VGMC – 2012

Press Release

December 5th, 2011

Dear Shareholders and Partners:

Marvelous year this is – 2011. I believe the majority of our shareholders are happy to be enjoying good returns (dividends) from their investments while the management team and board of directors are very optimistic about Virgin Gold’s future. We were even able to achieve all the objectives we set for ourselves in 2011 a few months ahead of schedule.
October and November are the busiest months at VGMC. These are the months when the Executive Board members meet to discuss the budget, business development plans and review the company’s key performance indexes (KPI). We then need to present the company’s financial statement and discuss our strategies and findings with the board of directors. Once we have the board’s approval, we will work with our Executive Board in order to implement the new measures and strategies for the following year (2012). During this period, we will also set new KPIs for each department and review reports from our sub and temporary committees. Some of these are external consultants, auditors and people with whom we work closely every year.

Convertible Preferred Share (CPS) holders only see their dividends every month and more often than not do not appreciate and understand what takes place behind the scenes. There is a great deal of hard work that needs to be done before dividends can be paid on time every month, ensuring that these dividends are sustainable while continuing to create value for our corporation year in year out.

I am trying to open up a bit to our shareholders about what management does so that they can understand more and have a greater sense of self belonging to this corporation. Below I highlight ten (10) of the most significant findings and measures this corporation will implement, improve and take action on for 2012. I am sharing this with you and I hope to receive some good feedback from our shareholders. Most of these measures won’t be implemented until early next year, so there is still room for changes and improvement if necessary.

One (1):
VGMC is definitely on course for public listing within the next 2-3 years. In order to do this, we may move our headquarters away from Panama. We will focus on a jurisdiction that will enable among other things:
a. Maximum Privacy for our shareholders and business partners
b. Tax free for VGMC and its shareholders for as long as possible
c. Minimum interference from regulators on the manner and methods we use to conduct our business
d. Guarantee us a free flow of capital for business expansion and growth

A business corporation is like you and me. We are very much alive and we continuously seek greener pasture to protect our own, our family, our close relatives, best friends, business partners, distant relatives, regular friends and acquaintances’ interests. Similarly, VGMC is currently studying the feasibility of relocating in order to achieve a higher level and a faster speed of success in accordance with its corporate vision.

Two (2):
Pending the approval from our board of directors, our corporate structure will be streamlined for better management and efficiency. Modern day management philosophy is to create a smaller team of top level hard-working executives so that policies may be decided and implemented more efficiently. I expect to reveal our new corporate structure effective January 2012 which will consist of a smaller executive board primarily focused on Finance, Business Operations, Investor Relations and Information Technology as a core center for integration of these four departments. As shareholders may have realized these past few months, I continuously strive for efficiency, productivity and cost cutting so that VGMC may continue to deliver top dollar earnings per share to shareholders over the long term.

Three (3):
Premier Shareholder service will only be extended to shareholders with a total of one hundred thousand (100,000) CPS effective 1^st January 2012. Premier shareholders may make appointments with Premier Relationship Officers to visit our Premier office to discuss their issues and ideas. All appointments must be made at least seven (7) working days in advance. Premier shareholders may also call our office to enquire about their credit top up and withdrawal as well as other issues. The threshold for premier shareholders may be raised from time to time as we see fit. We may also reveal more Premier Shareholder benefits in 2012.

Four (4):
VGMC has identified a number of Silver and Platinum Group Metal projects in which we will be taking a significant stake in 2012 in order for us to generate more returns for our shareholders. Such ventures carry very lower risk with a higher return as the investment in this sector is not as competitive as gold. There seems to be a lot of vulnerability in Europe and the U.S. for the next two years and we are monitoring the situation closely. The good news is that our investments are not exposed to financial risk in these two regions. However, in an event of economic downfall, the price of gold may either hit a record high or a steep drop. If the price of gold hits a record high, I congratulate all of us. If it falls, it simply means that your dividend in monetary value will be less. As of now, we have hedged the downside at USD1,000 per troy ounce of gold. This means that if the price of gold should fall below USD1,000 per ounce, CPS holders will be paid USD1,000 instead of 1 ounce of gold. I see the possibility to further hedge the amount between USD1,200 - USD1,500 this year! I also want to note that should there be any steep drop in the price of gold; VGMC is financially equipped to take full advantage of such an opportunity to engage in more gold mining ventures that could give the organization a sizeable advantage moving forward.

Five (5):
Payment of dividends to shareholders by third party payment providers may occasionally face some delays and hiccups. It’s no joke but when we are dealing with 50,000 shareholder bank accounts in 50 countries every week, you can imagine the possibilities and margin of error. I have mentioned this again and again that when there are any issues with credit top up or credit withdrawal, it is a situation that both the shareholders and company want to avoid and resolve as soon as possible. Patience is the key virtue.
In some circumstances, it is truly unavoidable, but we do see plenty of room for improvement. We would also like to suggest that shareholders open offshore bank accounts so that their dividends may be kept securely in a tax-free jurisdiction. We strongly recommend jurisdictions such as Hong Kong, Liechtenstein, Singapore and Switzerland.

Six (6):
A new measure with regards to shareholder minimum investments will be implemented stage by stage within the next year going forward. Shareholders who have invested 1000CPS or less will be given 90 days to upgrade their subscription to 2000CPS or risk automatic un-subscription from the company. All current shareholders will be given 90 days from 1^st of January 2012 to increase their subscription to 2000CPS. Failure to do so will result in automatic un-subscription after this 90 days period and the funds will be returned in full to the shareholder after 45 days similar to the normal un-subscription process. New shareholders who subscribe 1000CPS after 1^st of January 2012 will also be given 90 days from their initial subscription date to increase their subscription to 2000 CPS. Management feels that it is time for shareholders to move forward. This 2000CPS minimum subscription amount will gradually be increased to 3,000 and 5,000. The time to test the credibility of VGMC is over; beyond 2012 we will be gearing up this corporation to the next level. There are some “rotten apples” out there and this exercise will help get rid of the minority to protect the majority.

Seven (7):
Financial Statements and Transparency. Many CPS holders request VGMC to reveal some kind of financial statement. Firstly, we are not required by law to do this. Secondly, we are under contract through our dealings with our partners to not release such figures to the public. Thirdly, there is really no need for such disclosure to our CPS holders. CPS holders under our subscription terms have no managerial and voting rights to decide on the running of VGMC. When there are dividends and when dividends are paid on time to shareholders, it signifies that the corporation is well run and financially viable. As we move closer to public listing or when we are ready for public listing, these figures will be made available to the public.

Eight (8):
We will continue to offer gold trading to our shareholders. However, we urge shareholders not to go overboard with this. The strategy should always be to buy low and sell high. Daily trading is not encouraged. In fact, we may come out with a few measures and strategies next year to encourage shareholders not to speculate in short term trading but rather take a longer view on the prospect of bullish gold prices over the long term. We are studying and evaluating the proposal to implement higher intra-day charges and these charges may be reduced as time goes by and totally abolished if shareholders keep their paper trade for more than a week, for example. Our philosophy is simple: Encourage shareholders to build/create wealth through proper financial strategies. Speculating is not a strategy, speculating is gambling and gambling is illegal in all religions.

Nine (9):
Improvement on Information Technology (IT) facilities. As our shareholder base grows more every day worldwide, the need to add and upgrade our servers, firewalls and other hardware has become a necessity. We will implement our state-of-the-art IT facility throughout 2012 which will provide us with one of the most efficient and modern shareholder online account facilities comparable to any company of our size in the world. Our new facility will enable us to cater to a few hundred thousand shareholders from all regions.

Ten (10):
Events and Promotions. We feel that it is about time that we stopped our regional promotions for our shareholders. I have to admit that there is a sense of unfairness when we hold certain promotions in Uruguay but not in Brazil, for example. It’s time we focus on the contribution of all our shareholders and view/treat them as a global community. We are still discussing among our executive board members regarding the type of global promotion and events that we will hold for 2012.

These last few years have really been great for VGMC as we have been growing in leaps and bounds. The good news is we are aiming higher and we will reach greater heights over the next few years. Capital appreciation will be more significantly felt while dividends will seem relatively lower as the price per share increases. As I had mentioned months ago, it actually adds up to the same at the end of the day. It is part of the evolution of every great corporation. In the beginning as confidence is lower, shares are offered at a lower price and gradually the share value will appreciate in tandem with better management, confidence and capability to move forward.

I take this opportunity to wish all shareholders and staff a Merry Christmas and Happy New Year. If I may suggest, take some time off or go for a holiday with your family. Do some credit withdrawals and use the money to celebrate with your loved ones, your friends and donate a worthy sum to the needy. The more you give to the world, the more the world gives back to you. There is an ironic belief that money is very much alive. Contrary to normal belief that you must try your best to earn and protect all the money you can; money actually chooses its owner. If you are a worthy owner, it will come to you and it will call out to all its relatives and friends to come to you. If you think about Bill Gates and Warren Buffet, this belief is not so ironic and could actually be true!

2012…VGMC is coming to you!

5^th December 2011
Kenneth Elinger
CEO and President
Virgin Gold Mining Corporation

Bullion Authority Predicts $10,000 Gold

BMG President/CEO Nick Barisheff talks gold, U.S. debt and more

By Kyle Woodley, InvestorPlace Assistant Editor

 

$2,000 gold. A few years ago, that seemed like a crazy prediction. But with gold hitting an all-time high over $1,900 less than five months ago, that figure is very possible in 2012.

Of course, one person thinks $2,000 is just the beginning. Nick Barisheff, President and CEO of Bullion Management Group Inc., has his sights set on $10,000 gold.

His reasons? They are varied, but it all comes back to the fact that government-sponsored currency is worthless — and that gold is the only asset that will really have any value.

The only thing standing in the way? Ron Paul.

Barisheff heads a management company that offers mutual fund trusts and a bullion purchasing program. He regularly appears on CNBC, writes for finance publications and gives speeches to explain his bold call — and, of course, to tout his upcoming bookwith the apt title $10,000 Gold. He recently spoke withInvestorPlace.com to discuss precious metals and his bold prediction.

Q: You keep pretty busy talking about gold these days. Do you think people are more interested in gold now than ever before?

A: The interest is certainly growing, but it’s surprising how there’s little adoption. The bulk of investors have no gold in their portfolios, and the institutions have less than 0.3% allocations — that includes bullion and mining stocks. Even though it’s had solid performance for 10 years, it’s still not readily adopted by the public in general or by the financial community.

Q: So why do you think people are becoming more interested in gold?

A: Concerns are growing about the financial management of the economy, whether it’s the U.S., Europe or other countries, and the fact that governments are having to resort to continuously increasing levels of debt and … printing more and more currency. As you do that, the currency is going to be worth less and less in terms of purchasing power, and particularly against “real” money, such as gold and silver.

Q: Your upcoming book is called $10,000 Gold. Are you talking about 2012, 2013? This seems like it would have to be a long-term prediction.

A: This would be at least a five-year time frame. I’ve resisted doing predictions in the past for any long term, but what changed my mind is watching the U.S. debt ceiling debate. There’s no will to do what’s necessary. You’re going to see budget deficits running $1.5 trillion and likely increase year after year. That’s a huge amount of debt to keep compounding, and the issue that the U.S. is reaching is the ability to tax the people to reduce the deficit is dwindling or nonexistent. So the only course of action is to simply print the money. That’s how you get into the high-gold scenario — not that gold’s going up, but the currency will be devalued.

When you take the true debt position of the U.S. — when you add in the things like Social Security and Medicare — then you get the real national debt not being $15 trillion but $120 trillion. And when you try to put meaning against that, you find $120 trillion represents $1 million per taxpayer. Tell me: How that’s going to be paid back?

Q: Sounds like investors will have much bigger problems than their 401(k) statements.

A: Exactly. $5,000 or $10,000 gold isn’t going to be a pleasant society to live in. There’s going to be many other social problems to deal with — it’s not going to be that if you’re a gold investor, you’re living happily ever after. But you’d be better off having it than not having it.

Q: What’s the most important thing investors should know about gold right now?

A: Well, I think the important thing to understand is that gold is money. There’s a big deal of confusion. It’s also a commodity, and you can also look at it as an investment. But it’s been money for 3,000 years, and it still is today.

People say, “You can’t eat gold,” “You can’t put (gold) in your gas tank,” “(Gold) doesn’t pay any interest or dividends.” But if you put $100 bills in a safe, it’s not going to bear any interest or dividends, either. And that currency in your pocket doesn’t taste very good and it doesn’t work in your gas tank …

The difference is that currency in the safe is devaluating daily while gold has been increasing in purchasing power. So, in the case of currency you’re effectively losing principal value day in and day out, even if it’s staying in the safe.

Q: BMG’s products include mutual funds that purchase bullion, as well as an actual direct-ownership bullion bar program. Can you explain the differences between owning physical gold and owning a gold fund, and how investors can choose the right option?

A: I originally set (the mutual funds) up so they qualified for registered retirement plans in Canada, and we’re now working with a company to work it into U.S. IRAs and so on. But the funds are for smaller investors — the minimum subscription is $1,000, so that pretty much covers everyone. The fund itself buys physical bullion. We don’t market-time, we don’t hedge …  it’s a pure bullion holding.

But once you have high-net-worth investors … we provide allocated storage for the bigger investment-grade bars. And when you get to that, you have 400-ounce gold bars worth $600,000.

Q: Do you think gold miners are a good investment right now?

That’s more of a speculation. The problem: The gold miners haven’t been keeping pace with even bullion. Because the gold miners as a whole are a relatively thin market — I think for all of the miners, the (combined) market cap is less than a Microsoft (NASDAQ:MSFT) or a Google(NASDAQ:GOOG) — the problem is if you have a broad market decline, mining stocks will have a much bigger decline, even if the price of gold is rising. Under certain circumstances they might outperform, but the investor has to understand the difference.

Q: What about other precious metals, such as silver and platinum?

That’s why we set up the original fund with gold, silver and platinum, because then you have diversification in all three metals, and each of the metals has its own bullish story to tell. Platinum, for instance, is geographically dependent on South Africa. South Africa has 80% of reserves and production, so if there’s any sort of glitch in South Africa, prices rise regardless of what else may or may not be happening.

Q: What do you consider the greatest threat to an eventual explosion in gold?

Ron Paul getting elected and getting things right. *laughing* That’s the greatest threat. Because then the erosion of the currency, by getting into fiscal responsibility, may improve.

I think at some point we’re going to have a massive short-covering rally which is going to cause a spike, and when that short covering is over there’s going to be a decline, and people will think that the bull market in gold is over. No — it was just (lower) after the short-covering correction, and then it’ll go back to normal.

The thing to look at is the strength of the currencies — has anything really changed? Have the governments of the world gotten fiscally responsible? Then there’ll be less need for gold. But the way things are going, it doesn’t look like it’s going to happen.

Gold Prices: Where Will They Finish 2012?

Editor's note: As part of our partnership with PBS's Nightly Business Report, TheStreet's Alix Steel joined NBR Monday (watch video and read transcript here) to discuss what 2012 may hold for gold.
NEW YORK (TheStreet) -- Can gold prices regain their luster in 2012?

Gold prices ended 2011 with a fizzle. Gold ended the year up 10%, but had fallen 18% from their intra-day high of $1,923 an ounce, leaving many investors and fund managers weary of the supposed safe haven asset. Gold was undoubtedly a confusing investment to many. It traded with risk assets, then traded in tandem with the euro, oil and stocks and inversely to the U.S. dollar.

Gold bears point to weakening physical demand out of Asia. China and India accounted for 41% of total gold consumed in 2010, according to the World Gold Council, but both countries are struggling to maintain their fast and furious growth.

India consumed only 878 tons of gold in 2011, a 8.4% drop from 2010. The Bombay Bullion Association believes that in the first quarter, India could import half of what it did in 2011. Indian demand has been ravaged by high interest rates and a devalued rupee, making gold more expensive to buy.

Demand in China is strong, but not enough to compensate for lackluster Indian demand, and many fear a slowdown if China's economy also slows drastically. China's inflation has moderated to 4.2% and the central bank has allowed banks to keep less money in their reserves, but seems reluctant to cut rates further.

To make matters worse, mine production was up 5% in the last quarter and there is a worry that central banks might start selling gold to raise dollars.

On the flip side, the bulls point to 11 years of gold price gains and argue that gold's recent massacre was a normal correction. Central bank buying has also been robust, with the official sector buying 344 tons of gold in the first 11 months of 2011. Turkey and Russia comprised the lion's share of buying.

2012 Stock Predictions and Outlook

Your one-stop shop for 2012 stock recommendations and market predictions.

Finally, bulls take comfort in the fact that inflation is outpacing interest rates, leading to negative real interest rates in most countries. As people's money in the bank is literally worth less, investors flock to a hard asset like gold to preserve their wealth. Many are expecting inflation to pick up speed as central banks around the world gear up to fight deflation with more money printing.

Jeffrey Wright, senior research analyst at Global Hunter Securities, sees gold range bound for the year between $1,450 and $1,750 an ounce. Wright says there could be spikes to $1,900 or $2,000, especially if gridlock in Congress brings up another budget battle and highlights the U.S.' own fiscal problems. "I don't think the bull market is over, but there is near term consolidation that could go on for six months or longer."

Leo Larkin, metals and mining analyst at S&P Capital IQ, thinks that $1,900 gold might not be that much of a stretch. "Gold has been going up without interruption for 10 years" and a correction is totally normal, Larkin says.

"The United States' [money] supply is up 9% from the beginning of the year and the monetary base is up 30%. They are setting the stage for higher [gold] prices," argues Larkin.

"People get so caught up with the next three minutes for gold and they should really be focused on the next three years," says Frank Holmes, CEO of U.S. Global Investors. "Does anyone really believe in the long term strength of the U.S. dollar ... We're just going to have to live with this volatility for another 12 months," says Holmes, who still thinks gold price could double to $3,600 an ounce in 5 years.

5 Reasons Gold Will Rise In 2012

The following is a guest post by Malcolm Gissen, co-manager of The Encompass Fund.

As someone who has been buying gold and other commodities since 2002, I can say with some authority that it is difficult to predict the price of any commodity.

However, one thing I’m fairly certain about is that after 12 consecutive years of increasing value, gold will continue to go higher in 2012.  Here’s why:

1. The world’s central banks are buying. For the last two years, central banks around the world—notably those in Asia and Latin America¾have become net buyers of gold. That trend is likely to continue as the banks seek to diversify away from U.S. and European currencies and increase their allocation to gold as a percentage of their total reserves.

2. Europe’s investors are nervous. Nervous European investors are concerned about the survival of the European Union and of their banks. As a result, the World Gold Council reports that in the third quarter of 2011, Europe set a quarterly record, investing E4.6 billion in gold. This trend is likely to continue. 

3. ETFs, ETFs, ETFs. During this time of unceasing financial crises, ETFs have made it easier for investors to shield themselves with investments in gold. The gold Exchange Traded Funds saw an inflow of 77.6 tons in the third quarter of 2011, a 58% increase from the same period in 2010. With gold ETF’s expanding to other parts of the world, the demand for gold as an investment should only increase.

4. The Chinese love gold jewelry, too! In a society that values gold, the growing Chinese middle class helped fuel a 13% increase in the demand for gold in Q311 compared to Q310. Retail jewelry chains are expanding to smaller cities to meet this growing demand. As the incomes of Chinese citizens are likely to continue to rise, the number of Chinese reaching middle class status will also increase, creating a significant market for gold.

5. The easy gold has already been found. Gold supplies have been constrained for some time. It’s more difficult to find large gold deposits and increasingly challenging to bring remaining stores out of the ground. The process of obtaining mining permits is difficult and time-consuming. Skilled geologists are both hard to find and expensive.  The costs of building a mine and getting into production have soared to the point where capital expenditures of $3-$5 billion are not unheard of.  In addition, it can take up to 10 years from the initial discovery of gold to get a gold mine into production.

Global demand for gold in the third quarter of 2011 (the most recent available numbers from the World Gold Council) increased 6% from one year earlier to $57.7 billion (up from $45 billion), an all-time quarterly record.

At a time when demand is clearly outstripping supply, when confidence in our governments and financial institutions is at an all-time low, when wars and acts of terror have become a daily occurrence, when most of the world’s largest economies are either slowing down, near recession or barely accelerating, why would investors sell gold? It does not make much sense to me.