FAO (forward to) Jim Williams!FROM JIM SINCLAIR
www.jsmineset.com
"Nothing will unnerve the paper gold shorts more quickly and do more toundercut their confidence than to strip them of the real metal and forcethem to come up with more hard gold bullion to make good on deliveries."Stand and Deliver or Go Home" should be the rallying cry of the goldlongs to the paper gold shorts." --Trader Dan Norcini
Dear Friends,
The key to running the short position for any junior starts with successon the ground. A junior must move to the producer category if it isgoing to hang the shorts out to dry. If the junior cannot make this leapthen it will not fly with the eagles. However that alone is not enough.
The management of your junior gold producer will have to work for theirshareholders. This is what Durban Deep did in the late 1960s andHomestake in the 1930s. That is why Durban Deeps went from
.36 to$36.00. It is also why Homestake was the shining example in gold duringthe 1930s. Homestake's strategy was to dividend out a huge majority ofits net profits to their shareholders.
It did not hurt that the Hearst family was a major stockholder in Homestake. But even today that is simply not enough.
The junior has to dividend something to its shareholders that the shortdoes not want. A good example of this, albeit in a different marketsector, was Canada's Schenley Distilleries in the 1940s. Schenleyoffered a dividend to shareholders in cash or in warehouse receipts fordeliverable whiskey.
Applying the Schenley example to the junior gold producer, such acompany could offer their shareholders dividends in cash or gold bullionmuch like Durban Deep and Homestake did in the past. Now the partyshorting the junior producer will also be short of gold bullion invarious amounts according to the wishes of the shareholder of thecompany.
There is no way to beat these destroyers of wealth other than tostrategize retaliatory actions within a historical context - perhapsadding a Schenley wrinkle.
Send this to your junior mining and exploration company management. Youwill find out fast if the management is working for themselves or theshareholders.
This is where the rubber will meet the road in 2011 and thereafter