Confederation Minerals (TSX.V:CFM, OTCQX:CNRMF) seems to be trading counterintuitively, given that gold and the Venture market in general are both wallowing in misery at multi-year lows. What gives?
Well, a financing closed at $0.10 a share with a warrant at $0.15 good for one year. In a normal market, that usually indicates the share price will soon be hovering at around the same level. Historically, when a share price heads north immediately after a financing is closed, there are strong hands at work. Certainly, that would appear to be the case here. The stock closed up $0.07 on a day when gold dropped $50. Thats impressive.
But fundamentally, what is there to support a 30% increase in value in the course of a single day? And who would buy a gold stock when gold is getting hammered and has been getting hammered for the last year?
Newman Todd Project Potential
Brian Bapty, CEO of Confederation had no hesitation in explaining the potential of the Newman Todd project, Confederation’s flagship in which it is earning a 70% interest in Ontario’s Red Lake Mining District.
“We’ve drilled somewhere in the neighbourhood of 150 holes across 1.5 kilometres of strike, and pretty much every one has intersected gold mineralization,” he says. Thats impressive by any measure. In an evnironment where gold is getting beaten up and project economics are going to depend a lot on cash cost per ounce, its the higher grade deposits that will produce gold profitably, while the higher cost producers will be forced to close mines.”
If you take a look at Confederation Minerals drill results as published in press releases, there is confirmation of what Bapty says. And there is no doubt that patient, long-term money understands that despite a period of falling gold prices, the value of gold is rising in the form of pent-up demand that will likely take the gold price much higher if the current futures market nonsense can be defeated, and gold can trade freely against other asset classes.
Bapty went on to say that now the company will launch a summer drill campaign to continue adding ounces to the resource, and try to find more high grade zones to support a starter pit.
Gold Explorer Speculators are Still Out There…
It’s pretty obvious that there are still some believers around of deep pockets who are putting their money where their mouth is when it comes to gold. And rightly so.
Anybody who can use an abacus should be capable of understanding that the current gold price as expressed by the futures market is in fact a highly manipulated number. Gold futures contracts, thanks to the duplicitous anti-regulation imposed by the Commodities and Futures Trading Commission, are routinely issued for millions upon millions of ounces of gold beyond what the industry can produce. No delivery of gold is required in satisfaction of these contracts, and so the paper contracts for unlimited gold facilitate a U.S. government- supported gold and silver price suppression scheme.
All this to convince the world that the US Dollar is the only safe haven asset in times of financial upheaval.
The mainstream financial press, comprised exclusively of journalists and not financial participants, are incapable of reporting the facts as they have no basis of experience or education upon which to derive accurate interpretations of events in the regulatory framework governing futures. Thus, the public is fed a steady diet of misinformation framing the idea that the gold price is being actively and illegally manipulated by major financial institutions in the context of ‘conspiracy theory’. This despite a never-ending stream of scandals involving everything from the manipulation of LIBOR to the gross misuse of customer funds as in the case of MF GLobal.
Unfortunately, the vast majority of financial market participants are incapable even of using an abacus, and prefer to let their opinion of the value of gold be informed by the media-reported price of gold.
Or, as has been expressed to me on many occasions by associates throughout the investing universe, “Why buy gold when the United States supports the illegal manipulation of its price?”
In other words, as long as the U.S. continues to support gold futures contract origination without mandating delivery and satisfaction of those contracts in gold (not cash, as is presently permitted), they (futures) act as both artificial demand and supply of gold, but with a virtual cost of zero.
Mind you, if the U.S. bond crisis materializes as suggested by the Bank for International Settlements, the continuous fabrication of capital underway by the U.S. Fed and Treasury operations may grind to a halt as the now flimsy justification for Fed asset purchases – i.e. “demand” evaporates with each successive round of currency debasement.
Gold edged higher on Thursday after tumbling 12 percent over the past eight sessions, as soft data on U.S. economic growth eased fears of a quick end to the Federal Reserve’s monetary stimulus.
Bullion was still not far off Wednesday’s near three-year low, with its safe-haven appeal severely dented since Fed Chairman Ben Bernanke laid out a strategy last week to wind down the central bank’s $85 billion monthly bond purchases over the next few months.
It may be that companies like Confederation, which have been the targets of relentless selling since July 2011, are starting to look attractive at current prices, and as the U.S. dollar Ponzi scheme starts to implode.
I have no interest or compensatory arrangement in Confederation Minerals. This article is provided for information purposes only from sources believed to be reliable, no warranty of such is expressed or implied. The author is not an accredited investment advisor and so this information should not be construed as a recommendation to buy or sell any security. Always consult a properly accredited investment advisor in your jurisdiction before making any investment decision.
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