Commodity Focus

Gold and Silver

Our initial commodity focus will consist primarily of precious metals. The Castle Creek Project (Idaho) contains gold and silver while the SW2 project (Wyoming) contains Platinum Group Elements (PGE). PGE generally include platinum, palladium, gold, rhodium, ruthenium, osmium, and iridium. The reason that we will initially focus on precious metals is because of their high unit value and currency devaluation. In our opinion, gold and silver have increased in dollar value primarily through currency devaluation. Gold and silver tend to retain purchasing power. For example, in 1918, a new Ford automobile could be purchased for about US$ 500 (25 ounces of gold). A century later, a new Ford can be purchased for about US$ 30,000 (25 ounces of gold).

Devaluation of the US Dollar was once only a bizarre notion of the crackpot community. Since 1971, however, we believe that a 35-fold increase of the gold price in US Dollars has vindicated the crackpots. Gold has not really risen in value, but the US Dollar has decreased in value. This contention is further supported by the fact that Dow Jones Industrial Average (DJIA) in 2018 is around 25,000. In 1971, it was about 900. That is a 28-fold increase. The similarity of the gold/DJIA metrics is unlikely to be just a coincidence. In our opinion, they suggest that currency devaluation is the culprit. As the general public eventually becomes aware of the detrimental effects of currency devaluation, we feel that gold and silver prices will increase substantially as demand increases. This could create significant value leverage to potentially economic gold/silver resources. 

Prior to 1971, currency devaluation in the US was virtually non-existent. Grandpa often remarked that something reliable or credible was “as sound as a dollar”. In 1971, however, a little-known event occurred that is not mentioned in the public schools of Cletusville . President Richard M. Nixon unilaterally cancelled the Bretton Woods agreement of 1944 which linked the US dollar to gold at a fixed price of $35/per ounce of gold. Since then gold and silver have been on a near-relentless upward trajectory in US dollars terms. And, given historical comparisons, it seems likely that the upward trajectory will continue.

Platinum Group Elements (PGE)

Platinum and palladium have recently become of increased use, primarily in the automotive industry. Platinum is used for catalytic converters in diesel engines while palladium is used for catalytic converters in gasoline engines. These recent uses have driven the prices of platinum and palladium to historically high levels. Although diesel car sales have recently declined slightly in Europe, diesel automotive sales remain strong throughout the rest of the world. No viable substitute for these metals has yet been found for catalytic converters. 

Russia and South Africa are the two main producers of platinum and palladium worldwide. There are only two primary platinum/palladium producers in North America. The first of these is the Stillwater/East Boulder Mine Complex in Montana ,USA, in production since 1987. The second is North American Palladium's Lac des Iles mine in Canada. The World Platinum Investment Council recently determined that the supply surplus in the platinum market will shrink in 2018 as demand rises and South African mine production decreases. Indeed, increasing political unrest in South Africa could eventually mean nationalization of the PGE mines, which could severely disrupt platinum/palladium supplies, resulting in much higher PGE prices. 

Recent data shows that the US produces only about 2.5% of the world’s platinum and palladium. In 2017, the US imported 68% of the platinum used domestically and 45% of the palladium used domestically. Given those statistics, we feel that it is possible that Wyoming Mines could eventually benefit from some kind of government funding and/or rapid appreciation of share value in the event that the SW2 project comes to fruition. A domestic supply of PGE might become an enviable asset for a small company like Wyoming Mines, especially given the political instability in both Russia and South Africa.