Although the Phillips River project is polymetalic it will be the gold price reaching the magic US$1000 mark that will stimulate gold fever in the "penny stocks" and it will go much higher once the US$1000 barrier is truely breached.
As I am writing this post it has happend - US$1000 per oz has been cracked for the first time ever!!!!!!!! - reported just then on CNBC.
Market fear and avoidance of risk has kept a lid on the reality that the price of 1 oz of gold is at record levels in any currency you want to look at.
When times are tough and gloomy as the are now a spark is desperately needed. It might just be that those that still have some cash will see opportunity in the junior mining segement to recover some recent losses.
The demand for gold is outstripping supply even with central bank sales to fund liquidity. It is not going to get any better in the short or medium terms - the gold bulls have a long way to run yet. How long is it going to take the $US to recover???? The cost and risk of finding and mining gold DEMANDS solid margins for miners. Costs are going to continually rise and as gold is harder to find now than ever before - risk is rising. So if we can't see demand going away we can only see the gold price going to higher levels still.
There may be one event that will set off the demand for junior gold miners (others more qualified that I have said it will happen and probably BEFORE the general market recovery takes place). As risk aversion lessens the greatest opportunities for leveraged returns are with good undervalued junior miners. Anyone disagree?
The event that sets the ball rolling could be US$1000 per oz gold! I hope!
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