June 26, 2019 

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Risk Management Strategies


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 By Hans Kummerow

03/04/2019  4:16AM

I am currently in Toronto at the PDAC Convention - the annual meeting of the 6000 prospectors and developers associated in Canada. A wealth of risk management experience assembled in one single location for four days every year. And the biggest marketplace for mining equity worldwide. Here projects get funded that have much less to offer than ORIGSIX.
 By Michael Miller

12/13/2018  12:13PM

“I currently find snippets in articles about investments that bring back memories of the fourth global American gold rush and the only one during my lifetime. The first great gold rush (1849) to the newly discovered California wilderness united our vast continent under one rule, language and currency. Historians claim it was the largest human non-warring migration (figures as high as 200,000).

Alaska was the site of America’s second major gold rush (1986-1899). What a struggle it must have been.

President FDR drove the politically initiated third American gold rush (1934). Writers always report that was when the fixed price of gold rose from $20.67 to $34.00 per ounce. Output production records rather than a mass movement to “discover” fresh gold deposits for exploitation best defines the rush. WWII killed the gold mining industry and post war inflation smothered its return to pre war conditions. What no one remembers and what I never learned in school also happened with the 1934 legislation. Americans were prohibited to own gold other than gold in coinages. Even as an Economics major at UCSB, that tasty item of western free market capitalism was ignored.

The fourth American gold rush was based on the politically driven decisions of 1934. President Nixon did not arbitrarily increase the “value” of an ounce of gold; the government cut the shackles of restrictive ownership by our citizens. In other words gold was set free to reach an exchange value with dollars and it quickly surged to new heights.

Bingo! Our local papers, the Downieville Mountain Messenger and the Grass Valley Union featured the spot price of gold on its front pages…with every edition. It was big news because this is gold country. Grass Valley is the location of California’s largest gold producer, the Empire Mine. Sierra County is the home of the Alleghany Mining District with the oldest gold Company and longest producing mines. Everywhere people gathered the biggest topic of conversation was gold. The year was 1975 and the rush lasted through the early 1980’s. Manic investors, miners and con men tromped north and south along the 200 mile California gold belt in the Sierra Nevada Mountain range. It was exciting.

One of my favorite recollections that depicts a prevailing attitude during America’s awakening to the value of gold happened in Alleghany. The Sixteen to One was looking for working capital. A Sacramento bank president drove up to see the mine. During our conversation the price of gold came up. He wanted to know my opinion. Will it go up or down? I don’t know the answer to that question. He said something about the all time high in 1980. “Those in gold production thought it was an anomaly, an over zealous feeding frenzy”, was my reply. I vocally wondered who were the buyers during the January spike. Well, he told me that he was one and bought gold at its high. He waited for months, hearing about gold, watching it steadily increase in price and jumped in at the top. Was he an anomaly or does he represent the bankers and other cautious investors?

The stage is set for another rush. Think about it. What will it take for serious people to test their mettle with gold? Maybe it is mining the stuff or speculating on its present/future price. Maybe it will be viewed as a safe haven for previously acquired wealth. Some will just gamble, an act that neither others nor I who deal in gold production practice. Risk takers and gamblers are different.

The latest reason an investment guru says for putting ten to twelve percent of your investment into gold was this. Gold does not return interest. Banks and government investments now earn low interest. Jean-Marie Eveillard told Bloomberg news today why his fund is about 10% invested in gold and gold mining securities. “It’s insurance to protect against the fact that current policies by American government and the FED are potentially wildly inflationary.” (Nothing new and exciting here.) His novel idea is gold pays no interest and banks pay nearly no interest. You can print money but you cannot print gold. So, you don’t lose because of gold’s non-interest bearing condition. I’m not saying this will launch gold into a buying frenzy but somewhere the president of some bank is watching gold, waiting on the sideline before he jumps in…at the top.”

GOLD RUSH FILE: written June 9, 2009. How does this read, nine and one half years later?
 By Michael Miller

01/10/2018  4:06PM

David I,hope you are still checking the FORUM. I was inundated with paperwork in December, which has continued and took a break from the FORUM. Thanks for your participation. I plan to get back on a schedule to keep shareholders, gold minded people and curious others up to date on how 2018, looks for Sixteen to One.

My major concern regarding a dollar backed currency with gold is who will be fixing the ratio of dollars to ounces of gold. Most of the deep gold minded people believe that the “price” of gold continues manipulated. It could be those who want a lower spot price (buyers) or those who want a higher price (sellers) or those who want equity balance. I prefer the market to set prices; however an ounce of gold becomes out of reach for most of us at $10,000 an ounce. What will be our choices?

In 1974, my choice was to find the gold and participate in my expected price increase that way. My economics and business beliefs are simple: supply and demand; law of diminishing returns; dynamics of scale; and for gold ownership as close to the metal as possible. I dredged. I mined some. I took over one of the finest companies with honest gold in the ground. Here we are.

What I see after forty three years is a very exciting future with the only concern is the dynamics of scale. The odds, as Sixteen to One sits today, foretell a struggle (as if we haven’t had twenty plus years of struggle)are not-in-our-favor. To eliminate the struggle (too small an operation) is achievable in multiple ways. My job is to find others who want to join our struggle to overcome this issue. I will.

Paper work, via ridiculous wrongful regulatory behaviors, is reduced to one source. Soon I can tell you about which agency seems better and which agency continues to break the law. Any guesses? Gold business which is out of my influence or control (spot price) is fun to think about but whatever I can influence to improve gold mining in the United States of America and especially with our Company, I will pursue vigorously. Anyone want to join us?



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Alleghany, California 95910

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