This picture above is stronger than thousand words written by the FED's hired academics and even Austrian School of Economics - it cuts through the verbal mist to the bone of Inflation definition and what it really means. It means that your FIAT money are losing it purchasing power. It happens every day, day by the day. How much you can see from the McDonald's menu from 70s.
And below is the chart representing "Strong US Dollar Policy" in action implemented by FED from the day of its inception in 1913. Some people even think that Federal Reserve is as Federal as Federal Express, but we will not go that road today.
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Inflation is the dirty open secret of all Central Banks in the world. It creates the Inflation Tax by gradually stealing from the value of your savings and deflating the government's obligations on all social programs. It is the way for governments to finance wars and "Inflate away" their debts without taxing you "directly". Inflation follows currency debasement - organised by money printing or by QE in the iPad's century - and it is making its dirty work by itself.
Why Gold is so important here? It is the real measure of the rate of Currency Debasement and Inflation: Gold is the Real Money, not dollars. That is why it is manipulated so heavily:
"Manipulation is rampant in all markets: HFT Flash Boys, LIBOR, FOREX, Pensions, Energy ... Gold. Some of the former conspiracy theories are going in the court rooms now, others are still waiting for their time."
I will address you to James Rickards' books: "Currency Wars" and "The Death of Money" to get more information in depth on these subjects and Gold Manipulation is widely discussed on the web today.
The chart above provides you with idea why we need more Gold deposits now. Even if Major Gold Miners are squeezed on margins and divesting the projects now - it is these industry's fundamentals which will drive this market forward. Falling gold prices are the best cure from the low Gold prices. Gold miners are mining the "Gold Dust" by the 90s standards.
Number of discoveries is going down and will go down even more with Junior Miners struggling to get access to the capital now to develop their projects. Grades and sizes of discoveries are going down as well - easy stuff is all already found or is located in not so friendly places. We have Peak Cheap Gold in place now, whatever the Gold market massaged by BIS will tell you.
China's buying record amount of gold last couple of years will be the very strong confirmation of Gold monetary value and recent pick up in M&A activity provides very important signal for the bottom in this mining cycle:
"China continues its buying spree of copper assets all over the Globe: last month the huge Las Bambas copper project in Peru was bought by Minmetals Group for $5.85 B and now Guandong is bidding for PanAust. Reuters reports on the deal and you can notice how the activity in M&A by Chinese companies is picking up during the "soft market". It is the very important indication of the major bottom in the mining cycle: it is cheaper "to dig" for Copper and Gold on the Stock Exchanges now, when valuations of assets in the ground of listed companies are discounted by the depressed mining markets. "
Brent Cook very well articulates these issues in his latest article "Why Gold Miners Will Acquire New Projects in 2015, 2016":
"Gold miners will have to acquire new projects in 2015 and 2016 if they intend to stay in business.This from Brent Cook, economic geologist and the editor of Exploration Insights, a respected mineral exploration investment research service.A dearth of new economic discoveries, reluctance to make acquisitions, the “high-grading” of existing mines, and cuts to exploration and development expenditures over the past three years are the key reasons for Mr. Cook’s thesis.By 2015 and 2016 the boards of these companies will “wake up to the fact” that they are running out of new projects to replace their declining gold mines.“At that point there’s maybe a dozen projects out there that they are going to want,” Mr. Cook told CEO.CA in a Skype interview. CEO.CA.
This is another reason why I personally came into the TNR Gold - Shotgun Gold project in Alaska. Gary Schellenberg and John Harrop - our VP of Explorations, have done the great job over the years exploring this project with Nova Gold and now we have 100% of it and Nova Gold has become TNR Gold's shareholder. After our drilling results in 2012 Greg Johnson the founder of Nova Gold has joined our Board and we have published the first resource estimation on the Shotgun Gold project last May.
It was the first confirmation of my personal dream to develop the important Gold deposit and even if it is still the very early stage of project development, this dream is not limited in size by the resource model at Shotgun Gold project at this time:
"The mineralization style observed at Shotgun Ridge bears a strong resemblance to the 40 million ounce deposit at the Donlin Gold project operated by Barrick and NovaGold," stated recently appointed director Greg Johnson, "The similar age and host intrusive rocks suggest that, with continued exploration, there is significant potential to locate larger volumes of mineralization in and around Shotgun Ridge."
We are working on the corporate structure now, which will allow to develop Shotgun Gold with the potential new strategic partner on J/V basis like we are doing with Ganfeng Lithium in International Lithium. You can find more information in the Shotgun Gold Project presentation below, on our website and give us a call to discuss it at any time.
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