By Dave Brown – Exclusive to Gold Investing News

On Tuesday, U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke advocated rapid legislative approval of the plan for the Treasury to spend up to US$700 billion to obtain distressed assets from the banks.

Questions about the oversight of the bailout- whether the proposal should require restraints on executives’ compensation at participating companies- and even the level of assistance it would provide for troubled homeowners are all being raised in Congress. The move was initially treated with elation by equity markets; however, more pensive analysis by the markets have recognized that this will have a massive cost to tax payers and future problems are on the horizon. The additional cash injection by the Federal Reserve will likely serve as a catalyst for inflation, increasing downside pressure on real interest rates and driving investors out of U.S. dollar instruments. Amidst this uncertainty and confusion as a backdrop, the spot price of gold fell to US$884.00 per troy ounce.

First Eagle Global Fund Portfolio Manager Jean-Marie Eveillard stated that he has stockpiled US$1 billion in bullion in a vault near Times Square as a hedge against “extreme outcomes,” like a market disintegration or the effects of the bailout endeavor to avoid one. Evillard commented, “I am not expecting a disaster, and I acknowledge that the steps they took are probably helpful. What I am saying is, to the extent a price has to be paid, there will be unintended consequences, including the dollar looking shaky or inflation related to the ballooning budget deficit.”

Company news

On Monday, Queenston Mining Inc. (TSX:QMI) reported the results of a new mineral resource estimate at its 100 per cent owned Upper Beaver gold-copper property. Charles Page CEO and President of the company, commented, “In addition to establishing a significant first mineral resource estimate at Upper Beaver that exceeds historic production, we are particularly pleased with the grade and continuity displayed by the mineralized zones. The mineralization remains open to the east west at a depth and we feel that the gold-copper system indicates strong potential to host a one million plus ounce deposit. The Upper Beaver resource is a key milestone in Queenston’s strategy of returning to its mining roots by advancing four, 100 per cent owned gold deposits in the Kirkland Lake camp towards production supported by a central mill.”

Queenston Mining Inc. (TSX:QMI) received a “speculative buy” recommendation from Ovais Habib a Metals and Mining Equity Analyst with Evergreen Capital Partners Inc. The investment thesis is largely based on the resource estimates and the company’s plans to continue an underground development and exploration program on the western portion of the Kirkland Lake Gold Project with joint venture partner Kirkland Lake Gold Inc. (TSX: KGI-T). The price target issued by Habib for Queenston Mining Inc. shares is CA$4.50 which implies a 168 per cent premium over the current valuations levels.

Queenston Mining Inc. currently has a market capitalization of CA$91 ml and has been a past producer with an inventory of historic-current resources of 2 million ounces of gold. The Toronto based exploration and development mining company is focused on Canadian gold deposits on “Proven Mine Trends”, with a strategy to return to producer status. Queenston Mining Inc. possesses the largest assembled land package in the prolific Kirkland Lake Gold Camp, which is considered the second highest grading gold camp in Canada, as well as 2 mining properties located in Quebec.

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