Gold Rush Alaska a Poignant Reminder of Why Gold is Such a Good Money
Wednesday, February 23, 2011 at 11:25PM The final episode of Gold Rush Alaska aired last weekend. For those who missed our initial commentary on it or if you aren't aware of the show, a group of unemployed and down on their luck guys from Oregon sold their last remaining assets and pooled together about $250,000 and, despite having next to no mining experience, they headed up to Alaska to try to "make it rich" looking for gold.
In the end, the show ended up making an excellent point about why gold is such good money. These guys ended up bankrupting themselves, nearly dying on numerous occasions, being chased by bears, stalled by government regulators, working through most of the day and the night in dismal often freezing conditions for more than four months and after all of that the total amount of gold they found ended up fitting in something about the size of a large shot glass!
Now, contrast that to Ben Bernanke who spends his days slurping ice cream at Washington Nationals;)
games, getting his beard trimmed and taking his limo into work and at the flip of a switch, can create $600 billion, as he did in his second try (QE2) at making his laboratory economic theories work.
So, a dozen guys practically dying, working all day and night and getting chased around by bears came up with less gold than fits in a typical bar glass - about 8 ounces. Ben Bernanke, who has never had a real job his entire life, however, can press a button and create an amount of money that is the equivalent of 428,571,428 ounces!
See anything wrong here?
The total amount of gold ever mined in all of history is about 5.3 billion troy ounces. Worth about $7 trillion at today's prices.
Contrast that to the annual GAAP deficit reported by the US Government of over $5 trillion.
In other words, the US Government creates almost as much debt and liabilities, per annum, as the entire amount of gold ever mined in the history of the world is worth.
Put another way, the US Government's "official" debt of $14 trillion would have been the equivalent of having been in debt to twice the amount of money that ever existed, pre-1971 when money was tied to gold. That's a lot of debt!
Interesting, that, how the debt took off after the last vestige of gold convertibility was removed from the Federal Reserve Note.
Getting back to the Gold Rush Alaska crew, however, they ended up spending $250,000 and wasting four months of their life and ended up with 8 ounces of gold worth about $11,200.
And this during a time when gold stocks have been performing very well. If they would have just closed their eyes and picked a gold stock on the Toronto Stock Exchange or NYSE or AMEX they would have likely doubled their money over the same time period. Losing almost all their money would have been almost next to impossible, and they wouldn't have had to even leave the comfy confines of their home.
But, they said they wanted to "get rich". Well, even still, many gold mining stocks have gone up 10:1 and even much more than 100:1. It would not have been far fetched for them to turn $250,000 into $2.5 million just by investing in some of the most well managed mining companies in the world - as we do here at TDV. And even $25 million isn't out of the question.
Take for example Osisko Mining (TSX: OSK). Some of us here at TDV participated in their financing in;)
2005 at $0.25. Today that stock trades at over $13. That is 52:1.
Most of the crew on Gold Rush Alaska seem kind-of crazy. Certainly their leader, Jack, who is older and is the only member of the crew with any mining experience, seems to be completely crazy.
As example, numerous times during the show something would get plugged up or jammed. Jack, the leader of the operation would walk up, tap it with a wrench, squint and say, "I think it's plugged up with gold!"
Needless to say, he was quite incorrect on each count.
But, the main point is, that Jack and the gang should have just learned the ropes of investing in junior gold mining stocks - some of which are managed by crews with numerous discoveries under their belts - and invested their $250,000 into that.
However, they appear to now have a hit show on their hands and they've apparently already signed up for a second season with the Discovery Channel. So, maybe they've found gold of a different kind... in reality TV.
But we thank them, nonetheless, for the entertainment and for reminding us just why gold makes such a good money. Someone should buy the DVD Box Set for the Bernank next Christmas. Although Ben would likely just watch the entire show and say that it is proof that he needs to print more money - in order to "stimulate" the economy and help out those poor guys.
Some people never learn.
Subscribe to The Dollar Vigilante to learn how to protect yourself from the likes of Ben Bernanke and his Keynesian cohorts intent on destroying the US dollar and taking down much of the western financial system with it.
Reader Comments (9)
Excellent post. I read your last one about "Gold Rush" and was watching the show, thinking about what your commentary mentioned. So true. Thanks.
The frightening part of the government bureaucracy is that bureaucrats are rewarded for making life difficult for the rest of us. It makes their job worthwhile. I'm fine with regulation. I don't want cyanide in my drinking water. But what if the Mandarins were rewarded for having the most successful approvals of compliant business plans? What if the regulators were actually helping guys like this be successful? Just a thought....
HI Laurence,
Do you actually believe that if not for regulation that the company you buy water from would put cyanide in your drinking water? That'd be a fairly quick way to lose all your clients! In actual fact, BECAUSE of government regulation and operation, you are forced to drink a poison called flouride in your drinking water. As for regulators "helping" businessmen, that is a bit of an oxymoron. The only way any regulator could help business would be by not regulating. The marketplace is self-regulating, you just have to allow it to happen.
"You Just Got to Get it Out of The Ground"
Many thanks to Dollar Vigilante for a well written and documented post. There are growing numbers of us, in the 100's of thousands, [probably mostly classically educated; ( via formal schooling, self education over a lifetime, and the school of hard knocks) old f--ts like me], who understand well the coming monetary crisis, but who are not as articulate as your writer. I try to pass on easily understood articles like yours, to my friends, relatives and associates, but most of the time these people (whose investment "knowledge", they "know" which IS NOT SO) roll their eyes and tolerate me, as if I was a babbling weirdo.
My thoughs exactly,with a few variations.Gold is the product of hard work and sweat,investment and challenge.These men and our forefathers put their lives into producing wealth, hoping for a better life.
Lets say Bernake pulled up at the camp in the middle of the night and took their 14 ounces of gold, left an IOU, and went into town spending it all on fine booze and hookers? I would like to see this episode! How many times would he be able to pull it off at other camps? I dare say some old crazy coot would put him in a box.
The Federal Reserve does exactly this, loots all of us leaving worthless IOUs.By counterfeiting and increasing its amounts the value ofour "dollar" diminishes,our real assets in gold ounce value( divide your assets into ounces of gold) goes down, while the inflation "profits" of our investment are taxed at higher rates leaving us with less purchasing value once the taxes are paid to cover the interest we are charged for Bens IOUs left to cover the theft!
Is it not time to string them all up!!??
Actually, their 8 oz. of Real gold could end up being more valuable than your mining stocks, given the already proven propensity of governments to confiscate paper (read: Your Scottrade account) wealth.
You think you're going to get rich on your trade account - in the face of a propaganda machine that turns on those 'profiting at the expense of others'...?
In simple terms that the author can (hopefully) grasp:
Do you think you are going to have the Liberty and Freedom of profiting via free the free market, while simultaneously facing down a (quasi at-present, but rapidly morphing into a full-on) Police State, who's power grows larger by every news cycle?
Old Cap'n Jack may have been 'crazy' enough to lose a battle via a flawed/questionable approach, but his fundamental ideal did not necessarily lose the war -
Do not assume that as the world around you crumbles into chaos, that your trade accounts will remain untouched by the protections of current law. Time and events can change faster than your ability to fully absorb them.
The next osisko maybe...by the Northern Miner: A $.50 stock today!
DAILY NEWS Feb 24, 2011 4:05 PM - 0 comments
Northern Gold drills for Ontario's next big thing
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With so many gold juniors vying for investor's attention, it can be an ever more daunting task separating out the projects that will outshine the rest.
Since assessing exploration projects has always been a relative game, projects that meet with market success are generally the ones that show-off some advantage, some unique aspect, which makes them stand-out from their peers.
For Northern Gold Mining (NGM-V) that advantage is size and consistency of results.
While it is still early days, Northern Gold has managed to release a steady stream of long intercepts with consistent grades from its Garrcon deposit and those results have the company's president and chief executive, Martin Shefsky, confident that the project will deliver serious tonnage.
"There is a lot of similarities between what Osisko Mining's (OSK-T) Canadian Malartic was finding in its early days and this," Shefsky says as he stands on an outcrop which over looks the pine green valley overlaying the mineralized rocks of Garrcon. "We've already outlined roughly 700,000 oz. of gold and that's just from 20 tonnes of a deposit that we believe contains over 125 million tonnes...and that's just going down to the 200 metre level."
In September of last year A. C. A. Howe International compiled the first resource estimate on Garrcon which outlined indicated resources of 3.8 million tonnes grading 1.2 grams gold for 144,000 oz. and additional inferred resources of 18.5 million tonnes grading of 0.9 grams for 530,000 oz. of gold.
Not a bad first pass, and considering that none of the 41 holes and 10,114 metres of drilling done in 2010 were included in that estimate, Garrcon could be set to grow in stature just as the winter snow begins its seasonal melt.
That's because Northern Gold plans to update its resource estimate in March and results from last years drilling point to a significant boost on the horizon.
Some of the highlight intercepts released over the course of the year included: 102.5 metres grading 1.38 grams gold, 84.2 metres grading 1.49 grams gold, 20 metres grading 6.74 grams gold, 190 metres grading 1.1 grams gold, 220 metres grading 0.69 grams gold and 101 metres grading 1.07 grams gold.
It's most recent drill results, released on Feb. 22, did not break the pattern as a highlight hole assayed 58 metres grading 1.08 grams gold per tonne.
Such stellar results come as no surprise to Shefsky.
That's because while past drilling by previous operators outlined the boundaries of the deposit, drilling was done in a rough-shod fashion with no real consistent pattern, leaving Northern Gold the task of filling in the blanks.
"There's lots of open areas," Shefsky says of the deposit. "The 20 million tonnes in the resource estimate is spread out over the whole area, so we have a lot of infill drilling to do. We're not exploring, we're just infilling."
The area that the company is infilling is roughly 760 metres by 300 metres wide and has four separate and large outcrop zones which allowed Northern to run extensive and inexpensive channel samples to guide the drills.
But while the company tightens the drilling and heightens its understanding of the deposit, another intriguing aspect to the geological story lies undisturbed beneath.
That is because the current resource, and the updated resource to come, considers only ore between surface and the 200 metre level.
With so much near surface mineralization, Northern Gold has had little need to go any deeper as any future open pit would have ample material from the 200 metre level up for many years.
But looking out a little further into the future, the mineralization at depth becomes a prominent piece of the story.
Just what lay deeper down has been hinted at via historical holes drilled by Lac Minerals and ValGold (VAL-V). Several of those 52 historic holes went down to below the 500 metre level and returned grades similar to those, and sometimes greater, than what Northern Gold has encountered closer to surface.
"We're not focused on the deeper mineralization at this point, that's the blue sky here," Shefsky says. "But assuming that mineralization is consistent with what's closer to surface we could be looking at 250 million to 300 million tonnes. But we'll let people do their own math."
The bounty of mineralization that Garrcon already boasts, and could still yet yield, may come as less of a surprise to the uninitiated once its setting is considered.
Northern Gold seems to have taken the old real-estate adage that the three most important factors in an investment are location, location and location to heart, as the Garrison Project, which Garrcon is a part of, sits in one of Canada' prime gold producing regions.
Located on the Destor-Porcupine fault system, the 3.75 sq. km property is hosted by one of the most prolific gold producing shears in the world accounting for over 180 million ounces of production or 70% of all the gold ever produced in Canada.
More specifically Garrison sits 40-km north of Kirkland Lake and 100-km east of Timmins with St Andrew Goldfields' (SAS-T) Holt McDermott and Harker-Holloway mines sitting 15-km to the east and Brigus Gold's (BRD-T, BRD-X) Black Fox mine sitting 30-km to the west.
Like Holloway, Garrison has the particular benefit of sitting astride two major shear systems, both of which are spatially related to major gold deposits from west of Timmins to east of Val D'Or.
The two shear systems were formed out of the Munro fault splaying into the north wall of the Destor Porcupine system on the eastern boundary of the property.
Northern Gold was able to land such prime real-estate through a shrewd deal it closed with ValGold Resources (VAL-V) in September of 2009 which gives it the option to take an 80% stake in Garrison over eight years.
The initial purchase price for the option was just $25,000 in cash and 2.2 million Northern Gold common shares, which were valued at just 8¢ a share at the time.
Northern also agreed to pay another $200,000 at the one year anniversary mark - which has already been paid - and make a series of exploration and stock and cash payments over the years.
To get a 50% interest, for instance, Northern Gold will have to pay another $1 million and complete $4 million in exploration work. It has the option to make those payments in stocks or cash.
The final 30% would come via Northern Gold repeating the same payments and when and if it hits the 80% mark the option agreement converts to a joint venture with Northern remaining as the operator.
With all the success that Northern has had with the drill, it should come as little surprise that it is ahead of schedule on such commitments. In 2010, the first year of the deal, Northern Gold was only required to spend $500,000 on exploration, but wound up spending in the neighborhood of $3 million.
And while the low cost, high tonnage potential that Garrcon offers would be the envy of many a junior, the deposit isn't the sum total of defined mineralization at Garrison.
The property is blessed with a second deposit which sits just a few hundred metres north of Garrcon and is known as the Jonpol deposit.
In contra-distinction to the quartz pyrite vein stockworks at Garrcon, Jonpol is made up of four contiguous high grade, sulfide-rich narrow vein zones.
The difference in mineralization, despite the deposits' relative proximity, is due to Jonpol's sitting right in the sheared ultramafic volcanics of the Munro Fault Zone.
Garrcon, by comparison, sits in a zone of meta-sediment that rests between the Munro shear and the Porcupine Destor fault zone.
Mineralization at Jonpol comes from four contiguous mineralized zones with a strike length of 1,700 metres. The zones are all open to depth with the deepest mineralization to date being struck at the 600 metre level.
And while Garrcon grabs most of the attention today, that wasn't always the case.
Between 1985 and 2007, when the project was held by Cominco and then ValGold, Jonpol was the apple of the operators' eyes and saw over 112,000 metres of drilling.
A 184 metre shaft was also sunk in the mid-1990s and a ramp was built down to the 150 metres level that allowed Hillsborough Resources to mine a 50,640 bulk sample that graded 8.3 grams along 141 metres of continuous mineralization with an average width of 3.6 metres.
Such a rich history at Jonpol meant that when Northern Gold came on the scene the deposit already had a resource that merely had to be updated by the company.
That resource currently stands at 253,100 tonnes grading 7.77 grams gold for 63,200 oz. in the indicated category with another 1.6 million tonnes grading 4.93 grams gold for 246,540 oz. in the inferred category.
Despite such promising grades, Shefsky affirms that Northern Gold's focus is on Garrcon, and that he see's Jonpol as a deposit that could come on stream later to provide high grade material to a future mill at the site.
In the more near term, Northern Gold will continue to stay on top of the deposit by re-logging and assaying existing core. Surface and underground drilling are also being considered for later this year.
Looking for drawbacks at Garrcon
With such managerial confidence centered on the near surface tonnage to be outlined in the coming years at Garrcon, investors may well be looking to try to punch holes into Northern Gold's thesis.
One area where many projects can go awry is on the metallurgy, as a project can host a fantastic orebody only to be tripped-up by high costs and other complications on the extraction side.
But here to Northern Gold would appear to have a handle on things.
On Feb. 24 the company announced it had finished a metallurgical test program at the scoping study level.
Conducted by SGS Minerals Services using only ore from Garrcon, the tests confirmed that Northern Gold should have little problem achieving high gold recovery grades.
The testing showed that a combination of gravity recovery plus cyanidation of the gravity tails and cyanidation of the whole ore achieved the best recoveries, exceeding 97% on all four tests that were conducted.
The results also showed that there are no other metals in concentrations high enough to be of any significance.
By demonstrating the free milling nature of mineralization at Garrcon, Northern Gold passed another significant marker in its drive to develop a large open pit bulk mineable operation.
"We'll incorporate the metallurgy into the preliminary economic assessment study that will come out with the updated resource at the end of the quarter," Shefsky says. "Everything is coming together beautifully. The picture we are painting is that we will go into production as we are taking all of the hurdles and all of the questions out of the equation. And with the resource update coming out we will have the whole picture out there."
Whether it's a picture that will allow investors to see the faint image of Osisko's Canadian Malartic in it remains to be scene, but in a high gold price environment, it is a picture that is certain to attract some long hard stares.
© 1915 - 2011The Northern Miner. All Rights Reserved.
Companies in This Story
Brigus Gold Corp
Northern Gold Mining Inc
Osisko Mining Corporation
St Andrew Goldfields Ltd
Related Topics
Canada
Exploration
Gold
The average squirrel knows more about economics than the average economist - and that includes Ben, and all the other dolts who used to say debt didn't matter because we 'owed it to ourselves'. Savings doesn't matter to them either because they're usually plugged in to gold-plated pensions paid for by the slaves.
As far as the guys in Alaska are concerned, they've bought themselves a job for the next couple of years, and the worst they could do is break even - but they'll probably make money...