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Gold Spending in India is Set to Get a Boost From a Strong Monsoon Season

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By Frank Holmes

Since before recorded human history, the people of India have had an insatiable appetite for gold, treasuring it not only for its flawless natural beauty and religious significance but also as a superb store of value. This tradition carries on today, with India’s demand for gold jewelry in 2015 reaching more than 668 tonnes, nearly a third of total global demand and second in size only to China.

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I’ve pointed out many times before that the price of gold is largely driven by the Love Trade in India. Demand fluctuates year-to-year depending on several factors, the two most significant being the number of Indian weddings held in the fourth quarter and the amount of crop revenue that’s generated as a result of the summer monsoon season.

The wedding season is still three months away, but the June to September monsoon season is currently in full swing. It’s impossible to overstate just how crucial this period is to India’s important agriculture sector. During an average monsoon season, the Indian subcontinent can receive close to 80 percent of its total annual precipitation.

Most reports so far this year indicate surplus rainfall, with 12 inches being dumped nationwide last month alone, the fifth best month since the 1990s. This should come as welcome relief to Indian farmers, whose incomes have been squeezed by two long years of drought.

It’s also good news for gold consumption.

Converting Crops into Gold

Because of the above-average monsoon, gold spending in India is expected to increase 11 percent in 2016/2017 over the previous September to August crop season, according to Thomson Reuters. This would help reverse weak second-quarter jewelry demand in India due to a gold jewelers’ strike that closed the market for six weeks early in the quarter, a new 1 percent excise duty on jewelry and rising prices.

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About a third of Indian gold demand comes from rural farmers, who have traditionally converted a percentage of all crop revenue into the precious metal to be held as insurance and sold in times of dire need. A GFMS/Thomson Reuters study conducted last year found that, between 1985 and 2014, there was a strong positive correlation between Indian crop revenue and spending on gold.

Following the crop season, we have Diwali and the Indian wedding season to look forward to.

Diwali, also known as the Festival of Lights, is arguably the most sacred holiday in Hinduism, celebrated by millions of people all over the globe. Much like Christmas, it serves as a major shopping season. Families splurge on expensive items such as cars, appliances, clothes—and gold jewelry. You can see how, in past years, the price of gold has ramped up in August and September as Indian merchants and jewelers restock inventories in preparation for the fall festival.

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150 Million Indian Weddings Between Now and 2021?

The largest owners of gold in Indian are women, as it is auspicious to give them gifts of gold jewelry before their weddings. Because India lacks a formal social security system, it’s vital for women in particular to have some form of wealth preservation in the event of divorce or widowhood. This is what’s known as stridhan—a portion of a married couple’s wealth that is controlled exclusively by the wife and to which she is entitled, even after separation from her husband.

As World Gold Council CEO Aram Shishmanian put it during our joint webcast in June: “In India, a marriage is not a marriage without gold.”

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So how many weddings are we talking about, and how much gold? Let’s look at the numbers. According to the Indian government, there are 300 million Indians between the ages of 25 and 29 from now until 2021. During this period, a projected 150 million weddings will take place. And for each wedding, roughly 35 percent to 40 percent of total expenses will be devoted to gold in the form of bullion, coins and jewelry.

Put another way, it’s estimated that the amount of gold purchased for a typical Indian wedding ranges between 20 and 2,000 grams—equivalent to a little over 70.5 ounces, or $95,457 at today’s prices. The wealthier the family, of course, the more gold they can afford to buy.

But gold is just as popular and valued—if not more so—among lower income families, many of whom depend on monsoon rains to nourish their crops. Here’s to a bountiful yield!

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Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Does The Precious Metal Market Need Another Derivatives Exchange?

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Precious metals have significantly outperformed all other asset classes with year to date gains of 44% in Silver, 31% in Platinum, 28% in Palladium, and 26% in Gold. 2016 marks the highest recorded annual gain for gold in 36 years. Investment demand for the metal is 16% higher this year than the previous recorded high reached in 2009. Attempting to capitalize on this growing investment interest, the London Metal Exchange (LME) announced this week its plans to launch a gold and silver London based listed derivatives exchange in the first half of 2017. The new exchange will compete directly with the existing London over-the-counter market (OTC) system, the listed COMEX exchange in the U.S, and the Shanghai exchange in China. Contract sizes will be identical to those traded on the COMEX exchange.

London’s role as a major precious metal trading center harkens back to the 17th century but volumes have recently eroded as major banks pulled out of London precious metal trading due to increased regulatory scrutiny since the financial crisis and accusations of past market misconduct. The local precious metal market has an annual turnover of $5 trillion per year.

The 139 yr old LME has traditionally focused on the industrial metals with the exception of a brief and unsuccessful 3 yr foray into gold during the 1980’s. In 2014, the LME lost the bid to administer the important London gold benchmark fixing to one of its major rivals, the Intercontinental Exchange (ICE). The London precious metal market is administered by the London Bullion Market Association (LBMA) and dominated by privately negotiated (OTC) off exchange transactions. Listed trades have historically flowed to the U.S. COMEX exchange but have gravitated in recent years towards the Shanghai exchange as physical gold demand in Asia continues to outpace that of the U.S. and Europe combined.

30 banks were initially approached to take part in the LME venture but only 5 ultimately committed to the scheme. Important to note and critical to the long term viability of the nascent exchange is that none of the members are large gold clearing banks and the LBMA itself, the arbiter of good delivery standards, is not involved in the project. Like the OTC market, the new contracts will settle on an unallocated basis. This means that once the contracts reach maturity, investors own a fractional interest in a pool of gold or silver held by a bank but not specific bars. In the event of a bank failure, like in the case of Lehman Brothers 8 years ago, investors rank as unsecured creditors without a specific claim to physical gold or silver bars. This, in my opinion, is the critical flaw of the LME proposal. The new venue might be useful for high frequency traders that seek to arbitrage minute price differences between exchanges around the globe or front run customer orders but it does not offer investors a new or more secure alternative to what is already widely available in other markets. The financial crisis made it abundantly clear to long term precious metal investors that gold and silver should be held in physical form and outside of the banking system.

By Eric Schreiber from EMS Capital

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

George Soros Still Bearish on Stocks, Sells Some Gold, Why Investors Should Care

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Article By:  Adam Sarhan

Soros Fund Management Chairman George Soros  during the World Bank- International Monetary Fund Spring Meetings April 17, 2015 in Washington, DC.  (Photo by Chip Somodevilla/Getty Images)

George Soros made his fortune, over the last few decades, from his prescient macro views on markets. When Mr. Soros speaks, people listen. Mr. Soros is still bearish on stocks and sold some of his gold. In his quarterly 13-F filing, Mr. Soros bought a lot more bearish puts on the stock market and sold some of his gold positions. Remember, this filing tells us what he did in Q2 2016, before the S&P 500 and other indices all broke out and hit fresh record highs. It does not tell us what his positions are right now.

1 SPX- 20 years

1 SPX- 20 years
Mr. Soros, and several other large billionaire investors have come out in recent months and expressed bearish views on stocks. Meanwhile, the market continues to rally. Why? The short answer, continues to be easy money from global central banks. It’s one thing to be a large player in the global marketplace but it is another thing to be the largest player. These billionaire investors are very large players, but the central banks, are the largest players. For now, markets continue to listen to central banks and conventional wisdom takes a back seat. Eventually, markets will fall and we will enter another bear market. But until we do, why fight this very strong tape? Earlier this year, Mr. Soros publicly made the case that China is in trouble and it reminds him of the U.S. in 2007-early 2008- before the big 2008 financial crisis. To hedge against a market collapse, Mr. Soros, bought puts, which profit as the market declines, and bought gold, which is considered a risk-off investment.

At the end of the second quarter, Soros Fund Management owned puts in a variety of exchange traded funds that track the S&P 500 and the small-cap Russell 2000 index, among other positions. It is important for investors to note that Mr. Soros is expressing a bearish view on stocks but he is controlling his risk. The worst case scenario for Mr. Soros is that his puts expire worthless which means the most he can loss his the premium he paid to buy the puts. Theoretically, if the market doubles from here, his risk is capped. Another benefit of buying puts, instead of shorting the indices outright, is that time is on his side. He doesn’t need the market to go straight down, right away. He took a bearish view, controlled his risk and will make money if the market falls. If it doesn’t, big deal, it will another losing trade. Anyone in this business knows that losing trades are common and successful traders know how to manage their risk, when wrong. He is also free to exit the position at anytime. The media is bashing Mr. Soros but I want to take the other side of the trade. From a trading perspective, there is nothing inherently wrong with what he’s doing. In fact, I would argue, he is doing the right thing: He had a view, placed a trade that expressed his view, and controlled his risk in the process. What more can you ask for in this business?

Full Article: George Soros Still Bearish on Stocks, Sells Some Gold, Why Investors Should Care

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Hard Times in Venezuela Breed Malaria as Desperate Flock to Mines

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Carlos Raphael, right, and his crew in July, mining for gold at the Cuatro Muertos, or Four Dead Men, an illegal mine near Las Claritas, Venezuela, that is 15 stories deep. Credit Meridith Kohut for The New York Times (featured image). 

THE ALBINO MINE, Venezuela — The 12th time Reinaldo Balocha got malaria, he hardly rested at all. With the fever still rattling his body, he threw a pick ax over his shoulder and got back to work — smashing stones in an illegal gold mine.

As a computer technician from a big city, Mr. Balocha was ill-suited for the mines, his soft hands used to working keyboards, not the earth. ButVenezuela’s economy collapsed on so many levels that inflation hadobliterated his salary, along with his hopes of preserving a middle-class life.

So, like tens of thousands of other people from across the country, Mr. Balocha came to these open, swampy mines scattered across the jungle, looking for a future. Here, waiters, office workers, taxi drivers, college graduates and even civil servants on vacation from their government jobs are out panning for black-market gold, all under the watchful eyes of an armed group that taxes them and threatens to tie them to posts if they disobey.

It is a society turned upside down, a place where educated people abandon once-comfortable jobs in the city for dangerous, backbreaking work in muddy pits, desperate to make ends meet. And it comes with a steep price: Malaria, long driven to the fringes of the country, is festering in the mines and back with a vengeance.

Venezuela was the first nation in the world to be certified by the World Health Organization for eradicating malaria in its most populated areas, beating the United States and other developed countries to that milestone in 1961.

It was a huge accomplishment for a small nation, one that helped pave Venezuela’s development as an oil power and fueled hopes that a model to stamp out malaria across the globe was at hand. Since then, the world hasdedicated enormous amounts of time and money to beating back the disease, with deaths plummeting by 60 percent in places with malaria in recent years, according to the W.H.O.

But in Venezuela, the clock is running backward.

The country’s economic turmoil has brought malaria back, sweeping the disease out of the remote jungle areas where it quietly persisted and spreading it around the nation at levels not seen in Venezuela for 75 years, medical experts say.

It all starts with the mines. With the economy in tatters, at least 70,000 people from all walks of life have been streaming into this mining region over the past year, said Jorge Moreno, a leading mosquito expert in Venezuela. As they hunt for gold in watery pits, the perfect breeding ground for the mosquitoes that spread the disease, they are catching malaria by the tens of thousands.

Then, with the disease in their blood, they return home to Venezuela’s cities. But because of the economic collapse, there is often no medicine and little fumigation to prevent mosquitoes there from biting them and passing malaria to others, sickening tens of thousands more people and leaving entire towns desperate for help.

Ana María Padrón with her two sons, who were fighting malaria, in May at their home in El Dique. Credit Meridith Kohut for The New York Times

The economic breakdown has “triggered a great migration in Venezuela, and right behind it is the spread of malaria,” said Dr. Moreno, a researcher at a state-run laboratory in the mining region. “With this breakdown comes a disease that is cooked in the same pot.”

Once out of the mines, malaria spreads quickly. Five hours away in Ciudad Guayana, a rusting former industrial boomtown where many are now jobless and have taken to wildcatting in the mines, a crowd of 300 people packed the waiting room of a clinic in May. All had symptoms of the disease: fevers, icy chills and uncontrollable tremors.

There were no lights because the government had cut power to save electricity. There were no medicines because the Health Ministry had not delivered any. Health workers administered blood tests with their bare hands because they were out of gloves.

Maribel Supero clutched her 23-year-old son as he trembled, unable to speak. José Castro held his 18-month-old daughter as she screamed. Griselda Bello, who works at the clinic, waved her hands helplessly and told yet another patient to hold on a bit longer.

The pills had run out. There was nothing she could do.

“Come back tomorrow at 10 a.m.,” she said.

“My God,” the patient said. “Someone might die by then.”

“Indeed, they might,” she said.

In the nearby town of Pozo Verde, residents said malaria had swept in after miners began returning home sick, the government fumigators having vanished two years ago. Now, the public high school has become an incubating ground of its own: A quarter of its 400 students have contracted malaria since November.

“You would think we would do something — a cordon, a quarantine,” said Arebalo Enríquez, the principal of the school, who contracted malaria, as did his wife, mother and seven other members of his family.

Officially, the spread of malaria in Venezuela has become a state secret. The government has not published epidemiological reports on the disease in the past year, and it says there is no crisis.

But the most recent internal figures, obtained by The New York Times from Venezuelan doctors involved in compiling it, confirms a surge is underway.

In Ciudad Guayana, hundreds of people, all with symptoms of malaria, overflowed a clinic in May. Credit Meridith Kohut for The New York Time

In the first six months of the year, malaria cases rose 72 percent, to a total of 125,000, according to the figures. The disease cut a wide path through the country, with cases present in more than half of its 23 states. And among the malaria strains present here is Plasmodium falciparum, the parasite that causes the most fatal form of the disease.

“It is a situation of national shame,” said Dr. José Oletta, a former Venezuelan health minister who lives in the capital, Caracas, where malaria cases are now appearing, too. “I was seeing this kind of thing when I was a medical student a half-century ago. It hurts me. The disease had disappeared.”

In El Dique, a rural town where malaria was largely unknown until two years ago, Juana García, 66, sat outside her home, newly widowed since her husband fell ill with the disease and died. She hardly spoke or moved from her chair.

“She will keep fighting,” said her daughter Ana María Padrón.

Inside Ms. Padrón’s adobe home, her two sons were fighting malaria, too. Almost like clockwork, their fevers began in the morning: at 8 a.m. for Omar, who is 8; at 11 for Aristides, who is 7. The family has found no medicine. The boys have only painkillers.

“We pray,” their mother said.

Lure of the Mines

The illegal mines spill out over dozens of miles, leaving a pockmarked stretch of earth where the jungle gives way to countless craters and scars.

Some are no more than tiny pools where two men sift the mud with pans, like a scene from the California goldfields more than a century ago. Others drain wide marshes with tangled networks of tubes and pumps. In another spot, hundreds of wildcatters had dug out a gaping maw of red and white soil. It sinks 15 stories deep and runs the length of a football field. They call it Cuatro Muertos, or Four Dead Men.

It was not supposed to be this way. The gold reserves were once controlled by a Canadian company before President Hugo Chávez expropriated them and pledged to use their profits to fund his Socialist-style revolution.

But the expropriation followed the pattern of mismanagement and neglect that many others did during the Chávez era. The state eventually abandoned the territory around the mine, and the potentially lucrative profits. Wildcatters have moved in, and so have the armed groups that now call themselves the law here.

But at least there is food.

As the country convulses from food shortages and riots, as hungry mobs ransack grocery stores, restaurants and bakeries, the mining town of Las Claritas, only a short drive from the mines, lives in a state of relative plenty.

Soraya Rodríguez’s ear was pricked during a blood test for malaria at a clinic in Tumeremo. Credit Meridith Kohut for The New York Times

Restaurants offer full menus. Street markets are packed with fruit. Pickups drive by loaded with pumpkins. In a country where soap is in short supply, a dozen brands are on sale in a Chinese-owned grocery store, where seven models of flat-screen televisions are also available. Miners dish out fat wads of their gold earnings in cash, which run through a bill-counting machine.

The promise of a different Venezuela — one where there is ample food and work that pays enough — led Yudani González to abandon a program to become a preschool teacher in Ciudad Bolívar, the provincial capital, where unemployment is rampant. Instead, she headed to a ramshackle jungle camp, where she cooks for miners with one hand and cares for her two young children with the other.

“Here, you can get ahead,” Ms. González said, washing her 1-year-old daughter in a plastic bucket on the counter as she cooked.

Danneris Flores, a government employee moonlighting as a mining camp cook, sat nearby. She is an administrative assistant in a state-run health clinic, but Venezuela’s currency has tumbled so far that her salary amounts to only about $1 a day at the current street value.

So she asked for a vacation — and used it to work for a couple of weeks at the mines.

Her brother-in-law, who works for the state oil company, Pdvsa, does the same thing. In a short stint at the mines, Ms. Flores said she could earn twice her monthly wages. She counted the days until she would be home to see her three children, whom she had left after “closing my eyes and making my heart small.”

“I never imagined that I would work in a mine,” she said to Ms. González as they served a meal. “Before, people thought of going to school.”

A miner walked in to greet the women and said he had recently watched someone collapse and die of malaria on her way to a market. Ms. González said she had come down with it four times herself. Her 4-year-old, she said, has had it three times.

“They charge you two grams of gold for medicine,” she said. “You pay what they ask.”

Not everyone can find medication, even with gold earnings.

José Yoel Castillo stumbled to the doorstep of the malaria clinic in Las Claritas, carried on the shoulders of two relatives as he convulsed and was unable to speak.

At a Ciudad Guayana clinic, slides with blood samples from patients with malaria symptoms. Credit Meridith Kohut for The New York Times

He had been making a living in the town of Caicara del Orinoco, driving passengers on the back of a motorcycle. But an armed gang took the vehicle, and Mr. Castillo could not afford a new one.

So he came to the mines. He quickly found work and money — even malaria medication the first time he became ill. But when the symptoms came a second time, he could not find treatment anywhere.

“Some people can just keep working through it,” said his brother-in-law, Alejandro López. “But others can’t.”

Even with money in their pockets, the miners know the dangers of going back home.

Josué Guevara, 20, gave up last November on his university studies in industrial engineering in a city about 10 hours away. He once pictured himself as a manager at the state-owned aluminum company, Alcasa. But his family members who worked there could barely afford food, he said.

“Now I have other goals,” he said, standing at the edge of the Cuatro Muertos mines, where he lives and works today.

Using gasoline and other chemicals to extract the gold, Mr. Guevara earned 500,000 bolívars — around $500 at black-market exchange rates, about 33 times the country’s minimum wage — during a lucky two-week stretch. But when he got malaria this spring, he did what many miners do: He returned to his hometown to recover, bringing the disease with him.

“Everything has its risks,” he said.

On the other side of the vast pit, Pedro Pérez, 38, sat in a structure made of tree poles and tarp where he sleeps with 10 other miners. He tested positive for malaria twice in March. The third time he fell ill, he did not bother to get tested.

“I was lying here and I felt the same symptoms,” he said.

He, too, went back home — to the provincial capital, Ciudad Bolívar, where his mother eventually caught malaria, as well.

“It’s coming from us,” Mr. Pérez said.

Mr. Pérez remembered his life before he came to the mines last fall: He was a supervisor at a state-owned metal refinery, he said.

Maribel Supero clutched her son, an illegal gold miner who had been sick with malaria for 21 days. CreditMeridith Kohut for The New York Times

He owned a four-bedroom, two-bathroom house and a 2005 Ford Focus. He and his wife, a lawyer, once jetted off on last-minute getaways to Isla Margarita, a tropical island off the north coast of Venezuela.

Yet even before he lost his job last year and was unable to find another, Venezuela’s plummeting currency had whittled his salary down to about $26 a month. He eventually left home for the mine.

“I am still not used to washing myself every day in a river of dirty water,” he said. “I thought I had a good life.”

A few weeks ago, his wife came to Las Claritas to buy the food and soap she could not find in Ciudad Bolívar. The couple spent three nights together in a miner’s hostel. After she left, Mr. Pérez felt the strains on their marriage.

“‘I know it’s hard for you,’ I tell her, ‘but we have to accept this new reality,’” he said.

Back in Las Claritas, at a table in a dark brothel that smelled of alcohol, sat Angélica, a young woman with long black hair whose parents do not know she has turned to prostitution to make her living.

She left the eastern city of Maturín three months ago when riots erupted because food had gone scarce.

“Before, you waited in line for hours, but you got something,” said Angélica, who did not give her last name, ashamed of her work. “But now there is nothing there.”

Today she earns the equivalent of $40 when a miner wants to spend the night with her. More often, the money comes in increments of $8, when a customer wants to have sex and leave a short time later.

The Albino Mine in May. With the economy in tatters, thousands are streaming into this region. Credit Meridith Kohut for The New York Times

At times, she said, it may be a stranger who is trembling with fever, unable to perform because of malaria. Other times, it is the owner of one of the Chinese grocery stores. The men come from all corners of the country.

“The most difficult part of this life is being with someone who you do not love,” she said.

A Resurgence Ignored

Venezuela rose only after malaria declined.

It was the 1920s and another resource had set off a bonanza — the black gold of oil, discovered in massive supply.

But a vast malaria hot zone, then two-thirds of Venezuela, stood between the country and its riches. The deadly scenes were later immortalized in “Dead Homes,” a 1955 Venezuelan novel about the rural epidemics of malaria and the waves of migration to the country’s oil fields.

Freeing the country of malaria became pivotal to Venezuela’s development, said Dr. Oletta, the former health minister.

“Only once malaria was gone, roads could come, industry,” he said. “This was a sick country, and when it got well, things changed.”

That transformative effort was led by Dr. Arnoldo Gabaldón, the former health minister who began one of the world’s first large-scale efforts to eradicate malaria and who became a national hero during his age.

Teams across the Venezuelan countryside built irrigation ditches to drain pools of standing water, distributed quinine and constructed cinder block homes in rural areas so that mosquitoes had fewer places to breed. Dr. Gabaldón founded a research center in the city of Maracay, outside of Caracas and itself a malaria zone at the time, to broaden the mission and train officials from Latin America and Africa.

But it was his use of insecticides — initially DDT, then other substances — that began to turn the tide. The walls of nearly every rural home in the country were sprayed, a technique that killed mosquitoes when they landed to rest. Fumigators would leave an envelope showing the date they would return.

Carlos Freydel said he has had malaria 60 times during the nine years he has worked illegally mining for gold. Credit Meridith Kohut for The New York Times

By 1949, malaria deaths had fallen drastically: to nine per 100,000 people from 300.

By the time Mr. Chávez assumed the presidency 50 years later and began to carry out his Socialist-inspired vision for Venezuela, the regimented system of Dr. Gabaldón had long faded, though malaria still appeared to be confined to a few rural areas. But the restructuring of the economy under Mr. Chávez and his followers, including a growing dependence on oil revenue and a system of currency controls restricting American dollars, would eventually change that.

In 2014 and 2015, as oil prices collapsed and the government scrambled for money to pay for goods, services and imports, there were long shortages of chloroquine and primaquine, two drugs used for Plasmodium vivax, the most prevalent malaria parasite in the Americas.

By 2016, doctors said there were shortages of nearly all anti-malaria drugs, most notably a drug cocktail for the deadly falciparum strain that costs just several dollars for a full round of treatment. Though debilitating and even fatal, malaria is easily treatable with the proper medication.

Dr. Leopoldo Villegas, an international malaria expert in Bangkok, said the government also relied on outdated methods like outdoor fogging with insecticides, which had unproven effects on adult mosquitoes that transmit malaria. And because it was not publishing epidemiological reports of new malaria cases or deaths, it was unclear how much medicine was needed each year.

“This is an emergency, this is an outbreak, and it’s not being dealt with by the government this way,” Dr. Villegas said, adding that the Venezuelan government had repeatedly denied the extent of malaria’s resurgence to international organizations that could help prevent its spread.

Gustavo Bretas, a Brazilian malaria expert, said that Venezuela once trained people throughout the region in malaria prevention. But Venezuela’s inability to contain its own outbreak means that it now plays the opposite role: It poses a threat to the countries around it, particularly Brazil, where there are also illegal gold mines.

“It’s starting to spill over into neighboring countries,” he said, adding that the lack of government statistics made the extent of the problem hard to assess.

Venezuela’s Health Ministry did not respond to requests for an interview, including a letter delivered to its offices.

Oscar Noya now works in Dr. Gabaldón’s old laboratory in Caracas under a picture of his mentor in a suit and bow tie. On a recent day, malaria patients once again sat on the steps, most having arrived from the mines. Fifteen had come on a recent morning; 12 of them tested positive for the disease.

The watery pits of the mines, perfect mosquito breeding grounds, are spreading malaria to miners.CreditMeridith Kohut for The New York Times

Dr. Noya tries to make do without many vital drugs, like artesunate, listed by the W.H.O. as an essential medicine for the treatment of severe cases of falciparum malaria. He has only three vials of it left. He needs six to treat a single patient with a serious case.

One recent night, a gang entered one of his malaria laboratories and stole the computers, one of about 20 attacks this year against the Tropical Medical Institute where he works, Dr. Noya said. He wonders if the groups are aligned with the government.

“We believe this is no more than intimidation because we’re not quiet and we won’t be quiet,” he said, referring to public advocacy about malaria and the spread of other diseases.

Dr. Noya put away his vials of artesunate as more patients gathered outside. He looked up with an air of desperation. “Dr. Gabaldón would have died of a heart attack if he’d seen what is happening,” he said.

Order Outside the Law

Despite the constant churn of workers from across Venezuela, there is a clear order to the mines.

It is enforced by an armed group known as the Union.

One of the Union’s bosses came to the mines years ago to work as a dentist. He still does. But the squads of patrolmen on motorbikes who dominate this place are the real source of his wealth and power. He sports gold chains, two gold teeth — and brass knuckles made of gold.

After the government abandoned them, the mines soon grew again, this time at an unruly pace as wildcatters plowed into the forest, creating pools of stagnant water and a population of easy prey for the mosquitoes that breed in them, paving the way for the explosion of malaria.

Sitting on his patio, the boss, who declined to be named because he could be arrested by the government, took pride in what he said was the Union’s ability to fill in for the vacuum left by the state. Yes, he acknowledged, the punishments the group meted out could be gruesome, like shooting off a man’s hand when he stole, or tying others to posts at the entrance of town with a sign detailing the offense committed.

But he argued that the discipline kept crime in the camps low and allowed miners to go about their business in peace — another aspect of life that has steadily eroded in Venezuela’s dangerous cities.

The leader of the armed group known as “the Union” showed his brass knuckles made of gold.CreditMeridith Kohut for The New York Times

“To get justice from the police is a joke,” he said. “You have to get your own justice.”

Eduardo Medina agreed. A former pharmacist, he said he had left the drugstore where he worked in the state of Zulia a year ago to start mining because he saw the economic crisis spread and law and order slip away.

“At any time, you might go out and someone would put a pistol in your face for your phone, or knife your mother,” Mr. Medina said in his tent. “Crime is under control here. They charge us, but they solve the problems, too.”

But the appearance of calm is deceiving. Storms rage in other places where rivals vie for control of the mines. In March, at least 17 miners were killed in what the authorities believed was one such dispute.

Mr. Medina, on a break, looked down into the pit where his fellow miners labored.

“At any moment, you can be killed in Zulia,” he said. “But you can be killed here, too.”

For all the challenges of keeping order, the boss said, malaria was even harder.

“On malaria, we are screwed,” he said.

The task of monitoring the disease seems to have been delegated to people like a state health employee named Miguel Martínez, who sat at a lonely post a short walk from a brothel near the mines, examining blood samples from miners. Under his microscope, a dye had stained the malaria parasite a dark purple. The log beside him showed that half of the patients who had visited him that day had tested positive for malaria.

Like many health workers in this country, Mr. Martínez was exasperated.

“Just as there are no rice and beans in this country, there are no medicines,” he said.

Evening approached at the mine, the time when the Anopheles mosquito begins to feed. Dusk settled over a clapboard Pentecostal church, where parishioners speak in tongues, and past a red-and-blue circus tent promising alcohol and a strip tease.

Under a tarp, five men hammered away at a vein of quartz, which they would grind down and sift for gold. Others waded up to their shoulders in pools laden with heavy metals like mercury, angling tubes to pump the mud. Tropical birds flew in the distance.

Cuatro Muertos. When miners return home to Venezuela’s cities to recover from malaria, there is often no medicine.CreditMeridith Kohut for The New York Times

“Is the malaria really coming from the miners?” asked Aníbal Flores, 28, a miner who sleeps in a hammock between two poles beside the mine. “But where else can we go to make money? The city? There is no food there.”

Lately, many Venezuelans have taken matters into their own hands.

Five hours away in the newly infected town of El Dique, residents were collecting 100 bolívars from each household to hire a fumigator to come spray their homes.

In the mine, where malaria tests are sometimes unavailable, miners said they had developed an exam of their own: Drink two bottles of beer. If a sharp pain is felt afterward in the liver, where the parasites reside, then the patient has malaria, the test goes. Health officials said the measure was futile.

Still, Mr. Balocha, the former computer technician who works in the Albino Mine, lives by it. Miners call it an “artisanal test.”

He was sick once again, waiting for medicine at a chain-link fence on the edge of a clinic. He recalled the words of his uncle, who phoned him a year ago when Mr. Balocha found his salary as a computer technician to be worthless in the city of Valencia.

“There is money here,” said the uncle, who was mining then. “You have to know how to find it.”

Mr. Balocha started as a “palero,” a stone breaker, getting the smallest cut of the take. But it was still more than what his salary bought in the city after inflation had whittled it away, he said.

He recalled the first time he got malaria, too, the “chills like you were lying down between two blocks of ice.”

“The first time you get malaria is the ugliest,” Mr. Balocha said. “You can’t control the tremors. You feel like you will die. You feel like you are a zombie.”

But he would become a millionaire here, he joked, and one day he would head to Europe — with a Latin American woman, he added — far from the mines, the malaria and the Union.

He sighed, looking up at the sky.

“In the mine, happiness is only temporary,” he said.

Follow Nicholas Casey on Twitter @caseysjournal.

Patricia Torres and Clavel Rangel contributed reporting.

A version of this article appears in print on August 15, 2016, on page A1 of the New York edition with the headline: Seeking Gold, Getting Malaria.

Full Article : Hard Times in Venezuela Breed Malaria as Desperate Flock to Mines 

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Bob Moriarty on MX Gold Corp

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Bob Moriarty
Archives

Aug 15, 2016

One of the genuine pleasures I get from writing a new piece about a company and a project is finding that I am literally revisiting a project that I visited and knew from ten years or more back. It’s nice to know that I got it right in years past.

Recently a company now named MX Gold called me and said they wanted to advertise on 321gold. MX Gold has both a gold project and a giant moly project in British Colombia. The gold project is named the Willa Mine. The moly project and mill is called the Max Moly mine. That seemed familiar to me. It turns out that I visited the project in December of 2004 and wrote about it early in January of 2005.

The piece was very positive about moly and pretty negative about Scott Broughton of Roca Mines. The price of moly had shot up to $37 a pound. Roca had a giant resource at Max of 140 million pounds of moly at a .02% moly sulfide including a high-grade core of 10 million pounds in a 1.07% moly sulfide resource. If Scott Broughton put the Max mine and mill into production at a small rate of 200 tonnes per day at a cost of $8-$10 million he would have a cash flow of $100,000 per day and an IRR of 112% at $30 moly.

But Scott Broughton had this giant ego issue. And everyone who knows me and knows of him mentions it. It’s ok to be arrogant but before you get arrogant, you should have accomplished something in life.

Broughton took his sweet time making the mill just right. Rather than get into small-scale production in the 6-8 months as he said he could do, he took 2.5 years to get into production. By which time the price of moly started to tumble and kept going down. In 2012 the mill and mine were put into care and maintenance mode. By 2013 Roca was on dire straits and was forced to literally give away the $100 million dollar mill and moly mine millstone.

MX Gold, then called Discovery Ventures, made an agreement with Roca in late 2013 to acquire the mill and mine for about $5.7 million. While the price of moly had continued lower, Discovery had a high grade gold mine only 135 km from the mill named the Willa deposit.

MX Gold revised an earlier PEA for Willa in January of 2016. It makes forinteresting reading. At today’s prices, the gold/silver/copper ore has an in the ground value of about $262 per tonne. Costs of mining, transportation and milling work out to about $98 a tonne. While the existing resource only allows for a 4.25 year mine life, with a $21.3 million dollar capex the project will produce an incredible 83% IRR.

The Willa Mine is located in the Slocan and Sandon mining camps which hosted more than 20 mills and some additional 200 mines that shipped ore for processing in custom mills since discovery in 1890. With only a 4.25-year mine life, obviously MX Gold will be looking for more mill feed, both internally and as a custom mill. The Willa deposit is open in three directions and more resources will be found at some cost.

The real news for MX Gold other than the fact they practically stole a brand new mill for a few cents on the dollar is the hiring of Bert McPherson from Goldcorp. With a mill that was designed for use in processing moly ore and a gold mine that hasn’t been in production for many years, MX Gold needs someone with a lot of hands on experience. Bert McPherson comes with a boatload of qualifications.

Bert was mine manager lately of the Penasquito Mine of Goldcorp in Mexico with some 1400 employees. Just as a matter of interest, the mine was the 2nd largest in Mexico. He also was the VP/General Manager of the Tasiat Mine owned by Kinross in Mauritania. And he was the mine manager of Barrick’s Alto Chicama in Peru.

McPherson was hired as President and COO of both the mine and the mill. The company has been granted a permit for a 10,000 tonne bulk sample. It will take two to three months to get the mine and mill up to 500 TPD production but the startup period is necessary to work out the kinks that we all know will happen.

MX Gold is a lottery ticket. They stole a $100 million mill for pennies, have a small but potentially profitable known resource, first class experienced leadership and expansion potential in a 125-year-old mining camp. With the purchase of the Max mill and mine, they also got a $46 million tax loss meaning for a long time they won’t be paying any income tax.

If the stars align MX Gold has a lot of potential. In May the shares traded for as low as $.125 and have increased 200% since. In May the stock was dirt-cheap. Today the shares are more fully valued. Any increase from here will be based either on higher gold or positive results from the bulk sample and milling.

MX Gold is an advertiser and as such I am biased. I do not own shares. While I haven’t been at the Willa gold mine, I have visited the Max mine and mill before. The company is excellent at communication and the website well designed and informative. Please take some responsibility and do your own due diligence.

MX Gold
MXL-V $.365 (Aug 12, 2016)
MXLGF-OTCQX 141.5 million shares
MX Gold website

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Michael Phelps Might Owe Uncle Sam $9900 per Olympic Gold

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By Daniela Cambone of Kitco News

(Kitco News) – Being the greatest athlete of all-time may come at a high price. Michael Phelps might be paying $55,000 in taxes for his five golds and one silver, won during this year’s Olympic Games in Brazil.

According to the organization Americans for Tax Reform, the U.S. Olympic Committee grants its medalists with more than the actual medals. The athletes receive cash prizes — $25,000 for gold, $15,000 for silver, and $10,000 for bronze. But the IRS considers these amounts to be regular income, subject to taxation. “A gold medalist from Team USA could end up facing a tax bill of $9,900 per gold medal, $5,940 per silver medal, and $3,960 per bronze medal,” says the organization. These are the maximum possible tax amounts, and vary widely based on an individual’s tax circumstances and available deductions, the organization stressed.

The medals themselves are also taxed — based on the commodity prices of the metals involved.

According to Victor Hugo Criado Berbert, production manager of the Olympic medals at the Brazilian mint, the medals are only about 1.2% gold. Speaking with Kitco News in July , he said the gold medal is made up of 494 grams of silver and only 6 grams of gold. Nearly 100 grams heavier than the 2012 London Olympic medals, Berbert noted that the 2016 Rio Olympic medals weigh 500 grams each.

At current prices, with gold trading roughly at $43.04 a gram and silver at $0.63 a gram, the gold medal is worth $569.46. The silver medal is worth about $315.

Americans for Tax Reform brought the issue to the public’s attention during the 2012 Olympics. At the time, Sen. Marco Rubio (R-Fla.) introduced The Olympic Tax Elimination Act to protect U.S. athletes from getting taxed. The bill called for IRS code to be changed so that the gross income of U.S. medal winners “shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games.”  The bill died however.

This year, Sens. John Thune, R-S.D., and Chuck Schumer, D-N.Y., sponsored a similar bill to eliminate taxes on Olympic and Paralympic athletes. The bill passed the Senate in July.

As for Phelps’ medals — it is difficult to put a price tag on the intrinsic value of these exclusive sporting awards, not to mention the potential endorsement and sponsorship deals a lot of the Olympic medalists get post-games – so paying his taxes should not come as a problem. Phelps’ net worth stands at around $55 million, and Forbes puts world-record holder Usain Bolt’s net worth at over $32 million.

By Daniela Cambone of Kitco News; dcambone@kitco.com

https://www.kitco.com/news/2016-08-15/Michael-Phelps-Might-Owe-Uncle-Sam-9-900-per-Olympic-Gold.html  

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.