Here is an interesting, one might say insignificant, piece of news. The US Treasury Department is apparently going to block an investment by the Chinese in a small gold mining company. Why? The claim is for “security reasons.” On its face that is laughable. So, why be troubled by such a blip?
It could signal something more important. There are three possibilities that come immediately to mind. First, we are “getting tough” with the Chinese. This possibility is not very likely. One does not try to push their banker around, especially with trivial, annoying actions. Â Second, is that the US has longer term plans/needs for gold that they have not explicitly communicated. It is possible that US officials recognize the remaining life span of the dollar fiat currency is short and that it will eventually be replaced. If they envision gold as part of the solution, it would make sense to control gold within their own borders. China adopted a strategy more than a year ago of gaining control of gold and other critical resources using methods similar to the Nevada deal. If this speculation is correct, it is just another bullish sign for gold.
Finally, when dealing with the government, one can never rule out bureaucratic incompetence. The hypothesis that some muddle-headed official believes he has another good idea should always be in play.
Treasury Tells Obama To Block Chinese Investment In Nevada Gold Mine
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Firstgold Corp. (TSX: FGD) (PINKSHEETS: FGOC) (“Firstgold” or “the Company”) has been advised by The Committee on Foreign Investment in the United States (“CFIUS”) that they will, on Dec 21st, recommend to President Obama that he reject the proposed investment by the China-based company Northwest Non Ferrous International Investment Company Ltd. (“Northwest”) in Firstgold. CFIUS has determined through their investigation that serious, significant and consequential national security issues existed. In particular they noted the proximity of Firstgold’s properties to the Fallon Naval Air Station and related facilities. CFIUS had considered several mitigation possibilities and concluded that none would sufficiently resolve the national security issues.
“This is very difficult news to receive. While we certainly respect the process CFIUS has taken to arrive at their determination, we disagree 100% with their conclusion. We fail to see the connection between US national security and our principal asset the Relief Canyon mine, which has existed at its present location since the early 1980s. Our property is over 50 miles away from the Fallon base and surrounded by several other mining properties. At this stage we understand on Dec 21st that CFIUS will recommend rejection to President Obama. Our hope would be that his review of the matter will lead to a different and positive conclusion,” commented Terry Lynch Firstgold CEO.
“You can imagine how discouraging this is for Northwest. At this stage we do not know what their intentions are although we remain hopeful that we can yet find a way to close the transaction. In the interim Firstgold is reviewing other options to bring Relief Canyon into production and to obtain value for its assets.”
Firstgold has spent $16 million over the last 24 months developing a processing facility at Relief Canyon, located outside Lovelock Nevada, on the site of the previously producing Pegasus Gold Mine. Additional information about Firstgold Corp. can be found by visiting its web site at www.firstgoldcorp.com
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