Santa Fe Gold Corporation
Revenue Snapshot for SFEG
$4 Million in Gold Sales to Date: Thus Far ~ $1 per share
$40 Million Revenues by Year End 2010 - $10 per share?
20 x Earnings of 50c per share would not be so far-fetched
And How much more if Gold even reaches $1,350 or higher
Buying Gold will preserve your buying power against inflation
Buying the right Gold stocks could make you spectacularly rich
Fed to print $1.45 Trillion in new money to purchase Mortgages
Unfortunately, we have reached one of those times in history where
Inflation is the only way out and many people will likely be wiped out
The only way to protect yourself against this nightmare is invest in Gold
Santa Fe Gold Corporation
Mission Statement 2004~2009
"I intend to redirect the mission of this company to include the acquisition of high quality
Gold, Silver and Copper projects that can generate significant cash flows for the future"
W. Pierce Carson PhD President and CEO
Santa Fe Gold Corporation
$5.9 BILLION & COUNTING...
WATCH US GROW!!!
Santa Fe Gold Corporation
company news image
A Mining & Exploration Company
6 World Class Projects: 5 Acquisitions Completed - 36 Potential Acquisition Targets and Counting...
First $4 Million in Gold sales delivered September 2009 in ramp up to full production!
Santa Fe Gold Corporation
A Unique Goldmining Value Opportunity...
How you can turn back the clock on investing in Gold & Silver
And why Santa Fe Gold represents potentially one of the most dynamic ways to leverage investments in Gold and conquer inflation in coming years
Published Worldwide 1200 EDT Friday September 11 2009 and updated © Global Financial Strategies All Rights Reserved Enquiries 1 956 451 6000
Not being invested in Gold, Silver and other hard assets, could be as dangerous as being long equities in fall of 2007, if Julian Robertson's latest warnings are to be taken as seriously as his previous impending recession call back then.
He believes as we do: Many Americans could be wiped out by inflation in the coming years, and a weaker US Dollar...
In one section below: Why Invest in Gold? We lay out the case for this scenario with some compelling comparisons as to what could occur, especially in light of examples we present immediately below to illustrate the kinds of extreme upside potential gains, that could once again begin to manifest themselves, in most undervalued Gold opportunities...
Actual Recent Takeover Examples
A few years ago, as Gold was nearing some $700 per oz, one Goldminer with an estimated resource of up to 10 Million ounces was bought out for US$1.5 Billion Dollars predicating an in-ground resource value of $150 per ounce of Gold.
How good a deal did that buyer make? Remains to be seen as this resource is unlikely to be developed for years as its location near to the Arctic Circle is so remote, it can only be reached by plane even today. Still the fact that Gold is now $300 more valuable, would tend to imply that the value of this transaction has increased by US$3 Billion: Impressive enough and theoretically means if Gold continues to rise, in-ground valuations could in time rise as high as $450 pr oz.
Around the same time another Goldminer was bought out at 123 X Earnings for US$10 Billion - That also was $300 ago and begs the same question: How good a deal, did those buyers make? Even though they paid almost a previously unheard of premium: At today's prices, they probably stand to do well and of course, if Gold goes higher, even better. Another company paid just as dearly, buying a foreign based Gold Exploration Company with little more than a million oz in real proven reserves for $500 Million, highlighting the current significant disconnect in valuations today that have all the potential to catch up relatively rapidly to even higher premiums, in a new world of $1000+ Gold.
The Inflation Argument
Why are we recounting all this to you? We are research analysts and students of history: The extent to which you might view whatever potentially beneficial information you deem useful or helpful to be found herein just might cause you to rethink your status quo, or current investment posture, because, in the same way, few saw the Crash of 2008 coming, so too many may be tempted to dismiss the inflation argument as much ado about nothing. And something the US is immune to, unlike emerging nations who have been inflation prone in the past. Firstly... The once almighty Dollar has no divine right to remain so, and Second: Regrettably, the US is starting to act dangerously similarly to or emulate the behavior of third World countries past, that became victims of hyper-inflation, that took decades to be rid of and get their economies and currencies under control. And even though some of these countries have in a manner of speaking been re-born economically, they lost two decades and the majority of their citizens were financially wiped out... So we are trying to bring a different perspective to our readers, clients and subscribers trying to find the best ways to defend against this impending menace, so that they may benefit from it rather than be destroyed by it and so, we intend to be as fully invested as possible in the most outstandingly opportunistic Gold and Silver mining stocks we can find that stand to gain the utmost from what may be coming in a potential parabolic upmove in Gold and Silver that in time may well become the stuff of Wall St legend, not unlike that of almost exactly thirty years ago. And we strongly believe that with Gold's next breakout over $1,020 per oz, it is imperative to be fully invested ahead of time, before the next big move, as upside breakouts such as this, can often accelerate higher with such speed and intensity, it can become difficult or impossible to buy at the discounted prices that are still available today, before investment premiums for Gold stocks could explode higher, just as they did 30 years ago and more recently 10 years ago as Internet Technology stocks went through the roof and how the whole World is now waking up to Gold again...
The Impending Power of New Highs
Whether you learned this yourself or read about it from the best of the best in Wall Street Wizards or in countless other forms of media, the most powerful condition in any market, is one that is making new all time record highs and we can attest to thousands of examples of our recommendations over the past three decades, that bear this out time and time again. The closest analogy to the current potentially unfolding situation in Gold might best be exemplified by the Dow Jones Industrial Average held back below 1,000 and then finally breaking through and eventually rising by a stunning 1,400% to its all time high in 2007 that took just over 25 years. As we point out later on in this missive, we believe Gold is emulating the Dow by a 19.7 year time lapse and has been rising percent for percent over that time in a remarkably similar fashion. We also believe very strongly that the breakout in Gold over $500 mid-decade after being held back for 20 years was similar to the Dow breaking out over 1,000 and the closest analogy to Gold's current scenario, may well be that of Platinum a few years ago, that spent some 20 months consolidating and building value under $1,000 per oz, right ahead of a huge rapid and powerful surge to around $2,200 per ounce and Gold having been held back below $1,000 now for almost exactly the same amount of time, is finally breaking out to the upside.
We're not quite there yet, but the importance of such a development leading towards potential new all time highs in Gold, should not be dismissed in any way, shape or form as being inconsequential as the exact opposite may not only more likely be the case, but the opportunity provided by the knowledge of what Platinum already did is too compelling for any words, so this is a time when investment in Gold is almost mandatory, because of the uncertainty of not just the US Dollar, but all the World's currencies could be in jeopardy, that is supported by the views expressed below in excerpts of a report from Uncommon Wisdom that we feel is worth publishing here, as it really rams home the point about Gold and why, even though it may not always be readily apparent, Gold's buying power has withstood the test of time against almost every other asset class out there and moreover, by investing in the kinds of Gold stocks we have, we have far outperformed virtually all other assets over the past 10 years as we began moving into Gold stocks in the fall of 1999...
Why invest in Gold?
At various times throughout history, certain countries of the World or the World at large have faced extended periods of high inflation or hyper-inflation. Unfortunately, all the signs are pointing towards we're entering one of those times.
Perhaps the most recent best example of why one should invest in Gold as a hedge against such times and inflation or even hyper-inflation, can be take from the extreme case of Zimbabwe, whose currency has become completely valueless, several times over such that $10 Billion in new, new Zimbabwean Dollars still won't buy you a loaf of bread.
A much more relevant to the US and up to the moment example is what actually has occurred in Mexico since 1992, when following a few years of stability and an emerging boom following The Crash of '87 after its first round of hyper-inflation, Mexico removed three zeros from its currency a second time, so that its new value was just about two New Pesos to one US Dollar in 1992... And, since one ounce of Gold cost around $340 in Dollars or $700 in Pesos in 1992, just three years later, at the nadir of Mexico's second great crash and this time a crash of similar proportions and for similar reasons as the US in 2008 that sent Mexican Banks reeling and money market rates soaring in a desperate bid to support the Peso which got divided by three over a matter of weeks and at one point in March 1995 hit 14 Pesos to the US Dollar by which time the price of Gold in Pesos had already soared from P$700 to P$5,250 a 7.5 fold increase...
More recently, as Gold has risen against most all other currencies and especially the US Dollar on the back of its own crisis, Mexico's troubles worsened earlier this year as the Peso plummeted to new all time lows of almost 16 to 1 USD, essentially setting a new all time high for Gold prices in Mexican Pesos north of $P15,500 pesos per ounce. It is very important to realize the symptoms of Mexico's 1995 demise are scarily similar, to those that have recently befallen the US. Only this time there is no-one but the Fed to bail out the US Banks, unlike Mexico's banks that today, are almost all wholly owned foreign subsidiaries, that in the US would be akin to the Bank of China or HSBC owning Citbank or Bank of America. The important lessons to be drawn from all this is that it took years for the Mexican Banking system to be re-liquified, restructured and reorganized. Second, Gold is still making new highs in Mexican Pesos 14 years on.
This is a scenario that does not bode well for the future of the US since its problems dwarf those of Mexico today and are likely to continue this way for years or decades to come. Mexico has experienced a 22 fold increase in Gold over just 14 years and the long term outlook for Gold prices in the US, look set to repeat the 1970's syndrome, except this time around, the inflationary cycle could last for 25 years, rather than the average of 15: And resources are also being depleted, further adding to the potential for even more dramatic price moves than might have occurred in times past...
Nonetheless, Mexico has already experienced a 22 fold increase in Gold and our projection for a 25 fold increase from the lows at the turn of the Millennium portend a fairly significant and potentially very powerful price rise by 2015 to somewhere between $5,610 and $6,398 or even more.. Depending upon just how much more stimulus is needed...
So, in simple terms, in an inflationary environment you have to buy Gold to protect against inflation and preserve your buying power. And, in an accelerating inflationary cycle as looks like the one we now face, it becomes almost incumbent upon savvy investors almost to the point of being mandatory or their manifest destiny to buy Gold just to stay ahead of the inflationary curve. For the past 30 years, we have experienced a so called dis-inflationary environment, but this belies the fact that throughout this period, inflation even though relatively low or masked by Government manipulation, has never-the-less been constant and cumulative and has continued to eat away at the value of the US Dollar, such that almost everything has already increased quite drastically in price. That's the reality of it all and the relatively good news part of the story. The bad news is, we are in the process of transitioning into a much more observable inflationary environment, where the rate of inflation could move from a steady rate, to a much higher accelerating rate, rising and compounding faster and faster that perhaps could average between 4% ~ 7% per year and could likely continue to accelerate into double digits, something that could continue for years or even decades, and if by historical measures we are only just entering what might not yet even be the third innings of a nine innings game.... The the worst is yet to come and it could get really bad, not unlike Brazil and Mexico in the 1980's and 1990's, when they removed three zeros from those currencies, not once, but twice, wiping out people's entire savings in the process, affecting all kinds of vital things like life insurance policies and every other form of cash denominated savings and benefits that became worthless, virtually overnight. Inflation is an insidious destroyer of monetary purchasing power that can take years if not decades to almost invisibly build and yet it's a demonstrably proven fact, that even though they keep telling us that inflation is under control or non-existent, the US Dollar today is worth only 20% of a 1970's US Dollar... And are you ready for this? The intrinsic value of Gold today already equates to something in the realm of $3,450 per oz. At times when this has occurred in times past, the Gold price has not only caught up with its intrinsic value, it has usually surpassed it by almost double, which happens to coincide with our forecast of a $6,398 Gold price a few years hence. Most people look at that number and probably laugh and say never going to happen, but it already happened before on exactly the same scale that began 45 years ago when following the dis-inflationary period of the 1950's to 1965, inflation began building and accelerating higher, cumulating in a double-digit 14% annual rate by 1980 and even though it took a long time for Gold's energy to unleash its full power, Gold rose from $35 to $875 in little over just 15 years, a 25 fold increase and Silver rose 50 fold...
Factoring in the exact same multiples, taking this cycles low in Gold at 255.92 a 25 fold increase should put Gold at $6,398 and Silver at $150 per oz using its 50 times multiple, only this time, the inflationary cycle could be much longer and with 7 Billion inhabitants, Global resources could become a lot more scarce and inflation could be much higher...
We have laid out the case here for what anywhere from steady prices around $1,000 per ounce to modest increases in Gold and Silver prices could do for one particular stock, let alone what a six fold increase in Gold or 12 fold in Silver...
According to Legendary Hedge Fund Manager Julian Robertson of Tiger Management, who predicted a doosie of a recession, one week after the Dow Jones hit new all time record highs in October 2007, issued another dire warning September 23 2009: "Americans could be wiped out by inflation in the years ahead" You have to protect yourself with Gold and potentially the most dynamic way to leverage Gold purchases for maximum gains, is through Gold stocks...
He adds: "We're borrowing unprecedented amounts of money we can never pay back and that means that in time it will devalue our currency tremendously and there's some risk of hyper-inflation because of this". Some reasons why:
First, the economy, in real terms, in real dollars before the dollar lost more than 30 percent of its value over the last several years - actually peaked in late 1999 and has been declining ever since. This makes most everything up to 30% more expensive.
Second, the stock market has ALSO been in a bear market for 10 years in real terms, in terms of "gold," precisely paralleling the underlying economy, which unfortunately has been in an accelerating decline as defined by the capacity utilization of the nations factories & output...
Dow in terms of gold.
Third, for the economy to get back to its 1999 high in terms of the same money we had then — the same dollars with the same purchasing power that they had then - the economy's GDP would have to nearly QUADRUPLE, which is almost impossible.
The stock market — to make new highs in terms of real purchasing power — would also have to more than QUADRUPLE and cannot even begin to do this, unless the Dollar weakens dramatically and exports were to soar...
The reason for all this: There is now a bigger discrepancy between "nominal" values, the numbers and figures bandied about in Washington and in the media, and "real" values, what they are worth in terms of a money medium that retains its purchasing power (gold) — than ever before.
So what you see and what it's truly worth — or will be worth in the future can often be completely different and very, delusional and deceptive, just as the stock market appeared to rise from 2003 ~ 2007, the appearance of the recovery today, could be equally deceptive as the decline in the US Dollar is supporting that illusion to some extent similarly as it did earlier in the decade, the difference this time is, we are burdened with massive amounts of debt and profound headwinds that could stall any recovery to the point that more and more stimulus will not only be needed, but in all likelihood will have to continue to be applied, enhanced or expanded, especially to fulfill political ambitions in the two upcoming elections at whatever the cost, as this is the do or die mission of the current administration who are out to win, no matter what the consequences, which we believe will begin to be manifestly felt, in $6,000 + Gold prices soon.
And as was commented on Bloomberg recently by one noted analyst and inflation watcher: Right now Gold is rising, mainly because of a weaker US Dollar and right now there is still the time to invest in light of this while values are still reasonable: But just wait until Gold begins rising because of inflation or hyper-inflation and it will be too late: Values will absolutely have gone through the roof and will no longer be attractive or competitive options for investment as they still are today, but may not be for much longer, depending upon how rapidly these emerging conditions unfold...
This may be hard concept to grasp, but take a look at the data below and realize just how much Gold has risen over just 77 years.
Reason: Anyone failing to understand the critical difference between nominal and real values, is doomed to seeing his or her savings essentially wiped out in the years ahead. And that means even more so, than the destruction that's already been caused by the advent of and ongoing financial chaos.
Consider these ideas in light of the following quotes from two well-known, well-respected thinkers who fully understood this concept
"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."
— Ernest Hemingway, September 1932
"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose."
— John Maynard Keynes, 1920
Pay special attention to Keynes' statement: Not only is he 100 percent right, but most politicians today subscribe to Keynesian economics, making this perhaps one of the most dangerous times for your money, ever.
It's also why gold is pushing up well above $1,000 an ounce, and preparing for its longer-term blast-off to well over $2,000 oz even though we may get small pullbacks along the way they should be considered as last chance buying opportunities, mainly because...
Since the depths of the Great Depression in 1932 (when Keynesian economics really took hold in Washington) ...
Home prices are rising fast in Bangkok's Sukhumvit Road area.
arrow The dollar has lost 98 percent of its purchasing power ...
arrow But gold has soared in value by more than 4,300 percent.
Put simply, $100,000 of cash in 1932 is now worth merely $2,000 in purchasing power on an inflation adjusted basis and the buying power of the US Dollar has lost 80% of its value since the early 70's with Gold rising 2,800% since then...
... while $100,000 worth of gold bought in 1932 is now worth $4,449,313!
Bottom line: Understanding how to protect and grow your wealth in an age of fiat currencies — money whose value can be manipulated at will by those in power — is more important than ever before because ...
A. The dollar continues its decline, having just made a new 12-month low last week and is now also dangerously close to plunging to new record lows.
B. Fed Chief Ben Bernanke tipping you off — with deafening silence — to his actual policy of letting the dollar be devalued to inflate away the financial crisis.
C. Cries for a new world currency have become louder and louder amongst our creditors and is undoubtedly on the "agenda" at the upcoming G-7 and G-20 meetings ...
Our view: You are witnessing a momentous time in history, where the values of money itself is actually changing before our eyes...
So while Gold is has been a phenomenal investment as indicated by the above charts, what if you could A: Effectively turn back the clock on Gold to some extent, finding a Gold stock that could perhaps be anywhere from five to ten times undervalued? That would be like buying Gold a decade ago or longer and B: How much more hugely appealing would that same stock be, if it actually had the potential to actually rise an additional tenfold or more simply because of its unique attributes and upside leverage potential, that perhaps most other Gold stock may not be able to emulate in the ways that appear to make Santa Fe Gold such an intensely compelling investment opportunity at this time...
Why Invest in Santa Fe?
As the headline banner dictates: The main reason for choosing emerging Gold stocks, especially those that are just at the start of their production life, means that they usually offer a highly leveraged low-risk counter against inflation and because of that, they tend to rise much more rapidly than Gold itself, often at a rate of better than two to one and in the case of a company such as Santa Fe, as a result of its current low price opportunity, that rate of increase could be more like 10 to 1 over the coming year with expected rapid growth in production rates and the added elixir of potential exponential upside in Gold and Silver prices, meaning that Santa Fe valued at a lowly $1 per share today, really could actually be earning $1 per share a year or two from now and that could translate to $1 per share at 20 X Earnings that is considered to be the benchmark norm for valuations, that would even be conservative for many rapidly growing entities, and that could theoretically mean: Santa Fe Gold could rise to $20 or more, should any such numbers be achieved... And as you will read later on: If these numbers seem high to you right now, you cannot even begin to fathom what a $2,000 Gold price might do to SFEG's earnings and reserves, let alone the prospect of $6,400 Gold...
Santa Fe's Upside Leverage Potential
What It Could Mean For You?
Our record for finding great value in stocks and markets over the past few decades is already well documented and we see extraordinary value in Santa Fe, in light of the above, so in our efforts to share this with our investing associates, we are trying to open investor's eyes to the immense value we see today in Santa Fe, but more importantly, we want to impart to our readers and open up their minds as to just how highly leveraged Santa Fe might become to the potential of sharply rising Gold and Silver prices: The "triple whammy" of rising in-ground reserve values, increasing production and potential to increase both reserves and production further, through new discoveries or acquisitions, renders Santa Fe an extremely attractive investment candidate versus many of its peers because of its current extreme undervaluedness, combined with its ability to become significantly more valuable, exceedingly rapidly, both through organic as well as acquisitive growth with the added upside of, an enviable treasure trove of 36 potential acquisitions to choose from, six World class properties, with additional recently acquired highly prospective patents and claims all of which appear to have superb upside exploration potential, that clearly hold multi-million ounce discovery promise, putting Santa Fe on a somewhat of a unique pedestal of sorts compared to many of its peers. And though it has been time consuming to accomplish all of this, the significant rewards and ultimate payoff for Santa Fe's acquisitions and groundwork for real growth could come anywhere from an exponential rise in its stock price, or ultimately by takeover.
This is not the first time we have stuck our necks out and made major calls ahead of time, we do it all the time and in the past some of our calls have amazed even ourselves and many of you have experienced these calls first hand, especially over 2009, where we have been unequivocally bullish since March 6, at 3.25 PM EDT at which time we sent out a special alert advising to cover all short positions believing we started an 8 year bull market in stocks on that date. So far so good, but that doesn't mean we won't change our minds if the market conditions so dictate, we have in the past and we will endeavor to in the future. Because of this flexibility we've developed over the years have years we have made, in many cases what have turned out to be exceptionally accurate market timing calls and at some in the recent time past, when you responded to us, we have written various special reports and responded to you, as we are doing now, in what we consider to be a very special report of consequence, and regardless or whatever reputation we have gained for our precise daily or strategic commentary on Wall Street, Gold or other markets, to the more tactical market calls we make both inter-day and intra-day, we see Santa Fe as one unique standout situation that as a long term investment candidate is hard to beat at this time, in terms of major upside leverage. In spite of these difficult times, our investors have received uncommon guidance from this source all decade with an unusual knack for picking winners, with potential creation of numerous millionaires over these past few years.
What is the particular relevance of the above information? if you didn't know this was Santa Fe... What if, we told you about a relatively unknown Gold mining and exploration company that in light of the above major mining takeovers, would immediately be seen as being at least 10 times undervalued based on the significant amount of Gold reserves the company has managed to acquire over the past 5 years and yet in addition has all the potential in the World, to over a relatively short time frame, either discover, prove up or acquire what could become up to 10 Million ounces in total or more, in newly discovered, additional or acquired reserves of Gold. And what if, that company was selling at recent averages of $1 per share today and yet at valuations of those takeovers 3 years ago, would potentially value this company today at $18.75 per share, and that was $300 ago and thus today, with an already acquired almost 5.8 Million ounces, they could actually already be sitting on 10 Million ounces or more in reserves that stand to be proven-up in the near future, that by some estimates, could be 10 - 15 Million ounces. So, Santa Fe Gold could be a very highly leveraged way to invest in Gold in this current positively evolving marketplace for Gold that appears to have substantial upside potential over the rest of this year and beyond...
Therefore as a consequence of the enormity of groundwork that has been laid over the past few years, in combination with rising values of in-ground reserves from Gold, Silver and Copper growth, along with increasing production and cash-flow, most probably means anyone buying a million shares of Santa Fe today stands to make millions over the months and years ahead, the strongly supportive evidence of which, we have endeavored to lay out for you here, in this following special report, dissertation and thesis on the case for Santa Fe Gold's potential, to outperform its peers.
SFEG: Turning Dynamically Bullish?
Almost exactly two years ago to the day: Santa Fe Gold was beaten down undeservedly by a rogue seller... Tough luck on him. As is often the case when the fundamentals are overwhelmingly positive, sellers tend to get punished because as soon as he was done... In short order, SFEG proceeded to rally 400% off its lows in less than four months and we were among the biggest buyers of Santa Fe right at those lows, leaving no-one in any doubt as to our bullish views back then. And today our message is the same except this time we believe SFEG could turn dynamically bullish, in fact we now believe very strongly, that Santa Fe Gold, SFEG could do another deja vu repeat performance and potentially run up as much as another 400% over the coming months right into the end or the year, or first quarter of 2010... Why?
Because firstly they'll be working up to full production within just a few months and secondly since stocks and indices tend to run a two year cycle, that could indicate that the recent pullback in Santa Fe from its explosive up-move earlier this year, could be coming to a close soon... Marking its two year anniversary with another spectacular up-move right ahead: Only this time Santa Fe will be a bona fide Gold producer with one highly regarded analyst's strong speculative buy rating... And a $3 initial price target. The current pullback in Santa Fe appears to be partly due to another rogue seller that emerged over recent months and just as a similar such occurrence, provided the outstanding opportunity to buy Santa Fe at a steeply discounted price two years ago... We feel the very same phenomenon is creating an even better opportunity today that in some ways, is like "Turning Back The Clock On Gold"... As even though some Gold stocks have already advanced dramatically, the fact that Santa Fe has been held back, is actually creating another probable and likely excellent entry point for new buyers of SFEG at a discount, except this time directly ahead of what is more than likely to be the inevitable news that contracts for Gold production could be imminent and clearance for additional Gold mining and processing is tantalizingly near or about to begin. And the reason why Santa Fe could turn dynamically bullish this time, and break out to what could go well beyond new all time highs, is because of what we expect will become extremely powerful drivers that investors at this time, cannot easily foresee, or really feel: But they will as soon, as SFEG begins to deliver increasingly solid and consistent "Accelerated Revenue Growth" from several income streams, that in time, could add up to as much as One Million Dollars per week... Along with what are expected to be exceptionally high margins, that could even be upwards of the seventy percentile and might actually increase if Gold prices continue strongly higher, as Santa Fe's costs will effectively be fixed and thus SFEG's earnings multiples could skyrocket in time, as it earns an increasing premium and incorporates production efficiencies in much the same way as Placer Dome PDG did, when it was bought out at 123 times earnings a few years and a huge $300 ago in Gold and what that means to the uninitiated is: In the best of all Worlds an exceedingly high Gold price could mean that any Gold company earning a Dollar per share with sufficiently high margins could potentially be valued at $123 per share...
And before you say: Yeah right. Not in your wildest dreams: We've seen this happen before... Back in October 2002, Tesoro Corporation TSO got beaten down to close to $1, right before it soared to $130 over the next 5 years... Shows just what is possible: Our reputation for finding moves of this magnitude well documented and proven over decades. TSO split 2 for 1 around the time of its all time high price of $131.82, $65.91 today, near enough to where: We not only recommended selling out of, but also sell short, on our advisory service, along with most all other issues later in 2007.
To learn more about the Santa Fe Gold story and its immediate prospects and why we're maintaining our $3 ~ $9 price range objective for this year, we invite you to follow our step by step explanation of forthcoming events and how these and the underlying value of Santa Fe could factor in to substantially increasing share price values in the years ahead...
Firstly: What will likely be the driving force for Santa Fe's potential meteoric rise over the next few weeks? Should be easy enough to answer. Over the past six months, Santa Fe has been mining and stockpiling up to twenty thousand tons of ore in anticipation of receiving its final clearance for full production and processing of Gold and Silver to begin, and we're confident of a very significant upside move of as much as 80% because that's exactly what happened in the case of another mining company over the past few weeks, immediately upon gaining its permit to begin production. However, we see this as just the opening salvo in what is likely to be a sustained uptrend for some time to come as the company increases production and subsequent earnings, potentially earning at least $0.30 per share, before too long and that would put a conservative valuation on the stock at around $6 per share, which in fact is our initial target price.
This is not an unreasonable price objective given the following conditions at Gold prices approaching all time highs at $1,000 per ounce and keep in mind forward sales could actually be made at $1,100 Dollars per ounce over recent days, recording the second highest future contract prices ever paid for Gold and recording new all time contract highs also.
At anticipated initial output from the Summit mine, we expect production of some 60 oz of Gold and 4,000 oz of Silver per day, thus implying gross revenues of around $125,000 per day at current prices and approaching $625,000 weekly.
According to the company, higher grades have not only been found, but some exceptionally high grades have already been reported and we don't disagree. A survey of drilling in the Lordsburg area has revealed grades of 0.2 oz per ton and up to 8,000 oz per ton of Silver and these grades were found by another company at the perimeter of the Summit...
And that's not all... We recently learned that an old timer with 65 years experience in the mining industry and intimate knowledge of the Lordsburg area, has been accumulating over some time, a very substantial position in Santa Fe and when asked why he was so bullish on SFEG, reportedly replied: "When people figure out how much Silver there really is in the Summit Mine and how much larger it could potentially be with a much longer mine life, SFEG will be over $10."
That could potentially increase output to 80 oz of Gold and 8,000 oz of Silver daily and raise revenues to upwards of $210,000 or more than $1 Million per week and that's not all... Production could potentially be increased further in time, or perhaps sooner than many may expect, as Santa Fe may be able to increase and accelerate production well beyond the initial output by as much as 50 - 100% or more, depending upon how much additional ore the smelters can handle, taking their crushed ore and Silica Flux and leaving Santa Fe with a nice payout for the contained metals therein, which might contain Copper and potentially a few other rare metals that may be derived. This will have a truly electrifying effect on Santa Fe's revenues and net earnings and will likely impact its share price significantly and add to the leverage potential Santa Fe already holds. The way it looks to us, is even without the additional output from the smelters, earnings could potentially increase to as much as 45 to 50 cents per share, if some production efficiencies are achieved along with the hidden upside that any expected grade improvements might well deliver, and that could potentially raise Santa Fe's target price to more in the region of $9 - $10 per share, nearer the higher end of our range, not including the increased reserve values of the Ortiz, Virginia Mining District and Pilar, along with the Mica and MIO...
However, in a more perfect World we foresee later this year, at $1,300 Gold and $25+ Silver, Santa Fe's revenues could explode to upwards of a quarter of a million dollars per day or potentially more than 1.25 Million per week, such that at any higher prices with increased output and cost efficiencies, Santa Fe could be approaching 75-80 cents per share...
This could be without the additional ore being sent to the smelters and whatever extra that would produce in fact we're betting that it could add as much as another 20-25 cents per share, potentially bringing the total closer to $1 per share.
In the event of a doubling of Gold and Silver prices from current levels, the outlook could be raised for Santa Fe to in time earn over $1 per share, again, based on initial production, without the addition of smelter ore, which potentially should put Santa Fe earnings over the top and at a conservative 20 X Price to Earnings ratio, sending SFEG's price all the way to $20 per share at which point, with accelerated earnings growth and the market place willing to award higher multiples, one begins to ponder the possibility of what SFEG might be worth at 40-60 times earnings, as we suspect a number of Gold producers could trade at, as some already are today and even shoot towards such earnings extremes as 123 X Earnings. We'll let you do the math on that one, but in a raging bull market as could unfold with Gold, you cannot discount the possibilities of such occurrences ever... Keep in mind, back in 1979 - 1980, some of the most sought after emerging mining companies actually soared to as much as $500 per share or more in a massive buying frenzy that gripped the World at that time... Something that simply cannot be ruled out in the months and years ahead.
Turning Back The Clock On Gold & Silver
The current opportunity in Gold and Silver is potentially indeed historic, but you don't have to dive in at $1,000 per oz if you don't already own Gold. If you buy a company 5 to 10 times undervalued, it's really like buying Gold decades ago...
But the potential to run to 21st Century prices is no fantasy... Actually, in what we believe was initial ground-breaking by Investment Intelligence several years ago, we were among the very first to identify an uncanny similarity to the Dow Jones of nearly 28 years ago with Gold back in 2001. In fact if you overlay the two Gold chart bottoms of 1999 and 2001 over the same chart low points of the Dow Jones of 1980 and 1982, the similarities are not only striking, Gold has been following in the Dow's footsteps almost percent for percent over the past 10 years and that has extremely significant implications for where we are right now, because we are potentially almost exactly on top of the exact same date... January 16 1991 when the Dow had its biggest opening gap move in history that was followed by the very largest and strongest bull market buying stampedes of all time that actually lasted more than six weeks in an absolute frenzy:
When Markets Become "Over-Clocked"
Just as similar buying frenzy sent Internet stocks popping like champagne corks at the start of the Internet Bull move: That was an over-clocked market back then and we think Gold and Silver have the potential to become over-clocked in the short to medium term, initially over the next few months and then to a larger extent over the next few years. We are already on record as having called World markets "over-clocked" at times this year, especially recently as some of the most beaten down names like BAC, C, AIG, FRE, FNM, VG, ABK and RDN most of which we caught in their entirety on our live real-time advisory service having recommended them almost from their exact lows back in early March 2009.
Although the bull market of 2009 has spanned a much longer time frame, its potential to continue higher and actually drive Gold and Silver substantially higher cannot be ruled out, the overwhelming amount of monetary stimulus has the power to result in such an extreme: Just as the ignition and lift-off of the 1990's Bull Market created an unprecedented buying stamped at that time, we earnestly believe the exact same sort of frenzied buying stampede may be about to happen to Gold and Silver and especially Gold and Silver mining stocks, particularly those that are close to production or are already producing and we expect the most undervalued companies to lead to the greatest gains in an effort to catch up to their more fundamental true enterprise valuations: And the ignition and liftoff may have already begun last week as many of the largest Gold stocks gained 15% ~ 20% or more, but fortunately for you, emerging Gold companies often delay their liftoff for a few days and Santa Fe Gold SFEG was part of this not unexpected hold-back...
"The Trillion Dollar Killing"
Given how strong and broad the early part of this Gold and Silver rally in stocks was and how stealthy and sudden the actual underlying price rise was in the metals, it augers very well for what we believe could soon evolve into a very fast rally and exceedingly powerful rally that could initially take Gold to $1,100 to $1,150 fairly fast possibly even before the end of September to mid-October followed by a relatively brief pullback, after which Gold could be $1,300+ by year end and Silver could steal the show running to $25 or more but if Gold soars towards $1,785 Silver could reach $50 oz and that would definitely have Santa Fe earning well in excess of $1 per share, so it really could happen for this issue... This will effectively become the "Trillion Dollar Killing" for all those patiently deserving holders of Gold and Gold related instruments and equities, untold fortunes stand to be made in the coming years as the biggest bull market of our time, perhaps of all times, begins to unfold with "increasing intensity": The last time we used those words was just as stocks and Gold were lifting off their lows of July 12 and is something we tend to re-iterate when markets turn dynamically bullish, as Gold and Silver may well be starting to exhibit the unmistakable signs of an unfolding melt-up:
"It's The Money Stupid"
Most people don't understand why the market has risen so strongly off its lows earlier this year, against a backdrop of the worst economy of our lifetimes. And now they are just as puzzled as to why Gold and Silver have so suddenly and deliberately broken out to the upside, when just a few weeks ago, most Gold bugs were throwing in the towel at $930...
But not us, just as we went to maximum position on all stocks, ETF's and Futures on our real-time advisory precisely at 3.25 PM on March 6, 2009 and turned super-bullish just a few days later on air, declaring: "Never been more bullish ever", we think we are beginning to understand implicitly, how a similar phenomenon may be about to have an equally big impact on Gold and Silver prices, even in a so called disinflationary environment: It's the money stupid... In fact we believe we may have been the first to coin this neat phrase, that could become the epitath of 2009... As "The year of the stimulus". And that's the whole point... For some time now, we have been predicting the coming of another extreme phenomenon, we also coined and trademarked, just as we've done with: "It's the money stupid" and our long favorite "The Trillion Dollar Killing" which is partly what smart investors will make out of Gold and Silver, but also means that investors in US Treasury Bonds could lose big in the coming years as interest rates are forced higher and bonds sink!
The real reasons Gold and Silver are going up today, is because in just the exact same way the stock market correctly foresaw the first signs of recovery back in early March 2009, at the worst point or nadir of the economy in 77 years, is one of the reasons why we turned super-bullish. Our recent mega-bullish calls on Gold, predicting several months ahead of time a powerful upmove would likely occur in late August through September and pinpointing almost a week ahead of time that "Gold would be over 1,000 the day past Labor Day", has turned out to be right on the money and that's the whole point of it... It is the money stupid that is beginning to create this monster move of what could become a potentially "out of control move to the upside" that the Fed cannot do anything about anytime soon... It's baked in the cake and even if they were to raise rates and the imminent likelihood of that is slim to none as they continue to lose 200,000 jobs per month, they have no choice they have to help the recovery gain traction... As we've been saying all year: It's pedal to the metal at the Fed and even if the do raise rates at some point, it will be akin to throwing gasoline on the inflationary fire and just as occurred almost exactly 30 years ago, it will only make things worse. There is no way out... The money multiplier is already out of control and as Gold hits new yearly highs almost everyone who has ever bought Gold is now making money and that is a money multiplier and super-powerful elixir in of itself and is going to create enormous wealth for all the patient holders of Gold over the last 10 years or so, in their Trillion Dollar Killing...
Just as stocks saw recovery ahead in early March and even though we can't see it yet or feel it... Gold and Silver are seeing inflation ahead and possibly even a hyper-inflation of sorts because of the totally immense amount of stimulus that has already been applied with more to come, potentially as much as $24 Trillion Worldwide, but is also because of that hidden multiplier effect that is creeping up on us every day... Already tens of Trillions in increased stock values helping to reliquefy economies and as lending increases over time and it will, the multiplier effect could reach $100 Trillion plus and as we have been saying all year, this Fed has already done more than all other Feds combined and by maintaining rates at near zero and continuing all the stimulus measures in place, the market has become over-clocked and that is now beginning to flow into Precious Metals in the very early stages of what could become a truly awesome up-move of astronomical proportions, that could continue to feed on itself not unlike what occurred almost exactly thirty years ago and its worth remembering that at this stage of the year, there was still 300% upside in Gold and 500% up in Silver left to run. To be perfectly honest, if we got anything close to 10% of that, ie 30% in Gold and 50% in Silver would be sweet but anything beyond that would have to be icing on the cake for holders of Santa Fe. We have been waiting for a long time for to see this move unfold, so with all this promise in mind, we re-iterate again, our bullish call.
We could just as easily repeat what we said on air just as Gold was lifting off last week: "Never been more bullish ever", but we've been echoing that refrain increasingly strongly on Gold and Silver at each major low of the past 10 years and in particular back in March 2005, the mid-2006 lows, the August 16 lows of 2007 ahead of a $400 rise and again last fall and as readers of our reports have noted most of this year, we called the lows of the year in April and May as well as the highs and in the interim and again called recent lows weeks ahead of time, expectant of major mid-July and mid-August lows, which came in right on track and we now expect an acceleration to the upside as the mother of all 3rd waves to the upside begins to unfold with breathtaking effect... But naturally for that to really happen in earnest we need to break through the upside resistance on Gold between $1005 and $1015, but given how easy it's been for Gold to run up over $1,000 thus far, taking most investors by surprise, we still think the surprises are on the upside for Gold and in true third wave style a considerable acceleration to the upside could await us in the near future.
The Discipline to "Stay Invested"
What we've tried to communicate in the various paragraphs above, is a sense of foreboding that something really big and potentially momentous, could be brewing for Gold and Silver and unlike a few years ago, when talk of $2,000 Gold was met with scorn and ridicule, that is no longer the case. In fact talk of Gold's potential to move thousands of Dollars higher is now commonplace and Investment Banks and Brokerages are raising their outlooks and upgrading Golden names, so as we've done here, you have to maintain the discipline to "Stay Invested" we believe is critical to success, ultimately because as we have tried to point out, the leverage provided by significantly higher Gold prices to emerging companies about to begin production, is almost without equal and provides the perfect opportunity to compete with the kind of leverage provided by futures, without the attendant risk. And in some ways could provide similar results, or even exceed those of futures. Just consider some of those amazing stocks that rose hundreds of Dollars per share back in 1979 - 1980, far performing futures. Those who sold way too early back then, were lamenting their mistakes for years having missed out on the move of a lifetime, but one individual we know of held all the way to the all time highs, deftly managing to turn $20,000 apiece for a group of 15 investors, into $1.6 Million back then... An 80 fold return over a relatively short time frame of just a few years: Something that is equally possible today for one company with an hefty acquisition chest, that could discover, prove up or acquire an additional 10 million or more ounces of Gold over the next year to 18 months, renders Santa Fe Gold, a highly promising and somewhat unique candidate for investment. It's never easy holding on through thick and thin, especially dealing with the occasional rogue seller that can drive stocks down periodically, but when the fundamental are as solid and strongly improving as in the case of SFEG, in due time, this issue has rebounded resiliently and its overall structure not only remains exceedingly bullish, anytime a company enjoys record breaking advances, following a consolidation new advances often unfold with equal energy and upside.
At the end of the day, its the fundamentals that matter and Santa Fe's fundamentals remain exceptionally strong and it anything appear poised to improve even further as the rate of Gold and Silver production increases, and the pace of exploration and acquisitions are likely to continue to increase. Buying into stocks and having the discipline to hold on to them through thick and thin and add to them on dips takes a lot of courage and forbearance, but we've seen this before with other situations in the past, we have strongly recommended such as Headwaters HW at it lows of $0.50 in December 1999 and many people did not believe our initial target of $15 would ever be met let alone its ultimate all time highs at $45 and there was a lot of angst about that at the time. Today despite similar angst we feel even more strongly about Santa Fe Gold... And actually it has often been at times of previous angst or a high level of skepticism with other stocks that has often preceded awe-inspiring mega-runs, especially in stocks that have been basing out a long time..............
There's an old Wall St adage: The longer the base the bigger the move and by some measures SFEG has already been basing for 15 years and is not unlike Industrial Services of America IDSA an absolutely blistering move we captured almost in its entirety back in 2003, as we also did from SFEG's lows around the same time and we now believe the next upward breakout will leave behind this entire trading range as it begins to break through to new all time highs in due time and when that occurs in stocks in general, it is often the precursor to significant upmoves that can last for years or even decades and Santa Fe has one of the most indisputably ultra-dynamically bullish structures we've ever seen: And, since our longer term price objective on Gold is at least $6,398 and could under certain conditions, even run up to as high as $12,796 if more stimulus is required: That's why we are turning dynamically bullish on Santa Fe Gold SFEG.
Santa Fe Gold Corp - SFEG
An Evolving Future Takeover Candidate
or Ultimate Long Term Value Winner?
Again: Why are we sending this report to you? Four reasons: Firstly, because we feel so strongly about Santa Fe and its prospects and secondly because your have expressed and interest in Gold in the past and took the trouble to respond to one of our Special Reports, in appreciation of that and your interest in our work, we feel obliged to reciprocate. Thirdly, at this juncture most importantly, because time may be running out to get appropriately positioned to capture what might be forthcoming upside of very considerable price moves both in this issue and related markets and fourthly, because in the normal course of opportunistic events in our continual service to all of our clients, we feel a continuing strong responsibility to find outstanding investment ideas as not only paramount, but when markets reach important inflexion points, we feel it is our duty to advise clients and subscribers accordingly, as we do each and every day in our real time advisory service, that is now in its 10th year. And thus, we're always looking to share selective additional ideas and information that could be of further benefit, or special value to you... So how valuable has our information been to readers in the past?
Probably extremely valuable to those who either sold out of stocks on our advice, ahead of the downturn in 2000 or mid and late 2007, or to those who re-entered the market in mid and late 2002 and early 2003 ahead of one of the longest bull markets ever. And to those millionaires we have created in the meantime, they cannot say enough in thanks for steering them into such winners that have enabled them to prosper, even during one of the most severe downturns ever, and still were advised to re-enter the markets almost at the exact lows of March 6 2009 ahead of our mid-year headline call that an interim high was put in place on June 11 2009, with advice to sell out of all long positions, initiating net short positions on stocks, ETF's and futures and remaining short, except for one brief rally, until July 12th, when we covered and reversed, going to maximum long, perfectly positioned long Gold, Silver, Platinum, Palladium, Copper, ETF's, Stocks, Futures and Indices directly ahead of one of the biggest and fastest rallies ever, predicting S&P 1000 +, ahead of time.
And to be honest we feel today about SFEG in the same way we've felt at previous lows in this issue and most markets in general: We have a proven record of finding uncommon values... And our current proprietary analysis easily puts SFEG at being worth close to $10.
Why Santa Fe is a likely Future Takeover Candidate
This is not a solicitation to buy Santa Fe Gold. It is a statement of the facts as we see them for your consideration. Whether you decide to invest in Santa Fe Gold may or may not make a difference to the stock, but it could make a big difference in your life, as it has already done for many others, if our belief becomes a reality: That Santa Fe will most likely ultimately be taken over at much higher prices than those of today and we have tried to outline the many compelling reasons as to why this may occur below, but you don't have to hear it from us.. The company already has an analyst buy rating of $3 per share: And that was before the two recent acquisitions, that have probably added at least another $2 per share to that target price, that is now gaining increasing coverage with rising gold prices.
And that's the point. Santa Fe is not only getting increasing coverage and recognition, it is delivering on all of its promises and all of its objectives thus far have not only been met, they have actually been exceeded and any time that happens with any company, it usually means that it represents a major buying opportunity that will likely have continuing surprises on the upside in the future. And the best part of it all might be in this instance you may not ever need to sell your stock as it just might be bought out from you in a takeover bid.
For those who've been receiving our Special Reports and daily briefings on the markets, while we're not infallible, it can honestly be proclaimed that a very high degree of accuracy is our hallmark. And many may also be aware our reports are held in fairly high regard by a number of analysts on Wall St, as are our periodic stock picks over the past 3 decades, that by some measures have been beyond extraordinary, including the very early identification of a number of 10,000% gainers very close to their low points or in the earliest days of their ascent. And of course although we saw considerable upside ahead for those issues it would have been difficult for most any investor, to foresee 100 fold upside for any such issue, let alone have the staying power, to see such moves to their full conclusion.
But, we did manage to help a number of investors capture a good portion of these moves and in a few cases did even better often switching from one investment to another and actually outperforming the remaining upside of stocks we'd already captured most of the early upside of... So, when we identify stocks these days and highlight them in one of our Special Reports such as this, you can be assured it is a similar contender with considerable potential upside and fundamentals usually so compelling it's relatively easy to see why, even though often the fundamentals are not immediately reflected in the stock price and therein most always lies our opportunity.
And that's the message we are getting with Santa Fe. In fact, comparing Santa Fe to some of our most successful calls ever, we can honestly see huge potential upside for SFEG, especially if it executes on its plan to make a number of additional acquisitions that could add a tremendous amount of extra value to the company. But even if it doesn't and proceeds as is... With what they've managed to put together and accumulate over the past few years, the company already has the potential to be a 10 Million ounce resource, if they are able to prove up some of the expected "Superb upside discovery potential" as has been described regarding the Ortiz Gold mines, the Summit Silver Gold property, the Virginia Mining District and now their newly acquired Pilar Gold deposit showing very high grades...
Translation: Millions of ounces in upside discovery potential. And combine that with ARG "Accelerating Revenue Growth", which is something about to befall Santa Fe soon, and all of a sudden... SFEG's multiples could be rising from 20 to 40 to 60 x Earnings per Share, in other words at $0.30 cents per share, what might be a conservative valuation at $6 could actually soon balloon to $18 or more.
So in the case of SFEG, the situation is almost beyond compelling, because much of the groundwork for hyper-growth is already well laid and all of the right ingredients and potential combination of outstanding management, expanding reserves, exploration and impending production are not only in place, but in this particular instance, also includes the almost unbelievable accomplishments of eliminating $6.2 Million in debt and booking a $4.6 Million gain... So some very considerable upside does indeed appear to be of exponential potential, because by most all measures versus its peers, Santa Fe Gold also appears to be considerably undervalued and still under the radar and relatively unknown on Wall Street. These are usually additionally compelling reasons for buying any stock, especially one with all of the right credentials to be a mega-winner because it will eventually in due time get Wall Street's full attention.
And when that time comes, invariably the stock price tends to multiply dramatically and especially, if the issue at large is seen as being a potential take-over target at some time in the future... And in today's Gold market, any company that is bent on acquiring additional millions of ounces of Gold, is likely to become a takeover target before too long. We have made a number of predictions regarding Santa Fe Gold over the past few years, almost all of which have thus far come true, such as being the # 1 gaining stock in the World, both over a nine month period and in a single day, to being one of the first Gold stocks in the World to make new 52 week highs, post the recent latter part of 2008 melt-down, during which Santa Fe Gold outperformed almost all other Gold issues over the downturn and among such predictions yet to be realized, is for Santa Fe to become a 5 to 15 Million ounce Gold entity and as of this writing, with the recent acquisition and optioning of the Pilar Gold property in Mexico could already put the company at more than 5.8 Million (Five Million plus) on the low end and on top of that, the potential for the Ortiz Gold property to hold upwards of Five to Fifteen Million additional ounces, even at its low end, to potentially as much as 20 Million in total for all properties, given the immensity of this 57,327 acre, 90 Sq mile deposit , it might be a costly mistake to underestimate potentially just how many million ounces of Gold Santa Fe may already hold or likely, will acquire in due course... And so that not only explains part of the hidden value that Santa Fe Gold already possesses, but also demonstrates the wild card upside surprises that could lie ahead in the form of additional acquisitions, that have been advertised in past press releases as a high priority for the company, underscored by the fact that they may hold some kind of World record for potential acquisitions, currently numbering an astounding 36 prospective candidates has to be a first for any emerging company that even though you might not know it from the stock price, fundamentally is not only one of the fastest growing Gold companies in the World over the past few years, but with such a huge number of potential acquisitions, will probably continue to be so...
And as to the potential value of such acquisitions, given the company's formidable track record in adding value thus far, to date, with already five significant acquisitions completed over four years, it could be an even more costly mistake to underestimate the potential value of those 36 additional prospective acquisitions that the company currently has in its sights, given the experience and pedigree of sourcing of many of these coveted domains of reserves and the knowledge that only potential acquisitions of the very highest standards are ever even considered and experience has shown, by way of some of those that have already been rejected, that Santa Fe's demanding standards are indeed, exceedingly high. Therefore, the intellectual value of these thirty-six acquisitions, in our view, should not be underestimated one iota. In fact, we truly believe the combined value of all of these in ozs of Gold, could easily run into the many tens of millions, given that not all of them are just million ounce deposits or less. The Pilar deposit in Mexico's most Golden rich territory, is just one example of a potential multi-million ounce deposit acquired on excellent terms and is further proof of the deftness and skill Santa