I constantly get phone calls from Vancouver Junior Precious Metal stock promoters. I find many of these promoters are very knowledgeable and some have a lot of experience. The call yesterday was about young junior gold explorer with good properties in Peru and the Yukon. The Yukon deposit is an ore deposit at .7 gm/ton gold, the Peru deposit has .5gm/ton gold and some copper. The Co. spends $1 million/month (burn rate) exploring and drilling and has $2 million in the bank…good for 2 months. Of course, there are many more details but the best one is that people are paying 53 cents/share for it. That’s right 53 cents. So, here we have people paying 53 cents for an in-ground resource with less than 1gm/ton gold that still has to be dug out, transported, milled etc. Then we have SFMI with so far, min. 24 gm/ton already mined ore sitting on the ground…with estimates of portions of it being in the 2 to 4 ounce range…or 62 to 124 gm/ton. There are countless other examples.

What is obvious here is that the 53 cent stock is free trading and speculation is driving the stock. The other, SFMI at 15 cents today…is not free trading. Why? Because SFMI has the monster goods both in the 800,000 tons ore piles and in the mountain with geological estimates of up to 10 million ounces high grade gold/silver. It has to be kept down in order that no excitement develop…or it might take off and then the deal makers may have to pay much higher prices. It won’t work of course.

To quote Oryx: “The $75 "in ground" value for the 800k tons of already mined ore is low. There are no mining costs, and no 5-8 year delay for permits, financing, construction, mining, etc. SFMI is producing now. With $50/ton milling costs, doubled to account for hauling, smelting, etc., you still get a net of over $1000/t at an average 1 oz/t and $1300 gold. That's $800M, or $3 per share. And the 1 oz/t may be low, since the 0.75 oz SFMI used while getting the mill going is their "lower" grade.

There are estimates of 5-8M tons of Au eq in the mountain. Using $100/oz as a lower limit price for this (SFMI's mining costs will be very low, est. <$200/t) adds another $5-800M to the value, or a total of $5-6/share. I think those are conservative numbers.

So, if we all know this…( that many vigorously deny by their own opinion )…what do you suppose a deep- pocketed concern like a major producer is willing to pay for all the goodies SFMI undeniably has…worth up to $1 billion…or more? There are very few in the world…by the way. That, I suspect is just what is happening behind the scenes. There will be many players wanting a piece of the action...and with the prices of gold and silver escalating, the real value of SFMI’s resources is momentous. The urgency to get the right deal without showing one’s hand must be comical because one side knows what it holds and the buyer side is pretending the value is far too low. Then there are the intermediaries, MMs and all the other “players” greedily interjecting. PQ is in the catbird seat but has to deal with certain others that may be impediments at this time…because they want more than their fair share of course. He can take his time…they can’t.

So, what will it be? When will it be…as the stakes mount daily? Who will make the first move on a rare treasure trove in a safe environment that will double again and then triple or more in value over the next few years? If you had the financial resources and could make an offer today for $X …very high today…but that will be worth triple that in 2 years…what would you do? Your advisers/geologists have already told you the obvious …because they have had access to all the records and some no doubt have kicked around the site… that the property is very valuable. The Kinross boys know the property is very valuable…after all they once owned it and their Geos did reports on it. What is the best deal Pierre can make? After all the best deal he can make will also be the best deal for the shareholder. That’s just the way it is.

No matter how it all unfolds...the enemy of the suitors is time…as the competitive juices begin to flow…because the gold and silver rush has started and the race is to acquire those extremely rare, rich resources SFMI/GHDC holds…is on . The fact that the stock trades here at 15 cents is symbolic of the type of greed and power at play. One thing is certain….SFMI is worth at least $3 today…and on spec value, much, much more. Unless some incredible skullduggery is at play to steal SFMI, buying it at 15 cents is a crime in itself.

Here’s a nice article from Financial Sense today:

Welcome to the Mania

http://www.financialsense.com/contributors/jeff-clark/welcome-to-the-mania

Submitted by Jeff Clark on Thu, 30 Sep 2010

With gold punching the $1,300 mark, thoughts of what a gold mania will be like crossed my mind. If we're right about the future of precious metals, a gold rush of historic proportions lies ahead of us. Have you thought about how a mania might affect you? Not like this, you haven't…

You log on to your brokerage account for the third time that day and see your precious metal portfolio has doubled from last week. Gold and silver stocks have been screaming upward for weeks. Everyone around you is panicking from runaway inflation and desperate to get their hands on any form of gold or silver. It's exhilarating and frightening in the same breath. Welcome to the mania.

Daily gains of 20% in gold and silver producers become common, even expected. Valuations have been thrown out the window – this is no time for models and charts and analysis. It's not greed; it's survival. Get what you can, while you can. Investors clamor to buy any stock with the word “gold” in its title. Fear of being left behind is palpable.

The shares of junior exploration companies have gone ballistic. They double and triple in days, then double and triple again. Many have already risen ten-fold. You have several up 10,000%. No end is in sight. Your portfolio swells bigger every day. Your life is changing right in front of you at warp speed….”

Please go to the site to see the whole article.