Looking for gold in Nevada with Gold Standard Ventures ($GSV)

Here's the video of my latest trip to gold country in Nevada. I shot this a few weeks ago, while on a trip to the Railroad Project, which is owned by Gold Standard Ventures (NYSEMkt: GSV).



Gold Standard Ventures has a market cap of $62 million and 167.7 million shares outstanding. You can see its latest web presentation here: http://goldstandardv.com/pdf/gsvc_presentation.pdf

You can read more about my adventures on this tour here: "I Survived a Mining Tour and Didn't Even Get a Lousy T-Shirt".

The Railroad Pinion project is exciting (to me) because of its rich gold grades and the potential for resource upside. Luke Norman and the management team at Gold Standard have done a remarkable job of sewing together an excellent large and prospective property from a patchwork quilt of claims.

In the video, Luke and I have differing opinions on whether this is early stage. I consider it early stage because the company is still defining the resource and doesn't have a feasibility study yet. It will have to raise more money between now and when the gold is mined UNLESS the company finds a buyer for the project. 

And a buyer is certainly possible. GSV's main project has rich ore grades and blue-sky potential in one of North America's richest gold geologic trends. It has 423,000 ounces of gold indicated and 1.38 million ounces inferred just on the two targets it is drilling currently. And it has multiple targets to boot. But be aware that you can't force a big company to buy a mine.

Here is a chart of the stock recently ...

It has average volume of 117,860 shares per day. It trades under a dollar share, though above 10 cents per share. The company recently began phase 2 drilling at its Pinion and Dark Star deposits. So, it should have drill hole results coming out in due course, if the market is receptive to being moved by such things.

I think investors will have an interesting opportunity when Gold Standard Ventures raises money, as they may be able to get warrants with shares in a financing (if that's how the company raises cash -- they could also sell a gold stream, or do any number of things). The point is, I think there is extraordinary potential here. But for now, it's just potential, it is very speculative, and investors should be aware of that going in.

Do your own due diligence before investing in anything.

Drowning in the Desert, on the Fringe of a Dying Empire

You know what the Nevada desert has too much of? Rain. It’s ironic that at a time when neighboring California is so bone-dry that wells are running dry across the state and residents are turning to bottled water for just about everything, the first day of Burning Man in the Nevada desert was canceled. Due to rain.

The skies opened up in a deluge. So much rain poured down that roads leading into Nevada's Black Rock Desert were deemed "un-drivable" by the event producers. State police turned away 50,000 or so people, who then dragged their butts back down the road to spend the night in Reno.

A photo from a previous Burning Man

I know this because I was staying in Reno. It’s about my fourth time in the city in three years. And my hotel was flooded with rained-out Burning Man refugees.

The big casino hotels in Reno are cavernous structures built for a boom of a different age. They were constructed just around the time the local energy boom was cresting and the nascent gold and silver boom was in its infancy. 

Meanwhile, Vegas was building glittery castles to the sky. So, the entrepreneurs of Reno rolled the dice, and they built big.

They bet their hunches, but hunches can be wrong. A recession that Ben Bernanke calls “worse than the Great Depression” went around kicking the state of Nevada (and everyone else) in the ‘nads, repeatedly. Real estate collapsed. The mining boom flamed out, stillborn.

And while Vegas seems to be back on its slippery feet, Reno hasn’t come back. Not yet.

As a result, these huge hotels in Reno tend to be half-empty at the best of times, and eerily spooky at others.

But on Monday, my hotel was teeming with freaks, geeks, musicians, groupies, hippies, hipsters and wanna-bes, artists, poets, satirists, and the kind of red-eyed dilettantes that populate the fringe culture of a dying empire.

And I found myself doing something I never thought I would do – enjoying myself in Reno.

One of the main reasons I enjoyed this trip is that Reno hotels don’t assault you with noise the way Vegas hotels do. So I was more relaxed from the get-go.

Also, the wine at the bar was dirt cheap ($4). The entertainment was women in bikinis wrestling in chocolate syrup, which was cheered enthusiastically by the crowd. While we were there, a waitress came by our table and handed out a round of free shots of Crown Royal.

A better photo than I could have taken

The food at the hotel restaurants was excellent. And the indoor pool and hot-tub was clean, uncrowded and relaxing.

And the Burning Man refugees made the place a people-watching gawker's paradise.

Sure, the electric sign out in front of the hotel may not work correctly, and half the machines in the exercise room may not work at all. But Reno has a certain shabby charm.

In fact, I told friends, “The people here seem genuinely friendly, whereas in Vegas they just see you as a target and want to hose out your wallet.”

“What is wrong with you?” one of my friends, Jon, railed at me long-distance. “Reno is shabby Disneyland for low-lifes. It's a low-roller's paradise.”

“I must be a low-life then,” I replied with a laugh. “It’s not paradise. But I’m much more relaxed than I’ve ever been in Vegas.”

Jon then regaled me with HIS Reno story:

“On my one visit there, we stayed at one of the older casino hotels on the main drag, right across from the pawn shop. You could stand at the window and watch the teenage junkies five floors below as they pawned their leather jackets.

“Also, whenever Allyson went down to the lobby without me, she had to show her room key to the security guard by the elevators, because hookers. Nobody ever stopped me and asked me to show my key.

“And there was the hundred dollar bill incident. We were waiting for the elevator and the door opened and there's a hundred dollar bill, lying on the elevator floor. Instant dogpile as four or five people scrambled for the money--finally a woman came up with it in her fist and said ‘Praise God! My luck's finally turning around!’ Allyson and I stood there, stunned.”

Jon added: “This was all on a two day visit.”

I sighed. “I’m staying at a slightly better hotel, Jon.”

The fact is, I did enjoy Reno, and I enjoyed the Burning Man refugees tremendously.  That’s after I gave up trying to explain Burning Man, an art, music and culture festival that is probably the biggest to-do in that part of the country, to my host who was showing me around the gold and silver project I’d come to see.

The guy who invited me to see the project is a born salesman, a deeply committed Christian, a tee-totaler, FOX News true believer, and an avid sportsman. I think Burning Man exists in another universe than he does. He’d never heard of it before.

A local drilling contractor who accompanied us on the tour expressed his contempt for Burning Man attendees. “They’re dirty hippies,” he said. “They’re filthy, they stink. They roll around in the dirt like animals, and they don’t even know the dust is poisonous.”

There are many reasons not to attend Burning Man, but that’s the first I heard that the desert dust is poisonous. I think if I was young, I would go. They’re expanding Burning Man for next year, by the way. I guess we have no shortage of dirty hippies.

And it’s funny how so many people hate other people without getting to know them.

Anyway, I had some good conversations, and a good time. I’m not mentioning the name of the Reno hotel I stayed at because they deserve a chance to at least fix their big sign.

Oh, and I checked out a gold-and-silver project. I’ll be posting a video from that tomorrow. I am NOT recommending the stock; it’s too small, and it doesn’t have enough volume.  And it will probably have plenty of ups and downs as it grows (or not).

But I did meet some fascinating people. There are some big things going on in the Nevada Desert.

I'd say the potential for a major discovery is better than average, thanks to changes in technology and geologists better understanding how that part of the world was formed.

Why try to develop a gold and silver mine when the price of precious metals is in a slump? Buddy, that’s exactly when you should be doing it.

For one thing, you can get contractors for a song. In fact, I hear they’re having a special on hippie-hating contractors right now.

More Nevada Gold Goodness: 2nd Interview with Corvus Gold

Here's more video I shot in Nevada last week -- an extended interview with Corvus Gold's Chris Brown. Chris is a geologist, and he talks about Corvus Gold's plans for this next year, how the geology of this gold-rich trend was formed, and much more. Plus, I visit the core shack and check out one of the drill sites on Corvus' North Bullfrog gold project.


And if you want to see the other Corvus Gold interview I shot last week in Nevada, point your browser here: http://king1eye.blogspot.com/2013/09/mining-tour-day-1-las-vegas.html

Interview with Midway Gold in Nevada -- 2014 Production Target

While in Nevada, I interviewed Bill Neal, VP of Exploration for Midway Gold (Ticker symbol: MDW on the AMEX)



The damned Nevada wind tried to get in the act on this one.  But most of the video is of decent quality.

 Midway has an ambitious plan to start producing in August 2014.  It's a good company with smart people, it has money and it will be able (I think) to finance the rest that it needs.

August of 2014 is very ambitious considering that they haven't begun construction yet. And we also know that roughly half of all mining projects experience delays. So, if there was a delay in Midway's plan, that might cause the stock price to pull back, and that potential pullback might be a good entry point, if an investor was keen on this company.

Then again, maybe everything will go on schedule. In which case, picking up a near-term producer close to support, well ...

(Updated chart)

This is not a recommendation.  You're in charge of your own investing destiny, and please remember to do your own due diligence. There's a lot more to investigating a company than watching a video and looking at a chart.

You can see other videos I've taken on my recent tour of Nevada by clicking here: http://www.investmentu.com/sean-brodrick-scouts-nevada.html

I'm traveling back to Florida today so I have to keep this short. Good luck to us all.

The Millionaires & Madmen of the Comstock Lode

Today, I'm in Virginia City, Nevada. I'll be checking out a gold miner, and I'll post videos and an analysis when I can.

In the meantime, Nevada is so rich with mining history that I feel compelled to share a little of it with you today.

A Precious Find

The first big discovery in Nevada was placer gold in a stream flowing into the Carson River. This discovery was made by ‘49ers on their way to the California gold fields. It led to other discoveries, and finally the outcroppings of the Comstock Lode in 1859.

Two miners, Peter O’Riley and Patrick McLaughlin, prospected on a mountain slope near a small stream. They found some gold, but also large clumps of heavy blue-black mud that made it difficult to sift out the fine gold.

Closer inspection revealed that the blue-black mud was almost pure silver. It could be dug out by the ton with a shovel, and each ton was worth $2,000!

Enter the Villain

Enter Henry Thomas Paige Comstock. Comstock was a shady character with an advanced degree in weaseling. He came across O’Riley and McLaughlin, saw their discovery, and declared that he had a claim on the ground. That was a lie, but the panicked men didn’t want trouble. So they gave Comstock and his partner shares in the claim. This project became the famous Ophir Mine.

The silver rush was on! Prospectors, drifters, and ne’er-do-wells poured into the valley to work silver claims.

Grubby Prospectors Became Instant Millionaires

You probably already know one of those adventurers – a man by the name of Samuel Clemens, better known as Mark Twain. Twain found the mines of the Comstock Lode were a beehive of activity, and Virginia City was a festering den of scum and villainy.

Twain wrote:

“The country is fabulously rich in gold, silver, copper, lead, coal, iron, quicksilver, marble, granite, chalk, plaster of Paris (gypsum), thieves, murderers, desperadoes, ladies, children, lawyers, Christians, Indians, Chinamen, Spaniards, gamblers, sharpens; coyotes (pronounced ki-yo-ties), poets, preachers, and jackass rabbits. I overheard a gentleman say, the other day, that it was ‘the d—dest country under the sun,’ and that comprehensive conception I fully subscribe to.”

We like to think of Las Vegas as the original, 24-hour Sin City. But Virginia City claimed that title much earlier. In 1863, the number of arrests equaled one-third the town’s population of 30,000 people!

The wealth of the mines fueled Virginia City’s growth. Nearly overnight, grubby prospectors became instant millionaires. The boom extended to Wall Street, where stock speculators made fortunes from the Comstock boom.

The Comstock Lode hit peak production in 1877, producing more than $14 million of gold and $21 million of silver that year. But three years later, the mine was mostly played out.

As for the people who started the boom ...

• Henry Comstock took his profits from the Ophir Mine and opened a series of businesses, every one of which failed.  He committed suicide in 1870.
• Patrick McLaughlin, one of the original discoverers of the Comstock, sold his share for $3,000, lost that stake, worked a series of odd jobs and died a pauper.
• Peter O’Riley did better, holding on to his stake and finally selling for $50,000. He spent that fortune tunneling into the Sierras, certain he would find a richer claim than the Comstock. He lost everything, went insane, and died in an asylum.

Now, not everyone who dug for Comstock riches ended up broke. Some great American family fortunes were dug out of the mud in Virginia City.

•  James Graham Fair was a poor Irish immigrant who parlayed his Comstock fortune into a railroad empire and a U.S. Senate seat.
• John MacKay was another Irish immigrant and silver miner. At the time of his death he was worth $30 million.
• George Hearst made a fortune in Nevada, a fortune later parlayed into a publishing business by his son, William Randolph Hearst.

In fact, there were many people who did well in the Nevada boom and stayed rich. But many more made fortunes and lost it all. So this gives lessons we can all live by …

Don’t underestimate the potential of a great discovery. If McLaughlin and O’Riley had stood their ground and hung on to their blue-black mud, they could have given Thomas Comstock the bum’s rush.

Don’t expect every prospect to turn into a winner. Do your due diligence. No whims, tips, fantasies, or wheeling and dealing. Just good, solid research, and discipline.

You don’t have to be a miner to make a fortune. While a minority of prospectors became fabulously wealthy, many more stock investors made fortunes without ever seeing the inside of a mine. The same holds true today: You can build your wealth quite nicely by buying the right stocks.

Importantly, never think you know it all. I learn something new on every trip I make into mining country. I can’t wait to see what I learn this time.

Visiting Gold Projects in Nevada

Today, I'm going into a high-grade, underground gold mine.  This will be the third company I've visited in three days.

First, I visited a company that is developing a high-grade gold zone inside a halo of low-grade gold. It has to raise money, but it will have plenty of news to drive the stock higher, and the company has a lot of excellent drill cores that aren't incorporated into their mine plan or even released to the public yet. I could see buying this on a pullback. But I still have more research to do on that one.

Then I visited another company that is fast-tracking a million-ounce+ gold project for production (hopefully) to start in August 2014. 

Gold-bearing breccia at the surface.

The company has multiple projects, including this previously worked pit that has rock grading 0.75 grams per tonne gold.

That colored rock in the middle is the gold-bearing ore

The company has plenty of money, but it going to get loans from banks and equipment makers (Caterpillar) rather than burn through its cash. It's talking to banks about getting a loan at LIBOR +4%, and that shows you how highly everyone thinks of this company. The resource is open on all sides. It has multiple projects, including a joint venture with a large miner, and it can exercise an option to be carried for 25% on that JV.  I'll crunch the numbers when I get back to the office.

As for the mine that I'm visiting today -- it has a cut-off grade of 7 grams per tonnne, and it has visible gold in its veins.  I would like to wait for a pullback to buy this one because it just put out news. Again, I'll crunch the numbers when I get back to the office.

I'll check out two more mines later this week.

Giants in the Earth

Gold is down again this morning, as investors fear the Fed is going to taper its stimulus. Cue the gnashing of teeth.

I visited one project yesterday, and I'm leaving soon to visit another project, this time near scenic (?) Elko. And I'm going to another project tomorrow, and more projects through Friday.  I think Nevada is the happening place for mining, especially now that Mexico is talking about raising taxes on miners.

Driving through Nevada, it's amazing how empty of people this state is.  But there's still plenty of stuff here -- mineral stuff. It bubbled up millions of years ago, as the Pacific tectonic plate ground against the North American plate. Along with nearly ripping away California, it twisted, bent, and thrust the earth enough to push metallic deposits near the surface.

The grinding of those two plates along the fault lines dividing them also aggravated the "hot spots" of volcanic activity, which is why there are volcanic cones and caldera all over Nevada.

Do you know what volcanoes can bring bubbling up to the surface? Gold, silver, copper and other minerals.

These minerals were laid down millions of years ago. They were covered by more rock, and that rock has been eroded away over time. That's why early explorers found rich outcroppings of all sorts of metals.

Now we're on to the next round -- rich deposits that weren't visible on the surface. They're still there, though. Lots of them.

Driving through Nevada, you can see these huge upthrusts of rock lying all over the countryside, like sleeping giants. And it makes me realize how our ancestors could believe there were giants in the Earth.

And some of those giants are guarding some of the richest treasure troves imaginable.

For me, it's amazing how passionate people get about gold, both for and against. As I pointed out recently, there are plenty of other things you can invest in right now (solar ... oil services stocks ... Budweiser, etc).

In fact, I think the broad stock market still looks like it can go higher.

But I keep coming back to gold. For a couple reasons:  It's insurance against a corrupt financial system, the laws of supply and demand still apply, and many miners look dirt-cheap.  What's more, if current short-term trends hold, they may get cheaper.  That's fine by me.  I'l buy 'em cheap as long as the long-term trends hold.

Hey, let me share a chart with you. It's a chart (sort of) of global population density.

source

More people live INSIDE that circle than OUTSIDE of it.  You know what they generally have in common? A cultural affinity for gold. And now millions and millions of them are joining the middle class. Since a trend like that exists, I want to be on the right side of it.

The giants in the Earth are stirring my friend. They're slow to waken, but when they do, be on their good side. Good luck and good trades.