Principal investor and CEO Rob McEwen is going about the process in a methodical way. But it's a game of high risk -- high reward.

Everybody in the industry is hunting that elephant, often called the Motherlode. Very few discover it.

We tend to think of discoveries by brilliant scientists like Isaac Newton or Thomas Edison. The contribution to society of people like this is so huge it is virtually immeasurable.

In the minerals exploration business, it has been many years since a monster ore body has been discovered, and seldom is a discovery made any more by a freak accident. But whenever these discoveries are made, there is a huge contribution to society nonetheless.

Today, the process entails much research, planning, investment, financial risk, and determination.

Rob McEwen is one of those people who constantly tries to add value. He's like a miner's version of an Edison or Newton. Rather than exploit the discovery of others, he spends his time and money to make completely new discoveries.

So far, with his latest vehicle, U.S. Gold, McEwen has invested tens of millions of his own money. The prospects look good, but are far from certain.

Yesterday, Rob McEwen told his U.S. Gold story to about 600 people at the Denver Gold Forum. You can view/listen to the webcast here. It's worthwhile to any person interested in the gold market because Rob tells you how he sees the gold market as well.

I believe that U.S. Gold (USOTC: USGL and TSX: UXG) is the best of the pure exploration plays. A couple weeks ago, Rob McEwen sent this open letter to his shareholders to keep them current.

A few days back I received the following letter from a reader that concerns me because shareholders should never allow their broker to lend their shares to short-sellers.

"Bill, you might find this of interest re USGL:

I received today via UPS overnight a detailed 10 page loan agreement from Schwab (Howie Kennedy, Director of Securities Lending in San Francisco) to officially borrow my 25k shares of USGL. They are offering 6% interest with monthly payments, etc. You know the drill from there.

I will not accept this offer because in my view it further enables market manipulators (covers shorting and failure to deliver issues...). It would take a lot more than 6% to encourage my participation!

What galls me here is 1) No phone call to set up the discussion and then 2) a contract out of the blue with boilerplate BS. What nerve!

Anyway, if you have any further insights, I'd appreciate it if you might post them if and when appropriate. It goes without saying if you'd like further details, I'd be happy to scan the papers and email them to you."

If a broker's client cannot borrow a stock to deliver on a short sale, they are not supposed to short sell it. But, why would a broker presume that another client would want those shares sold short, effectively pushing down the share price?

I believe this letter went out just prior to the U.S. Gold listing on the TSX. Soon the company shares will be listed on Nasdaq, AMEX or NYSE. On all of these exchanges, a broker has an easier time of borrowing stock for a short-seller client, but on an Over The Counter stock, if the broker doesn't have the share position on their own books, with a right to borrow and lend out, the broker has to ask the clients.

That happened here, and the client was upset. In the case of the small cap companies, shorting can have a major impact on a stock, especially if there is a short-selling syndicate involved.

This situation is going on today with mutual fund positions. The fund manager, who has a fiduciary obligation to get the best price for the unit holder, is taking in additional fees by lending out shares that are then sold short, which knocks the price down.

I just don't know why there aren't class action lawsuits against the fund administrators who do those things. In the case of a mid-cap or large-cap stock, there is no problem because there is much less chance of causing a run on prices because of short selling. In fact I believe in the practice of short-selling " but only in cases where the shares are widely distributed, quite liquid, and there is a narrow bid-ask spread.

In any event, if your broker has asked your permission to lend out your U.S. Gold, or any other small cap stock, I'd turn down the request. Furthermore, if my mutual fund administrator was lending these shares behind my units, then I'd find a new fund.

Gradually, the owner of capital will understand the risks behind owning and controlling their share positions in small companies, and they'll see that under somebody else's control somebody else's interest will be served.

It's enough just taking the investment risk. You shouldn't have to take on additional risk.

The price has been knocked down. The price closed down -8.7 pct today to CAD$4.50.

I hope there are traders short, and I hope they get a call one day that the lending source dried up and they'll have to buy back those shares in the open market. That'll help.

The stock has dropped from a 2006 high of US$10.30 to $4.20, which was a gain of +3.7 pct on the day.

On the Toronto Exchange through yesterday, you can see the stock has had a rough ride.

The market is coming to you. It's a buyers' market. Once again, I hope you click on the link to the U.S. Gold webcast to see why I say that.

Rob tells a convincing story.