Is Gold Topping Off Here?

One sign we have gone crazy with precious metals speculation, is small miner Silver Falcon Mining (SFMI) share price has more than quadrupled the last few days but Silver Falcon has going concern issues raised by their auditors. This tells me this gold and silver market has just reached a dangerous speculative phase.

From a recently filed Silver Falcon Mining (SFMI) SEC Report (info from the company):
"Our balance sheet as of June 30, 2009 reflects cash of $83, current assets of $176,378, current liabilities of $1,249,092, and a working capital deficit of ($1,072,714).

We reported net losses during the years ended December 31, 2008 and 2007 of ($3,399,970) and ($1,282,437), respectively.

At this time, we have no revenues. We do not expect to begin generating revenues until we commence actual mining operations, which is not expected to occur until October 2009. Until we begin receiving revenues from mining operations, we are dependent on the deferral of salaries by our management, and loans from our officers and a significant shareholder to pay other administrative expenses. We plan to continue raising capital through the issuance of convertible notes, and we believe we have sufficient interest from investors to raise the capital we need to commence operations. We also plan to continue funding our development by issuing shares to acquire services that we need to commence operations.

Our financial statements have been presented on the basis that we continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, we incurred a net operating loss in the years ended December 31, 2008 and 2007, and the six months ended June 30, 2009, and have no revenues at this time. These factors create an uncertainty about our ability to continue as a going concern. We are currently trying to raise capital through a private offering of preferred stock. Our ability to continue as a going concern is dependent on the success of this plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

On October 11, 2007, we entered into a lease agreement with Goldcorp, under which we leased its mineral rights on War Eagle Mountain. Under the lease, we are responsible for all mining activities on War Eagle Mountain, and we are obligated to pay Goldcorp annual lease payments of $1,000,000, payable on a monthly basis, a monthly non-accountable expense reimbursement of $10,000 during any month in which ore is mined from the leased premises, and a royalty of 15% of all amounts we receive from the processing of ore mined from the properties. The lease provides that lease payments must commence April 1, 2008, but that we may extend the commencement date to July 1, 2009, in which event the lease term will be extended by an equal amount of time." (OUR NOTE: Goldcorp is owned by the present management of Silver Falcon Mining)

This is what the auditors said in their report on their last audited financial:

"As discussed in Note 12 of the notes to the accompanying financial statements, the financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the footnotes, the Company does not currently have any revenue is dependent on the deferral of salaries and loans from management and a shareholder to pay operating expenses. Those conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 12 – GOING CONCERN

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. However, the Company has incurred net losses of ($3,399,970) and ($1,282,437) for the years ended December 31, 2008 and 2007, respectively. The Company has remained in business primarily through the deferral of salaries by management, loans from the Company’s chief executive officer, and loans from a significant shareholder. The Company intends on financing its future development activities from the same sources, until such time that funds provided by operations are sufficient to fund working capital requirements. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time."