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Robert Martin's Precious Mettle Common Zense: Getting Zerious about ZurvivingRobert Martin It's time to get serious. Until now, the emerging bull market in precious metals and commodities always had a "?" after it. Is this the real thing or just a bear market rally? Observers as dissimilar as Robert Prechter and Andy Smith have kept us off-balance with dire predictions of gold tumbling down, taking us suckers with it. Meanwhile, the traders, dealers, shorters and swappers dodge in and out of the markets riding the swings in search of quick bucks. But I am neither a trader nor a dealer. And I am not looking for quick bucks. I am just a citizen of this Ant Farm we call America, hoping to survive. And I am writing this essay to those of you who, like me, aren't trying to outwit the market for fun or ego. Like Noah, we are simply trying to build family-sized arks in advance of rain. Those of you who have read my previous work know that I advocate gold and silver as suitable hull materials (I call them "portfolio bookends"). In ordinary times, building a boat out of gold and silver might not be such a "floatable" idea. But these are not ordinary times. So the more gold and silver your personal ark contains, the higher it should float when the rains of inflation and floods of deflation arrive. The rain and floods will come. Storm clouds continue to gather. Whether it's our trade and budget imbalances, our escalating foreign entanglements, or the shaky foundations propping up Fannie, Freddie and social security, we can see with our own eyes what Bob Dylan tried to tell us: A hard rain's a gonna fall. But being your typical ant, lately, I find it hard to stay focused on building my little ark. I can't speak for you, but conflicting emotions have been tugging at me, intensifying over time. They rise and fall with the price of gold, then ebb and flow with each pundit's warning-de-jour. The constant yo-yoing of the price of gold or silver at the hands of traders, who only deal in paper contracts and never the real stuff, is heart breaking. And for those of us who invested early in gold and silver vehicles - only to watch them languish for months on end - it has become a test of will. So where does a concerned ant turn? To Zen, of course. Zen, the ancient study of quietude. And before you question my qualifications to expound on Zen in all its ramifications, let me remind you, I took a college course in Chinese philosophy once. It was taught by a kindly old professor named Dr. Ho. So yes, I do consider myself an expert. Dr. Ho was a soft-spoken man of modest stature with a large round face sporting a squinty smile. (And before you ask if he had a mechanical arm and black-rubber hand sorry, that was Dr. No). Dr. Ho conducted class by sitting down with a small pot of opium tea, which he would sip quietly while idly talking about stuff. No chalkboard, no handouts, no exams. Through his accented English, I was first introduced to the idea that less is more. Dr. Ho would soothingly ramble on about the subtleties of eastern philosophy the way a Las Vegas hypnotist might mesmerize an audience into strutting like chickens. Here is something I learned from Dr. Ho: Never mistake motion for action. For motion can be action-less, and sometimes action should be motionless. Fast forward 35 years, and here I am, Survivor Ant, sincerely wanting to do the right thing for my family. But what? The answer is Zen-like in its simplicity: Use common zense. Common zense works like this. Go to a window. Open it. Look outside. Tell yourself what you see. If you see things that you don't like, believe them. Then act accordingly. In my case, I looked out the window about three years ago and saw a stock market in free fall, a Federal Reserve with printing presses blazing, a government sending troops to 130 nations, our factories crated-up and shipped overseas, quality jobs disappearing, bankers handing out credit cards to teenagers without incomes, car makers selling SUVs for nothing down and zero-percent financing, and news providers behaving like entertainment channels. The appearance of prosperity was everywhere. But the feeling of prosperity was not. Nothing seemed real. By comparison, gold and silver suddenly seemed very real. Why? Well, as it turns out there are many reasons, but here are just three: 1) If you drop
a large bar of gold or silver on your foot it hurts "real"
bad. These constitute truly Zen-like tests of realness. Trust them. So I began to convert many of my beautiful greenbacks into chunks of gold and silver which I hid in secret places. Then I traded more greenbacks for bigger pieces of paper called stock certificates (no electronic data bits for this ant!) granting me a shareholder's interest in various public mining companies. These companies all had one thing in common: Proven gold and silver resource/reserves in the ground. On the seventh day, I rested. I wager many of you have been doing the same thing. And now, months and years later, here we are, a nearly-completed ark in each of our backyards, a few dark clouds overhead, but not a drop of rain in sight! To the contrary, stock markets are on the mend, financial leaders declare recovery is here, many mining shares are 50 or 60 percent off their highs, and the Fed scoffs at inflation. No wonder we begin to question our beliefs and second-guess our decisions. Thank goodness we have Dr. Ho to remind us to follow our common zense in order to accomplish nothing. That's because doing nothing is a form of action. It may be the highest form of Zen action. For Zen teaches us that nothing can be everything. We need to trust our senses, quiet our emotions, and sit tight. Consider it a form of economic meditation. I employ Elliott waves to help me. While Prechter uses them to terrorize us with predictions of crashing gold and silver prices, I use them in a humbler fashion. I don't try to count every wavelet and sub-wavelet. I just count the intermittent tidal waves. Given the tragic suffering from the recent tsunami, it bears heightened significance that we keep a wary eye on incoming waves. From June of 2001 until January of 2004, we experienced our first tidal wave, which is my Wave One Up. Gold awoke from its 20-year slumber to climb from $255 up to $430. So far, so good. But then came Wave Two Down, a frightening wave conjured up by Mother Nature and made worse by those mischievous munchkins named Comex, JP Morgan and Greenspan. Wave Two Down has one purpose in life, to scare us into selling. Its full impact has been felt in the share prices of many gold and silver stocks, with the sight of silver plunging from $8.40 to $5.50 not to be soon forgotten. It takes a Zen master to overcome the bad ju-ju of Wave Two Down. At its first sign, Zen-men (and women) leap into inaction and immediately begin doing nothing. They follow up with inactivity and finish it off with a flurry of stillness. No desperate calls to their brokers. No frantic click-sells on their computers. No elaborate sell-this-and-buy-that. Just a lot of sitting around and trying not to look bored. They know that as assuredly as day follows night, Wave Three Up is somewhere out there, awaiting its turn. It has been over about a year since the end of Wave One Up, and it feels like Wave Two Down could be coming to a close. Gold is trying to tip-toe back up. Silver is regrouping for the millionth time. Will they soon challenge their recent highs? Maybe yes, maybe no. The Zen master continues to sit tight, like an iguana on a hot rock. For he is certain of one thing: Whatever the price, gold and silver are real. Everything else is a mirage. So use your common zense to get zerious about your family's zurvival. For heaven's sake don't just stand there DO NOTHING! Speaking of Doing Nothing My two gold and silver favorites, Golden Phoenix Minerals (GPXM) and Sterling Mining (SRLM) are doing just that, nothing! Last week, GPXM continued to drift down, trading as low as 15 cents, as if snorkeling in wet cement. And Sterling, after its brilliant dash to $14.00 (a 4,000% moon shot in eight months), has retreated to the $5.00 range, boasting a price line that looks more like a plumb line. So where's the Zen in that? Suddenly, the ghost of Dr. Ho comes to my aid, whispering in my ear. "Do not be deceived by the appearance of inactivity, sponge-head. Your mining stocks are like ducks on a pond. On the surface they appear aimless and sleepy, floating about with nary a rustled feather nor a quack. Ah, but just beneath the surface is a different story. For down below, your duckling's little feet are paddling like crazzzzzzy. My advice, noodle-brain, is to use this gift of time TO GET YOUR FREAKING DUCKS IN A ROW!" I never knew
if it was the opium tea or the Nehru jacket that lent Dr. Ho
his air of mystery. But true enough, both Golden Phoenix and
Sterling fit this description. While their share price floats
about aimlessly on Golden Pond, just below the surface their
little duck feet are going great guns. So grab your goggles and
let's dive in to check out our duckys, from the bottom up. Let's take Golden Phoenix Minerals first. Late last week a press release announced the resignation of its one-and-only CEO, Michael Fitzsimonds, and the promotion of two directors, Steve Craig and Jeff Tissier, to co-chairmanship of the board. This is immensely
significant news. Craig is GPXM's chief geologist and a man well
respected throughout Nevada's mining community. Tissier is multi-faceted
business leader, with a 25-year history in both mining and finance,
and a proven track record for directing turn-arounds of mining
companies. These two men first worked together at Kennecott Exploration
more than two decades ago, and their combined skill sets are
ideally suited to the task at hand. By the looks
of things, they are stripping GPXM down to a lean-and-mean fighting
machine in order to re-focus on the Ashdown moly/gold mine located
in northwest Nevada. Ashdown is a property that offers strong
and immediate cash flow at a time when molybdenum prices are
at record highs. And while I remain an ardent fan of the yellow
metal, the fact that GPXM hosts an alternative strategic metal
in the form of molybdenum brings welcome diversification and
balance to my portfolio. "Significant" is perhaps an understatement. Such high concentrations are rare. And while these concentrations may represent isolated mineralized pockets, 7.36% ore translates into 147 pounds of moly per ton. Do the math and one quickly realizes that at current prices, a ton of this ore is equivalent to 11-ounce-per-ton gold ore, worth more than $5,000. These appear to qualify as bonanza grades. Ashdown is
reported to host 146,000 tons of 2.9% moly resource situated
within an inferred body of one million tons of 1% moly ore. And
most of its 2,000 acres have yet to be explored. Better still,
Ashdown has already been bulk sampled by its previous operator
who extracted about 1,400 tons of moly ore and piled it on the
property. This ore has been assayed to contain 2.9% moly and
is just waiting to be processed. GPXM has acquired a 100-ton
pilot mill and is completing permits to install it on a near-by
parcel in order to start producing 1,000-pound super-sacks of
MoS for sale through its broker, Derek Raphael & Company
of London. From Bambi to Behemoth As for Sterling Mining, despite its 62% price retracement (a classic Fibonacci adjustment to a volatile rise), it continues its march toward the goal of becoming one of the giant silver companies of this century. Recent surface analysis of unexplored portions of its historic Sunshine Mine (using Induced Polarization and magnetic techniques) has identified three large anomalies, and just over two months ago a diamond drill rig arrived on property to perform a 2,400-foot sampling program. This is pioneering work. Keep in mind, only 5% of the property has been explored using modern methodologies. I find it ironic that this monster of a mine - that produced 360 million ounces of silver in the course of the last 100 years - contains large tracts of land never explored by the hand of man. One of the Ten Commandments of mining says that the first place to look for precious metals is right next to proven deposits and performing mines. It is a testament to the richness of the Sunshine that nobody ever bothered to look for more silver on the hundreds of contiguous acres that make up the original property. Perhaps nobody looked because nobody cared, there was so much known silver begging to be mined. Now someone's in charge who does care, Ray DeMotte, Sterling's hands-on CEO. In recent months, Sterling has methodically added to its acres through quiet acquisitions, cooperative agreements, leases and equity stakes, so now the bullseye is even bigger. DeMotte is determined to unlock these areas before deciding how best to put the 'Shine back into production. This is a wise approach since the fastest way to a shareholder's heart is through the pointy end of a drill bit. The same can be said for investment bankers at least those who have hearts. At the same time, DeMotte continues to consolidate other land holdings. He is up to about 15,000 acres and growing. He knows there is only so much God-given earth in the Silver Valley, and he has been doggedly gathering up good land for future development while the price of silver remains low. After all, you can't mine what you ain't got. It's all part of the company's plan to aggressively explore for silver, increase capacity and silver assets, lower projected production costs per ounce, and reactivate mines in a methodical manner as a foundation for long-term returns. So DeMotte continues his single-minded pursuit of silver properties in order to maintain the highest ratio of silver-to-total-resources-and-reserves, thereby ranking Sterling first among the top seven silver companies. To the best of my knowledge, one share of Sterling stock represents about 19 ounces of .999 silver in the ground, conservatively worth - net of mining costs - $50.00. It remains my belief that by the time this bull market is over, a single share of SRLM will be trading well above that $50.00 figure. At the same time, Sterling has expanded its land holdings into Montana's copper sulfide belt (nicknamed the Persian Gulf of Silver) and is one of only two public companies in the vanguard of that region. This is a newly emerging story, and one to follow in the future. Silver is where you find it, and Sterling is on the hunt. If it Swims Like A Duck, It's a Duck So what if the investment world has decided to take a breather from junior miners for a bit? With my gold and silver ducklings in a row, their little feet furiously churning the water on Golden Pond, I simply assume the lotus position and begin my meditation. My mantra remains the same, and whenever my mind wanders or uncertainty begins to stir, I chant these words over and over until my confidence returns: "Gold is real and silver's jolly, and don't forget to add some moly." Thank you,
Dr. Ho. 321gold Inc |
