Discovery, Discovery, Discovery!
Silver Stock Report
by Jason Hommel, Jan 12, 2006
The world is about to awaken to several discoveries!
First, the world will discover that gold prices have been suppressed, and will discover that gold is true and real money.
The world is now discovering what I discovered about the gold market years ago…
Gold Market Too Small For Chinese Diversification
"We view China's ability to raise gold holdings to a meaningful level for diversification as constrained, as the gold market is too small for this to happen without a serious price distortion [RISE!]," said Barclays Capital analyst Yingxi Yu."
"If it [China] were to raise (its gold holdings from 1.1%) to 10%, it would absorb some 4,680 tons, or around two years of global mine production."...
"For China to raise its gold in reserves to the international average of 8.9% would require the purchase of an additional 3,613 tons," said Williamson. "For China to raise its gold in reserves to the ECB benchmark of 15% would require the purchase of an additional 6,501 tons," he added. By comparison, most European national banks have agreed to limit their total gold sales to 2,500 tons in the five-year Central Bank Gold Agreement, signed in 2004."
In other words, when China buys 1000 to 6000 tonnes of gold, how high will the gold price have to rise?!
Compare this news with this excerpt from my Silver Stock Report:
1,296 tonnes -- the paper positions at the COMEX: Open Interest: 417,000 contracts for 100 oz. each.
5,000 tonnes -- the official number admitted that the central banks have sold.
15,000 tonnes -- the number that GATA research shows that central banks have sold or leased.
30,000 tonnes -- the number of official central bank gold, minus either the 5000 or 15,000 tonnes.
150,000 tonnes -- all the gold mined in the history of the world.
2,500 tonnes -- annual mine supply
4,000 tonnes -- annual demand
And all of that is nothing compared to the amount of dollars out there that exist that could buy gold. $20 trillion bonds, $10 trillion M3 = $30 Trillion. A mere 1% is $300 Billion, which, at $500 /oz. is a massive demand of 18,661 tonnes. Do you understand what that means? That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not that much gold available.
Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.
So, how did the value of gold get so low? Manipulation and lies! Central banks have been selling gold, to meet the gap between mine supply and annual demand. Now that central banks (Russia, China, South Korea, Argentina, South Africa, & Iran) are contemplating buying gold, the manipulation is ending.
You should buy GATA's DVD of "Gold Rush 21" a conference in the Yukon in August that cost $3000 per person to attend (I was there), that exposed the central bank gold selling and manipulation of the gold price. The world will increasingly discover what GATA knows, that central banks do not have the 30,000 or so tonnes that the IMF encourages them to report as "on the books", because 15,000 tonnes or more have been lent out and sold into the gold market, depressing the price.
Order for $19.95, the "Gold Rush 21" DVD, containing 8 hours of footage.
Second, the world will discover that the major gold mining companies are mostly hedged. Barrick owes 13 million ounces of gold, pre-sold at about $350/oz. At $550/oz., this is a trading loss now of $2.6 billion dollars, and growing! Barrick has been looking for a price dip to buy back this gold, ever since $330/oz., and the dip never came! All of Barrick's gains from "hedging" have now been lost! This is a major accounting fraud!
Third, the world will discover that gains can't be made in majors that may go bankrupt due to hedges. People will discover that the most leveraged gains will come from junior exploration gold and silver companies.
Hommelberg (no relation) in "JUNIOR FESTIVAL 2006 - Part II" January 5, 2006,
(A GREAT ARTICLE!)
quoted John Brigde (senior gold analyst JP Morgan) who said:
"If you are lucky enough to buy into an exploration company that makes a discovery, you can effectively buy your own auto teller machine. Some of these things are just phenomenally profitable."
The rest of this article is a promotion for a "penny stock", or “Junior exploration company”, O.T. Mining.
They say the best discoveries take place near where gold is found. How about near the "richest hill on earth" in Montana? That's where O.T. Mining is looking, having staked ground back in 1999, after the majors left, during a time when the major gold miners were struggling to stay alive due to low gold prices, excess hedging, and due to pressures from environmentalists.
O.T. Mining: Trading symbol: OTMN, trading on the pink sheets.
Use "OTMN.PK" for a quote a Yahoo! Finance.
The number of shares as of Nov. 21, 2005, is 9,911,606 outstanding.
121,837 warrants. 1,166,157 options.
11,199,600 shares fully diluted.
At $4.10, that gives a current market cap of $46 million. U.S.
O.T. Mining has recently discovered a copper porphyry system that could be the biggest in the world; and be a host to gold, silver, moly, zinc and more! So far, it may be 14 square miles or bigger (still trying to define the size, having staked an additional 10 square miles), and up to 2,400 feet deep, and could be the biggest porphyry ever! How do they know the size, with only a few drill holes? They have indications from the geochemistry of Mobile Metal Ions (MMI).
The MMI process is reliable, as it was used by some of the best geologists in the world to decide where to drill a hole that took two years to drill, that encountered the copper porphyry about 600 feet below surface, and extended 2,400 feet deeper!
With no surface minerals to sample, (as this porphyry is covered by 600 feet of overburden) they found out where to drill by using MMI.
O.T. Mining's porphyry could be bigger than Northern Orion's Agua Rica project.
Agua Rica has a "Drill defined metal inventory of 21.8 billion pounds of copper, 13.3 million ounces of gold and 1.7 billion pounds of molybdenum" and took $55 million to drill!
218 million shares fully diluted
= $776 million Market Cap.
O.T. Mining's porphyry could be bigger than Northern Dynasty's Pebble project.
Pebble has an Inferred Mineral Resource containing 27 million ounces of gold and 16.5 billion pounds of copper.
84 million shares fully diluted
= $495 million market cap.
O.T. Mining, at a tiny $46 million market cap, could see a share price rise ten fold or more in a few years as they raise up to $50 million over the next few years just to drill define their copper porphyry.
I believe O.T. Mining's share price has not yet reflected the significance of their copper porphyry discovery because the results from their first drill hole, so far, has not been of an economic grade. There were 3 more holes drilled in 2005, and while mineralization has been encountered, assay results are pending. But a porphyry is like a haystack, and finding the economic resources is like finding the needle in the haystack. The larger the haystack, the larger the needle, and O.T. Mining's haystack, their porphyry, may be the biggest of them all, and at the very earliest stage of the discovery process. At this point, they are still assessing the size of the haystack, not yet defining a resource (the size of the needle).
Finally, the last point in the discovery process is when the market finds out about what certain companies have. As I've seen with the moly stock I own, which was $1.18/share on Jan 5th, and $3.20/share today, Jan 12th, (Up 171%) the market moves fast when it makes it's own discovery.
Please remember the basics of investing in mining speculation stocks: start with investing in physical metal first, the gold and silver bullion, and then, do not put more than 10% of your portfolio into any one stock, and never more than you can afford to lose.
Disclaimer: I own shares of O.T. Mining, and O.T. Mining has not paid me to write about their company.
For more information:
O.T. Mining Concludes 2005 Field Work at the Ruby, Montana Property
Thursday January 12
O.T Mining: It’s ‘Our Turn’ -- By David Zurbuchen Dec. 2005
Majors Miners Fire at Unknown Elephant Hunter (July 2005)
I attended the PDAC in Toronto, and I wrote a report on O.T. Mining... (March 2005)
Here is a comparatively busy message board for O.T. Mining:
Jim Hess Tel: 514-935-2445
Excerpt from my article: Bible Verses on how to Manage Money
Use just weights and measures. Unjust weights and measures are an abomination. Therefore the dollar, which used to be a weight of gold, is no longer a just weight of gold. The dollar is fraud, and an abomination. The dollar is also a deception, a broken promise, because it used to be a promise to pay a certain amount of gold or silver.
Leviticus 19:35 Use honest scales and don't cheat when you weigh or measure anything
Deuteronomy 25:15 If you weigh and measure things honestly, the LORD your God will let you enjoy a long life in the land he is giving you.
Proverbs 20:10 Two things the LORD hates are dishonest scales and dishonest measures
Exodus 20:15 Do not steal