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Risk Management Strategies

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 By Michael Miller

12/24/2019  8:27AM

The following unedited article was written 108 years ago, two months before our company was incorporated in San Francisco. Red Star (our most northern underground workings) is my favorite target; however it yielding to the million plus dollar development of the most southern workings in the late 1990’s. The crew deepened a winze to cut through a fault proving that gold exists below the fault. Well, spot price took a dump and we discontinued developing this southern ore body.


Question: what goes into your Risk Management for investments? Do you have any assets in gold? If so, why? If not, why? An article will be coming out next year in the International Mining Journal. The writer asked me for advice to give readers interested in mining for gold. Hmmm. Do real hard core research.



JEWELRY ROCK FROM RED STAR
Aug. 20, 1911

Recent developments prove richness of vein. J.M. O’Brien has taken over the Tightner and the Red Star and has already installed new machinery and equipment in order to push the work.

George Scarfe jr. superintendent of the Middle Yuba Hydro Electric Company, at Alleghany, Sierra County, on a visit to San Francisco to contract for electric motors to operate air compressors and other modern machinery now being installed in the Omega mine in that district. For which his company is to furnish power, reported having been shown some unusually large specimens of high-grade ore or “jewelry” rock similar to that of the Tightner, which was taken out this week from the lower works of the Red Star. Which was recently taken over by J.M. O’Brien of San Francisco. He has installed and has in operation a modern plant on the Tightner and has added the Red Star group to his holdings, which gives 5500 feet along the lode.

As the mine are now being developed with air drills driven by electric power, it is proposed to continue the lower tunnel through the Tightner ground, which has opened up the same shoot as shown in the upper workings and has practically demonstrated that the ore body is continuous, or is a true fissure. And as the values in the Red Star have been proven within the past few weeks to be the same fissure, it is conceded by authorities that this should prove one of the large mines on the lode, as the lower tunnel will tap the Red Star at approximately 900 feet under its present workings. The site for the mill is completed and the building material is being erected. The machinery is being shipped in by the Nevada City Miner’s Foundry as fast as completed

This, which has been one of the richest gold producing sections in California, has been neglected for some years on account of the lack of power, and the Middle Yuba Electric Company is now one of the most valuable utilities in Southern Sierra. Without which deep and extensive mining was impossible, and there was no question in the minds of those who know the geological formation of the district, that a fabulous shoot of ore which has been encountered in the Tightner, Red Star and other mines goes down with the veins, which are unquestionably of the true fissure varieties.
 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?

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