Mkt Cap $180M Gold Held $290M Value, page-27

@mainholm

Thanks for your good wishes. I forgot to answer your question about the gold hoarding strategy. I am very happy with that strategy. Consider the two charts below. One the $A gold price chart and the other Australian official interest rates.

When the Kundana mine started in the year 2000 the $A gold price was about $450 and currently it's sitting at about $1,740. In the same time official interest rates have oscillated around about 5% and in recent years since 2012 they have dropped to about 2.5%.

If you had have sold the first ounce of gold from the Kundana mine and converted it to cash in the year 2000 you would have got $450 cash (pre a tax on profit). If you compound $450 at an annual rate of 4% for 16 years that money would be worth $876 (pre income tax and pre inflation). So the cash you got would have been taxed as profit when it was sold and any income from the cash as it compounded over the course of 16 years would also have been taxed. I'm not going to bother trying to calculate those amounts but let's just say that the $876 would actually be worth less some significant amount less.

Well that first ounce of gold that Mr Billis hoarded away is now worth $1,740 (pre tax and inflation). About twice as much. Now I can hear your brain ticking over thinking well if that $450 had been invested somehow back into the business or another mining venture it could have grown to become more. Well unfortunately its impossible to put values on what ifs, unproven businesses and speculation so that's all I can say. What's more with interest rates around the world falling and in some instances going negative the comparative dollar value verses gold value of the hoard will only increase further and heaven help us if the gold price actually hits unexpected highs due to some sort of events in the markets. Eshmun