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Warren Who? Gold bugs still think they have right idea
By Jeff Cox
CNBC, New York
Monday, May 7, 2012
http://www.cnbc.com/id/47324444
It's not every day you can find people to take the opposite side of a trade from Warren Buffett and Bill Gates, but then gold is not your average trade.
Gold bugs are known as some of the most passionate investors, so not even high-level slams from the Oracle of Omaha and the founder of Microsoft can cool their fire.
"Absolutely, I would take the other side of that trade," says Michael Pento, founder of Pento Portfolio Strategies in Holmdel, N.J. "The stock market has gone nowhere in nominal terms in 12 years. It makes sense as a default under the current conditions of negative real interest rates to own something that keeps you afloat, that preserves your purchasing power."
Pento is the former senior economist at Euro Pacific Capital, the firm run by noted gold enthusiast Peter Schiff. Pento has nailed the trajectory of gold's price for the past three years running.
... Dispatch continues below ...
Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement
Company Press Release
Friday, March 2, 2012
VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.
Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.
Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.
Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.
Prophecy thus will become a mid-tier resource company with a robust and diversified pipeline of platinum nickel projects, including:
-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.
-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.
-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.
For the complete announcement, please visit Prophecy Platinum's Internet site here:
http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...
Primarily because of the Federal Reserve's weak-dollar policies, Pento expects gold to continue to hold its place as an inflation hedge, as well as a safe-haven asset to buffer against global debt contagion.
For 2012 he thinks gold should be able to hit $1,900 an ounce.
"I would ask Mr. Buffett if he could own a lone share of a representative of the S&P 500, or would he rather have the equivalent of an ounce of gold," Pento says. "Which investment has done better over the last dozen years? The answer is clear: gold."
Buffett and Gates primarily don't like gold because of its lack of intrinsic value. It's not the same as holding shares in a company that has a clear revenue stream and business model, which in turn make it comparatively easy to value. (Buffett's right-hand man at Berkshire Hathaway, Charlie Munger, has been less diplomatic, suggesting in an interview Thursday that no "civilized person" should own gold.)
Rather than being cowed by Buffett's legend as a buy-and-hold investor, some gold advocates instead consider him out of touch with present-day conditions.
"His track record since 2008 has not been very good," says Kathy Boyle, president of Chapin Hill Advisors in New York. "He might be the Oracle of Omaha for the long term, but short-term since 2008 his trades have not been that great."
Boyle owns gold through the iShares Gold Trust, an exchange-traded fund that tracks the daily prices of bullion.
"Most of the typical advisers out there and money managers don't look at gold as an investment -- they don't look at it as a tradeable asset in their portfolio," she says. "There's going to be a flight to quality and a flight to safety. The dollar will go up, gold will go up and Treasurys will go up."
The safe-haven theme is a popular one, boosted by the notion that Europe's sovereign debt crisis is setting off a national recession that ultimately will spill to the U.S. shores.
Capital Economics in London has established a $2,200 per ounce price target by the end of the year for gold, though the firm thinks investing in the metal will not be profitable in 2013, when the price slips to $2,000
"Gold is still likely to benefit from safe haven demand and the continuation of ultra-loose monetary policy, including in the US," Julian Jessop, Capital's chief global economist, said in a note. "We suspect that gold would still do better than the dollar in a scenario where the issue is not just sovereign defaults but the very survival of the euro, and that in this scenario it would revert to a negative correlation with equities."
Jessop said a mass breakup of the European Union could send gold as high as $5,000, while a scenario in which Europe stays united and the global economy recovers could kick gold down to $1,000. However, he sees neither extreme scenario as likely.
To be sure, the sentiments of Buffett and Gates have support in the markets.
The agreement comes primarily from those who believe that the U.S. economy can survive and grow independent of Europe's problems, allowing stocks to keep pushing higher and negating the need for the rainy-day sentiment behind gold investing.
"Businesses have dramatically improved their balance sheets, there's a horde of cash out there and companies are slowly starting to deploy some of that cash," says Chip Cobb, senior vice president at Bryn Mawr Trust in Bryn Mawr, Pa. "There's a far better place in equities than in gold or fixed income."
Even a breakdown in Europe might not drive gold higher, as an economic slowdown would not produce inflation, argues Gary Clark, commodities strategist with Roubini Global Economics in London.
Clark says his firm -- and its famed namesake, "Dr. Doom" Nouriel Roubini -- remains neutral on gold with a near-term price target of $1,700 an ounce.
"Fundamentally, we're in a disinflationary environment for the moment. We see inflation decelerating for the rest of the year in many developed markets," Clark says. "On top of that I would say with the votes against austerity for Greece and France, that provides upside for the U.S. dollar. These are all downside risks for gold prices ahead.
Hedge fund manager Dennis Gartman, who authors the widely followed Gartman Letter, says he's a "tad skeptical" about gold -- which he owns in euros —--but understands its allure.
"One should own a bit of gold but one shouldn't be enamored of gold. It's nothing more than a hedge against Armageddon," he says. "The best one can say is the (chart) trend seems to be in very broad terms from the lower left to upper right. That's the best one can say, and anything more than that will make you look foolish."
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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters
From a Company Press Release
November 22, 2011
VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.
"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."
Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.
For the company's complete press release, please visit:
http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
