The Story of Gold – and BornOil

The Story of Gold

The world abandoned the gold standard in 1971 at a time when the price of gold stood at US$40 per ounce.

Today, gold prices have breached the US$2,000 per ounce mark as investors look for ‘safe havens’ amid the Covid-19 pandemic.

According to a BBC report, investors have moved cash into the precious metal as Covid-19 cases rise in the US and more money is pumped into the global economy.

The record high gold price has also been driven by concerns over tensions between Washington and Beijing, said the BBC.

The price of gold has increased by more than 30% this year as coronavirus cases continue to rise in America, causing dozens of states to halt or reverse their plans to reopen. Among the reasons for those rises is investors preparing themselves for a possible pick-up in inflation due to the impact of trillions of dollars of stimulus from governments and central banks around the world.

Going back in time, again, the world’s debt was said to be only US$10 trillion in 1971. Today, some experts believe that it is now some US$255 trillion.

Officially, the world only has 195,000 tons of gold (World Gold Council) – and if there is a gold standard.

Hence, as this theory goes, one ton of gold should theoretically be worth some US$1,307,000,000 and 1 gram of gold should be worth US$1.307 million!

So hang on to your gold cause there is a limited supply in the world, where annual world production of gold is said by some people to never surpass an average of 3,000 tonnes a year.

BornOil about to strike gold at Bukit Ibam

The local stock market, recently, has largely been driven by gloves – and gold.

A counter that holds promise that some investors are waking up to is Borneo Oil Berhad (BornOil).

In an announcement to Bursa Malaysia yesterday, the company said that it intends to proceed with excavation and mining on the first zone of Bukit Ibam in Pahang, where it is believed to contain total resources of 22,200 ounce or 621,917 gm of gold in 1.66 million metric tons of ore with an average grade of 0.42 g/t.

The findings were made by Dr. Yves Cheze, a member of the Australian Institute of Geoscientists as well as the Institute Geology Malaysia. 

Dr. Yves has also recommended for the BornOil group to develop the exploration of not only the immediate extension of the first zone but also in several other zones in the mining area that have similar geology as they may hold significant potential for additional gold resources.

Back in May 2010, an exclusive agreement had been inked between Perbadanan Kemajuan Negeri Pahang (“PKNP”) and HDL Global Sdn Bhd  (“HDL”) for the prospecting and mining rights to an area covering 1,200 hectares within Hutan Simpan Bukit Ibam in Pahang.

Subsequently in March 2015, BornOil –  via an exclusive production sharing agreement with HDL –  was granted sole and exclusive right to prospect, explore, mine, extract, process, sell and collect all revenue of sales with respect to all minerals and precious metals including gold over the said area.

Currently, an area measuring approximately 187 hectares/ 462 acres within the area has been issued with a mining lease on which the BornOil Group is currently carrying out mining works.

The mining area, in turn, is divided into eight zones on which the BornOil group has been conducting detailed exploration works.

At the conclusion of Phase 1 and Phase 2 of the preliminary exploration works on seven of the eight zones, an assessment of potential gold resources dated March 2019 was prepared by Dr. Yves showing potential gold resources of 60,032 ounce or 1,866,943 gm  (1.866 ton) of gold.

BornOil is also continuing with exploration works on the other seven zones at an interval of three to six months for each zone.

Note: This commentary is an opinion piece and not a recommendation to buy gold of stocks. Please consult your financial advisor before making your investment decisions.