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MGX Minerals Triples Fox Creek Alberta Lithium Land Position-

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MGX Minerals Triples Fox Creek Alberta Lithium Land Position-

VANCOUVER, BRITISH COLUMBIA – August 18, 2016 – MGX Minerals Inc. (“MGX” or the “Company”) (CSE: XMG / FKT:1MG) is pleased to report the Company has entered into an Definitive Agreement (the “Agreement”) to acquire a 100% interest in the Sturgeon Lake Lithium Brine Property (“Sturgeon Lake” or the “Property”) located in west-central Alberta.

The Property is located directly south and west of the Town of Valleyview, approximately 85 km east of the city of Grande Prairie and 270 km northwest of the capital city of Edmonton, Alberta. The Property consists of 15 contiguous Industrial and Metallic Mineral Permits encompassing 132,773.74 hectares (328,091.06 acres).

The mineral permits overlie the Sturgeon Lake oilfield, which has been producing hydrocarbons since the mid-1950s from the Devonian Leduc Formation at depths of approximately 2,500 m to 3,100 m below surface. Metallic mineralization on the property consists of lithium-enriched formation water, or brine, that is hosted in aquifers within Devonian Leduc Formation carbonate reef complexes.

Devonian-aged wells at Sturgeon Lake produce excessive amounts of brine in comparison to petroleum due to the mature nature of the oilfield where increased pumping is required to produce crude oil. The brine is considered a waste product as it is presently treated to separate and remove petroleum and then reinjected back down into subsurface formations. It is conceivable that existing water processing procedures could be modified to extract lithium and other elements from the Leduc Formation aquifer system brine; however, at this stage of exploration there is no guarantee that lithium can be economically extracted from the formation waters with current technology. New technologies require testing and may or may not extract all or a portion of the elements of interest.

Historical 1990’s to 2010’s government studies reported that brine geochemical fluid data from the Devonian aquifers associated with the Leduc Formation have anomalous values of lithium (e.g., greater than 75 mg/L and up to 140 mg/L lithium) along with other elements (e.g., potassium; boron; and bromine). In 2011, Lithium Exploration Group Inc. sampled and analyzed brine from 60 separate wells within the Sturgeon Lake oilfield (and within the boundaries of the permit area acquired by MGX). Of the 62 brine samples collected, 47 were collected from the Leduc Formation. Other samples included brine from: Mississippian (1 sample from Banff), Triassic (11 samples from Montney, Spray River and undefined), Jurassic (1 sample from Nordegg) and Cretaceous (2 samples from Wapiabi, Gething) strata.

The analytical results showed that the Devonian Leduc aquifer contains brine that is significantly enriched in lithium in comparison to the Triassic to Cretaceous brine. Lithium Exploration Group Inc. reported that the Leduc Formation brine from the Sturgeon Lake oilfield contained up to:

  • 83.7 mg/L lithium (average 67 mg/L lithium);
  • 6,470 mg/L potassium (average 4,641 mg/L potassium);
  • 137 mg/L boron (average 114 mg/L boron); and
  • 394 mg/L bromine (average 394 mg/L bromine); note: one mg/L is equal to one ppm).

These values supported and confirmed the government published lithium-enriched formation waters within the boundaries of the Sturgeon Lake Property. Lithium Exploration Group Inc.’s historical brine sampling and chemical analysis, which was overseen by APEX Geoscience Ltd., was conducted by Maxxam Environmental (“Maxxam”) of Edmonton, Alberta. Maxxam is an accredited laboratory with the Standards Council of Canada (Laboratory No. 160; valid to 2019-03- 06) and with the Canadian Association for Laboratory Accreditation (Membership No. 2996; valid to 2017-06- 08), where Maxxam’s standard conforms to requirements of ISO.IEC 17025.

Since the 2011 Lithium Exploration Group Inc. work, no brine sampling, analytical testing, mineral processing or mineral separation/recovery test work has been completed at the Sturgeon Lake Property.

“Previous exploration for lithium at the Sturgeon Lake oilfield indicates the potential for a high volume lithium bearing aquifer. We look forward to the testing of lithium brine from the field with our proprietary rapid lithium extraction process to confirm the lithium-enriched brine and determine the economic feasibility of the project,” stated MGX Minerals CEO Jared Lazerson.

Pursuant to the Agreement MGX will issue 1,000,000 common shares of the Company to Zimtu Capital Corp. (TSX.V: ZC) and 1,000,000 common shares to Mr. Patrick Power. Additionally, Sturgeon Lake is subject to a 2% gross overriding royalty on future production of all minerals, payable equally to Mr. Ryan Kalt (1%) and Mr. Luke Schuss (1%).

Qualified Person
The technical portions of the press release were prepared by Roy Eccles (P. Geo.) of APEX Geoscience Ltd., and have been reviewed by Andris Kikauka (P. Geo.), Vice President of Exploration for MGX Minerals. Mr. Kikauka is a non-independent Qualified Person within the meaning of National Instrument (N.I.) 43-101 Standards.

About MGX Minerals
MGX Minerals (CSE: XMG) is a diversified Canadian mining company engaged in the development of large-scale industrial mineral portfolios in western Canada that offer near-term production potential, minimal barriers to entry and low initial capital expenditures. The Company operates lithium, magnesium and silicon projects throughout British Columbia and Alberta. For more information please visit the Company’s website at www.mgxminerals.com.

Contact Information
Jared Lazerson
Chief Executive Officer
Telephone: 604.681.7735
Email: jared@mgxminerals.com

Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements
This press release contains forward-looking information or forward-looking statements (collectively “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information is typically identified by words such as: “believe”, “expect”, “anticipate”, “intend”, “estimate”, “postulate” and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors. The reader is referred to the Company’s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the Company’s profile on SEDAR at www.sedar.com.

You are receiving this email because you have subscribed to receive daily news alerts from MGX Minerals Inc. Our Mailing Address is 1080 Howe St., Suite 303, Vancouver, BC V6C 2T1.

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.

What Surging Mining Stocks Mean for Metals Markets

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What Surging Mining Stocks Mean for Metals Markets
Stefan Gleason

 

Gold and silver mining stocks have embarked on a rally this year that could prove to be one for the record books. The leading exchange traded fund for the sector, VanEck Vectors Gold Miners (NYSE:GDX), shows an incredible 125% year-to-date gain. That far out-surpasses the 27% and 44% advances of gold and silver spot prices, respectively.

What does the mining stock run-up suggest about the fundamentals for the actual mined product, physical gold and silver?

Overall, it suggests that investors and industry insiders are optimistic about the prospects for higher metals prices. The mining shares tend to lead the metals in major moves up or down.

One prominent silver bull is Keith Neumeyer, CEO of First Majestic Silver Corp. (AG), which is one of the world’s only true primary silver producers. As Neumeyer explained in a recent interview with Money Metals, silver supplies are scarce.

“We’ve been in a deficit for multi decades now. The above ground supply of the metal is very, very low. It’s actually at historic lows,” he said.

Top Silver Mining CEO Sees Silver Outperforming Gold by Factor of 7

Neumeyer notes that silver is being mined at a rate globally of 9 ounces for every 1 ounce of gold. Yet it currently takes 68 ounces of silver to buy an ounce of gold in the spot market. First Majestic’s CEO is betting that the gold:silver price ratio will over time move toward the 9:1 mined ounces ratio. That implies a HUGE outperformance in silver prices going forward.

So far this year, silver is outperforming. But it’s the silver and gold equities that are exhibiting the biggest gains. A big reason for the explosive gains in mining stocks this year is the fact that they crashed in the preceding four years to reach levels of extreme undervaluation versus the metals they mine.

The risks entailed by owning mining companies instead of the metal itself are far greater. The upside potential in the stocks is also greater than in the bullion. But actual real-world returns going back decades show that gold has delivered superior risk-adjusted returns and better absolute returns than gold stocks. The price of the physical metal is also less volatile.

The GDX gold miners ETF has been around for more than 10 years. Over the past 10 years, it has produced a net return total of -15%. GDX is still in negative territory even with the massive run up seen this year.

By contrast, silver prices are up 67% over the past 10 years (despite being well off their 2011 highs). Gold prices show a more impressive 109% rise for the decade.

Gold Has a Substantially Better Risk-Adjusted Performance Than Mining Stocks

Bullion and mining stocks are entirely separate asset classes with entirely different risk characteristics. One widely used measure of risk-adjusted returns is the Sharpe ratio. It measures “the average return earned in excess of the risk-free rate per unit of volatility,” according to Investopedia. Basically, the higher the Sharpe ratio, the better the risk-adjusted performance.

The trailing 10-year Sharpe Ratio for GDX comes in at a dismal 0.14, according to Morningstar. For the leading gold price tracking ETF, SPDR Gold Shares (NYSE:GLD), we get a much improved Sharpe ratio of 0.42. That makes gold very competitive with the 0.50 sported by the S&P 500.

Of course, gold spot prices as reflected in an ETF (whose returns are degraded by annual expenses), are not synonymous with gold bullion coins. An ETF is a financial instrument that carries counter-party risk and other risks that are not fully reflected in its Sharpe ratio. Gold bullion coins are tangible assets that have aesthetic qualities and utility that ETF shares don’t. Coins can also potentially acquire scarcity premiums above spot prices in an environment of retail shortages.

At present, the retail market is well supplied when it comes to virtually all bullion products. But supply deficits in the larger physical precious metals markets, particularly for silver, are on track to grow.

The recovery in the mining sector won’t immediately translate into ramped up output. Mining company executives who decide to invest in new capacity today may not be able to actually achieve new production levels until years from today.

At some point, mining investors will get carried away, the sector will be beset by malinvestment and overinvestment, and the boom will turn to bust. That’s how it has always played out in this notoriously volatile sector.

Given that the current recovery off a brutal four-and-a-half-year bear market in miners is only seven months old, there could be a lot more boom to go before the next bust. Those who wish to speculate in shares could make fortunes – but they also run the risk of giving back all their gains if they wait too long in the cycle to get out.

Fortunately, investors can take the cues provided by the mining sector to position themselves in a less risky, more solid asset class: physical precious metals.

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.

Hyperinflation is Nigh so Gold Will go High

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Hyperinflation is Nigh so Gold Will go High

This coming autumn, we are likely to see the beginning of the hyperinflationary phase of the sovereign debt crisis. Hyperinflation normally hits an economy very quickly and unexpectedly and is the result of the currency collapsing. Hyperinflation does not arise as a result of increasing demand for goods and services.

The course of events in a hyperinflationary scenario can be summarised as follows:

  1. Chronic government deficits
  2. Debt issuance and money printing escalating rapidly
  3. Bonds falling – interest rates rising fast
  4. Currency collapsing

The above process turns into a vicious circle that accelerates quickly. The more money the government prints, the faster the currency will fall and the faster the currency falls the more money the government must print. Once the hyperinflationary spiral has started, it will feed itself like we have seen in the Weimar Republic, Zimbabwe, Argentina and many other places.

Rates will go to 15-20%

What will exacerbate this process is a financial system which is totally bankrupt in all but name. If banks valued their toxic assets at market instead of at maturity, no bank would be standing today. As longer term government bonds start falling, this will also put upward pressure on short term rates with Central Banks losing control of their manipulation of rates. This will lead to rates going into the teens in the next 2-3 years like in the late 1970s. Virtually no borrower, whether public or private can afford rates just two or three percent higher and definitely not rates of 15% or 20% which we are likely to see –  at a minimum. Also, with higher rates, the whole derivatives market of $1.5 quadrillion will blow up since these instruments are all interest rate sensitive.

In a world of exponentially growing sovereign deficits and debts, the outcome of the biggest credit bubble in history has always been guaranteed. But the road there has been laborious. Through financial repression combined with lies and propaganda, governments and central banks have managed to extend the suffering for ordinary people for the benefit of a small elite who has built incredible wealth. The average person is, directly through personal debt or indirectly through sovereign debt, responsible for the $230 trillion global debt but can of course never repay it. On the other side of the balance sheet, these debts have all accrued in the form of assets or wealth of a similar amount to an extremely small elite. This massive inequality is what creates social unrest and eventually revolutions and the problems we now see emerging around the world are most likely the start of that.

Fed policy has totally failed

Governments have since the 1987 crash and the early 1990s property bubble desperately tried to avoid the inevitable.  In a panic, Greenspan lowered US short term rates from 8% in 1990 to 2.5% in 1992, thus fuelling the beginning of the final phase of the Fed’s 100-year destruction of the world financial system. Bernanke took over in 2006 when the subprime crisis started and he became the most profligate Fed chairman in history. During his reign, US Federal debt went from $8 trillion to $17 trillion and rates went from 5% to zero. It took the US over 200 years to go from zero debt to $8 trillion

 

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.

Venezuela’s Gold Reserves Tumble 25% Amid Economic Crisis

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Venezuela’s Gold Reserves Tumble 25% Amid Economic Crisis

Venezuela’s international gold reserves slumped 25 percent in the first half of the year as the country’s foreign currency crisis deepens.

The holdings fell to $7.5 billion in June from $10 billion at the end of last year, according to financial statements published by the central bank this week on its website. The drop surpasses the 16 percent decline estimated by the International Monetary Fund.

Venezuela’s government has to find the funds to meet $928 million in bond payments later this year, while the state-owned oil company, Petroleos de Venezuela SA, has $4.2 billion in debt coming due and interest payments, according to data compiled by Bloomberg. Officials have assured creditors they will honor debts despite growing discontent over shortages of essential items, and a record-low approval rating for President Nicolas Maduro.

Venezuela’s total foreign currency reserves, which include the gold holdings, dropped to $11.99 billion on Aug. 16 from $17 billion the year earlier.

The volume of the country’s gold reserves fell 27 percent to 6.3 million troy ounces in June from the end of last year, central bank figures show.

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.

Arizona Government Looking At Gold Bonds

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Arizona Government Looking At Gold Bonds

By  Neils Christensen of Kitco News

 

(Kitco News) – In a world of negative bond yields, the state of Arizona might have a solution as it looks at how to monetize gold.

 

 

 

 

 

 

Recently, the state created a committee to look at the possibility of issuing a Treasury bond payable in gold, holding its first meeting last week.

Gold has attracted significant speculative interest so far this year as prices have rallied more than 27%. However, committee member Keith Weiner argued that gold’s current role as a speculative asset doesn’t do anything for the broader economy.

Last week, in a presentation to the committee, the founder of Monetary Metals Inc. said a government issued gold bond would not only benefit the country’s monetary system but also Arizona’s economy.

“Thanks to the Fed’s monetary policy, investors basically earn zero interest rates. A gold bond is a way for people to get a real rate of return,” Weiner said. “People are urgently seeking a way to make a yield on gold. I think Arizona will draw the world’s attention and it will draw capital inflows.”

He explained that a gold bond could be used to reduce the state’s debt by specifying that the bond will be issued to investors who want to tender outstanding state bonds. Quoting statistics from Arizona’s Treasury department, Weiner said that it is estimated that the state’s debt is currently at $10 billion, not including unfunded liabilities.

The committee, Weiner continued, doesn’t even need to rely on developing its own gold reserves before issuing a gold bond. He suggested creating the bond by using gold flows created from taxes.

Arizona is one of the top gold producing states in America and has historically produced 16 million ounces of the precious metal. Currently, gold is produced as a byproduct at significant copper projects. Some of the major companies mining in the state include BHP-Billiton and Freeport-McMoran, which both generate billions in mining revenues.

Weiner explained that under current laws, the state can actually collect taxes in gold and silver bullion. In his presentation, he recommended the state collect gold as part its severance tax of 2.5%.

“That tax can provide the state a gold income stream, which is what you need to amortize the gold bond,” he said.

“This presentation lays the foundation that we don’t have to settle with the status quo,” said Mark Finchem, Arizona State Representative and chairman of the committee.

The issuance of a gold bond is part of a larger plan within the state to recognize gold and silver tender. Legislation has been presented twice in the House of Representatives but has been vetoed by two Governors.

 

By Neils Christensen of Kitco News; nchristensen@kitco.com

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.

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.

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

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

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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Read more at http://www.stockhouse.com/opinion/independent-reports/2016/08/18/gold-spending-india-set-to-get-boost-from-strong-monsoon-season#CvgOecC2Gz2VKpYj.99

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