10 Reasons why Gold may be an Insurance Policy

Most investors are drawn to gold because it has gone up over 400% in the past ten years. Not a bad track record, especially in light of the stock market suffering through the “lost decade”. However, wealth creation is not the primary reason to buy gold. Gold may serve like an insurance policy to insure against the many negative events that can occur in today’s global economy. Events such as:

1. The fragile economic recovery we are experiencing in the US.
   
2. The high level of debt we see in our cities, states and our Federal government.
   
3. The economic uncertainty we currently see in the European Union, Russia, Japan and many other parts of the world.
   
4. The sovereign debt crisis in Greece, Portugal and Ireland.
   
5. The geopolitical tensions that we see in the Middle East; India and Pakistan; North & South Korea and elsewhere
   
6. The volatile currency markets. Even Central Banks are becoming less reliant on paper money and trading it for gold.
   
7. The devaluation of the US dollar.
   
8. Investors trying to deal in financial markets that move at the speed of light and where “flash crashes” occur and one year later can still not be explained.
   
9. Inflation in the US and many other parts of the world as governments has chosen to just print money to cover their debts.
   
10. Black Swan Events. The earthquake that causes a tsunami that hits a nuclear reactor in Japan. The unexpected events with severe negative consequences that cannot be predicted. We know they are coming but we cannot say when and we cannot say what they will be.

Gold holds value in times of uncertainty where your other investments may not. There is an old saying, “put 10% of your money in Gold and 90% into stocks, bonds or cash. Then every night go to bed and hope Gold prices go down because that means there is a good chance your other investments went up.”  You purchase insurance on your home not because you want a tornado to hit, but in case a tornado hits.  Gold may be able to provide the same protection for your investment portfolio.

Dealers predict gold prices will still go higher, but warn of risks

MOUNT PLEASANT — Are you looking for a new investment?

For those who can afford it, metals such as gold and silver are still the way to go, multiple dealers agreed Sunday at the 74th annual Racine Numismatic Society Coin Show. But some cautioned there is still a risk.

Gold was at $1,774 an ounce Sunday, said Bill Spencer of Racine, who owns American Coin and Jewelry, at the corner of Highway 20 and Ohio Street.

That is up from about $800 an ounce in the beginning of 2008, before the recession hit. Silver is also up from about $15 then to $35.41 an ounce now.

On Sunday, an estimated 400 people attended the show at Roma Lodge, 7130 Spring St., with coin enthusiasts buying and selling coins, dollars and metals.

People probably should be holding on to a lot of it, but some people cannot afford to, Spencer said.

“If (the government) had to back our currency with gold, it would be worth $20,000 an ounce,” Spencer said. “If this (economy) gets good, gold and silver will get bad ... (but) do you think that will happen?” Spencer asked skeptically.

But Peter Gass, 46, of Sturtevant, who works at U.S. Bank and sells and buys coins at weekend shows, said he doesn’t think the value of gold and silver will keep going up.

“At the height of where it’s at, it’s unstable,” Gass said. “If you don’t like volatility, this might not be the place to be,” pointing to the real estate market and the dot-com bubble, which both burst.

For a more stable investment, Gass said he thinks coins are the way to go.

But Tom Rebler, a coin dealer from Waukesha and retired truck driver, said that for the average person gold and silver are a better way to go, because coin collecting can be very technical.

Also he estimates gold will reach at least $2,000 an ounce by the end of the year, and silver will go up to the low $40s.

Pete Laehr, 61, who owns a coin shop in Watertown, also said, “We haven’t seen the max.”

But in reality, many people cannot afford to buy right now, Laehr said.

People buy coins from him at shows like the one in Mount Pleasant, but not in his hometown, where people are just selling.

“It’s a good time to buy,” Laehr said. “But with the economy in Watertown, people are selling, not buying.”

‘Gold prices may hit $5,000’

 

Singapore: Gold may climb to a record $2,500 an ounce this year on demand from centralbanks and investors, according to Schroder Investment Management, which said a longer-term bull run may push the price to twice that figure.

The metal may trade between $1,500 and $2,500 this year, ending 2012 at about $2,250, Christopher Wyke, London-based productmanager for emerging-market debt, commodity and currency funds, said at a briefing in Singapore.

The bull run may last a further five to eight years, with the price coming near to $5,000, Wyke said yesterday, echoing a call that he made in 2008.

Spot gold, which peaked at $1,921.15 onSeptember 6, gained for an 11th year in 2011, buoyed by central-bank purchases andincreased haven demand driven by Europe’s sovereign-debt crisis.

Holdings in exchange-traded products backed by bullion are near an all-time high, according to data tracked by Bloomberg.

“Over the next five to eight years, it’s going to go considerably higher,” said Wyke. “We wouldn’t be surprised to see the price close to $5,000.” Schroder Investment manages about $10 billion in three commodities-related funds.

Can Virgin Gold Afford High Dividend Payout?

“Can Virgin Gold afford to pay high dividend to shareholders in the long run? Is the company’s financial portfolio stable? Is Virgin Gold overpaying? How long can Virgin Gold keep its commitment to CPS holders? When will Virgin Gold go for public listing?”

The company is being asked questions similar to the ones above by many of its shareholders around the world time and time again. Being the Chief Financial Officer of Virgin Gold, I am the person in the best position to answer these questions. With over 20 years of mining, investment and financial experience, I am sharing with you the latest insights of this corporation and industry from a financial perspective.

Let us start by looking at real market scenario and what we all experience on a daily basis regardless of whether we are from Europe, the Americas, Asia or Africa.

Now, how many times have all of you seen a listed company’s share appreciate from $1 a share to $3 in 3 months time following a profit call or a rating upgrade to outperform? How often do you see a company shares appreciate from $1.00 to $5.00 per share within 1 year as a result of corporate restructuring, a new contract with clients and a better business operation model? Let me refer to some examples here.

Shares of BAIDU, Inc (BIDU) rose by 2500% over 5 years, with an average raise of 500% per annum. In January 2009, BAIDU was trading at around USD15 per share and in January 2011, the share cost had risen to approximately USD120 per share.

Allied Nevada Gold Corp’s (ANV) share price rose from about USD2.00 in November 2008 to USD30.00 in February 2011. This represents an appreciation of about 1500% in just over two years.

For FORTUNE 500 companies, the best stock in 2010 was CC Media Holdings (CCMH) with a 222% appreciation whilst Las Vegas Sands (LVS) who held the second place, appreciated by 204%.

When you invest in these companies’ shares, you earn zero to 5% dividend per year but you earn somewhere between 200 – 500% return in monetary value from stock price appreciation.

What does all this have to do with Virgin Gold Mining Corporation? I am telling you that Virgin Gold is just like all these typical examples I quoted above. The only difference is that Virgin Gold’s share price appreciates by 5-10% per year but dividend and other incentives amount to about 200% per year.

While in the common market, listed companies pay you 5-10% dividend per year and stock value appreciates by 200-500%; Virgin Gold’s stocks appreciate 5-10% per year but dividend and incentive payout amounts to about 200% per year. As a non-listed corporation, we are able to control or rather suppress the appreciation of our stock value as it is not openly traded. When stock value is low, dividend seems high.

As you can see, there are no secrets in Virgin Gold. What Virgin Gold does is that it pays dividend, incentives and bonuses just like what other, very well run and profitable corporations do. It is just the other side of the coin. This is indeed a revolutionary financial technique and application. My staff in Asia heard some CPS holders call this the Virgin Gold – CPS REVOLUTION! I personally thank our Middle East investors for this term.

Your choice is between investing in the open stock market which will yield higher stock value with a lower dividend payout, or the consistent Virgin Gold stock value and a high dividend payout. In terms of monetary return on investment, your returns would be pretty similar in either case.

Having said that, if you are looking for getting the highest return of investment in the shortest period of time, subscribing to Virgin Gold Convertible Preferred Shares (VGCPS) would not be the ideal form of investment for you. When investing with Virgin Gold, both your dividend and share price is roughly fixed while in an open market, the value of your stocks is unlimited. However if an investor is taking a long term investment view, investing with Virgin Gold could yield a higher return as reinvestment of profits or dividend in a consistent environment over 3 to 5 years which will have a return of more than 10 times of the initial investment.

Putting what I have mentioned above aside, I want to highlight a few other facts that are often overlooked by many of our shareholders.

First of all, as Virgin Gold raise its capital from issuing fresh CPS with no borrowing, the corporation has no need for any loans and have neither short or long term debt. This enables the corporation to channel more of their operational profits into income generating operations after paying shareholder’s dividend.

Secondly, the corporation does not need any advertising, and neither does it have any need for promotional or corporate image expenditures like most public listed companies or companies that are actively seeking funding from the venture capitalist do. Our reasonable high dividend is enough to attract more new subscriptions from all over the world.

Thirdly, we use high information technology all across our business operations, management and administration. Having an administrative office only in Panama and investors’ relation offices in Asia and Europe coming up this year, we are able to operate at the lowest possible overheads.

Fourthly, being based in a tax-free offshore jurisdiction, Virgin Gold is able to re-invest 15 to 40% (normal onshore tax rate) more of its profits into income generating operations every year compared to its peers.

Taking into account the exponential model of re-investment and opportunity cost, all the extra savings that this corporation has made in the last 5 years may translate into an extra growth opportunity of over 1000%. These are the reasons why Virgin Gold is able to sustain a high growth rate and we foresee this corporation to outperform our peers for many more years.

Listing

As for listing Virgin Gold as a public company, this is still our long term plan. We hope we will be ready for this within 3 to 5 years’ time. Having said that, being ready as a corporation and actually going for it is two different matters. Being ready means we set all our Standard Operation Procedures and Protocols, Accounting and Corporate Governance like any listed company. Going public means we have to change the way we run our business, the way we pay dividend to our shareholders and subject ourselves to the regulations of the security commissions where we list. So our corporate vision is to make this corporation ready for listing by 2015, but whether or not we will actually be listed by then will be subject to many considerations. I hope our shareholders will not misrepresent our vision by informing potential shareholders that VGMC will be listed by 2015.

As the Chief Financial Officer, I just want to reassure you that this corporation has a long term working plan as well as the vision and financial power to fulfill its long term commitment to all shareholders and partners.

Thank you very much.

Peter Nolinski
Virgin Gold Mining Corporation – Chief Financial Officer
Virgin Gold Mining Corporation

Gold Mining Challenges

In terms of gold mining revenues, 2012 is expected to be another year of strong performances. Gold miners’ production costs are expected to continue rising, but as in 2011, gold prices are likely to continue providing insulation from most financial pressures. Still, gold miners will face their share of challenges in 2012 and beyond.

Low-grade mining

Gold miners are going to find themselves paying more to get less. Companies will need to devote more money to their exploration budgets, but in most cases, where there is return, it will be in the form of lower-grade resources. Large high-grade discoveries are hard to find.

Given current gold prices, increased numbers of low-grade projects may be deemed more economic than in the past, but they will also be more sensitive to rising production costs.

With regards to low-grade projects, Steven Letwin, CEO ofIAMGOLD (NYSE:IAG,TSX:IMG), said every penny makes a difference with respect to cost.

Furthermore, exploration and development projects are increasingly requiring gold miners to operate in underdeveloped locations. This often presents a host of challenges, many of which boost costs, especially with regards to accessing the needed infrastructure and electricity.

Letwin said it is going to be difficult for anyone to produce gold at less than $1,200 per ounce in terms of new discoveries.

Wage disputes

One result of high gold prices is higher expectations from workers. Demands for better wages and benefits have been on the rise and aren’t likely to subside.

Yesterday, Centerra Gold (TSX:CG) announced that unionized workers at its Kumtor mine are embarking on an illegal strike associated with demands that the company pay the mandatory employee contribution to the Kyrgyz Republic social fund. As a result, operations have been suspended. Further, Centerra has already said that anystoppages could have a significant impact on its ability to achieve the forecasted production.

Of 99 mining strikes which occurred from January 1, 2009 to December 1, 2011, most were at gold mines, and 70 percent were related to demands for higher wages, according to the 2012 Gold Price Report by PricewaterhouseCoopers (PwC).

These companies experienced an average production decline of 550 ounces per day, and the strikes often acted as a drag on their stock prices. The PwC report found that 53 percent of those companies saw their stock price decrease the day after a strike.

Investors

John Gravelle, Mining Leader for PwC, says investors are hesitant to get back into the market for equities. Last year’s market volatility has made risk, or even the perception of it, a much harder sell.

Miners are well aware that their business involves risks such as labor strikes and geopolitical issues, but is necessary to come to terms with the fact that investors are aware too. As other gold investment options, such as bullion or ETFs, are arguably safer, when investors do have the nerve to put money into gold mining equities, they also have mounting expectations. Attractive dividend policies are expected to be a persistent issue.

More companies are implementing dividends or increasing them, but gold miners need to make sure that pressure doesn’t skew their judgment. Dividend policies need to be both attractive and sustainable. Companies should give adequate consideration to whether their strategy for divvying up the wealth will conflict with their growth and other financial demands. Having to reduce or eliminate dividends tends to send a negative message.

Labor

Another labor-related challenge for gold miners is finding an adequate supply. As it stands, the scramble for workers is expected to intensify, and the more specialized the skills required, the more severe the problem is likely to become.

The Australian Mines and Metals Association has warned that hundreds of billions of dollars worth of the nation’s mining projects are at risk of struggling to survive or never coming to fruition if labor supply is not addressed.

For gold miners, the problem is aggravated by the obscure location in which many gold projects are located.

Letwin said that it is becoming increasingly difficult to attract talent to remote locations.

As gold miners contemplate this issue and attempt to develop strategies to deal with it, it should be remembered that they are not only competing with one another for skills and labor, but also with other industries. Some, such as the petroleum mining industry, are widely perceived as better employers. Competitive wages and incentives are going to become more prominent issues.

Accountability

Mounting concerns about resources funding rebel groups and pending conflict mineral legislation highlight another issue. In addition to caring about where miners operate, growing concern about how they operate is coming from all segments of society.

Gold miners will need to become accustomed to operating in environments where they are held to higher standards of accountability and transparency. The handling of issues such as community development and environmental protection are going to demand increasing amounts of attention.

Appeasing the various segments of society will be a phenomenal challenge. But, due to the potential for negative backlash from laborers, investors, and the public, companies are likely to find it beneficial to prioritize developing policies that avoid and reduce the perception of risks associated with gold mining.

SUBSCRIBE CPS OR SHARE VGMC

SUBSCRIBE CPS OR SHARE VGMC


1. Check account balance before you activate VGMC or subscribe share / additional lot. Make sure you have a enough minimum of VGMC credit for 1 lot activation are USD1350 for February 2012.

2. Click the arrows buttons.

3. Total number of shares in space we need to put 1 lot activation for 1000 or 2000 for 2 lots, click on marking the box we agree to the terms and conditions, click subscribe button CPS. Minimum value of credit is a credit to be available in the balance and transfer VGMC accounts for our subscribe for shares. After that, click confirm button.

CREDIT TOP UP VGMC

CREDIT TOP UP VGMC


This is the step to Top Up share directly from VGMC.

Minimum share that can be bought directly from company is 5000 share. It's a standard amount of share if you really serious to invest in VGMC, with 5000 share you can directly withdraw your money to your bank account. With 5000 share you will have good trading margin. With 5000 share you will receive some amount of dividend that can support you to run networking.


After registration is completed, you will receive SMS and email contain your account information. Log in into system using your shareholder ID or username and password provided in SMS / Email.


1) Click 1.0 Account > 1.14 Credit Top Up

2) After that click Top Up button.

3) A pop up will come out. Fill in the Top Up form. Please take note that, there are 2 ways to buy share from company:

a) Local Transfer

Some country has it own local agent (appointed by VGMC). When you choose local transfer, the system will automatically list down local bank that can be use. Choose of that bank listed. Let say if you choose ABC bank, VGMC will provide one local agent account for ABC bank. Therefore you need to bank in into that account. Usually VGMC will credited CPS credit within 24 hours.

b) International Transfer

If you choose international transfer, VGMC will provided international account. There might be some charges depend on the bank. Amount transfer is unlimited up to USD 1 million. Usually VGMC will credited CPS credit in 2-3 working days.

4) After you have completed top up form, click submit button. A ticket is created for that form. Go to main page, and you can see REQUEST TO TOP UP CREDIT ticket. Usually the status is IN PROGRESS. Click on that ticket and you can see bank account information provided by VGMC.

After issuing ticket to top up, do the money transfer and kept the transfer slip. Log in into system again and click on REQUEST TO TOP UP CREDIT TICKET. Write down information in bank slip such as time, location, date & amount. Finally scan that bank slip and uploaded into that ticket then click submit.

5) When VGMC credited the CPS credit, the status will turn to APPROVED.

6) Click on your name at the top, and one pop up will come out at the end of your name. You will see some amount of CPS credit in credit area.

The Vision of VGMC

Dear Shareholders and Partners of Virgin Gold Mining Corporation:

Congratulations to all of us for becoming richer today as our asset in Virgin Gold Mining Corporation increased by 4.5% overnight. I am referring to the Virgin Gold Convertible Preferred Share (VG-CPS) price increment of five(5) cents effective today, 1^st of September 2011. If you did not subscribe for more VG-CPS yesterday, you should reconsider because I assure you that:-

One, the VG-CPS price will continue to increase every month over the next few years until we are ready for public listing, regardless of the gold price movement.VG-CPS will continue its uptrend momentum because this corporation is growing more valuable every single day. Our image, our credibility and the stability of this corporation gives our shareholders and partners a great deal of confidence. As our share price increases steadily over time, VGMC will become wealthier and have greater financial power to invest in many more profitable operations.

Two, the price of gold will continue to increase over the next few years. My personal view is that the price of gold will reach USD3,000 per ounce before 2015. The price of gold will increase due to many factors in particular the devaluation of the US dollar and economic instability of the Western World, both of which are still miles away from any potential solutions.

The United States is almost 15 trillion dollars in debt and the situation will only become worse. The United States Dollar (USD) has lost 90% of its value since 1971 after President Nixon cancelled the direct convertibility of USD to gold. Even when America and Europe has not recovered from the 2008 financial crisis, inflation is already catching up. Central banks like the European Central Bank (ECB), Australian, Chinese, Brazilian and Indian central banks have had no choice but to keep raising interest rates for the past 12 months due to inflation. Inflation in the simplest terms in our business means a higher price for gold. So shareholders can be assured of even higher dividend in the coming years as CPS dividend is paid in ounces of gold.

As I mentioned earlier, the price of our share will continue to increase month after month throughout 2012 and beyond. Increments of our share price make our corporation wealthier. Our market capitalization is equal to our share price multiplied by the number of shares. In fact, we all know that VG-CPS is extremely undervalued at the moment. Base on a Price-Earnings Ratio – P/E ratio of 15 and a gold price of USD1, 700 per oz.; 1 share of VG-CPS should be priced at 15 x 0.0001oz. (monthly dividend per share) x 1700 (assumed gold price per troy oz.) x 12 (12 months in a year) = USD30.60 @ USD30.

We are three (3) to four (4) years away from reaching public listed company requirements. Hence our share price is only a dollar and fifteen today. By the time we get listed, our share price should not be lower than USD30 because we will use the next few years to grow our corporation and furthermore we are confident that by then, the price of gold will not be lower than it is today.

My medium term objective starting from 2012 is to transform VGMC into a financial holding corporation focusing on gold and other precious mineral ventures. Unless there is a seriously exceptional opportunity to own a gold mine outright, I do not want to bring this corporation down that road. VGMC has been focusing on making other people’s cup full and reaping maximum benefits. That will continue to be our investment strategy going forward.

As we continue growing to the next level, we are beginning to explore the opportunity of holding stakes in silver and platinum group metals (PGMs) mining ventures. It is getting more and more expensive to invest in new gold mining ventures these days. We are still able to do so right now because all of our deals and options were concluded when the price of gold was in the hundreds, a few years ago.

Our board of directors wants me to transform VGMC into a sustainable wealthy corporation. To be a wealthy corporation and to be a corporation of value and trust that qualifies itself to be a public listed company; I will continue to implement practical measures going forward.

There is a simple saying that, “one should choose their friends/spouse carefully because it will decide their destiny”. At VGMC, we are able to choose who we want to work with and we can even choose the type of shareholders we prefer because we are a private corporation. There will be no place for shareholders who just want to take a “quick-bite” in VGMC, if you know what I mean.

I am very proud and glad to have a large group of shareholders around the world that holds a long term perspective on VGMC. We are also very fortunate to have a board of directors who are very wise and brilliant in their advisory role. Our Executive team work very hard and are fully committed to achieve our corporate mission and vision. We have many partners around the world who are working very closely with us to ensure that they will be part of our success. To conclude, I can confidently assure everyone that this VGMC team has all it takes to go all the way to reach the next level of success.

I would like to take this opportunity to congratulate and welcome qualified shareholders to our VG Premier office in Dubai. Enjoy your visit and have safe trip. I know for sure that you will be very proud to be shareholders after this. And always remember that if it weren’t for you, we wouldn’t have made it this far. You make this possible and together we will achieve more.

Thank you.

Kenneth Elinger
CEO and President of Virgin Gold Mining Corporation