Dear Editor,
I read with great elation that the Guyana Gold and Diamond Miners Association is calling on miners to meet and exceed this year’s target of 300,000+ ounces of gold (it does not state what the target is for diamonds). Doing some basic mathematics at the current world price for gold of approximately US$1,100 per ounce, I get the staggering figure of US$330M or $66B (at the exchange rate of $200 to US$1). Even at the lowest gold price of the year of approximately US$900 per ounce the figure is US$270M or $54B.
I do not know what the budget was for this year, but I am fairly certain that $54-$66B is a percentage, maybe even a significant percentage, of this budget. What I would like to know is why such a successful and lucrative industry is not given more prominence in Guyana. Further, where does all this money go? Not only where does it go, but also where does one of the poorest countries in the world get between US$270M and US$330M from to buy and sell gold? Also, what about diamonds? How much money do diamonds rake in?
I also have questions about Norway and the LCDS: will they be willing to remunerate the gold (and diamond) miners of Guyana between US$270M and US$330M annually just to stop mining our gold? Will they find alternative employment for over 100,000 Guyanese (according to the ad in the local newspaper) that pays them at their current salary? Will they remunerate the Guyanese nation and its people the value of all the gold and diamonds in our earth? What about the other valuable minerals and resources in our earth? Will they remunerate us the value of these resources? Will they develop our country so that it reaches first world status to the tune of at least US$330M annually? Or if they prefer, will they give every man, woman, and child in Guyana US$500 annually, just to stop gold mining?
If the gold board operates at a 1% profit margin its profits will be between US$2.7M and US$3.3 M ($540M and $660M at the exchange rate of $200 to US$1) just based on buying gold from the local miners at a 1% markdown and selling it on the world market. At 5% it will be between US $13.5M and US$16.5M ($2.7B and $3.3B), at 10% between US$27M and US$33M ($5.4B and $6.6B), and at 15% between US$40.5M and US$49.5M ($8.1B and $9.9B). In essence the Guyana Gold Board must make a profit of at least US$2.7M ($540M) assuming it is at least 1% profitable, which it must be, and can be potentially making as much as US$49.5M ($9.9B) on gold alone. Indeed, it may be as the advertisement says “too big to fail.” It may be the largest and most profitable government agency outside of the GRA.
I know that some clever accountant will come at me with expenses, operating costs, fluctuating gold prices on the world market, the fluctuating value of the US dollar, etc, etc, but the numbers don’t lie – the Guyana Gold Board can be making as much as US$49.5M ($9.9B) annually buying and selling gold alone. And if they play the markets right their profits can be well in excess of this figure. It will take some really clever accounting to hide this amount of money. However, Guyana does have some very clever accountants, and it would not amaze me if someone says that the Guyana Gold Board is not profitable and actually loses money, and does the maths to prove it!
Yours faithfully,
Fidel A. Captain