Going Long The Continental Drift

April 27, 1997

GOLD STANDARD INC. (GSTD - Nasdaq Small Cap)
Recent Price: 15/16
Incorporated: November 28, 1972

Sometimes, as a market astrologer, we feel like Dr. Frankenstein in that scene from the original movie where his brother-in-law, who thinks he can talk some sense into the man, implies quite strongly that his experiments are crazy. "Crazy am I?" The good doctor replies, "We'll see who's crazy." Had to be an Aries.

Herr Frankenstein had no self-doubts, leastwise not until half the village was burned to the ground and his monster was off playing rabbit to a pack of dogs and irate townsfolk. When they light up the torches, it's time to close out all positions and go to cash, or, better yet, gold. We say this by way of obtuse introduction of what we must admit, against all "sane" principles, is our favorite gold stock. Sure, when the peasants rise up and start persecuting all the monuments to bio-creativity, and economic stability, the mainline gold miners will doubtless offer solid gains and a measure of confidence. Especially when everyone is trying to buy shares in an ENTIRE SECTOR that probably doesn't have a combined market cap to match General Motors or IBM.

Nevertheless, the junior gold companies have always lured us the way Eve captivated Adam. Naturally, the attraction of these little companies is that someday they will be as the gods themselves. A large ore body will be unearthed, a few miles of quartzite right below the earthworms will test out an average 1.2 oz. gold per ton, and our little seventy-five cent share will zoom to nineteen dollars in seven months. Dream on. On the other hand, we have seen enough markets come and go, and spent plenty of years deeply immersed in metaphysics, to know by now that anything is possible on this human earth. If you can think it, it will express itself out here sure as karma and reincarnation. So bear with us as we invest just a little more of our light and power into this fantasy projection. It could pay off big.

It qualifies as one of our stock
selections we like to call
"Pennies from Heaven."
 
 

 

Our broker and liaison to the investment mainstream, "Whisper," called us up a few weeks ago and finally confessed why he was perennially bullish on air-conditioning stocks. "It's global warming," he intoned, quite seriously. When we caught our breath and stopped laughing, we told him that while we could wait a year or two now and then to let a position work out, we really weren't THAT long-term an investor. But with Gold Standard, Inc., we suppose Whisper will now have a laugh on us. It all revolves around "Continental Drift." But first, some background.

GSTD, based in Salt Lake City, Utah, is one of those little miners that has sizable geological parcels all over the place, some cash in the bank, a moderate accumulated deficit, and a tad of a book value. Hardly any production sales, just hopes of developing the properties. Here we must confess our partiality to the junior producers who always seem to have these "promising" properties tucked away in some forsaken corner of the earth (usually untouched by shopping malls). It qualifies as one of our stock selections we like to call "Pennies from Heaven."

The company filed suit against Getty Oil, Texaco, and American Barrick Resources in 1986 over a joint-venture partnership in the worldclass Mercur Mine, Utah, that went sour. GSTD, original discoverer of the mine, claimed breaches of joint-venture obligations, failure to provide a proper feasibility study, and fraud. The fraud case finally came to trial against Getty Oil in July 1993. Texaco conducted Getty's defense, owning 100% of Getty Mining Company stock. It was a case of David versus not one, but two Goliaths. After a seven week trial, the jury returned a verdict in favor of Gold Standard in the amount of $404,164,000 (yes, you read that right). It was the highest amount ever awarded by a jury in the State of Utah.

Originally organized to conduct
exploration and acquisition
activities in Uruguay, GSTD now
has significant properties there,
as well as in Utah and Brazil.
 
 
 
 

 

Six days later the judge "usurped the role of the jury" in the case, and granted the defendants motion for a directed verdict claiming fraud had not been proven by Gold Standard. This decision effectively overturned the jury's positive verdict even though each jury member was required to complete a detailed special verdict form consisting of questions designed to verify that all components of fraud were clear and convincing. Finally, after ten years of litigation, the last appeal by GSTD was denied, and the entire situation ended when the Utah Supreme Court denied a Motion for Reconsideration. Needless to say, shareholders were as angry as the townsfolk in "Frankenstein," and with similar good reason.

At the bad news in January 1996, the stock fell from over $5 to a buck. It crashed in a price chart pattern eerily repeated recently by Bre-X after the Busang imbroglio. After Gold Standard crashed, it roiled around a bit, and spent the rest of '96 at just about one dollar. It came off the floor to challenge the $2 level briefly, and has since sunk back to around a buck.

Originally organized to conduct exploration and acquisition activities in Uruguay, GSTD now has significant properties there, as well as in Utah and Brazil. The company has so much territory in Brazil, that a Brazilian subsidiary has been formed, with over two million acres of applied-for mining claims covering both gold and diamonds. Here's where the "Continental Drift" theory comes into play. This theory, according to GSTD engineers, explains the viability of a successful diamond exploration program in Uruguay. "Under the hypothetical slow movement of the continents theory, Uruguay was formerly attached to Namibia, Africa, a host to prolific diamond occurrences."

Call us an occult visionary if you will, but this always made sense to us. What gold explorer, or crude oil seeker, for that matter, hasn't looked at a world map with an eye to matching up the scattered pieces of the puzzle? Where one section of geography once touched another, even though now separated by an ocean, surely the geology must be the same. The way South America once tucked neatly against the left side of Africa has provided more than a few clues to mineral wealth. It might also explain how the leopard became the jaguar. But then, we tigress.

In Brazil, the company has, through shares in still another exploration company, interest in 200,000 acres of mineral requests in the Coromandel Diamond District. This area is known to be a producer of very large, high quality diamonds in excess of 100 carats. Indeed, the sixth largest diamond in the world, the 726 carat "President Vargas," (reminds us of the cigars we used to smoke) was found about a mile downstream from one of Gold Standard's properties. With 1.2 million acres acquired already in Brazil, GSTD believes quite strongly in the mineral potential of this humongous nation. We always did like Astrud Gilberto.

The way South America once
tucked neatly against the
left side of Africa has
provided more than a few
clues to mineral wealth.
 
 
 

 

The transiting Pluto was sweeping past the company's Mercury at the turn of '96 when the legal battle GSTD waged for so long finally unraveled. The savage blow to stock price, while a trauma for shareholders, is quite possibly a superb opportunity for astrologers and investors. This company has a natal Neptune/Sun conjunction between 5 and 6 degrees Sagittarius. This means that these two important celestial features in GSTD's horoscope are right next to each other. The powerful, long-term planet Pluto, moving in the heavens at present, will line up with that feature in GSTD's chart in December 1997, just when we foresee gold preparing to rev up for a multi-year bull market. Our experience has shown that Pluto conjunctions with such horoscope features are more often than not very positive indicators of future activity.

We feel that some shares could be nibbled at now, while prices are in the one dollar range. This is a long-term bottom level and simply too good a price to pass up. If there is a recovery from here, all well and good. More can be bought at expected final weakness in gold late in the year. Our target is unabashedly that full Pluto conjunction with the company's Neptune/Sun at the end of '97. '98 and '99 should then be good years for GSTD.

For those conversant with astrology, in 1999, with what we feel will be a gold bull market clearly under way, transiting Uranus will trine GSTD's Saturn, while transiting Saturn in Taurus, and Neptune in Aquarius, will square the company's Venus/Mars conjunction at 5 - 8 Scorpio. In the process, in April 1999, Saturn will be CONJUNCTING New York Stock Exchange Venus (our prime gold significator) at 5 degrees Taurus, while Neptune squares it. In March 2000, Jupiter gets to NYSE Venus, with Neptune back in a right-on square (as well as sextile to natal GSTD Neptune/Sun). For those NOT conversant with astrology, take it from us that this is primo astrological action extraordinaire!

And, finally, with Jupiter AND Saturn BOTH conjuncting NYSE Sun (extremely rare and powerful occurrence) in June 2000, we suspect all the markets will be in full uproar (or "downroar" as the case may be) and exciting to behold. Just keep your steel pots and flak vests on, troops.

We feel that some shares could
be nibbled at now, while prices
are in the one dollar range.
This is a long-term bottom
level and simply too good
a price to pass up.
 
 
 
 
 

 

So it is clear that we fully expect Gold Standard to be a vigorous participant in the end-of-century excitement. As with anything we say, we implore you to do your own due diligence. Don't come crying to us if this one tanks on you. As far as we can see, fundamentally this company is as reasonable an unproven speculative junior exploration outfit as any. Astrologically we can only drool. As a contrarian play, the abandonment by sellers over the hopeless legal verdict makes the shares an arguable bargain, and the trauma from this may have finally run its course. But you WILL have to be patient. Nevertheless, at these prices, it might make more sense to stuff your mattress with GSTD shares than with continentals, if you get our drift.

_________________________________________________

Caveat: The Astrological Investor is not a financial or investment advisor. Material presented herein is journalistic commentary for the astrological and metaphysical edification of investors and market observers. The writer of this article may have a position in the investments mentioned. Market investments are subject to unforeseen fluctuation and no predictive strategy may be accurate in determining future values of any investment vehicle. Not even debt instruments or currencies of sovereign nations, including those issued by the Treasury of the United States, or the U.S. Federal Reserve, may be depended upon to retain their value, or purchasing power, relative to other currencies, commodities, or any other thing upon this earth.

Gold is impervious to rust.