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Here is how the gold mining sector reaches new heights…

By Jeffrey H. Corbett


Over the last few years the price of gold has skyrocketed! An ounce of the precious metal is currently priced at USD$1,730 which represents a near historic record high. The reason for this astronomical level is simple…economic uncertainty. It is almost to a cliché to suggest that investors will flock to gold in times of perceived crisis and recent history is no different. Unrest in the Middle East, the European debt issue, a weak US dollar, the US budget crisis are among the major reasons the metal has hit these levels and found support. Since 2006, when gold was hovering around USD$500 per ounce, this precious metal has been a favorite haven for investors resulting in a steady march upward. In order to meet present demand, therefore, gold mining companies have geared-up to capitalize on the major economic incentives they see at these price levels. Nobody of accomplishment, however, ever claimed business was easy. Gold miners will need to confront substantial challenges – some historic in nature and others brand new- to profit from the enormous increase in demand.


On the road to achieve sustainable growth over the next few years, mining concerns will be influenced by challenges that are indigenous to their industry and its extreme nature. On a macro level the backdrop will continue to be market fluctuation. At these record gold price levels, investors seem even more apt towards emotional reaction to world events. Commodities prices, consequently, are pushed into wide price swings which have become a constant pattern and the new norm. Thus, profit margins move and long term planning becomes difficult. In addition, the direct capital nvestment required for operation has dramatically escalated as miners have expanded to the most remote locations of the world. They are often facing the volatile politics of emerging economies while at the same time costs associated with increased environmental controls, legal issues and local oversight. Add to these points a shortage of skilled workers and the recent surge of weather related disasters around the globe, an observer would find it is easy to understand that the modern day miner has a plate full of challenge.


Control, Asset Protection and Non-traditional Financing
To assist mining companies manage these risks and challenges, we offer the Swiss Trust Company (STC) as a potential structuring and networking solution. The STC model is a corporate hybrid which operates as a non-banking financial entity. It is time efficient in acquisition and amazingly inexpensive to obtain when compared to alternatives. In this instance the STC would operate as a captive entity to the mining concern. By bringing professional operations in house, mining ownership can increase control over much of their operations, build quality banking relationships and trust that their profits have been moved out of harms way. In addition, because of the world’s comfort level with Switzerland as a financial hub, new sources of funding might be more easily captured.

For example: Asian companies frequently have cash and are looking to partner with Western companies in sectors where they do not have expertise. Switzerland offers the perfect backdrop for this type of deal making and collaboration.


The key for mining companies to succeed in the foreseeable future hinges their ability to reach new project sites which are often in remote areas while building quality professional relationships to support their endeavors. New sources for direct capital investment will also be a necessity for many of these mining concerns. As such, building quality contacts and relationships in one of the world’s premier financial center’s makes good business sense. It is a discipline that transcends markets and can be applied to virtually all international business.

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News Items

On January 9, 2012, the Internal Revenue Service indefinitely reopened its offshore voluntary disclosure program (the “2012 OVDP”) to assist taxpayers in reporting undisclosed foreign accounts, assets, and income.

We have always stressed paying your taxes and here is yet another story to that end. U.S. prosecutors filed criminal charges against Switzerland’s oldest bank in tax evasion case. http://www.reuters.com/article/2012/02/03/us-usa-tax-swiss-indictment-idUSTRE81203M20120203 Bottom-line: there is absolutely nothing wrong with doing business abroad – just pay your taxes!

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