I hope some have locked in profits. It seems the juniors are coming off the boil and back into reality - bad fundamentals. Quarterlies are due soon.
Here's a few quotes by Neil Charnock. "The Australian mining sector is spattered all over the share price floor and the bargains are stupendous if you can work out which stocks are going to survive. Cash, cash flow and profitability are key – so watch the cash costs."
For me, investing in any junior they MUST have cash and not just a few $million to plod along. The need real capital and enough to survive for years. Of course capital is not always enough, they need a real resource.
For producers, they must be profitable and not just mining the ore body as well as investors. Read the real "cash costs". Most companies tell you it's $400 when it's really $1600. Have you ever wondered why they raise capital every year? Don't just listen to the biggest rampers on each stock thread. They're full of them. Also don't listen to the biggest ramper of all - the CEO. Full of Bulldust in my opinion.
I like this quote from Neil Charnock also. "A word of caution – do not fall for ‘apparent’ value at this time as more companies can still go to the wall. An investor recently contacted me and mentioned a list of troubled stocks that looked cheap to him, and they are – the question is however – will they survive at all? The inexperienced investor or those with a gambling spirit can get caught this way. They see very weak stocks and fail to connect this with danger."
You need to look no further than Victorian miners. GBM and GDR recently have folded. I suspect a few more Victorians will fail before we have finished.
Beware of thinly traded stocks. Those that regularly have zero volume for the day. They aren't traded and are cheap for a reason. It's usually after they have their initial JORC resource and where to from there? Capital they can't find to expand.
I'd love to give you some examples of those above but I will leave it for another outing. Some get all sentimental.
I believe the only time to hold gold juniors is when they all run. For the rest of the time hold real producers and physical gold. You'd be surprised how many "gold bugs" don't even own an ounce of gold. Talk about irony.
One more thing about physical gold - what do you think will happen the the Aussie dollar when we lower cash rates next month?
