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“Reagan Gold” Plays from James Rickards and his “Millionaire Miner” (part one)

What's being hinted at from the special report, "Unlocking the American Vault: 3 'Reagan Gold' Plays to get in on TODAY"

By Travis Johnson, Stock Gumshoe, November 16, 2016

We’ve looked at a lot of Jim Rickards ads over the past couple of years, most of which either promise rapid-fire profits from currency options or predict huge gains for gold and, perhaps, a return to gold-backed money… today’s pitch is another one of the latter, it’s an ad for Rickards’ Strategic Intelligence.

The hook for this ad, since every ad needs some sort of attention-getting scandal or surprise, is a “shocking” 44-second video of then-candidate Ronald Reagan that has been “locked away” for decades — it is, in brief, an ad that Reagan cut during the lead-up to the 1980 New Hampshire primary that extolled the benefits of the gold standard.

The gold standard was, in some ways, an important part of the 1980 campaign and the political talk of the early 1980s — though really it wasn’t the gold standard that was the focus, it was the rampant inflation and the lost credibility of the Federal Reserve (both of which, of course, tie in heavily to monetary policy). Milton Friedman and Reagan’s other advisers convinced him to scrap the “gold standard” ad, though I’ve seen reports that it aired once or twice, and they also, once President Reagan was in office, talked him out of his gold-standard thinking — the commission that Reagan put to the task recommended against the gold standard and in favor of other controls on inflation.

That was 35 years ago, with the scrapping of the gold standard under Nixon still fresh in everyone’s mind and blamed for the inflation of the 1970s… but now, as you’ve probably noticed, the gold standard is seen as an ancient relic by most and is almost never discussed in political campaigns. Even Senator Rand Paul, son of famed libertarian Fed critic and former Representative Ron Paul, has only said that he’d like to see a “commission” to look at connecting the dollar to gold or some other commodity or hard asset, and his campaign fizzled out pretty quickly… perhaps because any commission that includes economists, like Reagan’s commission in 1981, would probably say “heck no” to the gold standard.

But anyway, here’s a bit from Rickards on that campaign ad video:

“In fact, for the last 36 years, this rare footage has remained ‘shelved’ to the world at large…

“Leaving millions of Americans in the dark about the true legacy of one of history’s most accomplished leaders…

“And the raw, wealth-creating power of what I consider the single most lucrative ‘secret gift’ a President has ever left to the American public.

“Now, as a former advisor to several Republican administrations—and a current economic advisor to the U.S. Government—I’m one of exactly THREE people in the world with access to this footage.

“But in the next few moments, all that’s about to change.

“Today, I’m going to show you Ronald Reagan’s ‘buried tape…’

“And tell you exactly how to claim YOUR share of his ‘secret gift’ to the American public.”

So… the “secret gift” is, of course, not a “gold standard.” And the only real secret to that video is that Reagan and his political team set it aside because they figured it wouldn’t work. Rickards portrays Reagan as someone who wanted to do the right thing in returning to a gold standard but was thwarted by his aides and advisors at every turn (including the well-covered interview with Bob Novak in 1986, when Reagan was asked about the gold standard and responded that “I still support the gold standard” but, after being told by his aide Don Regan not to get bogged down, “they just won’t let me have my way”).

And to make sure that conspiracy buffs have a home in Rickards’ newsletter, he also brings up the Reagan assassination plot — when Hinckley made his try at Reagan in 1981, wounding the new president, gold prices apparently dropped sharply… which to Rickards means that Reagan “mattered” to gold prices.

That was before Reagan’s Gold Commission met, with their mandate to consider a return to the gold standard, and during a time of extremely violent moves in the price of gold, so it’s awfully hard to pin causality on any one event. It was also a few months before the Fed Funds rate peaked at 20% during the continuing “lick inflation now” strategy under Volcker, and a year before the Gold Commission’s findings were reported (“The Commission concludes that, under present circumstances, restoring a gold standard does not appear to be a fruitful method for dealing with the continuing problem of inflation”). And, of course, the Soviet invasion of Afghanistan and the release of the hostages from Iran were in the mix and in the headlines as well… the world was not primarily focused on the gold standard, though Rickards says that he was at the time disappointed in Reagan for not winning that fight.

No major currency is backed by gold anymore, and my guess is that as long as the world is run by politicians who prefer to be unfettered in their spending and want to be able to influence exchange rates, probably no major currency will be backed by gold.

But that’s not really the point of Rickards’ ad — he used the assassination and the “secret video” to get our attention, but the real Reagan “secret gift” he notes was a regulatory change to make it easier to develop mines in the US. Here’s how he describes that:

“… on March 15, 1988…

“Nearly six years to the day after the Gold Commission pronounced the return of the gold standard ‘dead on arrival’…

“President Reagan sat down at the Resolute Desk…

“Rolled up his sleeves…

“And took the future of American gold into his own hands…

“Executive Order 12630—and arguably the most lucrative “gift” ever given to the American people—was born….

“Rooted in the principle that the federal government may only regulate a business’s right to mine, ranch, or otherwise commercially develop a parcel of federal land if it is willing to compensate the business owners for the FULL cost of the regulation…

“E.O. 12630 put an end to the overzealous ‘land management’ phase that had led to the Sagebrush Rebellion…

“Ensured generations of Americans the inalienable right to pull their fortune from the land itself…

“And cleared the way for billions of dollars in ‘Reagan Gold’ profits in the years to come.”

I am not a student of the long-simmering disputes over federal land in the American West, so I don’t know whether this particular executive order was really critical to reinvigorating American mining and exploration… there was a big increase in gold production in the US in the 1980s, though whether that’s because of the surge in the gold price before inflation was beaten down, or because of new technologies that made heap leaching more effective, or because of Reagan’s influence (or any other reason), well, I have no idea.

But then, finally, we do get to our point. Rickards says that “Reagan Gold” is, essentially, “buying shares of gold miners.” And they go up faster than gold when gold is rising. Which we already knew.

And, as you’ve noticed, he’s trying to sell a newsletter — so he’s got a few secret “Reagan Gold” buys to pitch for you. What are they? Let’s listen up to the few clues he provides:

“… right this very moment, my ‘Millionaire Miner’ has his eye on 3 set-to-pop ‘Reagan Gold’ stocks that could earn you a seven-figure payday before the year is out….

“Believe it or not, you’re already familiar with the first “Reagan Gold” play on my geologist’s radar…

“Because it mines the site from the video you just saw!

“It operates in a region that has already produced over 110,000 ounces of gold…

“And that some scientists estimate holds as much as 739,000 ounces…

“Still waiting to be found.

“Leveraging a cutting-edge processing facility, under the guidance of a highly-experienced (and extremely motivated) management team…

“This under-the-radar ‘Reagan Gold’ company is, in our ‘Millionaire Miner’s’ expert opinion, a screaming ‘buy’ opportunity.”

OK, so if you didn’t sit through the presentation like I did you didn’t actually see that video, but it was, well, a video of a mining facility 200 miles east of Reno, Nevada, narrated with enthusiasm by that “millionaire miner” — and the “millionaire miner,” should you not recognize his voice from having to listen to hundreds of these pitches over the years, is still Byron King, who used to helm a few commodity-focused newsletters for Agora but now just works on supplying junior miner ideas for Jim Rickards’ letters.

So… will this be a shockingly great junior miner from King? Or does he somehow sift through the ideas and save the bestest ones for Rickards’ $3,000 Gold Speculator while dropping the lesser ideas down to this $49 entry level Strategic Intelligence newsletter?

That I don’t know, but the stock being teased here by King and Rickards is, according to the Thinkolator, Pershing Gold (PGLC in both NY and Toronto). They’ve been busy this year, with a PEA for their Relief Canyon mine published a few months ago, and they have a new investor presentation on their website now that was created for the Silver and Gold Summit (which ended yesterday), so that gives the basic background. Their PEA says the net present value of the mine is about $230 million at $1,350 gold, with the potential to expand those reserves as they keep drilling, so that makes the current market cap of about $100 million seem reasonable but not absurdly cheap.

I don’t know anything else about them, I’d guess that the price is dropping mostly because gold has been soft recently, they could start production soon but I don’t know if there will really be a dramatic catalyst in the next few months — it’s a small mine that’s expected to produce 90,000 ounces a year, with $700-800/oz as the estimate for all in sustaining costs (AISC), so at $1,200 gold that presents the possibility of about $36 million in annual earnings from the mine, on average, over the 5.8 year life expectancy of the mine.

So with a $100 million market cap, that seems like you’re paying a fair price for what is “known” — you’re basically paying half of the free cash flow that would be generated over the next six years, which is less than you’d pay for a risk-free business but a pretty fair price for a risky business like gold mining. The upside would come from what’s beyond the current PEA plans, I’d say, the possibility of future discoveries on their unexplored land, an extra-easy mine startup, a higher gold price, that kind of thing.

And I’ve run out of time and am getting pulled into a meeting, so I’ll leave you with that first “Reagan Gold” play and will come back to dig into the other two (hopefully the Thinkolator will be up to the task) in tomorrow’s missive… thanks for reading!

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6 years ago

Ok so havent read the article or seen the video. The Pershing mine and county are just 100 miles East of Reno it is Newmont mining that is out some 200 miles past Winnemucca at Battle mountain and into Elko. I suspect mining is a dirty business and do not follow it. SLW

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👍 15112
6 years ago

Maybe 200 _road_ miles. Straight lines are kind of hard to come by in that part of the world.

6 years ago

They recommended DRGDF and calls on AEM this week. Not sure if these are related to the Reagan Gold pitch.

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👍 178
Dave S.
Dave S.
6 years ago

OK Travis, ‘fess up—you either got a ghost writer or a rigorous proofreader for this one. Not one comma splice in the whole piece, and an actual “of” after “couple”, not to mention a lot more dashes and ellipses than usual! It all adds up to a rather different feel. Very good, but different.

And thanks for the usual excellent sleuthing.