owned a futures firm in N. Y. that specialized in precious metals and was a contributor to Veneroso Associates, a global strategic investment firm and producer of the 1998 Gold Book Annual.
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