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IG: I'm pretty sure that the stock market is manipulated by the authorities. I know that people will say that's just conspiracy nonsense. However, Fed Chairman Ben Bernanke and former Chairman Alan Greenspan both have said they feel that stock prices are extremely important to the confidence of the American people. That confidence leads to confidence in the economy. If stock prices can be held at high levels, people feel wealthy when they look at their mutual fund statements and when they spend money. I don't believe that this kind of manipulation is sustainable. I'm a big believer that markets follow natural law.
TGR: Once the Federal Reserve loses the ability to prop up the stock market, will we see a collapse and a rush into gold, much as we did in the early 1930s?
IG: Yes. I believe that the Dow will bottom at around 1,000 points or less, mirroring the economic depression caused by the debt bubble collapse.
TGR: Allow me for a minute to play devil's advocate. The investors of the 1930s didn't have the options that investors now do. There are now currency markets. Investors can put their money in renminbi, German bonds, Swiss bonds, exchange-traded funds, real estate or other commodities. Why is it going to be gold?
IG: Because gold is money. Unlike paper money, there's no debt attached to gold. The Chinese are buying gold. The central banks are buying gold. They're buying gold because it's the money of last resort.
TGR: Do you expect interest rates to go up dramatically?
IG: Yes. The big debtor nations are having problems with interest rates. Look at Greece. Go to Spain and then Portugal. Interest rates in Spain are over 6%. Italy is getting up over 6%. Imagine what happens to the U.S. if interest rates go to 6%. It's going to be a massive problem. The whole system is collapsing here. It's going to be very traumatic. The move to gold is going to be very dramatic as a result. The move for anybody who has gold assets in the ground is going to be very big, as it was in the 1930s.
TGR: You've helped raise hundreds of millions of dollars in equity financings for juniors that you feel are deserving companies. What are some examples of those?
IG: Let me tell you what I think a deserving company is, first of all. Deserving companies are well managed with good assets in areas without major political risk.
In the early days, I financed Minefinders Corp. at about $1/share. It just got taken over by Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ) for better than $10/share. I remember financing a little company called Pelangio Exploration Inc. (PX:TSX.V), which is still around and which I like very much. We financed Pelangio at $0.11/share and its share price exceeded $5 a few years after that financing and was then taken over by Detour Gold Corp. (DGC:TSX).
It's been much more difficult lately to find companies that you want to get involved with simply because political risk has increased in many parts of the world, Argentina and El Salvador, for example.
TGR: Do you do site visits?
IG: I do fewer now than I used to. I'm getting to be 70 years old and I just find that a lot of traveling is a little onerous. I spend a lot of time discussing companies. I often make several calls a week to different companies that I have an interest in.
TGR: You wrote in your paper, "What we must do is hold shares in companies with already good gold in the ground assets, properly managed, and with sufficient cash to last at least another 18 months, even if that means cutting back on planned exploration expenditures." Does that mean we can expect at least another 18 months of poor performance from junior precious metal equities?
IG: I don't expect that's going to happen, but I want to be prepared because it might be a difficult period for companies to obtain financing. Things in Europe are going to unravel pretty quickly. I don't think it's going to take 18 months for this thing to completely collapse, but it might.
TGR: What are some companies that you're following and are invested in?
IG: I like PC Gold Inc. (PKL:TSX). PC Gold owns the past producing Pickle Crow mine, which incidentally was placed into production in the previous long wave winter in the 1930s. I've been up to Pickle Lake. It's easily accessible by a six-hour drive from Thunder Bay. The company has been achieving good drill results. It has an NI 43-101 resource of about 1.2 million ounces (Moz). Investors can buy PC Gold for about $8/oz of gold in the ground.
I continue to like Temex. It's got 1.8 Moz gold in the ground on its Juby property, half of which are in the Indicated category. I see little to no political risk in being in Ontario. Investors can buy Temex today for about $8/oz gold in the ground. I think that's pretty cheap when gold's at $1,600/oz.
Temex owns 60% of another property, the Whitney project, in the Timmins camps, which it has been drilling near the past-producing Hallnor mine and getting some really good results. Goldcorp Inc. (G:TSX; GG:NYSE) has a 40% ownership in the property. There are five past-producing mines on that property, of which three, including the Whitney, were put into production during the 1930s.
Temex has recently added two new prominent members to the Board of Directors.