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JT: Yes, I'm more bullish on gold. I'm much more bullish on gold than uranium too. When you have a boom period, people don't want gold too much. Everybody's happy because everybody's making money and there's no worry about credit and all of that. But when you start to have a problem and the credit markets seize up as they have now, then people go to the ultimate money—gold—but not until they completely give up on paper.

Now, for goodness sakes, people are buying Treasuries and actually getting negative yields or zero yields because they have no confidence in the highly leveraged monetary system. People are lending their money to the government and saying, "We don't want anything; we just want our capital returned." Ultimately they go to gold because its value is intrinsic—unlike paper money, its value is not dependent on the ability of people to pay their debts. And by the way, low to negative yields are extremely bullish for gold. An excuse for not buying gold has been that it provides no yield. Well, now U.S. Treasuries provide no advantage over gold even in that respect.

If we start to inflate, as you were suggesting, it could be a concern and I don't disagree with that. If we start to inflate, the dollar loses its value and then I think you see people fleeing from Treasuries and going into tangibles of one kind or another, including gold. But that doesn't mean the economics of gold mining will improve with inflation because the cost of producing gold, unlike now, might rise faster than the price of gold. The nominal price of gold would likely rise; but profit margins may or may not rise along with a higher price of gold.

For example, in March of 2008, when gold was briefly over $1,000, mining company shares were not performing very well and I believe the main reason was that their profits were being squeezed. They were reporting disappointing earnings because the cost of energy, the cost of labor, the cost of steel, capital costs in building projects were going up very much more rapidly than the price of gold was going up. Now the opposite is happening. The system becomes very illiquid at that point when the debts can no longer be repaid. That's clearly where we are now. Debts cannot be repaid; there's an implosion of the credit system, forcing people to sell everything they can get their hands on. But gold is under the least amount of pressure because as that happens, the price of gold gains versus everything else.

We need to liquefy the system. When we bottom out, when we get all of this debt behind us and it's repudiated and wiped out of the system to the point where we can start to grow again in a healthy way, then I would expect to see some of the other things—the base metals and all those other items—coming back.

TGR: Can you give us some examples of projects you're looking at these days?

JT: We're really looking at gold mining projects and companies that have the best potential. First of all, that would be the majors that are producing cash flows and earnings, such as Agnico-Eagle Mines (TSX:AEM), Newmont Mining Corp. (NYSE:NEM), Goldcorp (TSX:G) (NYSE:GG) and Yamana Gold Inc. (NYSE:AUY)—those major producing companies that are doing well.

And then from those down to the juniors that are evolving into production—Sangold, New Guinea Gold Corp. (TSX.V:NGG). Some of these are really off the radar screens of most serious investors, but they're really starting to produce and perform well. And if they can generate their own capital from cash flow, then they don't need to worry about financing in a world that is very, very difficult from which to gain financing.

TGR: Your discussion about the cost of mining coming down dramatically implies that they're already producing.

JT: Yes, it does. Take an example such as New Guinea Gold, which is a favorite of mine that is producing from its first mine now, Sinivit, in New Guinea. It's had some startup problems, but it looks like things are starting to pick up. The first mine is a small one. It will produce 36,000 ounces a year, but at a cost of under $200 an ounce. They have a second project that is really a major deposit, high-grade, open-pit, low-cost target that should be very profitable. They'll take the cash flow from the Sinivit mine and use that to build and develop this world-class deposit that could host between 3 to 5 million low-cost ounces. Because New Guinea is off the radar screen and because of the credit implosion, this company is selling at a mere 15 or 16 cents and a market cap of under $30 million. We see a possible $3 or $4 number in that stock primarily on the basis of the high-grade gold they have on the second project.