Friday, February 18, 2011
Last night I met up with an old friend who after a pension worthy NFL career went on to get an MBA and worked for the Vampire Squid before heading out on his own. Also, he is about to launch a very interesting athlete commutation social site that we will mention when the time is appropriate.
We clearly have one major difference of opinion, what the future holds for the Au chart. I tend to avoid arguments since the only way I can be fired is if the market tells me I am wrong, I have nothing to gain from discussing in detail what I think about anything with any other human.
So, we settled on a simple steak dinner bet, my suggestion. He offered an over under at $1,400oz Au on 12-31-11. I am a handicapper at heart so that was one that I am all in on.
Here is just a quick example of how “Out of touch” I am with former Squid employees and the society in general. I truly believe that we will see Au/Dow at 1:1. We have seen that 2 times before in the past 100yrs, we will see it again. To me, I want to sell gold when it seems like someone is willing to give me another asset that I want at a discount. At this time, people still take this worthless paper and give me gold. I am totally amazed that this transaction is still available. And for example, if I wanted a commercial warehouse space for the utility and cash flow, it’s probably in a submarket that has 35% vacancy issues and a broker tells me how it should trade at a 6cap and how I don’t understand anything. When I ask about the several hundred million of flat tire conduit financing being held back in this area and what that will do to the already oversupplied market he says that I have just successfully removed myself from his A-List for future deals. So, why would I trade say 1,400 ounces of gold for that while the Middle East burns and the regime here can’t agree on how to cut 2% of the annual budget DEFICiT. Thats right, of the DEFICIT, not even the entire thing. Right, that is with the same currency that I can trade for the Au.
I will keep taking that for now and will take my steak dinner, but he will need more fiat to pay for the steak as beef prices are set to rise, how can they not have you seen a corn chart?
Thursday, February 17, 2011
- What is in the deposit? You need to see "heavy" REEs
- What is the cost per kg of extraction? Be sure you get the NET cost as other materials can be sold to lower it
- Pick mines that will produce before 12-31-15 remembering that 100kt-150kt depending on growth of demand needs to be replaced before supply issues emerge
- Share structure, use your own judgement but make sure you are getting an appropriate slice of the pie