Wouldn’t the US keep printing money and keep buying there own currency until all countries sell it to make a profit?

It is all electronic so you just keep adding zeros no matter how big the number is

(Wonder if there is any data to show how much US is buying back)

I only have a simple mind so I only see things simple!

A post in the Gold Report (which can be viewed at the Bullion Vault link)argues that most juniors will fail. In an Australian context I disagree but the analysis does get the old brain ticking. Key points and my retorts (capitals but no yelling intended) follow:

1. “Interestingly, many of the pundits and gold bugs who have been warning of the leverage and speculation in the US mortgage/derivatives markets failed to recognize the same risk in the junior gold miner stocks.”

YES. WE FAILED TO REALISE THAT MANY INVESTORS IN THIS SECTOR WE INVESTING ON LEVERAGE. HOLDINGS CONTINUE TO BE LIQUIDATED AND AS A RESULT THE PRICES WILL REMAIN AT BOTTOM UNTIL MORE CONSERVATIVE “VALUE INVESTORS” IDENTIFY A LOW TO MEDUIM RISK OPPORTUNITY.

2.” Most also failed to predict the deluge for mining stocks as those loose credit policies were arrested and unwound. Many actually participated in the leverage at the private placement level. Today, they continue to bash the US Dollar although it stubbornly remains the safe haven currency in a financially troubled world.”

AS OF TODAY THE USD IS IN DROP MODE. IN BILL'S ARTICLE ABOVE HE PROVIDES AN ACCURATE AND TIMELY WARNING ON THIS. US MONEY IS (I SUSPECT) GOING EVERYWHARE AND ANYWHERE – TO THE MARKET, TO METALS TO OTHER CURRENCIES. GOLD IS UP AS I TYPE (BUT WILL REMAIN VOLATILE).

3. “So where do we go from here and when does the market for junior mining stocks recover? Unfortunately for shareholders, a majority of the companies will never recover. Many are out of cash and have no prospects for additional equity. These will slowly fold and their only legacy will be as historic drill results. Some companies have developed bankable assets and might secure some type of debt financing. The process will be slow and painful, much like mortgage foreclosures. Many cash strapped companies are now in "hunker down" mode. It appears that "hunker down" is mining terminology for "stop all operations and cover G&A as long as possible".
When their cash is depleted, many of them will also fold.”

THE MIXED BAG HER NEEDS TO BE UNTAGLED. YES MANY COMPANIES ARE RUNNING LOW ON CASH. BUT THAT DOESN’T MEAN THEY WILL FOLD IF THEY HAVE NEGLIGABLE (OR ZERO) DEBT. MOST CAN SIT QUITE COMFORTABLY FOR A WHILE. COMPANIES WITH A GOLD BIAS CAN SIT EVEN MORE COMFORTABLY I THINK. IF THE IS NO DEBT WHO IS THERE TO FORCLOSE?

4 “Unfortunately, even some of the best gold miner juniors failed to focus their resources on a flagship property and advance it into an actual development project. Easy capital enticed them to build a "pipeline" of properties more appropriate for larger companies.”

THIS IS TRUE BUT NOT QUITE THAT SIMPLE. Because of a mony irons in the fire strategy my remaining (2) gold juniors have a RANGE of development options which may enable organic growth. If the price of Gold increases (say another 20%) against the currency basket and holds there – most Gold juniors with good prospects will be viable. The money will follow!

5. “Investors were easily swayed with this "irons in the fire" business model. Today the market is seeing these undeveloped properties for what they are, liabilities not assets. There are a few that were smart (and lucky) enough to advance a project that is truly developable. These will receive additional equity, albeit at substantial dilution to existing shareholders. Others will proceed, without shareholders, as debt holders take over the projects. Some will merge. But mergers won't bail out existing shareholders as few premiums will be paid in the consolidations.”

THERE IS NOTHING WRONG WITH CONSOLIDATIONS, MERGERS AND TAKEOVERS. SHAREHOLDERS BENEFIT AND WORK CONTINUES. I AGREE THAT MANY GOOD POTENTIAL GOLD PROSPECTS WOULD BECOME LIABILITIES IF THE PRICE OF GOLD FAILS TO FIND A HIGHER LONG TERM FLOOR OR IF THE USD FAILS TO DROP FROM ITS CURRENT HIGH.

6.” Even the companies with projects nearing production are finding it difficult to finance construction in the current market. Companies with once profitable poly-metallic mines are being forced into "care and maintenance" at current base metal prices.”

YES BUT…CARE AND MAINTENANCE GOLD MINES WILL REACTIVATE IF A PRICE FLOOR AROUND THE $900 MARK (USD) IS FOUND. READ THIS ABOUT AUSTRALIAN JUNIOR ALKANE
http://www.aspectfinancial.com.au/asxdata/20081217/pdf/00914129.pdf

MONEY IS STILL AVAILABLE FOR GOOD COMPANIES WITH GOOD PROSPECTS.

5.Easy capital is mostly inefficient capital. Looking at mining projects today, it is amazing to see just how little was actually created with the billions invested into the junior sector over the past several years. The capital was simply spread too thin. Way too many companies were created. But, like the mortgage market, it was mostly the securitization process that created profits for insiders, bankers and management.

THERE IS STILL A RAPIDLY INCREASING GLOBAL POPULATION (A CORE GOLD DEMAND DRIVER) AND THER ARE INSUFFICIENT NEW GOLD PROSPECTS IN THE MEDIUM TO LONG TERM TO FILL THE DEMAND GAP.

6. “With mortgage backed securities, somewhere underneath all that paper, is a house. The sub-prime analogy stops here. Obviously there will be no bailout for junior mining companies, but there will be survivors. There are some real developable mining assets, under all that paper, that are currently being severely undervalued. Unlike most other assets, gold continues to hold on to the bulk of its gains of the past five years. Base metals appear to be forming a bottom and their current underperformance relative to gold cannot be sustained. “

YES BUT I’M NOT TALKING ABOUT BASE METALS. WITH GOLD, A GOOD STRIKE REMAINS A GOOD STRIKE!

6. President-elect Obama has stated that he will develop a series of infrastructure-based jobs programs in the US. This build-out will compete for metals with China, India and other emerging countries as their growth accelerates in a worldwide economic recovery. Money will begin to flow back into commodities and other hard assets as credit market free up, early next year.

BASE METAL PRODUCERS WILL HAVE TO LIVE THROUGH A COLLAPSE IN PRIVATE CAPITAL EXPENDITURE DURING 2009. PUBLIC SECTOR PROGRAMS WILL NOT COMPENSATE FULLY. I’M BEARISH ABOUT THIS SECTOR BUT WHAT DO I KNOW?

7 "In this financially challenged market it is still difficult to differentiate the "baby from the bathwater." Our North American Gold & Silver Explorers Model is currently following 24 companies we believe will survive to drill another day. Companies with cash flow or high cash balances will not only survive, but will be positioned to acquire new assets as other companies fail or drop properties. We are currently positioning our clients for a strong rally beginning in Q1, 2009."

OK THEN – THE ARTICLE IS ACTUALLY QUITE BULLISH! MY ANALYSIS OF THE AUSTRALIAN SITUATION IS THAT MANY JUNIORS HAVE EXCELLENT GEVERNANCE ARRANGEMENTS THAT WILL PULL THEM THROUGH IN ONE WAY OR ANOTHER. OVERLEVERAGED COWBOYS (BIG AND SMALL) WILL FAIL BUT THEIR PROSPECTS WILL BE PICKED UP BY OTHERS.

Regards,
A worried saver.