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Possible chance for group inflation hedge - gold mine

By Zak   2013 Jan 28, 10:26am   1,343 views   9 comments   watch (1)   quote      

I've recently found a literal gold mine for sale that was shut down because of wild fire just before the run up in gold prices. Most of the mine buildings were destroyed halting operations. I happen to have personally visited the mine, which was why I was very surprised to find it was for sale. Is this something anyone on Patrick.net would be interested in participating in a group purchase as an inflation hedge? In other words, form a corporation and participate in the purchase of a gold mine?

The purchase price on the gold mine total on over 20 acres is under 400,000 list price. I believe an S corp or LLC with under 30 investors could purchase the mine with initial capitalization of 10-20k per shareholder. Operating the mine would be an entirely separate issue. It could be profitable, but in my mind, this would primarily be a speculative hedge of 10-20k against a highly inflationary period that might happen. Rather than buying and storing gold in a vault or something, you just buy it raw stored safely in the ground, waiting for extraction.

Obviously, there are numerous issues to deal with in setting up this kind of venture. This is just to find out if there would be any kind of interest.

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1   Zak     2013 Jan 28, 12:53pm  ↑ like (1)   ↓ dislike   quote    

Excellent reply. Unfortunately I will need $250 to initiate the $4000 transfer. Please forward the funds via western union.

Seriously though, if you think it's a bad idea, please elaborate. I am a student of the world and if you have something intelligent to add I'm more than willing to listen.

2   Raw     2013 Jan 28, 1:01pm  ↑ like   ↓ dislike   quote    

Do you have a better scam? I don't like gold.

3   iwog   1500/1501 = 99% civil   2013 Jan 28, 1:10pm  ↑ like   ↓ dislike   quote    

I'd love to buy gold property, however the price of gold is set to decline and prices for any gold bearing property is way too high right now. I would consider it a bad investment.

4   yup1     2013 Jan 28, 1:14pm  ↑ like   ↓ dislike   quote    

Why are you trying to hedge for inflation? Are you worried about the sub 2% that we are currently running? Or is this massive inflation just around the corner like the media has been saying for 4 years? Where is this hyperinflation that we have been hearing about?

All I see is more automation taking away jobs, more jobs being shipped overseas, more empty store fronts, more college graduates who can't get jobs in their field of study.

Where the FUCK do you think we are going to get inflation from in these conditions?

You should worry more about a Zombie Apocalypse, a large comet/meteor striking the planet, Yellowstone supervolcano, or a massive tsunami generated from the Canary Islands..............all of these are vastly more likely to happen.

5   Zak     2013 Jan 28, 4:40pm  ↑ like (1)   ↓ dislike   quote    

@yup1 Great points if you lend zero credence to wage deflation, expanded money supply, and a changed CPI baseline calculation. I'm sure the politicians in Greece never thought overspending at the public trough could lead to a receding economy with wage deflation and austerity either.

I'm not personally looking for an opportunity to go big or go home on. However, a workable commodity mine for sale in distress piqued my interest. If its not your cup of tea, feel free to move along. As I mentioned, it is something I am interested in as a hedge, and wanted to get the rest of the patrick.net community feedback on the validity of such an enterprise. If someone has constructive positive or negative feedback about the proposition, I welcome it... Iwog's speculation that property prices are too high for gold bearing property is interesting to me for instance. Of particular use to me would be a reference to some standard price per acre of gold ore bearing land that he is referring to from which to judge good or bad value.

Other than that I have only the raw value of land per acre from which to judge, and which I have compared against, hence my inclusion of the acreage and price to allow people to see a general value ratio of the current pricing. Again, constructive comments welcome, but if you have nothing to add, I appreciate your time taking a look anyway.

6   yup1     2013 Jan 28, 5:06pm  ↑ like   ↓ dislike   quote    

Wage deflation will lead to either demand destruction or price deflation.

Expanded money supply that sits on the Feds balance sheet and does not get into real peoples pockets leads to well nothing, fake banking assets that the banks know are fake and will not lend or borrow against.

CPI calculated incorrectly. This is in my opinion what has lead to wage deflation, and will continue to lead to wage deflation.

I believe that gold is a good investment for inflation, but so are housing and stocks.

It would seem to me that buying an old gold mine would be leaning more towards "all in" than say buying some gold, stocks, or RE. If you are are wrong with stocks you can liquidate with the click of a mouse. Not so much with RE and certainly not with a mine.

I know nothing about mining for gold, I wouldn't have the slightest idea how to value an old mine. I would bet that most of the people here, including yourself are in the same boat.

With the price for gold holding north of 1500 per ounce I would figure that anyone with a background in goldmining would probably jump on a "deal" only costing 400k. Hell we have people on this forum buying millions of dollars of property with borrowed money massively speculating that rents and prices will remain the same or go up.

7   curious2   549/549 = 100% civil   2013 Jan 28, 5:28pm  ↑ like   ↓ dislike   quote    

Personally I would not invest in this, but I will offer hopefully constructive criticism.

If you are looking for a gold mine as a hedge against inflation, you might consider shares in a publicly traded mining company. Usually they mine more than one metal, which might help you hedge against gold too. I'm not an investment advisor, so I won't mention any particular stock and I don't know enough to have an opinion about the future price of any particular metal.

The value of a mine depends on who is going to mine it. As you wrote, operating "would be an entirely separate issue." Problems include breakdowns, injuries, and operators stealing the gold. A major mining company can have maintenance crews on staff, safety protocols, and internal controls to ensure the gold is counted properly. Mining has huge economies of scale, and a 20-acre mine seems probably too small to interest a large and reputable company.

8   elliemae     2013 Jan 28, 10:27pm  ↑ like   ↓ dislike (1)   quote    

1) Can you send me a nugget to prove that there's gold in them thar hills?

2) will you take a check?

9   Tenpoundbass   977/978 = 99% civil   2013 Jan 28, 10:38pm  ↑ like   ↓ dislike (1)   quote    

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