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The story on Luzon Minerals is not quite as impressive. The company had only Canadian $447,000 last we checked. They did option from Vista Gold 100% of a property in Bolivia with some 652,000 ounces of proven or indicated gold and some 15,000 ounces inferred, with a further probable reserve of 444,000 ounces. The company has some 40.8 million shares fully diluted, based on our understanding of their financial reports. We derive a value per share of US$4.84 to US$9.97 for their assets at $452/oz for gold. The company has liabilities of about $65K. Their market capitalization is a scant C$9 million.

However, we are very interested in the prospects for Bolivia as a gold mining location. There is a good exploration story on the company's property at Liphichi which the company has optioned to own 100%. The property is a geological analog to the Bendigo District in Australia. The mines at Bendigo operated from 1854 to 1953, producing 22 million ounces of gold; an Australian company has consolidated the district and delineated a further 11 million ounces of gold under the old workings. Luzon is working with Bendigo Mining's geological consultant, Dr. Simon Dominy on sampling protocols for Liphichi.

At Liphichi, gold occurrences have been found over a strike length of 14 kilometers and over a vertical extent of 700 meters. Gold is found in quartz veins and stockworks in association with stibnite and arsenopyrite. Previous drilling and channel sampling have shown a mineralization structure of up to 50 meters width, grading up to 5 grams per tonne. Luzon has embarked on underground tunneling and drilling at Liphichi and has refurbished an existing adit. Drill bays have been installed in the footwall and hanging wall of the structure and drilling is being done on fifty meter centers.

The Amayapampa project in Bolivia is the aforementioned project optioned from Vista Gold. Vista performed feasibility studies there in 1997 and again in 2000. Vista has proposed mining the deposit at Amayapampa at a rate of 2,330 tonnes per day, using open pit mining to produce an average of 41,000 ounces per year at a cash cost of $168/oz. The initial capital cost, including working capital, is estimated at $26 million. The measured and indicated resource is 12.6 million tonnes grading 1.61 grams per tonne Au. The resource was delineated by 19,971 meters of RC and diamond core drilling and 5,355 meters of underground channel sampling. The project is fully permitted. The company is negotiating with the indigenous people of the area to allow use of the surface lands required for the project.

Of course, the opportunity with these exploration companies is to buy into the process of discovery at an early stage. Provided the discoveries are substantial, and don't fall into what our friend Rick Rule calls the "small mine trap" the opportunity can be very substantial. Of course, another aspect of Rick's advice is that very few of the many thousands of geological anomalies that are discovered each year ever become mines. So, it is important that an exploration company be looking for large deposits, preferably in places where large deposits are found. In this way, the return may be large enough to reward for the substantial risk involved.

Almaden Minerals is a similar story, although we see the company trading at values close to the asset values we calculate for them. We show Almaden holding C$5,500,000 in cash, with 207,600 oz indicated and another 207,800 oz inferred gold. Their exploration projects are in Canada and Mexico. They have 60 million shares fully diluted, as we understand it. Based on these figures, we calculate a value of US$1.63 to US$3.18 per share for their assets. The company has C$487K in current liabilities, and some $353K in contingent liabilities involving a dispute over the deductibility of certain expenses in a matter currently being defended by the company against the "British" Columbia Ministry of Energy and Mines.

We met both members of the father and son team of J. Duane Poliquin and Morgan J. Poliquin on our recent excursion to New Orleans. Duane has an impressive track record of finding large gold mines. Both have excellent credentials and experience in mining.

We like the company's approach to finding gold projects and acquiring them mostly by staking. This approach means that holding costs are low. The company then tends to develop its properties through joint ventures with companies that specialize in mining operations. The exception to this rule is their Elk or Siwash property in Canada which they own, explore, and develop on their own.

Their Siwash gold deposit appeared to have as much as 141,962 ounces of gold in 123,142 tonnes as calculated at the completion of the drill program in 2000. A further drill program has been conducted in 2004, which produced a "calculated global resource" of 207,600 measured and indicated ounces of gold and a further 207,800 inferred ounces of gold.

Elsewhere in Canada, Almaden has optioned their PV Au-Ag project in Coast Salish Columbia to Consolidated Spire Ventures. Spire may earn 60% interest by issuing 1.1 million shares of Spire to Alamden and spending C$1.3 million on the property. Surface grab samples have returned values up to 43.3 grams per tonne Au.

Almaden has optioned their Mor, Caribou Creek, and Cabin Lake properties to Kobex Resources which may earn 60% interest by expending C$1 million in exploration and issuing 1.1 million shares of Kobex to Almaden. A news release of 29 October 2004 by Almaden indicates that the Mor prospect has significant copper, zinc, gold, silver, and lead. Intervals with over 1% copper, over 1% zinc, and up to 40.71 parts per million silver were identified in a two hole diamond drill program completed in August 2004.

In Mexico, Almaden has optioned its Fuego Au-Ag property to Horseshoe Mining which may earn 50% interest by spending US$2 million on exploration and issuing a million shares of Horseshoe to Almaden. An option to acquire a further 10% for an additional US$1 million on exploration would bring Horseshoe's interest to 60% whereupon Almaden would have 120 days to sell its remaining 40% to Horseshoe for 40% of the issued capital of Horseshoe. Horseshoe has already carried out surface geologic mapping and rock and soil sampling, revealing up to 13.6 grams per tonne Au and 643 g/t Ag.

Caballo Blanco Au-Ag-Cu in Mexico has been optioned to Comaplex Minerals, with a drill program to commence in October 2004. Galeana Au-Ag in Mexico has een optioned to Grid Capital. The El Pulpo Cu-Au-Ag project in Mexico has been optioned to Ross River Minerals. Best result on this last property intersected 1.02 meters showing 3.73 g/t Au, 157 g/t Ag, 0.94% Cu.

Almaden's Bufa Au-Ag project in Mexico is optioned to Grid. The property surrounds the town and mining camp of Gaudalupe y Calvo in Chihuahua. Gold was discovered there in 1835 and was sufficiently productive that a mint was built there in 1844. Historic production of 2 million ounces Au, 28 million oz Ag has been estimated. Chip sampling at 33 locations show values up to 13.95 g/t Au. Drilling was to commence October 2004.

Almaden has optioned their San Carlos Cu-Au-Ag project in Mexico to Hawkeye Gold and Diamond. The company's BHP Billiton joint venture is a regional exploration program to identify new Cu-Au deposits in Mexico. A recent company brochure indicates an "ATW diamond project" in Canada between the Diavik and Snap Lake deposits, of which Almaden seems to own 40% of the 75% stakeholder.

A completely different approach to resource development was disussed in a panel discussion at the New Orleans conference. This approach was characterized by Rick Rule with the question "why mine?" The idea is that with prices for gold, silver, and other metals generally on a rising trend, it makes more sense to hold resources in the ground rather than mine them for immediate sale.

Silver Standard takes this idea one step further by having some 1.95 million ounces of silver bullion in inventory. Recent information indicates US$40.4 million cash (& marketable securities), 508.4 million oz indicated silver, and 446.1 million oz inferred silver in projects in Canada, the USA, Mexico, Argentina, Chile, Australia, and Peru. The company has 54.5 million shares fully diluted, as we understand it, and we calculate an asset per share value of US$74.60 to US$139.26 depending on what you believe about inferred resources. With a recent share of about $14, the SSRI stock looks like a "ten bagger" to use the term coined by Doug Casey.

In keeping with the fact that the first of Doug's seven "P's" is "people," let's take a look at 'em. It was over ten years ago that the legendary Jim Blanchard, Rick Rule, and Bob Quatermain decided that resource stock investors should have a pure play for silver. They reorganized "Silver Standard" and put Bob in charge. The objective for the company was to have a billion ounces of silver resources.

According to Brien Lundin's Gold Newsletter for November 2004, which we snagged in the registration loot bag in New Orleans, the "new block model" estimate of SSRI's La Pitarrilla (near Durango, Mexico) contains 60.2 million ounces of indicated and 12.9 million ounces of inferred silver. The indicated resource figure is up 46% from previous estimates, and was added for about two cents an ounce. The company now controls 868.9 million ounces of indicated and inferred silver.

Briefly, the company has 100% of Pitarrilla in Mexico, 50% of Manantial Espejo in Argentina, 100% of Pirquitas in Argentina, 100% of Bowdens in NSW Australia, 100% of Challacollo in Chile, an option for 100% of the silver at Maverick Springs in Nevada, 100% of Shafter in Texas, and an option for 100% of the silver at Berenguella, Peru. SSRI bought 93.8 million ounces of silver and 820,000 ounces of gold from Pacific Rim Mining in 2001 at Diabillos in Argentina for about 2.5 cents per ounce silver-equivalent. They also have 100% of the Candelaria mine in Nevada. Other projects not on their 2004 summary show in Canada, Australia, Argentina, Mexico, and Chile.

Liabilities, including current liabilities, provision for reclamation, and long-term debt amount to C$2.48 million. In other words, there is not a lot dragging this company down. The management were clever enough to see silver at $5.60 after April's high to be a good buying opportunity for silver bullion. Let's see how they are at timing their exit from this inventory now that prices have risen again.

Lumina Copper follows the career of Ross Beatty. Ross organized Pan American Silver to outstanding success. Lumina Copper is his copper version of the same. Lumina now has 28.3 billion pounds of copper in 10 separate deposits. As well, the company has 14.8 million ounces of indicated and inferred gold. Their projects are in Canada, Peru, Argentina, and Chile. With a bit over 21.4 million shares fully diluted, the company is a screaming opportunity with as much as US$2160 per share in asset value.

Nothing appears amiss on the balance sheet, with a mere C$848K of liabilities as of June 2004. Two possible difficulties are the ninth year of the traditionally eight-year copper cycle, so we may be seeing a bit of a top in copper prices, and Peru. We simply don't like the political risk in Peru, which appears to be once again heading toward thieving communism.

Fortunately, most of Lumina's properties and most of their copper and gold show up outside Peru. The company has three projects in Chile at Regalito, Relincho, and Vizcachitas for 5.74 billion pounds Cu in Chile; two in Peru at Galeno (6.1 billion lbs Cu, 2.19 million oz Au) and Pashpap (1.43 billion lbs Cu, no gold, a bit of molybdenum); two projects in Argentina at Taca Taca and San Jorge for 5.57 billion lbs Cu and 2.39 million oz Au in Argentina; three projects in Canada at Hushamu, Redstone, and Casino for 9.35 billion lbs Cu and 10.21 million oz Au in Canada. At Redstone in Northwest Territories, the company lists nearly ten million ounces of silver in its "by-products" column.

Vista Gold is described by Brien Lundin (Gold Newsletter November 2004) as "a call option on the price of gold with absolutely no expiration date" and as "the Silver Standard of the gold world." The audience in New Orleans was saddened by mention of the passing of Vista's CEO Jock McGregor, but Mike Richings seems to be doing a fine job of carrying on the traditions and business model.

The company has US$5.5 million in cash along with 12.5 million ounces of indicated and inferred gold in the USA, Mexico, and Bolivia. Please note that if you buy both Vista and Luzon, you are getting both sides of the option Luzon has for the Amayapampa property of Vista. Vista seems to have optioned this property on the grounds that it was limited to measured and indicated 660K ounces, with no significant inferred resource. We show 18.4 million shares fully diluted, so we toy with the notion of asset value per share of US$304.

We found US$4.5 million in total liabilities, including $4.1 million for reclamation and closure costs.

In terms of properties, we find most of their stars in the USA and Mexico, with one lone star, presumably Amayapampa down in Bolivia. Interesting note, the Maverick Springs property which shows as 350,000 ounces measured and indicated gold and 747 million ounces of inferred gold would appear to be the same Maverick Springs where Silver Standard has optioned all the contained silver. These relationships among players in the industry give us greater confidence that we've found a successful mix.

We still like Newmont. You'll recall our earlier suggestion contained basically the same type of analysis we've performed on the above cited companies. It seems to have worked well. The improvement in Newmont's share price speaks for itself.

For Newmont, the mining operations are in the United States, Australia, Peru, Indonesia, Canada, Uzbekistan, Turkey, Bolivia, New Zealand and Mexico. As of 31 December 2003 gold reserves of 91.3 million ounces and an aggregate land position of approximately 60,000 square miles (155,840 square kilometers). In 2003, Newmont obtained more than 65% of its equity gold production from the United States, Australia and Canada. Shares Outstanding: 443.91 million.

Newmont offers cash per share of $3.78; gold per share of 0.206 ounces (recent value $93.58); an annual dividend of $0.40/share; a dividend yield of 0.85%; diluted EPS of 1.027

Northgate Minerals acquired the Kemess Mining district from a bankrupt predecessor near the bottom of the recent commodities bear market. Ken Stowe and Terry Lyons have built an excellent team to take advantage of this opportunity. The company recently showed current assets of US$39.7 million, gold of 2.061 million ounces proven, 6.224 million ounces indicated, and 2.3 million ounces inferred; copper of 459 million pounds proven, 2.2 billion indicated, 700 million inferred, all in Canada. They have 198.8 million shares fully diluted, giving the company an asset value per share of US$85.40 to US$292.

This company is not an exploration play. It is a mining company, with basically one mining resource sitting in two big chunks. The mine is currently operational, it is currently moving enormous tonnage of rock every day, it is currently producing gold and copper. We see a mining rate of 150,000 tonnes per day and a mill throughput of 52,000 tonnes per day. The life of the existing mine profile shows 300K oz Au per year and 75 million lbs Cu per year, with cash costs of $150/oz Au and $1/lb Cu.

The one big chunk is the Kemess South Pit, with a reserve of 2 million ounces and a resource of 0.8 million ounces. The Kemess North chunk has a reserve of 4.1 million ounces Au and 1.46 billion lbs Cu. When these chunks are used up in another two decades, the company anticipates having discoveries in the region to keep its mill running. Three projects in the region were profiled at the New Orleans show. the closest seems to be the Sustut copper project, just 40 kilometers away, acquired at a penny a pound of recoverable copper, showing a measured and indicated resource of 4.6 million tonnes at 2% copper. (Now, a tonne is 2,200 pounds. We figure 202.4 million pounds Cu.)

The company produced 79,311 ounces of gold in third quarter 2004 and 18.7 million pounds of copper. For that quarter, they show a full absorption cash cost of $129/oz.

We think Northgate is undervalued on a price to net asset value basis. It is also undervalued on a price to cash flow basis. We see it as a hundred-bagger.

The company gave us a DVD at the New Orleans show which indicates some prospect for a hydroelectric power project using the company's property and power lines. We know nothing about the energy business, so we won't evaluate that possibility. It might be icing on this delicious cake, but it might be gravy.

Here's how the stocks we presently suggest in this area look right now:

We did tell you "tight trailing stops" on Newmont and Freegold, which are down, as predicted, with perhaps more end of year tax loss selling yet to come. You should have sold by now to preserve your profit. If you didn't, you should look at these lower prices as an opportunity to add to your position. If you did sell, you should watch the market until the first week of January, or buy in at the last of December.

We read a very interesting article by Michael Bolser in the November 2004 Gold Newsletter. Michael's site is interventionalanalysis.com and the article is the October entry in his articles section. He makes a compelling case that technical analysis fails when one of the players in the market is government. Obviously, during the period from 1792 to 1971, the prices of gold, silver, and copper were fixed to the dollar, though not without periods of significant fluctuation or even divergence from the world market.

We met Michael at the New Orleans show, but lamentably we were thoroughly distracted during his presentation in the exhibit hall. Too many people were stopping by Doug Casey's booth to make all manner of inquiries. Nevertheless, the article Michael wrote goes a long way to developing the theme for his site. One of his interesting techniques is what he calls "multi-phasic" regression which he uses to test parts of a data series to detect randomness. Obviously, where a part of the data set approximates a straight line, there is evidence for manipulation. That's especially true when the data is a long-term moving average, such as the 200 day moving average. (As Michael notes, a moving average is like melting ice cream. The longer the period, the more melty it looks. In our view, the presence of straight lines in long-term moving averages suggests that a series of market operations have produced a desired effect.)

Michael finds some very interesting straight lines which crop up in his "Dollar Index Value of Gold" (DIVG) and the Multi Currency Dollar Index (MCDI). The DIVG is calculated by taking the London PM fix times the MCDI divided by 100. Michael found a 200 day moving average sitting at 323 on this index for about nine months in 2003, and then the same 200 day moving average moving at about a 45 degree angle for several months thereafter. He gets r-squared values very close to unity on two other long term moving average lines he finds in data from the Federal Reserve relating to the MCDI.

One of the events that impressed Brien Lundin was Michael's ability to state categorically that the gold price was about to be slammed "tomorrow" and come to find out it plummeted $7 immediately after the opening bell as predicted. For us, the chill-spine effect comes with Mr. Bolser's concluding words, "The government appears to be engaged in a very large, computer-driven effort to steer major strategic commodity markets and financial indexes, suggesting leaders have already concluded that the American financial system is unsustainable without such intervention." Emphasis in the original.

The two stocks we've suggested in this sector are PVH and MCG. PVH is down a tiny bit from .043 gram/share to .042 gram/share. MCG is unchanged.

Space Frontier

"In modern research laboratories, curcumin's ability to scavenge free radicals and suppress inflammatory cytokines has impressed scientists who are seeking ways to prevent and treat Alzheimer's disease and other neurodegenerative disorders."
John C. Martin, LE, December 2004

When Life Extension magazine and Life Enhancement agree on the value of something, it certainly gets our attention. We've seen several articles on turmeric (Curcuma longa) or curcumin. Turmeric is the seasoning which, as Will Block points out, gives curry powder and yellow mustard their yellow color.

Martin notes, "Turmeric is rich in its active compound, curcumin, which is widely prescribed in Indian medicine as a potent remedy for liver disorders, rheumatism, diabetic wounds, runny nose, cough, and sinusitis." These disorders, you'll note, have in common an inflammatory reaction.

Curcumin may prevent cancer. It may suppress the proliferation of cancer cells. It may inhibit cancer metastasis. So, that boring, bland hospital food may be exactly the wrong thing for cancer patients, who might do much better eating a lot of curry powder.

Curcumin studies suggest it has value in preventing cataract formation, recovering from liver injury, and recovering from heart attacks and stroke. It may also work, especially with rosmarinic acid, in preventing the formation and extension of beta amyloid fibrils, a formation associated with Alzheimer's. Curcumin has also been found to inhibit "neuroglial proliferation" associated with Alzheimer's. It may also be useful in fighting Parkinson's disease.

You may be asking, "If it is anti-inflammatory effects, why not aspirin?" And, indeed, various anti-inflammatory compounds exist including aspirin and ibuprofen which are referred to as "NSAIDs" or non-steroidal anti-inflammatory drugs. The problem is these compounds often result in gastrointestinal, liver, and kidney toxicity which a UCLA study traces to NSAIDs inhibiting cyclo-oxygenase-1, an enzyme which protects the stomach lining. Curcumin avoids this side effect.

We strongly recommend you read up on curcumin.