gold shares here on monday ... , page-5

Just finished watching a Brent Cook interview up on the kitco website regarding gold stocks. He raised some interesting points.

Basic points of the interview (and a few interpretations of my own) are this:

1. Avoid late stage producers that have left it too late to replenish their reserves. They are going to have to spend big bucks to replace these resources in the near future. Better $$ to be made investing in their targets.

2. Stick with early stage producers and late stage developers with known resources that have real value , real jorcs and good management with clear plans to mining. Multi million ounce ( SINGLE !) deposits and 10yrs + mining potential.

3. Avoid juniors that have nothing but promises. They are going to hit a "fiscal wall" when they try and raise money next year if markets don't improve. 2013 could be a big year
for juniors disappearing as quick as they came. Many will not survive.

4. Money will flow away from the early purely speculative explorers with no jorc resources and will start to be concentrated and redirected to co's with real assets and real mining/takeover potential.

5. At present , investment dollars are being spread too thin throughout the sector and for the most part , are being wasted on too many speculative projects with only promise and nothing proven. This is coming to and end most likely.

6. A few big take overs in the next year , will really start to focus the investment dollars towards the type of co's mentioned in point 2.

My ASX picks that meet the above criteria (most I hold , have held or will be holding again at some point soon) :

Early stage producers:

BDR - Just starting production - shallow resource , low cost and long mine life

PRU - THE example to be followed in West Africa. Just recently went Debt Free.

Late stage developers/explorers:

AMX - Best value explorer out there imo - heavily discounted . Current EV/RES about a 1/3 of the average in its peers group. Expect the discount to dissolve fast once the PFS is released next year and puts it doubter in check. 3.1mil/oz resource at 1.8g/t

GRY - Kicking goals and consistently moving forward to production. A good example investment dollars moving towards these types of stocks . Even in this market , recent cap raise was oversubscribed and one of the few stocks that has held above the cap raise price, while early stage juniors struggle to raise funds. 4.5mill/oz resource at 1.9g/t

PIR - Size ,scale, discovery rate are all on this stocks side. Big take over target. 3mill/oz resource at 2.5g/t and counting....Good enough for GRY to stake a large early stake. Running low on cash , will raise soon imo.

AZH - Not sure why the market has sold this down so heavily. 2mill/oz at 2.2g/t and good management. No real negatives that i can see.

Others worth investigating : PVM, TRY ,NMG

If it doesn't have a few million ounces (preferably in a single deposit like PVM,PRU,PIR and AMX) Then I'm avoiding it for the next 12 months or until they get some points on the board.

A few that may scrape through if they can pull their fingers out - GMR,BOE,CAY,WAF - but all running out of cash fast.

Have a good weekend.