$4 Bucks be Xmas, page-8

Hi Guys,

I read an interesting piece recently talking about the fact that this time may be the 'real-deal' vs. the seemingly endless head fakes over the past few years.

One of the arguments is that during this rise in gold miners it is the larger, more respectable producers that are enjoying the run to a greater extent (percentage wise) than their riskier and smaller peers.

The authors cite that this is evidence that institutional money is now arriving in the sector as they only invest in the more stable end. The fact that the minnows and riskier companies (usually favoured by retail investors) haven't moved as much is testament to the fact that retail investors (on the whole) have given up.

Whether that is right or not I don't know. However, you can't argue with the gains made in NCM, NST and EVN over the past several months - and these are Australia's largest gold producers.

It also ties in nicely with a comment made in Denver by the EVN CFO - he stated that Australia was the second largest gold producing nation, yet the GDX only held 8% of it's portfolio in Australian producers.

We could well be seeing foreign institutional money flowing into the Australian gold miners now that the AUD has fallen so much and sector sentiment is changing.

The fx has the added benefit of making the investments less risky to adverse fx moves for US investors along with the fact that foreign investors are likely recognizing the massive cost savings the gold miners are now enjoying due to the collapse of the Australian commodity sector.

I agree with others - the biggest risk after being a contrarian in this sector for so long is exiting too soon into the bull rally. IMO it's important to alter your investment style from contrarian / value investor to MOMO investor to fully benefit from the years of investing in this most-hated of sectors !!

Cheers
John