CASEY’S INTERNATIONAL SPECULATOR 1

Volume XXXI, Issue 7 / July 2010

Black Swans Need Not Apply

Dear Subscribers,

I was pounding pavement instead of kicking rocks a few days ago, on Wall Street of all places. There were Suits hanging around outside the familiar iconic buildings, despondently smoking cigarettes. In my surely biased opinion, the feel of the place was distinctly less energetic than usual.

But what really struck me was not one, but two guys with sandwich-board placards announcing “WE BUY GOLD” – for different companies.

Just afterwards, while having lunch at Rockefeller Center, my sister, a conservative mainstream banker, called and asked me how to go about buying physical gold. I knew that day was coming, just as I knew the Soviet Union was destined to collapse sooner or later from the weight of its own economic stupidity, but it was still a shocker when it happened.

And yet, if you ask your neighbors, you’ll most likely have a hard time finding any who own gold. My New York adventures are signs of an approaching gold mania, not a present one. But I believe more firmly than ever that it’s coming.

In This Issue Click on the link to jump directly to an article. Black Swans Need Not Apply Chart of the Month: Central Banks Are Buying Gold International Speculator Recommendation Guide Company Updates: Ugly Ducklings Are Good Things

Explorers’ League Updates: Latest from the Greatest Questions for IS: The Latest from Readers End Notes: Upcoming Events, Stupidity, and More End Quote: From the Mouths of Babes…

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He was ready to give me his card – note the guy behind him actually reading the placard. Two companies, maybe more, were competing for gold, right at the high altar of the “gold is a barbarous relic” belief system.

Meanwhile, the Wizards in Washington entreat us to pay no attention to the man behind the curtain, hoping to distract the American consumer from the mounting evidence that the so-called recovery in the U.S. of Oz is faltering. Rather than let the market liquidate malinvestment and mismanagement, government intervention to prop up failed companies, bankrupt states, busted banks, and toxic business models (like condo flipping) is only dissipating vast sums of borrowed money to no useful end.

The second dip in the U.S. economy is coming, if not upon us, and that will exacerbate the rest of the world’s problems. The evidence in favor of this is so abundant, no black swans need appear on the scene to drive the point home. The next leg of this “W” shaped recession we’ve been warning about for some time is, as I’ve said in the past, already baked in the cake. Here’s why:

Top Five Reasons Why the Economy Is Going DownA “jobless recovery” in the U.S. is not a recovery. You can bail out the largest and most mismanaged •companies and change the rules to allow banks to forgo reporting their mistakes, making national economic statistics look better. But that doesn’t change the reality that millions of people are out of work – since the crash, over six million more in the U.S. alone – and unable to find jobs. Nor does it make it any less alarming that the rate of bank failures is well ahead of last year’s record (140), with 86 shuttered as of mid-June. Nor does it have the slightest effect on a myriad other harsh realities that politicians, as a group, are unable to face.

The EU’s massive rescue package has not, and will not, avert trouble in the eurozone. To the •contrary, the situation continues to deteriorate, pressuring the euro ever lower and taking it to levels not seen since early 2006 (US$1.228 as we go to press). In today’s global economy, what’s bad for Europe is bad for Asia and the U.S. Ominously, the Baltic Dry Index, a barometer of international trade that staged a feeble recovery following the 2008 crash, is falling sharply again. With all due disrespect for the man, Alan Greenspan considered this his “must watch” leading indicator, and it has proved a good predictor of where the global economy is headed. That would be south.

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Just as Greece exposed the extent of Europe’s problems with the PIIGS (and they thought the •“Mexican Swine Flu” was a problem!), California seems poised to upset the whole U.S. applecart if it doesn’t get bailed out. It would be hard to maintain the illusion of recovery if the most populous state in the U.S. – with a GDP greater than Russia – implodes into a black hole. Illinois, New Jersey, and at least 43 others are just behind, hat in hand.

From Obama’s attempted ban on drilling for oil in the Gulf of Mexico, to the new financial •regulations Congress has just passed, to America’s flirtation with socialized medicine, it is clear that the U.S. has entered a new era of Big Government. Big Government, Big Debt, Big Deficits, Big Military… and surely soon: Big Taxes. One does not have to be an anarcho-libertarian to see this as a Big Problem delivering huge, negative unintended consequences.

The real estate markets are still an unfolding disaster. May sales of new homes fell to a record low •(seasonally adjusted 300,000 units vs. 800,000 “normal” sales) and the average price fell as well (to $200,900, about a 10% drop year-over-year). Housing starts are down similarly, and previously more rosy stats have been revised downwards. A recent report from Florida tells us that 81% of all loans in the state are ‘underwater’, and that nearly 40% of all Florida borrowers owe more than 150% of the value of their homes – just another hay bale in the wind. And the commercial real estate debacle David Galland has been warning of in Casey’s Daily Dispatch and The Casey Report has yet to hit the fan.

I could go on, but I’m sure you get the point that what’s already visibly ahead is Trouble with a capital “T” – never mind the possible black swans that may soon arrive. That said, while the global economy doesn’t need any black swans to tip it over the edge, the fact is that there are plenty of them out there, circling lower like buzzards. The BP oil spill disaster was one – a major disaster to those affected directly, but barely more than a hatchling black swan, on the global scale of things.

Yes, Virginia, there really are black swans – and they are sailing this way. I found these in Lithuania, a once bustling place that seems intent on snatching economic defeat from the jaws of victory by

responding to the economic crisis with all manner of regulations that suppress business. Alas, they are not alone.

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Full-grown black swans could range from no-holds-barred war in the Middle East, to a spectacularly stupid new regulation in the EU or U.S., to an exceptionally long and harsh winter. Events that would be unfortunate difficulties to a robust economy can be fatal blows to one as rickety as the world’s today.

Which will it be? I don’t know – I’m not a fortune-teller – but I don’t need to know. All I need to know is that they are out there, like sparks swirling around a powder keg – and this one has a lit fuse anyway.

The Big Question

Assuming our predictions of a double dip in the world economy are right, the big question we face as speculators betting on gold is: what will happen to gold in the next economic downturn?

Or, more specifically (and perhaps painfully): will gold and our gold stocks get hammered as they did in 2008? Or will visible failure of the governments’ rescue attempts, and the debts and deficits left in their wake, cause gold to go through the roof and head for the moon, pulling our gold stocks along behind?

All of us here at Casey Research believe the ongoing train wreck of the global economy will send gold to the moon and our stocks to the outer planets – but that doesn’t mean it’s about to happen now. A particularly frightful black swan could set off the mania we’re expecting at almost any time, which is why we have core holdings in precious metals and related stocks. Absent that, we believe the gold market could continue its “two steps forward, one step back” progress for many months to come, with the odds presently seeming to favor a step back.

It’s easy to think that the mania is around the corner, with gold setting new record highs (not inflation-adjusted) in recent weeks – but betting that way would lead to massive losses if 2010 ends up more like 2008. Waiting for clarity, on the other hand, leaves time to redeploy cash into winning picks when it looks clear that the mania is starting.

And, as we’ve said before, in our present near-term deflationary environment, cash is not a bad place to be.

So, in spite of the lofty gold prices, I don’t regret last month’s call to go to cash and core holdings (risk-free, where possible). Cash and Core holdings – I think of it as C&C – never forgetting that gold is a form of cash. If gold takes off in the near future, we’re positioned to benefit. If it does the opposite, we’ll have the cash to scoop up the bargains.

Heads, we win – tails, we win more. I like it.

If we’re so sure gold and our shares are eventually headed way north, why not buy more now?

Well, if you’re relatively new to the sector and are still building your core portfolio, cautious buying on the dips is justified. But ask yourself these questions (and be honest with the answers – it’s your own money that’s at stake):

If you had arrived on the scene in early to mid-2008 and started buying just before things fell off a •cliff, would you have had the staying power to hold on and thus benefit from the resurgence in 2009 and new highs in 2010?

Would it make you sick to see great companies on sale for pennies on the dollar, but already have all •your speculative cash tied up in the market, at higher prices?

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If you can honestly and without hesitation answer yes to the first and no to the second, then buying (more of ) the Best of the Best now may work out well for you.

But I have one more question: why take the chance?

If we wait to see if the market corrects and it doesn’t, our profits will be lower – but so will our risk.

I’ve said it before, but it’s worth repeating in these heady times: “Buy High, Sell Higher” may work sometimes, but it relies on someone coming along later, willing to take even bigger risks than us. Our favorite recipe is “Buy Low, Sell High” – especially if offered a shot at “stupid cheap” prices as in the fall of 2008. When it’s time to buy, with or without the lower entry points we expect, I will definitely say so in these pages.

Patience remains the key virtue of the savvy speculator today.

Until next time, keep your powder dry and watch for updates on our portfolio page, as well as important developments in our sector covered in Casey’s Daily Dispatch.

Sincerely,

Louis James Senior analyst and editor Casey’s International Speculator Casey Investment Alert Casey’s Gold & Resource Report

P.S. For those of you who heard about the live “Conversation With Casey” Doug and I did at our last summit in Las Vegas, but missed it, we’ll be doing another one at this year’s FreedomFest, coming up next week. For more information, see: www.freedomfest.com. If you think ideas are important, this is the event of the year to attend.

P.P.S. I am happy to report that Doug Casey and Rick Rule have agreed to make video appearances at this year’s Casey Youth Conference on Liberty and Entrepreneurship (CYCLE10). The Cato Institute’s Tom Palmer will be there, as well as Austrian economist Ken Schoolland. We’ve got a record group of students this year from Belarus, Ukraine, Latvia, Lithuania, and, at last, from America as well. If you know of a college-age or advanced high-school student who would benefit from this unique educational experience, please email me at LJ@caseyresearch.com for details.

Back to Table of Contents

CASEY’S INTERNATIONAL SPECULATOR 6

Chart of the Month: Central Banks are Buying GoldIn 2009, for the first time in decades, central banks in aggregate turned net buyers of gold.

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0

200

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600Tons

© Casey Research 2010 Sources: Wirtschaf tswoche, Bloomberg, Wikipedia, Erste Group

Change in Official Gold Reserves of Central Banks and International Organizations

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This reveals a sea change in central bank behavior, many of which had signed on to a treaty (CBGA3) limiting the amount of gold they could sell per year.

Why?

It would take a phone-book-sized paper to speculate on all the possible reasons. However, the central bankers’ motives don’t alter the bottom line: this change from sellers to buyers fundamentally alters the landscape of supply and demand for gold. If it persists, the change is extremely bullish. Back to Table of Contents

CASEY’S INTERNATIONAL SPECULATOR 7

International Speculator Recommendation GuideWe frequently get reader questions about what is meant by the terms we use in our recommendations or updates. The typical reply is that we’re usually quite specific in our write-ups and will, for example, give price ranges for what constitutes an appealing amount of non-company-specific weakness to take advantage of when we recommend buying on weakness.

However, it often seems that what readers really want to know is not what we’re recommending but why we’re recommending one course of action over another. Why Hold instead of Buy on Weakness or Sell? We hope that, too, is spelled out in the text of the recommendation or update. But sometimes we run short on time and may forget that what is clear to us may not be so obvious to readers, so here is the basic logic behind our calls.

Buy• : If you like it, buy it. A buy is a buy. There’s enough upside in the play for us to see a double within a year of our recommendation (and from the price recommended, of course). If the share price has risen significantly since we made our Buy recommendation, check to see if there’s any news particular to the company that explains the rise (like a new, larger resource estimate or higher price of the underlying commodity) and justifies paying more – if not, wait for a pullback to the originally recommended level or lower. If the shares have fallen significantly, look for adverse developments (a permitting setback, etc.), and if there are none, take advantage of the bargain. In most cases, we’ll have commented on company news on our portfolio page within a day or two, and offered new guidance if the news affects our recommendation.

Best Buy• : Clearly, we think a Best Buy company is a great deal at the given price. Often a Best Buy recommendation comes when a great company has gone on sale for no reason related to the company or, even better, because the market has temporarily misjudged the significance of some development. It may also mean that we see high odds of very good news in the very near term. We’ll spell out our reasons in the text of the recommendation.

Buy on Weakness• : We like the company enough to buy and see potential for a double within 12 months, but we also see reasons to expect the share price to head lower before it goes higher. The message here might depend on your situation. If you’re new to the stock, buying now will probably work out well, but waiting for a lower price we think is likely will work out even better. If you own shares, you already have exposure to the upside, so it makes sense to avoid taking on more risk unless you can do so at a better price. We make every effort to identify in the text of the recommendations and updates specific prices that would look like attractive “weakness” to us.

Buy Under C$X.XX• : This means exactly what it says. You can pay whatever you want, but we wouldn’t pay more than the price indicated, either because it’s about half of where we see the share price in a year (our target is always a double) or, more frequently, because we see a very high probability that the share price will dip “under” our target. If we lack a strong sense that the odds favor a lower price, we go with the less hard-line “Buy on Weakness” recommendation. We often use “Buy Under” guidance when we’ve just bought shares in a company (for example, it’s a new pick) and don’t want more unless we can get them cheaper.

Buy on Spec• : This is basically a Buy but carries unusually high risk. If, for whatever reason, the odds look long or impossible to guesstimate reasonably, but the payoff looks spectacular, we may take a chance on such a speculation. We understand that this is not for everyone and generally envision only subscribers with a higher risk tolerance buying the shares. Usually we Buy on Spec with a relatively small amount of money – just enough to make it worthwhile if the play works out, but not so much that you cancel your subscription if it doesn’t.

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Buy If You Dare• : Add steroids to our Buy on Spec – very high risk. This is effectively a recommendation not to buy unless you have some play money you’re willing to put on long odds for a huge payback, should you get lucky. Even though we’re speculators, we’re not gamblers, so we don’t recommend this often – sometimes, however, some wacky opportunity just looks too interesting not to mention.

Stink Bid• : An extreme, low-ball offer. Companies hate to see them in the bid-ask spread, hence the name. But during times of exceptional market volatility – or when you suspect the market will overreact to company news – they can be a great way to pick up shares in solid companies on the cheap. We’ve heard of people getting stink bids 50% under market filled, even with no bad news or market jitters, just because a seller was careless enough to hit the bid without looking. We love stink bids and often leave them on the table, even for companies we’re willing to pay more for, just to see if some sudden scare will bag us a bargain. This should obviously never be done if you have reason to expect genuinely bad news from a company.

Hold• : Just as it sounds; we’re neither buyers nor sellers at this point. Sometimes this is because the price has risen above our expectations – we’re happy with the company but no longer see a double from current levels, so we’re holding. Other times we’re disappointed or have concerns about the company, but not so seriously that we feel compelled to sell. This happens a lot when a good company runs into trouble but all the upside remains intact, and management seems to be doing the right things to solve the problems. Rarely, it happens when a company’s share price drops so low or volume dries up so thoroughly, there’s no point in trying to sell – if you do, you just realize a massive loss and retain no upside, all for a handful of pocket change (whereas, if you hold the now junk-stock, it has a chance of adding some value in the future, even if it’s a very slim chance).

Sell• : We mean exactly what the word implies, but only use this recommendation when there’s some clear reason in our minds for exiting promptly. If, for example, the company has suffered a serious reversal and will not likely recover for years, if ever, you want to sell immediately. Even after a massive drop on the day of bad news, the stock usually continues to fall for days afterwards, as those who missed the news initially hear about it and hit the bid.

Note to savvy speculators: sell-offs can be overdone. There are times when selling morphs into an irrational frenzy, as when a company’s market capitalization is pushed way below the cash the company has in the bank. That kind of bad news can be good news. We cannot contradict our own recommendations, of course, so we never buy stocks we’re recommending you sell, but you don’t have the same constraint. You have to be very careful with this tactic, but brief opportunities can open up where you can make a quick 10% or 20% gain in a couple days by buying something that gets oversold.

Closing Position• : Our most common form of Sell recommendation, issued when we think it’s time to exit a stock but see no urgent need to do so immediately. There’s a tendency for subscribers to attempt squeezing through the exit all at once, even when we issue a Closing Position recommendation instead of a Sell. The more disciplined and patient among us can often get a much better exit price by waiting for the dust to settle and then selling on an uptick. The intent of a Closing Position recommendation is not to be ambiguous but to let you know that you have time to exit gracefully, and at the best price possible.

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Sell on News• : This is a variant of our Sell recommendation used when we know we want to exit a stock but have reason to expect a major liquidity event or a much better price in the near future. By issuing the Sell on News, we alert you to expect the event so you can take advantage of it to maximum benefit, rather than waiting to hear about it after the fact (and after prices have settled back down).

Take Profits• : Contrary to what some people may think, this is not a subtle form of a Sell recommendation. If we cease to see the potential we want in a stock, we go ahead and sell. Taking profits is what we do when a pick has worked out well for us and we continue to see upside, but now have the luxury to scrape some money back off the table and continue free of risk.

There are nuances in a Take Profits recommendation spelled out in the text. Usually, we issue this call on our first double, so it equates to selling half of your position and retaining the same exposure to the upside you started with, now free of risk. Sometimes a stock has gained more than 100%, and if the play looks very risky, we might recommend taking all the profits by selling more than half, and sticking with the original exposure to the upside, now free of risk (for example, a stock shoots up 300% but is very high-risk, we might recommend selling 2/3).

But if the play looks less risky, or still has clear and substantial imminent upside, we might recommend recovering only your initial investment and retaining a larger exposure to the upside than you started with (for example, a stock shoots up 300%, but is very low-risk, is still undervalued, or looks highly likely to deliver more great news soon, we might recommend selling 1/3).

That’s it in a somewhat wordy nutshell. Just remember: whatever the short form of the recommendation is, we’ll do our best to spell out exactly what we recommend you do, and why, in the text of the recommendation or update. Back to Table of Contents

COMPANY RECOMMENDATION UPDATES: Ugly Ducklings Are a Good ThingLast month, we recommended shifting more heavily towards cash and gold, a move that may have cost us some profits on some shares, but netted us profits on gold itself, which is, of course, a much safer investment. That is still our general guidance this month, with no new recommendation, most companies on hold, and recommendations to buy only on weakness.

With the time of the normal summer Shopping Season upon us, that still seems the most prudent course – we’d love to pick up shares in the best ugly ducklings on the cheap, before the market realizes they are swans.

And with the so-called U.S. economic recovery visibly coming apart, giving rise to the possibility of another liquidity crunch like that of 2008, “prudent” and “safer” are words we’re not at all averse to having associated with our speculative strategy.

But what about new subscribers who don’t have a full portfolio of speculative stocks yet? Or those who’ve got more cash than they want in their portfolios?

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Well, first, we’d recommend patience. Just because you’ve got cash burning a hole in your pocket doesn’t mean you should buy whatever is offered at whatever the price of the day is – especially if the odds favor better prices around the corner. That said, if we didn’t yet have a portfolio set to take advantage of a major positive break by gold, there are three picks that we’d buy in the nearest term, perhaps limiting our bids to those at the lowest end of the bid-ask spread or pushing for a few percentage points less. The only reason we don’t call these Best Buys is that our projection remains for broad weakness this summer, but they would be our top picks for July 2010.

TOP IS RECOMMENDATIONS:Fortuna Silver Mines (T.FVI)

International Tower Hill Mines (THM, T.ITH)

Medusa Mining (T.MLL, ASX.MML, AIM.MML)

But even on these, keep the potential for non-company-specific weakness in mind when you review these and the rest of our recommendations below. Valuations and prices are as of June 25, 2010.

Company

Share price, 6/25, US$

MCap, US$M

EV, US$M 2P, Moz

M&I, Moz

EV per unit of 2P, US$/oz

EV per unit of global resources

& reserves, US$/oz

EPS, US$ P/E

All-in cost, US$/oz

Mine value (MV), US$M

MCap/MV

Ratio

EV/MV Ratio

GoldMedusa Mining 3.80 713.1 659.6 0.5 0.1 1,319.23 349.00 0.29 13.0 304.39 425.1 1.68 1.55OceanaGold 3.25 740.1 882.3 3.6 2.2 245.77 96.32 0.32 10.1 865.63 658.0 1.12 1.34Red Back Mining 27.12 6,956.7 6,141.2 7.4 2.5 835.54 500.51 0.48 56.5 673.66 3,707.6 1.88 1.66

SilverFirst Majestic 4.29 398.8 395.1 47.8 92.4 8.26 1.32 0.08 53.7 9.52 324.4 1.23 1.22Fortuna Silver Mines 2.06 227.5 156.1 55.4 0.6 2.82 1.80 0.01 206.5 10.77 333.3 0.68 0.47Silver Wheaton 21.27 7,286.0 5,326.8 938.2 396.0 5.68 3.04 0.39 54.5 7.73 9,705.5 0.75 0.55Silvercorp 7.23 1,183.1 1,105.7 121.6 140.6 n/a 2.11 0.20 36.2 5.89 6,328.8 0.19 0.17

Footnotes KeyUSD/CAD $1.04 EV - Enterprise Value, which is the value of a company's project net of its financial assets and obligations.Gold price, US$/oz $1,255.70 2P - Proven and Probable Reserves as defined by NI43-101 standardsSilver price, US$/oz $19.10 M&I - Measured and Indicated Resource as defined by NI43-101 standardsCopper price, US$/lb $3.10 EV per unit of reserves or resources - Enterprise Value divided by the quantity of metal undergroundCopper price, US$/oz $0.19 EPS - Earnings per share

P/E - Price-Earnings ratioMV - Mine Value, an estimate of present value of a mine as an assetMCap - Market Capitalization, the share price multiplied by the number of shares issued and outstandingAll-in Cost - Total cost per ounce/pound of metal producedMoz - million ouncesBlbs - billion pounds

Producers

Click here to enlarge.

Company

Share price, 6/25, US$

MCap, US$M

EV, US$M

2P, Moz M&I, Moz

Inferred, Moz

EV per unit of

2P, US$/oz

EV per unit of total

resources & reserves, US$/oz

Recovery rate, %

All-in cost, US$/oz

Total Capex, US$M

Mine Value (MV), US$M

MCap/MV Ratio

EV/MV Ratio

SilverAlexco 3.24 171.9 111.2 0.0 9.5 42.0 n/a 2.16 96% $11.79 42.0 318.7 0.54 0.35

Advanced Exploration/Developers

Click here to enlarge.

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CompanyShare price,

6/25, US$

MCap, US$M

EV, US$M

Total resource, Moz (Au, Ag), Blbs

(Cu)

EV/unit of total resource, US$/oz (Au, Ag), US$/lb

(Cu)

GoldAlmaden 0.96 47.4 30.0 0.7 41.87Andina Minerals 1.16 126.7 90.2 11.1 8.16AuEx Ventures 3.32 144.2 128.5 0.8 170.67Camino Minerals 0.25 16.1 6.5 0.0 -Colombian Mines 0.84 19.1 14.5 0.0 -Exeter Resources 6.67 503.9 466.8 41.7 11.20Extorre Gold Mines 2.86 215.8 197.8 2.3 87.49Fronteer Gold 6.23 747.3 540.0 4.9 110.45Inter-Citic Minerals 1.54 161.8 141.8 2.9 49.75International Tower Hill 6.77 447.5 405.4 8.6 47.23Northern Freegold 0.29 20.5 16.1 1.0 16.03Pediment Gold 1.22 57.9 45.2 2.3 19.51Premier Gold 4.94 483.8 441.4 1.2 362.90Virginia Mines 6.91 207.4 161.0 0.2 842.22

SilverBear Creek Mining 4.45 311.3 304.0 504.5 0.60

CopperAntares Minerals 2.29 155.9 134.1 13.4 0.01

Explorers

Click here to enlarge.

As usual, click on company names to see the detailed recommendations.

COMPANY Price SO FD MCap REC gain 52-weekALEXCO (AXU, T.AXR) C$3.37 53.1M 58.2M C$178.9M C$3.25, 5/06 3.7% C$1.98-C$4.45

HM: Ag, Pb, Zn / HOLD/BUY ON WEAKNESS—Alexco moved with silver last month, the company having reported no news of its own. High-grade Bellekeno mine on track for production later this year. Shoot for C$2.75 or lower to add to position.

ALMADEN (AAU, T.AMM)

C$1.00 49.4M 56.1M C$49.4M C$0.78, 3/03 28.2% C$0.64-C$1.42

HM: Au / HOLD—AMM optioned its Merit prospect last month – a good move, but not a game changer. We see excellent potential at high-grade Elk and large-scale Caballo Blanco projects, but are holding. 50% off would get our attention.

ANDINA (V.ADM, PK.ADMNF)

C$1.21 109M 130.9M C$131.9M C$3.94, 6/08 -69.3% C$1.05-C$2.18

HM: Au / HOLD—Andina Andina delivered very encouraging drill results last month (122 m of 1.45 g/t Au & 110 m of 1.72 g/t Au), but we’re still waiting for the new economic study that should make or break the flagship Volcan project.

ANTARES (V.ANM, PK.ANMFF)

C$2.38 68.2M 76.1M C$162.3M C$2.78, 5/10 -14.4% C$0.85-C$3.12

HM: Cu / HOLD—Antares has a major drill campaign underway, testing targets with potential to greatly increase the 13.4B pounds of CuEq resources at Haquira, but economic downturn could hit ANM hard.

AUEX (T.XAU, PK.AUXVF)

C$3.46 43.4M 48.1M C$150.2M C$1.32, 6/05 128.8% C$2.42-C$3.81

HM: Au, Ag / HOLD/OR BUY ON WEAKNESS—More great drill results (21.2 m of 16.4 g/t gold) from Long Canyon and modest first resource from West Pequop project, more potential for discovery. C$3.00 range for first-time buyers.

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COMPANY Price SO FD MCap REC gain 52-weekBEAR CREEK (V.BCM, PK.BCEKF)

C$4.63 70.0M 74.1M C$324.1M C$3.97, 4/10 16.6% C$1.49-C$5.38

HM: Ag, Au, Pb, Zn, Cu / HOLD/OR BUY ON WEAKNESS—Encouraging drill results from Santa Ana project increase confidence and offer hope for a possible resource expansion to the north. Try C$3.50 for stink bids.

CAMINO MINERALS (V.COR)

C$0.26 64.3M 66.4M C$16.7M C$0, 4/10 C$0.26 C$0.235-C$0.49

HOLD—COR projects have merit – the Rodeo project in particular is one we like – and exploration work is underway. However, we’re not willing to recommend new buying until we see clear momentum developing.

COLOMBIAN MINES CORP. (V.CMJ, CMBPF.PK)

C$0.87 22.8M 28.4M C$19.8M C$0.92, 2/10 -5.4% C$0.07-C$1.62

HOLD —CMJ remains unchanged; pure drill play at this point. Holding for drill results.EXETER (XRA, V.XRC) C$6.95 75.5M 86.1M C$524.7M C$2.74, 6/07 102.4% C$2.83-C$9.32

HM: Au, Ag / HOLD/OR BUY ON WEAKNESS—Caspiche project is a growing gold monster, but it’s winter in South America now, so things may quiet down for a while. C$6.50 or less would work for a first tranche, C$6.00 for more.

EXTORRE (T.XG) C$2.98 75.4M 86.5M C$224.7M C$0.00, 3/10 C$2.98 C$1.30-C$3.25 HM: Au, Ag / HOLD/BUY ON WEAKNESS—XG again held up to a volatile month, suggesting a determined buyer. Assays that could expand flagship Cerro Moro project pending, but it’s not cheap. Watch for seasonal weakness.

FIRST MAJ. (T.FR, PK.FRMSF)

C$4.47 92.9M 107.6M C$415.3M C$1.85, 2/05 118.6% C$2.06-C$4.52

HM: Ag, Au, Pb, Zn / HOLD/BUY ON WEAKNESS—FR has had another great month, but a lot of the success we hope for at the La Encantada mine seems factored in at current prices, so we’d hold for lower entry points.

FORTUNA SILVER MINES (T.FVI, PK.FVITF)

C$2.15 110.2M 118.2M C$236.9M C$2.13, 12/09 0.9% C$0.77-C$3.01

HM: Au / BUY ON WEAKNESS—Perhaps because it will take time to build the San Jose mine, FVI shares have already shown weakness worth taking advantage of, but Caylloma may surprise the market with its performance.

FRONTEER (FRG, T.FRG)

C$6.49 119.9M 131.7M C$778.2M C$4.96, 4/06 114.7% C$3.51-C$7.27

HM: Au, Cu, U /HOLD/BUY ON WEAKNESS—Great news from Long Canyon JV with XAU and the Sandman JV with Newmont, which also seems likely to become a mine. Plus, uranium spec. Great company, not cheap.

INTER-CITIC (T.ICI, PK.ICMTF)

C$1.60 105.3M 116.9M C$168.5M C$1.80, 11/07 -33.3% C$0.50-C$1.89

HM: Au / HOLD/BUY ON WEAKNESS—ICI still up in spite of no news. New resource estimate out soon, but you never know how long the engineers will take, and then the real economic feasibility work will become key.

INTL. TOWER HILL (THM, V.ITH)

US$6.77 66.1M 72M US$447.5M US$1.21, 11/08

266.1% US$2.42-US$8.08

HM: Au / BUY ON WEAKNESS—THM’s new resource calc. was larger as expected, but also higher-grade, a big plus. Offsetting our general concern re summer weakness is the imminent spinout of non-Livengood assets.

MEDUSA MINING (T.MLL)

C$3.96 187.5M 188.7M C$742.5M C$3.40, 3/10 16.5% C$2.75-C$6.25

HM: Au / BUY ON WEAKNESS—Medusa has had no news in the last month but remains exactly the kind of company that should do best this year, with high profits likely and excellent discovery potential.

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COMPANY Price SO FD MCap REC gain 52-weekNORTHERN FREEGOLD (V.NFR)

C$0.30 71M 97.5M C$21.3M C$0.335, 2/09 41.1% C$0.25-C$0.60

HM: Au, Ag, Cu, Pb, Zn / HOLD—No news from Freegold Mountain yet. Having taken profits, we continue to hold to see how it plays out.

OCEANAGOLD (T.OGC, ASX.OGC, NZX.OGC)

C$3.38 228.0M 233.6M C$770.6M C$1.91, 2/10 77% C$0.82-C$3.49

HM: Au,Cu / HOLD (PREPARE TO TAKE PROFITS)— No news, but we’re clearly not alone in expecting a better bottom line from early retirement of the company’s hedge book, among other factors, and we’re close to a double.

PEDIMENT (T.PEZ, PK.PEZFF)

C$1.27 47.5M 53.6M C$60.3M C$2.69, 1/08 -52.8% C$0.72-C$1.98

HM: Au / HOLD—Story unchanged, but a major drilling campaign has started at the flagship San Antonio project. We look forward to seeing if the results can reestablish momentum.

PREMIER (T.PG, PK.PIRGF)

C$5.14 98M 103.2M C$503.7M C$2.48, 7/08 90.1% C$2.31-C$5.42

HM: Au / HOLD/BUY ON WEAKNESS—PG continues delivering excellent results from the Hardrock project (6.7 m of 11.7 g/t gold) and has now picked up a high-grade historic resource in Nevada. Great company, but not cheap.

RED BACK MINING (T.RBI)

C$28.24 256.5M 261.4M C$7.2B C$12.05, 9/09 124.6% C$8.98-C$28.94

HM: Au / HOLD—Story unchanged. We still love this play, but it’s expensive and we’re risk-free; better to stay that way for now.

SILVERCORP (SVM, T.SVM)

C$7.53 163.6M 164.4M C$1.2B C$6.30, 5/06 19.5% C$3.11-C$9.21

HM: Ag, Au, Pb, Zn, Mo / SEE CGR FOR COVERAGESILVER WHEATON (NYSE.SLW, T.SLW)

C$22.15 342.5M 346.2M C$7.6B C$3.18, 2/05 383.0% C$8.31-C$22.17

HM: Pure Ag / SEE CGR FOR COVERAGEVIRGINIA (T.VGQ, PK.VGMNF)

C$7.20 30.0M 31.6M C$216M C$5.80, 2/07 24.1% C$3.50-C$8.60

HM: Au, Ag, Zn, Pb, Cu / HOLD—No change: Eleonore royalty underpins the value, and exploration continues elsewhere. We look forward to results, hopefully that will put the company on track for a new discovery.

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CASEY’S INTERNATIONAL SPECULATOR 14

EXPLORERS’ LEAGUE COMPANIES ON THE MOVE

The latest from the greatest...

Dr. Rui Feng

Silvercorp Metals’ (T.SVM) GC project took another step closer to construction, as management recently received the all-important environmental permit for this silver/lead/zinc mine in Guangdong Province, China. The company will immediately submit an application for a mining permit to the Ministry of Land and Resources in Beijing; upon approval, SVM will begin building the 1,500-tonne-per-day mine and mill operation.

Comment: This is SVM’s next mine with 28.5 million silver ounces in measured and indicated, and 30.7 million in inferred. And like their mines in the Ying District, GC is projected to have low operating costs. SVM is trading under our $7.50 recommendation, which we think is a great long-term price. If you’re looking to initiate or add to a position, we might try for even lower prices as suggested in the Summer Buying Guide in the current issue of Casey’s Gold & Resource Report.

Lukas Lundin

Fortress Minerals (V.FST) is selling its Svetloye gold project in Russia to OJSC Polymetal, a Russian company, for US$9.25 million.

Comment: This offer bests a prior one from MacRitchie Metals (even though dropping that previous deal will require FST to pay a break fee of C$250,000 to MacRitchie). We don’t blame FST for selling: political risk in Russia remains high despite President Medvedev scraping capital gains tax on long-term investments, and Svetloye never quite delivered the phenomenal drill results prior surface trenching seemed to promise. The project’s remote location also has little infrastructure.

Where will they go next? We don’t know yet but wouldn’t be surprised if they return to Mongolia. Wherever it is, we hope it’s beyond the Kremlin’s reach.

Lucara Diamond (V.LUC) recovered a 53.5 carat white diamond in the first week of production at its Mothae mine in Lesotho. Production continues to ramp up to the design capacity of 1,000 tonnes per day.

Comment: Here’s the best way we can think to comment:

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The company continues exploring in Africa and hopes to evolve into a mid-tier diamond producer. As we’ve stated before, we’re on the sidelines with diamonds, but this sure looks encouraging.

Ron Parratt

AuEx Ventures (T.XAU) reported its first resource estimate for West Pequop (49% owned) in eastern Elko County, Nevada. At a cut-off grade of 0.3 grams per tonne, it shows an indicated resource of 64,138 ounces at 1.63 g/t gold, and an inferred resource of 249,441 ounces at an average grade of 1.41 g/t.

Comment: If that has you mumbling “That’s not a lot of gold,” you’d be right, especially considering it’s spread across several zones. Still, it’s better than a stick in the eye, and it does indicate they have more gold than just Long Canyon. In fact, we can’t help but speculate about the possibility of an underground connection between West Pequop and Long Canyon.

Bottom line: this isn’t a game changer, so we’re leaving a Hold on the company since it’s fairly priced for what it can currently show it has, and also because we think a market correction is likely. This is one of our favorite companies, but we’re patiently waiting for better opportunities to buy on the cheap.

Simon Ridgway

Radius Gold (V.RDU) was granted a license for what is considered a highly prospective geothermal property in Guatemala. They also have pending applications for six other potential geothermal fields totaling 200,700 hectares.

Comment: This is an interesting move by the company, considering that they’ve been using hot springs to locate gold-related hydrothermal activity when prospecting in Guatemala. In fact, the company’s drill programs were once halted when large quantities of hot water and steam began spurting from their drill holes.

Robert Dickinson & Ronald W. Thiessen

Anooraq Resources (V.ARQ; Amex: ANO; JSE: ARQ) is changing its name to Atlatsa Resources Corporation. The board wants to reflect its focus on South Africa, particularly after the Bokoni Platinum Mine acquisition there. Atlatsa is a Sotho word meaning “to make prosperous.” The name change won’t be in effect until regulatory approval is granted. The company has not yet announced if its ticker symbol will change, so stay tuned for that.

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Questions For ISQ1: My question has to do with what I saw recommended concerning gas explorers and the rapacious levies the government of Argentina burdens them with. It makes me leery of Argentina, as their fiscal model has always been Italian, and we know they couldn’t balance a three-dollar budget if they had ten bucks in their pocket. I recently received some Extorre from the Exeter spin-out and was just wondering if their approach to the gold miners is different, or if they will pounce as their needs increase? Personally, I feel more at ease in Chile…

A1: The oil & gas business is treated differently in Argentina than mining, with its own set of controversies. However, as mining jurisdictions go, Argentina has been losing ground steadily this whole cycle. As you may have read in these pages over the last few years, they broke their no-new-taxes pledge, Mendoza province banned cyanide, and even once solidly pro-mining Santa Cruz province restricted mining to a certain area. The national government is not currently pro-mining, but the regulation is done mostly in the provinces, so we’re still willing to have a little exposure to really good stories – but they would have to have exceptional upside from a given price to prompt us to buy anywhere in Argentina at this point.

Radius reviewed its hot spring database and decided to stake several active geothermal systems believed to hold geothermal power generation potential. Not a bad move considering the Guatemalan government is forecasting country demand for electric power will grow more than 8% per year through 2015.

RDU say they intend to exploit their extensive knowledge of Guatemalan geology to identify and acquire potential geothermal resources, and then hopefully joint venture anything promising. They assure us they’re still a gold company, but... one never knows.

(For the best geothermal plays, check out Casey’s Energy Report, where our Energy team is convinced they’ve identified the most explosive opportunities in geothermal stocks. You can try it risk free here...)

Ron Netolitzky Golden Band Resources (V.GBN) received initial assay results from recent drilling on the Bingo gold deposit in northern Saskatchewan. Grades are very high, ranging from 5.05 grams per tonne to as high as 315.5 g/t (10.1 ounces).

Comment: The catch: the lengths of the hits were nearly all less than one meter, confirming this is unfortunately a fairly small deposit. The company continues gearing Bingo up for production and is in the process of finalizing two financings, one with Sprott Asset Management. For our part, we’ll stick with our favored strategy for gold deposits: go big or go home.

By the way, looking for a mining job? Check out all the hiring GBN is doing here.

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CASEY’S INTERNATIONAL SPECULATOR 17

Q2: Jim Rogers said: “Just to get back to the old high back in 1980, adjusted for inflation, the price would need to be over $2,000 now. So we’ll certainly get there some time in the next decade.” This implies that gold has not (yet?) kept up with inflation for the last 30 years. Are there other areas of the economy that have done so? And if so, aren’t these areas the ones that IS is supposed to be keeping us informed about as well? There are, of course, individual stocks that have, but I understand that IS is not a stock market letter per se, but a long-term trend advisory. IS was not advertised as just a gold stock investment letter; although that seems to be what it currently is, but was to change as newer long-term investment ideas were found. Yet those ideas seem to have migrated to other CR publications over time and at additional cost. I’ve no complaint with this, but would like to know of any investment ideas or areas you are currently publishing that have actually kept up with inflation. I continue to be “all in” as Ed Steer feels he should be.

A2: You’re right and you’re right. The International Speculator was originally broader, but we found that we had different sets of readers who wanted us to focus on different things. Instead of trying to persuade investors who prefer oil & gas or the bigger gold companies that they should focus on precious metals juniors as IS long has (with a smattering of the others), we decided to give those others what they wanted. To their benefit and ours, of course.

But IS does look into other asset trends as well. Right now, Doug just doesn’t see anything that looks cheap to him. He doesn’t want to buy real estate, classic cars, blue chips, anything else. Maybe some agricultural commodities – but the best way to do that is an involved, long-term, overseas effort that’s not for most readers. We do see a solid trend for rising interest rates in the future, and some other opportunities covered in The Casey Report, but nothing that tempts us to broaden our focus in IS at this time.

Q3: When someone stores physical bullion in another country, how do they minimize the risk on selling if a dramatic sell-off occurs? With the ETFs and the general Internet psychosis, this could be very dramatic. Is there a ratio of Dow/gold price, or something similar to use as a warning?

A3: When this secular bull market for gold finally tops and goes into reverse, there is indeed a great danger of sudden and dramatic reductions in price, but that’s true whether you store your gold overseas or at home. It may be harder to sell overseas, but not necessarily so; there were plenty of gold dealers who dried up and blew away after the 1980 top.

But to answer your more specific question: no, there’s no reliable number you can use as an early selling signal. If there were, for the very reason of the computerized trading you mention, the existence of such a number would send gold instantly through the roof while it was positive, and through the floor while it was negative.

The only thing you can do is to err on the side of exiting early – because exiting late could be disastrous.

How? The price of gold remains more a function of mass psychology (fear) than of industrial supply and demand, and while the trend favors continuing and increasing fear, as it does now and seems likely to remain for years to come, we remain solidly bullish.

Q4: Gold fell around 35% during the last stock market crash. I think the Casey team needs to produce an article to put this possible risk into perspective. What are your views?

A4: We did publish a relevant article earlier this year in Casey’s Gold & Resource Report, which you get free with your subscription to IS. Even if you don’t favor the larger companies that are CGR’s focus, it always has useful information relating to our sector. Here’s a link to the review of corrections: http://my.caseyresearch.com/displayCgr.php?id=53#a3

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That said, driving by looking in the rear-view mirror is always dangerous in our business. History may rhyme, but it never repeats.

Our general review remains that as long as the underlying trend favoring precious metals remains strong, any corrections are to be treated as buying opportunities.

Q5: Although the juniors are having a fairly tough time, better ones are holding together, and quite a few mid-tiers are doing very well. Do you think a hard crash would really damage these, or is there a little bit of a breakaway from the general market starting to happen? (Wishful thinking?)

A5: Sorry, but yes, that’s wishful thinking. Even the Best of the Best, with great projects (no discovery risk or wide profit margins), lots of cash, and top management got hammered with all the rest last time. There is, we believe, reason to hope for the next crash to be less abrupt than the last one (though perhaps longer-lasting), but no reason to expect panic to spare the good companies. And that’s to our favor, because we’ll be waiting to buy.

Q6: I just finished reading a “Conversation with Casey” in which Rick Rule points out the high risks in investing in JV’s exploring in the United States. Can you identify those gold JV’s that are exploring in the U.S., that Casey Research is recommending? If what Rick Rule says is true, subscribers invested in these JV’s may want to get out of them.

A6: We’ve been following this story in our “Stupidity Watch” comments for over a year now and would have made a lot less money in 2009 if we’d sold everything with U.S. exposure. The good news is that this is the sort of thing we should get some warning of – and we do have someone in Washington specifically tasked to keep an eye on this for us. The bad news is that we agree with Rick and think some form of U.S. federal royalty is highly likely in the future.

This is one reason we have little exposure to U.S. political risk in our portfolio. Fronteer and AuEx have Nevada properties, with the most important being Long Canyon, where about 80% of the deposit is not on federal land and not subject to any new royalties that may be enacted. International Tower Hill is also U.S. focused, but its flagship Livengood project is on Alaska state land specifically set aside for mineral development to benefit the state’s mental health care system. Premier Gold has just bought a project with a historic gold resource in Nevada, with unstated exposure to this risk, but the focus there is still on the Canadian projects, so, again, risk is minimal.

Q7: I thought that Osisko Mining bought out Brett Resources? My Brett stock converted to Osisko already some time back. But I see that Brett’s stock is still trading daily. I thought the deal was completed – what gives?

Also, your recent sell calls in this area are turning out to be a great contrarian indicator? Holding on is turning out to be a good move of late. I think that since PM stocks appear to be a little undervalued and stronger than even you guys think, I’m not sure they will be going on sale much this summer (unless the big problems in Europe and the U.S. become a lot bigger this summer). Most of my big movers are now free trading, so setting, waiting, and watching appears to be the best idea to use at this point in time.

A7: Osisko bought a large majority of Brett’s shares and took over the company, but not all of the shares. Some of them remain free trading and will remain so until Osisko passes a resolution to absorb the rest of the shares. With its majority, of course, the motion will pass and BBR will stop trading and be delisted.

CASEY’S INTERNATIONAL SPECULATOR 19

As for being a contrary indicator, we’ve never claimed to be able to time the market tops and bottoms perfectly; we just look ahead and call the trends as best we see them. Our portfolio is up and full of realized gains, so we’re happy.

Q8: As we all know, during the 2008 selloff the junior miners initially performed poorly. Some of that response was likely due to then-current market structure (commodity prices, allocations by funds) as well as the capital structures of the junior miners at that time. So, thinking ahead about the potential case of a future general market sell-off, are there differences in the market and capital structures of junior miners between now and 2008 that might indicate a different response if a general market sell-off occurs again? If so, what are some of those differences, and are they significant?

A8: We’ve commented on this before, believing that there are important differences. First off, while many of the juniors that had assets with merit did recover, while most that had nothing more than hopes did not. This winnowing should make a difference. Second, while it’s hard to measure, we think that with 2008 still fresh on most investors’ minds, there is probably less leverage in our sector, and that should make for less forced selling in the case of a liquidity crunch. Third, this time, investors will remember how gold outshone almost all other assets in 2008, and how the good companies that went on sale came roaring back, many to new highs – this should both limit the downside and hasten the rebound to the upside. And, of course, it’s possible that next time gold will not drop at all but head higher, fueled by both greed and fear, and that could make the outcome very different for our stocks as well.

Q9: I have 19 stocks recommended by you. I would like to buy more of the same stocks and not of other stocks. For instance, I have FRG, bought for $3.82. I have 1,000 shares. If I buy 500 shares for today’s price of $6.49, my average cost would be $4.71, which is below your stink bid of $5.00. Is this the right approach, or am I missing something?

A9: That’s not a bad way of looking at it, if you have great confidence in where a stock is going and the emotional strength to face a future decrease in share price without feeling that you’ve made a mistake. But if we had that confidence, we’d recommend a higher buying price or no stink bid at all. The basic truth remains that you’d be buying more shares above our recommended price. We don’t recommend buying under current market for no reason; we think the odds favor our price guidance being met. We prefer to average down, not up – unless a story has changed so much that the new, higher price is still a great deal, or maybe even a better one.

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CASEY’S INTERNATIONAL SPECULATOR 20

End NotesUpcoming Events

Doug Casey and Louis James plan to attend the FreedomFest in Las Vegas, NV, July 7 - 11, 2010. For more information, see:

http://www.freedomfest.com

Louis James and Olivier Garret plan to attend the Agora Financial Investment Symposium, Vancouver, British Columbia, July 20 - 23, 2010. For more information, see:

http://agorafinancial.com/vancouver2010/

Louis James will be conducting CYCLE10 in Trakai, Lithuania, August 19 - 25, 2010. For more information, see:

http://www.profitfromfreedom.com

Doug Casey plans to attend the 2010 New Orleans Investment Conference, New Orleans, LA, October 27 - 30. For more information, see:

http://www.neworleansconference.com/

For more events of potential interest, please see:

http://www.caseyresearch.com/upcomingEvents.php

Stupidity Watch

Australian Stupidity, Continued…

The big news remains the 40% super-profits tax in Australia. Even before the measure takes effect, response has been strong, including mining major Xstrata canceling $5.6 billion worth of projects in the country:

http://www.bloomberg.com/news/2010-06-03/xstrata-suspends-495-million-of-spending-in-australia-on-government-tax.html

Originally, the government stuck fast to its guns, but recent reports suggest that the new prime minister, Julia Gillard, who stepped in to replace her unpopular predecessor, is more open to negotiations:

http://www.reuters.com/article/idUSN2622370720100626

We’d rather see the whole stupid idea scrapped, and “negotiate” does not mean “capitulate,” so we’ll have to see.

Better News from Peru?

Craig Spencer, a longtime reader, reports from the recent 9th Gold Symposium in Lima, Peru. This actually took place in May, but a technical glitch prevented us from publishing the report last month. It remains relevant, however, and is presented here for your information.

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Louis,

I attended the 9th Gold Symposium here in Lima for the last 3 days. It is held every other year, so there will not be one next year. It was very interesting to hear first hand from many of the major players in the mining industry in Peru (and Latin America in general).

I was particularly impressed with Michael Steinmann of Pan American Silver, but many of the presenters were interesting and competent.

Of surprising note was the closing address delivered by President Garcia. He said almost all the right things: affirming a commitment to stability, the rule of law, property rights, clear, reasonable and stable mining regulations and taxes, prudent monetary policy with minimal debt, a balanced budget, etc. When a politician says such things, one has to be skeptical that it means anything, and Garcia only has another 14 months in office anyway. Such a “commitment,” and the fact that Garcia has actually been conducting his government that way, is particularly odd given Garcia’s outrageous first term 20 years ago in which he did exactly the opposite and turned Peru into an even worse basket case than his predecessors.

I found it particularly noteworthy that Garcia gave a quite long and detailed disquisition on the fact that the developed countries were all so overburdened by excessive debt that it could never be paid off and that bankruptcy and economic collapse was extremely likely. He made the point that Peru had prudently avoided getting into such a dangerous situation and as a result was one of the most attractive places in the world for investors seeking to find a place to preserve their wealth and would likely do very well in the coming economic troubles.

He ended by declaiming that all developed country currencies were at risk and that gold was the best “investment refuge.”

One has to wonder how much of this was sincere or actually understood by such a slick politician. I can tell you that Garcia spoke at length, extemporaneously, and with no (or very few) notes. So this message was not crafted by a speechwriter. It is hard to see how he could have delivered such a coherent speech (although he is well known for his oratorical skills) without having some understanding of the issues.

In any case, much will depend on whether Garcia’s successor continues recent Peruvian government policy.

Craig

We don’t generally trust politicians, but this sure beats the leftist populism we see from so many in the region. The “worthy successor” hope seems to be working in Colombia – we hope it will in Peru as well.

Continuing Education Department

Here’s a video of Nobel Laureate Vernon Smith discussing how exchange, specialization, and property rights evolve in a free-market system. The good professors peaks rather slowly, so don’t watch this before bedtime, but the results of his experiments – not just theoretical wool-gathering – are quite striking and worth pondering. (Thanks to Craig for the link.)

http://newmedia.ufm.edu/gsm/index.php/Smithvdiscovering

CASEY’S INTERNATIONAL SPECULATOR 22

Term of the Month: Competence

When geologists speak of “competent” rock, they obviously are not referring to rocks that know what they are doing. What they mean is that the rock is strong, in several senses of the word. If the rock itself is structurally weak, it will cave in on you if you mine out too great a cavern or tunnel in it, or even dig too steep an open pit into it. Even if the rock itself has great strength but has been highly fractured, it can still give way on you.

This is important, not just for safety but as a cost factor. You want the steepest pit you can engineer and still mine safely, because that reduces the amount of worthless rock you have to spend money moving out of the way to get to the good stuff. The same thing applies underground, but you also want to leave behind as few “pillars” and other supports made of valuable ore as possible.

It’s an aspect of geology that’s on the technical side, so we don’t discuss much in our write-ups, but it is something we look into. Sometimes pit walls collapse, tailings dams burst, etc., reminding us graphically of the importance of competent rock and good engineering. It’s not mine-related, but if you ever wondered how bad a landslide could really be, check this video out:

http://sorisomail.com/email/42722/ja-viram-desmoronar-uma-montanha.html

Laugh or Cry Department

Our own Louis James recently debunked U.S. government claims to have discovered a trillion dollars worth of minerals in Afghanistan (http://opinion.financialpost.com/2010/06/16/afghan-mineral-bonanza-is-bogus/). This video is a brilliant but brutal mockery of the significance of the supposed discovery. (Warning to sensitive souls, this is harsh.)

http://www.thedailyshow.com/watch/tue-june-15-2010/ore-on-terror

Even more harsh but as brilliant and even more important is this George Carlin segment on the state of our planet. Don’t watch this of you don’t care for gutter language, but the thinking is completely in line with what Doug Casey said about global warming and may, in fact, become an important contribution to the debate. (Thanks to Katya for the link.)

http://www.youtube.com/watch?v=ovbF0D2wySI

This movie trailer for the Atlas Shrugged movie is a fake, but it’s very well done. Worth a smile for fans of the book.

http://www.youtube.com/watch?v=w151-e_Y_XE Back to Table of Contents

CASEY’S INTERNATIONAL SPECULATOR 23

End Quote Your editor was in the Republic of Belarus recently, a country that continually fascinates him, as much because of as in spite of its post-Soviet legacy. The place still has a KGB, and every city still has a statue of Lenin in its central square. And yet, like a blind man groping in the dark, even Belarus is turning towards a more liberal economy, creating an atmosphere of both uncertainty and opportunity. Yin and Yang. It’s an exciting, if sometimes unsettling, place, full of smart, talented, hard-working people struggling for better lives.

At any rate, while enjoying a sunny afternoon with my daughter in Park Gorkova in the capital city of Minsk, we heard a loud hissing noise behind us and turned to see a (licensed, inspected, detected, infected, neglected, and selected) balloon salesman inflated a balloon.

Said my 9-year-old future economist:

“Oh, it’s balloon inflation! Hmm. Too bad money doesn’t make the same sound when the government inflates it, so we could know when it’s happening!”

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