When you get a loan from the typical finance route (banking) in addition to your interest paid you MUST also guarantee the principle in a contract which requires you to forward sell your gold to them at the market price at the time of the loan in an amount sufficient to cover the principle.

I may not have stated that exactly correct. This same discussion came up about 6 months ago and the Agoracom format for paging only allows one to go back to the beginning of time or a max of about three pages at a time. I haven't the time for that so I will just state it as it comes to mind. Others can correct me if I mis-speak.

What happens in an inflationary environment (as an aside I will not get into an inflation/deflation debate; I have found that the deliberate disinformation surrounding this issue is so strong virtually everbody argues points that do not relate to the issue at all - they look at short term price effects rather than long term causes - the monetary aggregates) is that the cost of production goes up (perhaps substantially- think potential peak oil effects here) and the offsetting price of gold goes up as well but the borrower is locked in to sell his gold at the market price at the time of the loan, at least the portion given back to the bank to cover the principle on the loan.

This can put such a strain on a company that they need additional financing, knowing this and usually getting warrants in the deal the banking financer shorts the company's stock and uses the warrant shares to cover the shorts after all but wrecking the company. Illegal, but standard practice nonetheless.

Through a succession of such counterproductive measures the bank strangles the company. Somebody else takes over and they run the same game on them.

The bank makes as much or more money being a non-beneficial partner as they might if the company were successful. What Tyhee should want IMO is either a partner who benefits with them or a financier who is interested in their success. Such a partner will not come out of the standard financing/banking industry IMO.

I don't know that I have stated all the above exactly correctly but this is the built in derivative clause in all loan contracts that I believe Jim Sinclair has been warning about from the first day I began following his website years ago.

P.