Gold Miner To Withhold Sales: "Storing It For The Long-term... Makes More Sense At These Prices"

Tyler Durden's picture

Submitted by Mac Slavo via SHTFPlan.com,

Last year, following an attempt to motivate the Commodities Futures Trading Commission into investigating rampant manipulation of gold and silver prices, the Chief Executive of one of the world’s leading primary silver companies called on other producers to withhold precious metals from the market in an effort to stem the fraud. He recently reported that not a single producer contacted him to do so. But as precious metals prices fail to reflect the growing demand around the world, one company in particular is actively preparing to do exactly that.

MX Gold Corp CEO Akash Patel and CFO Kenneth Phillippe say that they are positioning their company to stockpile between 20% to 30% of their physical gold production in coming months, noting that prices are nowhere near where they should be at current supply and demand levels. In an interview with SGT Report, Phillipe appears to be taking the stance of many precious metals investors, which is to stockpile the physical asset in anticipation of any number of potentially cataclysmic economic and monetary events like the hyperinflation we are witnessing in Venezuela.

We want to pull out the physical gold… We want to take this gold and we want to store it. We believe that having the physical gold in the vault makes a lot more sense than selling it at these prices. Gold is ready to move. We believe it’s going to continue to rise… we’re going to be storing our gold and holding it for the long-term. 


(Full Interview at Youtube)

This whole entire industry – the gold market – is fueled by the economies.

 

With the economies… the state that they are in right now… where they are continuously printing more money… This is why I understand most people would like to put gold into their portfolio… Because it’s clear to me that people have to take precautions against the unknowable future.

 

We don’t know what’s going to happen tomorrow. We don’t know if China is going to blow up. We don’t know what’s going to happen in the U.S. at any given time. They continuously keep printing.

 

 

We truly believe that people in the United States are not investing into T-bills… government paper is just not what people want at this point in time… gold is liquid… under all these market conditions we truly believe investors are going to acquire gold. Owning the physical gold is the only way to see a major increase [in wealth]…

 

The United States has gone on for eight years consecutively… and they haven’t gone anywhere. Everything that’s going on in the world… they’re not moving forward… they continue to print paper and the paper is worthless.

 

Gold is the only physical value we see out there. We also have a lot of silver. We also have a lot of copper… which are the byproducts that will pay for our gold production.

 

…You use what you need to sell to pay off all the bills, to pay off all the employees and keep the company moving forward…

 

But we would really like to look at banking some of this gold… keeping it physical and holding it for the long-term future.

 

We’re going to be pouring bars on site… hopefully 20% to 30% of all production physically into gold bars on the project. 

MX Gold is the first mining company to announce such a revolutionary strategy and it completely makes sense considering that some of the world’s largest investors are gobbling up everything they can get their hands on.

And while gold and silver are still shunned by the majority of the population and mainstream financial pundits, as Phillipe notes, this is not the case in China where lines out the door are a daily occurrence :

I have a close associate who just came back from China. He went to Beijing, Hong Kong and Singapore and he said that there are still people lined out the doors to get into these gold shops.

 

Everything in China is physical gold.

 

They’re selling gold bars… they’re selling gold ornaments… everything in China is being sold and it’s so busy… There is a lot of gold buying still going on.

And for good reason.

Whereas in the United States the former head of The Federal Reserve Ben Bernanke argues that gold is not money and is only held by some central banks as a matter of tradition, the Chinese government has been touting gold investing and stockpiling for several years.

They, of course, know what’s coming.

In the United States, however, the government and media have actively conspired to convince Americans that there is nothing to worry about because, in President Obama’s words, we’ve been saved from another Great Depression.

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TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jun 13, 2016 5:04 PM

Translation:  Supply > Demand?

JohninMK's picture

My eyes are a bit poor, is this gold or coal?

BaBaBouy's picture

We need like the Barrick's et al to do the same...

Take 25% production off the market.

Watch the paper fiats USD price +++...

These AU/AG Miners will become money machines once the POG passes $2K ...

Bay of Pigs's picture

Goldcorp did this years ago with great success. 

38BWD22's picture

 

 

If a gold miner has sufficiently strong cash flow (to pay bills, etc.), I think that what MX is doing is an excellent idea.

Most miners are financially pretty weak though.  

Thanks, BOP, with the news re Goldcorp.  They were thinking ahead even if their timing did not look so good from 2013 - 2016.

Buckaroo Banzai's picture

If you know anything about Barrick, you know they will never do that.

Folkvar's picture

Barrick are carrying too much debt to get away with doing this, their creditors wouldn't be too happy about it.

auricle's picture

Good luck getting investors to pay to sit and wait. You want to dig it out of the ground to do nothing with it? Nice. Why not just leave it in the ground until the price goes up to where you are willing to go get it? 

Antifaschistische's picture

of course you make a valid point.  

I would actually go the other way.  Allow me to buy a stock in a gold miner, and pay a negative dividend.  Yep, that's what I said.  Pay x% per/share negative dividend (or a fixed fee) say $4 per/share, per/year and the miner vaults all the physical.  If you want to sell you can also have the option of taking physical delivery.  You get to deduct the negative dividend "fee" from income for tax purposes...

...only variable?  would you really trust the miner to vault the gold.  So, a legitimate independent (shareholder approved) monthly audit would suffice.  Or store it in a third party vault like with Brinks...or, off shore it.

. . . _ _ _ . . .'s picture

"My eyes are a bit poor, is this gold or coal?"

Neither, it's Tungsten.

silverer's picture

Well, this should give COMEX a case of the runs.

Peak Finance's picture

Fuck man I hope this guy got nailgun insurance.

 

knukles's picture

Does it feel right this time?  Does it feel right this time, punk?
This is a 440 oz. bar and I drop it on your head it's gonna hurt like hell.
Well?  Does it feel right?
Go ahead, make my day.

Billy the Poet's picture

We thought about it for a long time, "Endeavor to persevere." And when we had thought about it long enough, we declared war on the bankers.

Albertarocks's picture

Well it's about bloody time somebody stepped up and sided with Keith Neumeyer on this.  The only reason any gold or silver miner should be selling any of their precious product at these robbery prices would be if they have no other choice, in order to meet cash flow demands.

Just pull their precious metals off the market.  Period!!  They're called "precious" for a reason.  Fuck the bastards at Comex and at the London FIX.  Let's all hope the rest of these Canadian miners finally stand together and take their own destiny into their own hands.  No better proof of the old saying that "the cure for low prices is low prices".  The bankers have finally driven prices so low that the miners are starting to say "Sorry JPM, you will get no more until we like the prices."

nibiru's picture

yeah, trust Obama and you will end up homeless and divorced with NSA looking inside your ass for drugs, counterfeit dollars and white male privilege.

 

If Chinese are buying the amount of annual gold production then you should too. Simple as that.

http://independenttrader.org/the-power-of-the-sino-russian-alliance-part...

matinee55's picture

holly shit they will be creating billions more paper gold in the futures market now - reselling each piece 1000x over

Albertarocks's picture

They can't do that any longer and get away with it because of the new physical exchange in Shanghai.  In fact that Shanghai exchange basically put the London "fix" out of business because of the arbitrage now available.  If London "fixes" the price too low, the Shanghai exchange instantly exposes the fraud by selling the actual physical at the real "price discovery" price.  Buyers will pay what they need to pay to get their hands on "the real stuff", and the whole world can now see what that price is... instantly.

 

There is so little gold and silver left at Comex that if just one big investor alone says "no thanks, I want the physical... every last ounce of it", that could put the Comex into default.  Game over for Comex.

PlayMoney's picture

They are still doing it. A couple of weeks ago someone did the 2:15 shuffle and "sold" 2.3 billion gold in about 5 minutes. Thats about 2% of total world global yearly output....in just a few minutes. Comex probably cash settles...and forces it to the extent they can. I hope somebody takes them down because as long as Comex is open the Fed/JPMorgan and their ilk will pul paper contracts right out their azz.

fbazzrea's picture

i agree but the problem is, China is not motivated for higher prices either--yet.

but i don't think they're going to put up with any shenanigans from the Crimex, either.

great Agatha Christie title: Death by Arbitrage

i_call_you_my_base's picture

If enough of them do it it'll be self-fulfilling.

Kaiser Sousa's picture

curious approach....

mirrors what ive been doing for eight years though...

go figure...

DEATH TO THE MONEYCHANGERS.

fbazzrea's picture

yep, each mining in our own way.

SlipStitchPass's picture

THANK YOU TYLERS! I bought 10000 shares of this today. Almost didn't because Fidelity charged a $50 add on fee ( not usually the case with Canadian Juniors). Anyway, the original interview was done by Sean at SGTreport and on ThePhaser. I usually don't run out and purchase but I like Gold miners and these guys have a pretty compelling story and some sick drill hole results...like 10G/ton over 100meters. Thats a shitter of gold. Mill is in place and mine is permitted. They stole a Moly mine with gold and copper for cheap!

I knew it would move because he has done other interviews that have moved stocks like Golden Eagle and Bayhorse Silver.

Hopefully the ZH exposure will be good!

bugs_'s picture

lets have a gold freeze!  it worked for oil!

taggaroonie's picture

This is what happenned in New Zealand.

Small operators were supposedly given incentives with lower application charges but they ended up not declaring recovered gold because the royalties were a bitch.

I don't know how the state can expect their claims on other peoples' property to work on independent-thinking miners.

When you work that hard you want to keep your earnings rather than submit to legal theft. Fuck 'em. 

Yen Cross's picture

 

   What???  You mean the miners don't want that 100:1 paper hedge, or to buy calls against their ownership shares?

   Keep stacking Bitchez---

 

Chuckster's picture

Custer had a plan.

ali-ali-al-qomfri's picture

everyone has a plan until they get

punched in the face by Miner.

HRH of Aquitaine's picture
HRH of Aquitaine (not verified) Jun 13, 2016 5:49 PM

Smart strategy. I hope other mines agree to adopt this strategy. Other forces are manipulating the price, why shouldn't the miners get in on some of the action? Brilliant, absolutely brilliant!

hendrik1730's picture

Well, if all other gold miners would do the same thing, they might break the Comex bubble within a few months. The supply of physical would crater, the demand is still strong, bingo. But : all of a sudden, the registered gold of the Comex rose 4.5-fold between april 2016 and today. 4.5-FOLD. In just 2 months time. This means the battle is starting. Let's see who bites the dust first.

Dickweed Wang's picture

Well, if all other gold miners would do the same thing, they might break the Comex bubble within a few months.

 

 

Never happen . . . what is much more likely is if the USA keeps pissing off China and/or Russia one of them will place an order for say 4 billion dollars in gold contracts on the Crimex and then demand immediate delivery.  Game, Set, Match . . . . and if the Crimex can't deliver (which they won't be able to) then the "Emperor's" clothes will be ripped off his emaciated/pox ridden body in front of the entire world.

ramgold2206's picture

Fellow ZHer's we opened up to the Asian market last year, and we getting to china by year end,,, you would not beleive the demand,, physical at any "paper cost" ... the demand is so great that personally i have all but forgotten about the US as most of joe six pack USA just dont get it!. if you know gold,, there is no reason in the world why you cant make money with us

http://ramgold.ilp24.com/18968

 

www.teamramgold.com/about-us

Dickweed Wang's picture

. . .  and we getting to china by year end,,, you would not beleive the demand,, physical at any "paper cost" . .

 

 

That's basically what the guy said in the piece . . . . "lines out the door" [in all the gold shops in China].  I've seen this same kind of statement made by many people that have actually been to China recently.  Then in the USA we have anti-gold assholes on the "financial news" like Warren Buffs-it and Ben Berspankme . . . they make me want to puke.

ramgold2206's picture

agreed.. even in euro land, there is a concensus with the MSM to essentially ignore gold like its non existant ... bizzare world we live in

Tegrat's picture

A company to invest a few thousand shares in imo.

knukles's picture

Just out of curiousity.  They say they're gonna be pouring bars onsite.
Are they and the facility LBMA approved or will they broker raw unapproved bars through the recasting and assay process, etc?

Bastiat's picture

Would have to be dore bars. 

Dickweed Wang's picture

Would have to be dore bars.

 

 

I'd have no problem whatsoever taking a pile of 20 karat dore bars . . . . and by the way, fuck the LBMA . . . with the rise of the Shanghai Gold Exchange their days are numbered.

38BWD22's picture

 

 

Yes, I would go for dore bars (purity varies, can be as low as 55% Au, depending...), if I had a handy & trustworthy way of assaying them.  And, at a discount so I could have them refined locally and not lose money.

mctimm's picture

This is a Micky Mouse junior exploration company that produces no gold whatsoever. So what's the big deal?

Rock On Roger's picture

They got some drill holes so they might have produced a couple femtograms of gold.

 

We're gonna be rich!

antidisestablishmentarianismishness's picture

can you say pump & dump?

FX223's picture

Shit these guys are copying my strategy of getting as much Au Ag as I can and hold...who spilled the beans?

 

Next they'll need to be hoarding Pb as well.

HRH of Aquitaine's picture
HRH of Aquitaine (not verified) FX223 Jun 13, 2016 7:29 PM

I hear you! My strategy as well. I am holding for the long term.

auricle's picture

Why would you invest/pay them to store gold? Why would you not go get your own and store it yourself? This is one of the dumbest business plans I've seen. If they aren't selling then they aren't making any money. If they aren't making any money neither is the investor. You want to invest in that business model? 

Until the fiat system and the commodity pricing mechanism burns, commodity's will continue to be suppressed. Natural predation is the only way to reduce supply. It's just like oil, nobody will agree to coordinate the slowdown of production because past experience has shown there are always cheaters. Why would one expect things to be any different for gold? Once enough companies go under, enough supply/development/exploration come offline or physical demand rapidly increases will gold price rise. Not a minute or gimmick before. 

gcjohns1971's picture

You'd be paying them to buy up less wise miners' plant and equipment at pennies on the dollar,    Presuming the company deals honestly with investors, it would amount to a futures contract on Gold at a wholesale strike price....  Because if monetary Gold demand pans out they won't be selling it anywhere near cost.

 

So, to answer your question, it depends on whether the current futures-manipulated price is above or below production cost.  If below, then but physical gold.   If above, then investing in this company theoretically closes that delta from current to production cost.

rbianco3's picture

Buying shares now. 

My vote of support!