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XMFSinchiruna (26.56)

Hammer Time: Gold is Too Legit to Quit



September 01, 2010 – Comments (14) | RELATED TICKERS: EGO , CDE , GLD

Gold: Too Legit to Quit


From the backwaters of marginalization and ridicule to the front pages of reluctant acceptance, gold has endured a very gradual ride to full-fledged legitimacy.

At the top of Fortune Magazine's list of the 100 Fastest-Growing Companies for 2010 sits none other than Eldorado Gold (NYSE: EGO).

In a real sign of the shifting tide, The Wall Street Journal recently echoed my long-held contention that gold is not adequately understood when it is viewed as a commodity. The article detailed that gold price movements are significantly more correlated with the U.S. dollar than inflation.

China moved briskly this week to prove that this recent policy directive regarding gold was more than words on paper. The state-owned China National Gold Group (CNGG) is using Vancouver-based China Gold International Resources (in which CNGG is already a 39% stakeholder) as a conduit for consolidating assets outside of China, beginning with a $742 million transaction involving a copper mine in Tibet that features gold and silver by-product. CNGG is the same entity that inked a gold supply agreement with Coeur d'Alene Mines (NYSE: CDE) in June, and is the leading gold producer in China.

People take time to wake up to a new idea; even if that new idea is as ancient as gold's reign as a medium for exchange. I will close with a pair of quotes from former Fed Chairman Alan Greenspan. The first quote is from 1967, and the second is from 32 years later, in 2009:

"Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

"What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."

Gold's legitimacy was never lost; it was merely forgotten, ignored, and then grossly misunderstood.


Okay Fools, extra credit for anyone who can identify from this article the most bullish prospective investment I've encountered since Primero Mining. :)

Fool on!


14 Comments – Post Your Own

#1) On September 01, 2010 at 10:33 AM, outoffocus (23.76) wrote:

Okay Fools, extra credit for anyone who can identify from this article the most bullish prospective investment I've encountered since Primero Mining. :)

Taseko? JAG? Let me know if I'm close

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#2) On September 01, 2010 at 10:43 AM, silverminer (30.17) wrote:


Nope ...:)  It's named in the article. Like Primero, it lacks a sponsored ADR listing for U.S. investors, which has this Fool really looking to switch brokers to gain direct access to Canadian exchanges.

The growth prospects for this company, if I am correct in my initial analysis of emerging relationship between the two companies in question, could be greater than anything else out there.

For context, re-read this one:

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#3) On September 01, 2010 at 10:45 AM, kdakota630 (29.12) wrote:

+1 rec, despite a subject heading that made me say, "ugh."

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#4) On September 01, 2010 at 11:13 AM, silverminer (30.17) wrote:



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#5) On September 01, 2010 at 11:50 AM, wmarshb (< 20) wrote:

Is China Gold International Resources same as Jinshan, JINFF on the OTC?

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#6) On September 01, 2010 at 12:09 PM, silverminer (30.17) wrote:


Yes, and yes... you earn the extra credit. :)

Keep in mind, though, that JINFF falls into the same category of an unsponsored ADR on the pink sheets that was the focus of much collective discussion regarding Primero Mining.

Over the course of due diligence regarding MONCF, which like JINFF is a pink sheet ticker that remains unchanged after a name change, neither our brokers, the SEC, nor even the indicated transfer agent were able to answer the basic question of who actually issued the security and what rules they are bound to with respect to those securities. Therefore, there is an arguable risk to these unsponsored pink sheet holdings that investors are encouraged to consider carefully. Brokers commonly characterize them as being identical to the underlying shares associated therewith, but I have not yet been convinced through my research that this is the case.

Therefore, the best way to gain exposure to Primero and China Gold International Resources is through a broker that supplies direct access to the Canadian exchanges. I am looking into making such a switch myself, and thereafter to reduce my rather hefty exposure to unsponsored ADRs on the pink sheets.

Please see this blog post for related discussion of the Primero Mining issue.

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#7) On September 01, 2010 at 12:36 PM, MissionMan2010 (< 20) wrote:

In addition to finding a broker with direct access to Canadian exchanges, it may be worth looking into taking another route.  For example, E*Trade gives you the option (through its Global Trading platform) to transfer U.S. dollars into 6 foreign currencies (including the Canadian Loonie) and make purchases on foreign exchanges, such as the TSX.  I invested in Jinshan more than a year ago using this method, and I benefitted from both the appreciation of the Canadian dollar vs the U.S. dollar and a 500%+ gain from the rise of the stock.  Like other posts, I also remain extemely bullish on China Gold International's prospects.  

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#8) On September 01, 2010 at 12:44 PM, XMFSinchiruna (26.56) wrote:


Congrats on getting in on the ground floor with Jinshan.

I see no distinction between "a broker with direct access to Canadaian Exchanges" and the particular option that you mention. They can call it what they want ... it's still direct access to Canadian exchanges. :)

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#9) On September 01, 2010 at 1:43 PM, ElCid16 (95.47) wrote:

Clever title, but MC Hammer once thought he was too legit to quit, too.

He filed for bankruptcy 5 years later...

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#10) On September 01, 2010 at 2:45 PM, silverminer (30.17) wrote:


Oh man ... I totally forgot about that. :P

Well, perhaps that will serve as a reminder that throughout the next five years and beyond, gold investors will have to remain vigilant to track the fundamental underpinnings of this secular bull market as they progress.

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#11) On September 02, 2010 at 1:15 AM, Tastylunch (28.69) wrote:

I duuno man seems like Hammer wants cash instead of Gold...

cash4gold makes me sad. Really bad deal for consumers :(

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#12) On September 05, 2010 at 8:00 PM, clipper5903 (< 20) wrote:

I just purchased long-term positions in JINFF so we'll see how it goes.

Now I'm debating between EGO or Taseko Mines (TGB). I like Eldorado's exposure to China and Turkey. Their place as the world's fastest growing company doesn't hurt either. However, I'm not entirely convinced about buying on a high even with the price of gold rising.

As for TGB, I like the fact it's sitting in miner-friendly British Columbia and fully expect approval for their Prosperity site. Billions in economic investment is too much to pass up. And Canada's strong position during the current recession is a plus.

Does anyone see Taseko becoming EGO in the years to come?

If you could only choose between the two, which one and why? 

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#13) On September 05, 2010 at 10:16 PM, 100ozRound (28.69) wrote:

If you believe in Prosperity,  TGB would be a good bet. 

I have Nov 11 5/7.5 bull spreads on TGB

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#14) On September 05, 2010 at 10:17 PM, 100ozRound (28.69) wrote:

oops - that should be Nov 10

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