by Travis Johnson, Stock Gumshoe | January 3, 2017 1:04 pm
This is the intro from the ad we’re considering today:
“Jim Rickards[1]: Halfway to heaven, in a location with life-threatening temperatures, a little-known company is about to unleash…
“‘God’s Gold’
“15 TIMES the concentration of the average global gold[2] mine, this deposit contains arguably the highest-grade gold on the planet.“And one company trading for less than $9 per share is
poised to begin unleashing $638,100,000 worth of ‘God’s Gold.'”
Who wouldn’t want to know what that is, right? The ad tells us that this is super high-grade gold (15.7 grams/tonne) and a large deposit (approximately 6.9 million ounces of proven and probable reserves), which will certainly help us to pinpoint the stock.
The ad is a pitch for Rickards’ Gold Speculator ($3,000 a year), which is headed by Jim Rickards and designed to profit from his prediction that gold will go to $10,000 an ounce… though it appears that the gold stocks are picked and the analysis done by Byron King[3], who has been Agora[4] Financial’s natural resources guy for many years and helmed their Outstanding Investments[5] for a few years along the way.
And, as so often is the case, there’s a near-term date to give us a sense of urgency…
“The deposit contains arguably the richest bonanza-grade gold on the planet…
“And a company that’s trading for under $9 per share is poised to begin unleashing $638.1 million worth of it.
“When that wave of cash floods into this tiny company’s books…
“I expect share prices to shoot through the roof.
“For reasons you’ll soon discover, I believe this could happen on or before March 20, 2017.”
The dates in these ads are, of course, usually either made up or given hugely exaggerated importance — with good reason, because advertisements that don’t have a sense of urgency don’t convert the curious into subscribers. Any good copywriter knows that if you decide to “sleep[6] on it” or mull it over, you’re more than likely not going to buy the newsletter — you need to be convinced that the opportunity is urgent and immediate… buy now!
So what is this? We get a little more inducement to act RIGHT NOW because it’s your last chance to get in before everyone else knows about it… word is leaking out! OMIGOSH! HURRY!
The specific pitch about that date is that “the company is going to open a critical piece of infrastructure as early as March 20, 2017.” So we’ll check on that as we go along, too.
From the ad:
“… you’ll need to act RIGHT NOW…
“Already, news of this heavenly-rich deposit is rocking the mining industry.
“Renown mining investor Tommy H. calls it:
‘…A spectacular high-grade resource.’
“Natural resource analyst Evin R. gushes:
‘One of the highest-grade and largest-sized gold deposits in the world…’
Are you getting our free Daily Update
"reveal" emails? If not,
just click here...“Chen L. of the The Gold Report has this to say:
‘A world-class mine…’
“And one of North America’s leading mining magazines puts it bluntly:
‘…A jewel in [the company’s] crown.'”
See what they did there? Not just add urgency, but also add some authentication with quotes from “renown” and “leading” sources to give you some confidence that Jim Rickards is not just making this up.
Quotes from reliable-sounding sources and upcoming catalysts, check! Now all we need is the promise of ludicrous wealth!
Rickards does that with another familiar routine popular with newsletter ad copywriters: Talk about thousand-percent gains over and over again, even while putting in smaller type that, well, perhaps you won’t see gains like 5,379% or 1,380% or 3,757%… but maybe it will be “only” several hundred or thousand percent.
That 5,379% gain isn’t made up, it’s a reference to the price spike made by the stock of a silver[7] company that was founded and run by the CEO of this same secret “God’s Gold” company. Here’s more from the ad:
“Could he really deliver another 5,379%?
“Well, it’s highly unlikely.
“While this ‘God’s Gold’ company is trading for just under $9 a share…
“The silver firm I mentioned before was sitting at 78 cents when it took off.
“But that’s not to say this $9-per-share company won’t return gains in the hundreds to thousands of percent.”
I know, I know, the suspense is killing you — me too! But we’re almost there… can we get just a little more intel about just what the heck they mean by this made-up “God’s Gold” term first?
“‘God’s Gold’ is typically found near volcanoes or in very high-altitude mountain ranges…
“And why it can be so cheap to extract from the ground.
“Just listen to what one CEO had to say:
‘The beauty about [‘God’s Gold’] mineralization is that for the most part the processing is a tried and proven technology of simply crushing and milling the ore. This is not a complex type of ore nor is it an expensive process.'”
OK, so, as you might have guessed, “God’s Gold” is, well, gold. It’s just that they’re referencing a particular kind of gold deposit that tends to be found in mountainous areas — that quote is from Ken Booth, who is CEO of a microcap gold explorer called Redstar Gold (RGC in Toronto, if you’re curious)… which is NOT the stock being pitched by Rickards, it’s just that Redstar’s potential gold deposits are, like the “secret” gold company being teased here, likely low sulfidation epithermal mineral deposits.
Woohoo! Sounds fun, right?
Well, to be fair, most of us are not mining geeks — but these kinds of deposits have inspired some lust among investors in the past. Several of the big mines hinted at in Rickards’ pitch, including Kupol in Russia[8] and Cerro Negro and El Penon in South America, are characterized by low sulfidation epithermal mineralization, and those were all high-grade deposits that were bought out by big miners for multi-billion-dollar prices.
And, of course, our secret “God’s Gold” stock is also in some ways a similar kind of deposit — so what is it?
Well, I hate to talk about something that most of you have probably already heard of… but here we are again being teased about Pretium Resources (PVG)[9].
Yes, Pretium is right around $9 a share (and, probably thanks in no small part to Rickards’ attention, it’s rising already this morning, up about 8% — though gold and the average gold miners are all up today as well).
Their main asset is the under-construction Brucejack mine in northwestern British Columbia, and it is indeed an unusually large and high-grade gold mine. It’s also going to be producing gold this year, and is fully financed through commercial production — so this is a big and established company that’s on the verge of actually producing revenue… as is reflected by their market cap, which is about $1.5 billion.
Pretium is not an explorer that’s about to shoot into the headlines with a big new discovery — it’s a discovery that has been well-known for many years… though, despite the fact that CEO Robert Quartermain[10] is widely followed and respected (thanks to his work building Silver Standard, which he left — and then he raised a big pile of IPO[11] cash to buy Brucejack from Silver Standard), you could perhaps argue that the unique nature of the deposit has meant that it didn’t get as high a valuation as it otherwise might have. The gold is found in narrow and extremely high-grade veins, and it took quite a while before skeptical analysts and observers were ready to accept the estimates about how much gold might be in the ground and the best way to produce that gold.
Now, though, the sentiment seems to have swung pretty well over to Pretium’s side — the stock is not overvalued if things work as expected with early production and the confidence in the reserves increases, but neither is it all that cheap based on the proven and probable reserves… so to some degree buying in here represents at least a small leap of faith that the initial mining will produce as planned in these early years, and that the reserves will continue to expand to extend the mine life.
I’m no expert on this particular project, though I know many of our readers have been discussing it with great enthusiasm over the past year or two — including hendrixnuzzles, who has followed it all year in the mining discussion threads he has shepherded (you can browse those threads[12] if you like, but some recent comments on Pretium start around here[13]). The company did upgrade their reserves in mid-December, as is detailed in the updated version of their investor presentation here[14] — the changes were not huge, and the grade was reduced a little, but proven reserves were boosted enough to give some additional confidence about the first few years of production.
And yes, there are quite a few analysts who are pretty excited about Brucejack and Pretium now — a summary piece by the Gold Report quotes many of those same folks[15] cited in the Rickards ad.
The economics laid out for Brucejack by Pretium itself indicate that it’s probably priced about right — they calculate that the after-tax net present value of the mine, at $1,100 gold and $14 silver (which is pretty close to where we are now), is about $1.55 billion. So it’s pretty easy to imagine the stock doubling if the early commercial production is successful and without any big hiccups, or if gold prices soar much higher in the near term, but the notion of thousand-percent returns seems pretty wildly speculative at this point. There is potential for a strong long-term producer to emerge from this as well, and a pretty stable one even if gold prices are jittery, since the reserves could expand beyond the current projected mine life of 18 years, and since the per-ounce “all in” costs are expected to be low (near $500 an ounce, half of what many mines incur to produce an ounce of gold).
There’s plenty of operational risk, since we don’t know if they’ll hit a problem in the commissioning of the mine (it’s been pretty smooth so far), or if the initial wave of mining will produce gold at the level expected, and there’s always a heightened risk when you’re talking about a single mine and reliance on a single commodity, but it’s a pretty well-advanced construction project and the skeptics have so far been wrong about Pretium.
Oh, and that “March 20, 2017” date? That could be a few things, though I don’t know that any of them will have a marked impact on the stock price (unless there’s a surprising failure, that is). The transmission line is probably the biggest thing that will be completed in the next couple months, though the construction of the mill should also be wrapping up around then as well, as will the underground infrastructure (crusher, transfer tower, etc.)… and the underground development is continuing, with most of the ramps and shafts well underway or complete — so you can take your pick, but there doesn’t seem to be any one big piece of the infrastructure that’s not expected to be complete on time, and the company has been clear about indicating that they expect the mill to be commissioned in mid-2017 and the “first pour” of gold produced from the mine could come before the end of the year, so it’s probably wisest to assume that investors are expecting things to proceed apace.
What usually has a big impact on stock prices are surprises — so if they finish early, or early production is better than expected, that’s a good surprise… if they hit delays, or something breaks, or initial production is lousy or the mill needs re-engineering of some kind, that’s a bad surprise. Beyond that, it’s investor sentiment about gold stocks and the price of gold (both of which, as we’ve seen over the last twelve months, can move dramatically and quickly), so you can throw all that into your mental model and, voila! You can decide how much the stock should be worth.
I don’t own this one personally and have mostly shied away from investing in individual mining projects, though Franco-Nevada (FNV)[16], the royalty company I’ve been buying most recently, does have a royalty on Brucejack.
Sound like the kind of “God’s Gold” you’d like to own? Let us know with a comment below.
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My father in law (GB) built the road to the Brucejack mine.
His company and all the other contractors are having a hard time collecting payment from Pretium for work done. Maybe this is standard for mining companies.
It is! I see their financials when published and their accounts payable (liability) is usually “fat.” PVG, like most I’ve researched, squeeze the nickle so hard they rupture the buffalo. The key fact is once the road is built, your in-law’s firm lost leverage. Quartermain is one of the strongest hands at the table. However, they will get paid.
I subscribe to one of Jim R’s services and he is quite a huckster.
Thank you for the work you have done and for sharing freely.
Tom Dyke, Austin, Texas
Periodic Table of Elements #79 is Au. Derived from Latin. In English it’s Gold. There is no superior Gold. It’s always periodic element #79. It’s so stable it’s practically inert.
Teuton Resources TEUTF has sold several of its claims to PVG and remains one of the two biggest landholders in the Golden Triangle, home of PVG’s Brucejack and Seabridge Gold’s massive KSM find. When the area explodes, I believe this undervalued company may soar. They have several assays pending on their own properties and a low float. I’m a shareholder, full disclosure.
TEUTF…I have noticed the Teuton claims in maps for the area…but do they have any drill results or other data to look at ?
TEUTF
Bid 0.1358 Ask 0.1585 High 0.1509 Low 0.1509
Volume 5,000 Time (ET) 9:51:16 AM
% Wise — Too big a Spread–almost 20% and VOLUME 5,ooo ?? I could be the Entire Market foe less than $75 ..Might have a good “story” , but without Liquidity of 200,000 MINIMUM on a stock less than 0.25 …I’ll PASS! I’d rather pay 0.25 with 500,000 volume…that way ..I CAN BUY//SELL Without Worry— No Profit, if I Can’t BUY or get a buyer to SELL To! What if I want 15,000 shares?? —it wouldn’t happen! Plus a 52 week Low of 0.03 …a lot of profit for earlier Buyers to sell it down
If you are interested in claims in the vicinity of PVG’s Brucejack mine, in my opinion the stocks to own are SA Seabridge Gold and CLASF Colorado Resources. I am aggressively long both, in addition to Pretium. Seabridge is, by some measures, the best value in gold “optionality” that I have seen; Colorado is a great play for very little money…tiny market cap, with huge upside leverage.
Richards sales tactics are questionable. However, his book “New Case for Gold” is a very good read.
Just a point of view, but Rickards never provided any recommendations until he took the blue pill and joined Agora. Just found out Celente – Mr. Trends Research has too taken the blue pill and joined Agora.
I have the greatest respect for both gentlemen and respect their learned points of view on their area of expertise.
However, stock picking for newsletters isn’t one of them. Celente will wind up with an assigned copywriter and analyst re-tread to align some equities, ETF’s or Options to Celente’s key trend themes.
Agora is on a massive hire streak. Stockman, Rickards, Celente. All brilliant people in their own right and great reputations.
Must be a lot of coin or vig on the newsletters to join that “august” org.
Again, just my point of view.
Agora has become the Great Squid of newsletter conglomerates, depressing to me watching people like Ron Paul and the others you mentioned shill for the company, which also has a massive supplement division with the likes of Mercola. I put up with their relentless embedded ads for the morsels of truth that are occasionally presented , some of which don’t make MSM.
I can identify with your point of view. It’s a lot like picking fly sh!t out of pepper. When I want some fact facts, I have to go to search page 20+ to get past the MSM shills also.
Staying truly informed is damn near a full time job.
PVG is for real, which is more than I can say for most of the hucksters pushing pricey memberships that pick our pockets to line their own. Surprised that Jim Rickards actually recommended this one – most of the “penny” gold/PM stocks he & Byron King select are under $2.00 and highly speculative (as are most all penny stocks). Long PVG & PVG Jan ’18 Calls, GDX, SLV, PAAS.
$PVG…Pretium Resources…long…regardless of what one thinks of Rickards or Casey, IMO Pretium is a first-class gold investment. I have done as much research as an amateur can do on it. Conviction pick for me. It is my only long-term hold production gold miner…the big caps are trading plays for me, PVG is a hold.
Condn’t agree more David and Fred. Jim Rickards is constantly coming out with new 3K plus newsletter service and I’ve barely broken following his advice after using his lower priced service for 2 years. Very insightful and knowledgeable person but has gone off the deep end with all the expensive services he’s constantly coming out with. Soon to just let my service lapse. Apparently have to spend 3-7.5K a year with him to make a buck and that’s a big maybe! Lost my faith in you Jim.
Just a point of view: He’s not recommending anything. Byron and Agora analysts are. He’s still a brilliant man, well connected, experienced, and has an interesting point of view. I find his interviews on RT and even MSM sites, to just listen to his point of view. He hasn’t made or lost me any money as I don’t pay for Agora shills.
I have read Naomi Prinz’s books and she’s a brilliant investigative journalist/writer. But, she too isn’t a equity strategist. Prinz and Byron are aligned to Rickards and the newsletter.
If you want to get way out on the leverage curve with exploration companies, feel free. A Harvard trained geologist isn’t going to help much. An EX company has half a dozen on staff-maybe not from Harvard, but as good or better geology schools.
Just saw Celente last night with a $3K Agora “Trends” subscription for only half off!! HaHa-typical Agora bait, trading on a reputation. Celente and his Trends are interesting reading and he’s been doing it for a couple of decades and a pretty good track record. But, now part of Agora, and the picks you pay the privilege of seeing are around “possible plays” that are aligned with Celente’s trends-MaryJane legalization, Subprime Auto loan meltdown; and a couple of others. Celente identifies trends-he doesn’t pick stocks. Point of fact he holds a lot of gold in hand…since he got burned by Corzine (but did get his money back-2 years later).
My view is it still pays to listen to what Rickards and Celente have to say. It doesn’t pay to spend thousands on the newsletters for picks.
I don’t fault either person for capitalizing on their reputations, which at the end of the day is all they have (and book sales, or Trends journal subscriptions).
Find sectors you have more than a passing interest in, and then devour everything published you can get your hands on.
That’s where you’ll find your PVG’s long before a newsletter writer finds it. Long PVG since the pink sheets;-)
Thanks for info, MP. Rickards macro views are sharp and I spend too much of my retiree days reading Bonner conglomerate free emails.
Well, I’m 60 days away from joining you having taken advantage of delayed retirement to fatten my SS check.
Just view the Bonner emails as you did the Sunday comic section of your newspaper back in the day.
Personally, I use several on the list of 200 “Russian controlled sites” WaPo published and bookmarked them to see if one can actually find fact, facts and threads to Rickards, Celente, Stockman and others without the added “fat and calories” of Agora or any other newsletter, all designed to get you to part with your coin.
They’re the racing tip sheets of the horse racing era writ large in Wall St. casino of today.
Time is the most valuable commodity we have; use it wisely:-)
“Time is the most valuable commodity we have; use it wisely”
You already have the right perspective. Carpe diem. For some of us, the Fates decree infirmity as the new retirement.
If you can open your eyes in the morning, it’s going to be a great day!
Good attitude, you’ll be a happy retiree…as long as you don’t
Buy Agora picks LOL.
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Hoping this comes through…..nope didn’t…
ok, same pitch for PVG again .. what has mine seekers guessing now is the ” red gold ” from Casey’s analysts Louis James ( i think) — and the newsletter is only $2000.?! sheeeesh! we need a group /coop membership for that tip
I believe that this God’s Gold stock will be like any other stock. Will see what it does in the near future..
I’m new to the mining sector but not so commodities. I’m curious about a company being touted as a huge new source of supply being the underlying reason to buy up the price of the stock?
Increasing supply would have a depressing effect on the commodity price all things being equal (which they are never).
So I’m wondering about the production costs v. the price of gold ratio as some indicator of the company’s value?
Of course that implies the company can accurately predict the cost of production over some future period, and that their (or our) crystal balls can accurately predict the price of gold over the same period.
Seems to me it would be easier just to speculate on the price of gold (futures) rather than also having to believe/trust in the production cost numbers touted by a company (or its handlers) who have a vested interest in the share price increasing even as they increase the supply of a politically charged commodity…
Any mining veterans care to shed light on the dynamics I’m undoubtedly missing?
This particular mine is likely to produce about 500,000 ounces a year, which as I calculate is about one half of one percent of the total annual gold production from mines every year (assuming about 3,000 tonnes of gold produced/year). It’s not going to impact the gold price, but it will be very much impacted by the gold price.
Mining stocks are almost always quite levered to gold, and can provide windfall returns if you’re fortunate, so people will always try to find the best small miners… though speculating on gold itself has similar leverage if you can trade futures options, it doesn’t have the same open-ended potential that a good small miner does (because options expire), and it’s not as fun a hobby as trying to find the next hot mine. Brucejack is well-known, and is expected to be a low-cost mine, so it won’t be super-levered to gold prices rising but it should be able to operate even if gold falls another 30%.
Thank you, I’ve been corralled into Casey Research, Agora Financial, etc., etc….thank you for disclosing PVG(already on my ‘Junior Mining Acquisition’ watchlist)- as three separate newsletters want a couple thousand USD for a silly little pick..Pretium still has buying interest, although after 16% gain today…might wait and see. Great article, cheers!
I got turned onto ITA from the Agora group and also NVDA. I am up 150% on NVDA and about 15% on ITA.
Best thing to get out of Jim Rickards is that he has keen insight on how the central banks and financial systems work. But he is a terrible investor and investment advisor. His timing is always way way off.
Just ignore his sales pitch, and read his books and you make decision .
Looks like “Gods Gold” (PVG) as well as NAK are both going to hell today. pvg off 7% & nak down 15.9%. Gld is only down 1.5% near close so some type of individual newz or “dumpers” needing cash must be occurring.
Both are super-volatile, partly because they get such an outsized level of attention from newsletters and mining pundits. Looks like Rickards is pushing the “God’s Gold” spiel again today, but it’s also true that The big newsletters might recommend specific stop losses on these stocks that help the “sell” momentum when things turn ugly for any reason (if lots of holders had a 25% trailing stop loss on PVG, for example,
That would have triggered at the close yesterday).
Or there could always be a negative article or short piece circulating, as happened with NAK a couple weeks back — haven’t seen any meaningful negative pieces about PVG of late, but that doesn’t mean they aren’t out there.
He’s great for the long look ahead.
Rickards is such an odd case… he really does have a powerful resume and set of contacts that take him to the epicenter of financial power and its “Who’s Who”. I am a member of the Chicago Council on Global Affairs, they have world leaders like Tony Blair, Madeleine Albright, Mayor Daley, and scholars like Francis Fukiyama speak, and they have Rickards. His books do reach some in the mainstream… So, yes, his street level marketing blitzes are so annoying… they are like Trump’s Tweets… so we can be annoyed at Trump and Rickards…. but you can’t argue with their success… Instead of giving Rickards $3000 (or $1750 if you are on his insider liste!!!), I am reading this thread! Thanks for the free advice, all!!!!!
Yes, I am one of those who bought into Jim’s silver tongue. I have lost over 60% in all of the stock picks that Jim and Byron gave us. Today, May 31st gold is soaring but my stocks are still losing ground. But Jim always has a way of explaining all the problem away and just says to be patient $10,000 gold is just around the corner. Gee whiz Jim gold has to pass $1300 first Jim. I like Jim he is smart but I don’t think he is in touch with the pain his subscribers feel and how his constant ads to sell you another strategy to make you a millionaire every day non stop!!! Today I sold half of my “God’s Gold” stash and I just feel sick about the whole thing.
I so empathize with you and all the others. My losses are similar, and at the tune of a $1750.00 subscription that didn’t really offer anything profitable. Everything I bought into they advised on went down and has pretty much remained there. Agora tried to renew my subscription recently and I cancelled. As a retiree, I feel like a fool for falling for Jim and Byron’s intellectual escapades. There ought to be a class-action suit against them for taking advantage of people this way. I feel quite sick too, John.
Seems PVG struggling to find the grade of ore they had reported. If need a gold short ever, might be the candidate.
Used to love to listen to em. Now can’t listen to em at all. Don’t think he actually knows the mines.
Late to the discussion but not surprise how we all feel about Jim. I actually like him, just not for mining picks.
KL has been a high flyer and now Wesdome reporting sweet new jewelry with their ongoing drilling results. I’m hard pressed to find anything approaching these two. Would love to find a few others. . .