The Golden Country
by Matt Badiali
June 6, 2006
Benny Hollinger’s discovery is the story of dreams.
Benny was prospecting for gold in Ontario, Canada in early 1909. He was pulling moss off of rocks when he came across a quartz vein. This particular vein had a strange pattern… almost like candle wax melted along it. Except that the "wax" was pure gold!
This vein of “jewelry rock” was 6 feet wide and 60 feet long… on the surface.
Benny’s discovery turned out to be the largest find in one of the single richest gold regions in the world… the Superior Province of Canada. Home to the Abitibi Greenstone Belt, the Superior Province hosts 7 deposits that contain over 100 tons of gold… and 4 that contain over 500 tons!
Canadian mining giant Goldcorp (GG) has a mine in this region that produces extremely rich ore. Goldcorp earns $2,500 for every ton of rock pulled out. I’ve moved a lot of rocks in my day and nobody ever paid me even 1/100th of that…
Canada’s giant gold deposits occur in orogenic belts. These are hard rock deposits associated with special geologic events called orogenies. These deposits occur all over the world, although only 23 contain more than 500 tons of gold.
I bring up Canada’s huge ore deposits for one reason: Because high commodity prices make governments greedy.
It’s an unpleasant fact. If you’ve read the paper or watched the news, you’ve seen story after story about nationalization of assets or increased taxes.
The hunger for resource profits has caused several South American countries to nationalize their oil fields or jack up taxes on oil companies. This, along with instability in important oil regions such as Nigeria and Iran, has put a $20+ fear premium on the price of oil.
But let’s get back to gold…
Since gold prices rose so quickly, I’m concerned. Nationalization might happen to gold mines too. Gold is produced in many of the same South American countries that recently snatched oil concessions away from international players.
That’s why I recommend gold investors keep the bulk of their resource dollars in stable, business friendly countries like Canada, the U.S., and Australia. In many cases, you can still buy incredible mining assets cheaply… and avoid the risk of government theft.
I especially like Canada in the gold sector. Canadian companies are some of the world’s best miners. Canadian gold regions are similarly world class… and I’m still finding value in this region of the world.
Next time you go shopping for a safe mining investment, I encourage you focus on Canada…
If gold continues to rise as I expect it will, owning the right companies - companies that won’t be robbed by dictators - could literally pay for your retirement.
Good Investing,
Matt Badiali
Editor's note: Matt Badiali is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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