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Science of the Comstock - Scams

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Mark Twain


Quoting from Gold from Water and Other Mining Scams, be cautious if you hear any of these statements:

"There are not only gold and silver but also platinum group elements in the ore."

(Here's why that statement is generally wrong: Most ores do not have substantial quantities of both platinum and gold. Other platinum group elements, including ruthenium, rhodium, palladium, osmium, and iridium, rarely occur in economically significant quantities in gold deposits.)

"The deposit is so large that it will upset the world market when it is mined."

(Here's why that statement is generally wrong: Most legitimate large discoveries are bought by major mining companies, not peddled to individual investors.)

"The ore is substantially higher grade than most ores."

(Here's why that statement is generally wrong: It is rare to find substantial tonnages of ore, say more than a few thousand tons, containing more than $300 worth of precious metals per ton.)

"Nearly all samples analyzed have ore-grade concentrations."

(Here's why that statement is generally wrong: Most ore deposits have pockets or zones of unprofitable waste rock.)

"Reserves of over a million ounces of gold have been discovered, but few, if any, exploration holes have been drilled into the deposit."

(Here's why that statement is generally wrong: The term "reserve" has legal meaning with the U.S. Securities and Exchange Commission and should only be applied when there is a high degree of confidence that the stated grade and tonnage of ore and the total recoverable quantity of gold are known. Usually hundreds of exploration holes are drilled and thousands of samples are assayed before being able to define a reserve of a million ounces of gold.)

"You must use a proprietary or nonstandard technique to assay the ore or extract the metal from the ore."

(Here's why that statement is generally wrong: Standard analytical techniques unquestionably detect ore-grade precious metals in rocks, soils, and waters. Fire assay, neutron activation, inductively coupled plasma-mass spectrometry, and atomic absorption spectrophotometer are standard techniques that, when properly performed, yield accurate assays of gold in ores.)

Unfortunately, even today such scams continue to occur. In 1997, for example, investors lost about $2 billion when mining-stock prices dropped after it was discovered that an apparent gold deposit in Indonesia was a scam. If it sounds too good to be true, it probably is.