I find it interesting that Chavez doesn’t want the gold to leave Venezuela and I can't blame him. The government wants control of the gold sales or just to keep it for themselves as reserves, not a bad move on his part and if I was him I would rather keep the gold and pay off everyone else in paper money too. Now what would be an interesting development and if Chavez was smart, would be that he allows some western miners such as Crystallex to start gold mining operations. He can then buy the gold from them and keep it as a govt reserve asset, pay the western miners off with their own worthless paper dollars and he gets a higher royalty for the gold production under the new mining laws. If this scenario does materialize and Crystallex is given the option to take these terms, they may want to consider taking it or continue fighting the case in world court which well get them nowhere and is no benefit to anyone. As this story plays out, I will keep my eyes on Crystallex as it may become a great buy even if they have to accept these terms.
In fact, today I started buying some shares. Now, this is a total speculation on my part, but Crystallex shares are dirt cheap and the price does not nearly reflect the value of gold in ground they have. Back in May 2007, the shared traded as high as $5.52 which was it's all time highs for the last 10 years and even at that price, I am sure it was never given full and fair value because there was always political risk associated to the project. I am sure if this project was allowed to be put into production within the next few years, Crystallex would easily be trading over $10 and this would make all existing shareholders very happy. Going from $0.12 to $10 over a 5 year time frame is an amazing return and is what I would get as potential returns, that is if the boys in the sand box could play nicely.
Original Investment $0.12
Investment Return $10.00
Term of Investment 5 years
Gain on Investment $9.88
Return on Inv. 8,233.33 %
Simple Annual ROI 1,646.67 %
Compound Annual ROI 142.19%
Now, maybe I am smoking pipe dreams to believe these kinds of returns are possible, everyone would tell me that I am dreaming. Instinct and history has shown us that the average person could never dream of possibly make these kinds of returns, no one would believe it and at this moment I don't believe it will happen either. However being an optimist and a speculator, I actually could make these kinds of returns and in fact it could be very possible with Crystallex. But again like most dreams, mine will most likely never come true because the level of bureaucracy, greed and control by governments, politicians and management. Without going into politics, my dream of growing my wealth by investing in Crystallex will never come true because of power, control and ego coming from the same people calling the shots. But there is always hope and that is why I bought shares of Crystallex today.
Hope come from believing that Venezuela, the West and Crystallex can come to a middle ground quickly and thus turning around this non-productive asset of a gold mine which is just sitting there doing nothing and is currently no benefit to anyone. Chavez, has now laid his cards down on what he wants from the gold mining industry, I am sure management at Crystallex wants to see their gold mine go into production and no one will benefit from this asset if it gets tied up in World Court. The citizens of Venezuela are defiantly not getting any benefits from all this political arm wrestling. What we have here is an opportunity to turn a nonproductive asset into something that will be positive and a benefit to everyone including the shareholders. So yes I am hopefully that people will do the right thing and get this deal done, that is why I am buying the shares at this cheap price, shareholders should start voicing their opinions and demand that progress is made on this project even if it means playing nicely and making compromises.
If I am wrong and there is no willingness to come to an agreement by the politicians and management, then my shares will have very little value or will become worthless, much like my dreams. I guess I could always frame my share certificate of Crystallex on the wall as a memento of my hope in believing that we as humans are doing the right thing for the benefit of everyone. My certificate may expire worthless because of factors beyond my control, but it will have some value to me as reminder and a great conversation piece of how my dreams and hopes for a better world never came true because people with power just can't get beyond their ego. Or I could just chalk it up to me making another bad investment decision and I should just take the certificate, put it in my pipe, smoke it and say "I had a dream, but all it did was go up in smoke."
Venezuelan President Hugo Chavez's nationalization of the exploration and production of gold became law on Monday, requiring foreign firms to enter into partnerships with the state.
The law, decreed by Chavez last month and published in the Official Gazette on Monday, will allow private firms to mine gold, but only in partnerships with the government in which the state will receive royalties of up to 13 percent.
"All of the gold that is obtained as a consequence of mining activity in the national territory must be sold and delivered to the Republic of Venezuela," the official text of the new law says.
"The republic will exercise a monopoly on the marketing of gold," it adds.
The leftist Chavez decreed the law through special powers granted in December 2010 that allow him to bypass parliament.
Under the new law, the state can enter into partnerships with private firms in which it holds a majority of at least 55 percent.
Russia's Rusoro is currently operating a gold mine in the south of the country, and Cuba's Geominsal has evaluated reserves in partnership with Venezuela's state-run Minerven.
The new law grants the state gold royalties of 13 percent, but reduces the rate to as low as three percent for mines "linked to social interest, with the participation of indigenous communities, small-scale or artisanal miners."
In August, Chavez announced his intention to nationalize the gold sector in order to prevent "mafias" from exploiting Venezuela's natural resources. Illegal mining makes up 60 percent of local production in the gold sector.
The leading oil exporter in South America, Venezuela has the 15th largest gold reserves in the world, with an estimated 365.8 tons, according to the World Gold Council.
Here is the 1 Year chart on Crystallex KRY-T, I don't recommend this as an investment, but if you are speculator and have hope like I do, you may want to consider buying some shares. Looking at the volume over the last few days, some one else is also speculating on this stock too. Also, on the bid and ask chart, we can see there is strong buy order below .10, so the risk is very low compared to the potential returns with some hope and belief in my pipe dreams.