Look for a pot of gold in the under-10c bin.Robin Bromby From:...

Look for a pot of gold in the under-10c bin.

Robin Bromby From: The Australian May 31, 2010

DESPITE all the vexing news and portents, Pure Speculation has tried to keep a brave face over recent months.
Buck up, we've said, weather the storm, keep a grip and remember how we missed out by sitting on our hands during the previous panic of late 08. But every so often the smile becomes a little more wan, the worry lines more permanently etched.

Now we have Spain losing its triple-A grading at Fitch Ratings. And we were really spooked by news that, despite all the stimulus spending, the US money supply dropped in the three months to April from $US14.2 trillion to $US13.9 trillion. Annualised that would be a 9.6 per cent decline, matching the rate of fall of M3 between 1929 and 1933, according to one report.

That says deflation, but across the Atlantic the OECD is urging the Bank of England to raise interest rates to head off an inflationary outbreak. And Jeremy O'Gorman at Shaw Stockbroking reports in his weekly letter that investors are buying gold more quickly than the world's producers can mine, with exchange-traded funds adding 41.7 tonnes in the week to May 14.

Bloomberg quotes Evan Smith at US Global Investors saying Europe's troubles will make gold more of a safe haven. "You could see gold go up another $US1000 (an ounce)," he added.

What is going on? What do to?

Hard to know, but one strategy might be to search for bargains in the under-10c bin.

Tectonic road show.

ONE company that has kept a low profile of late is Tectonic Resources (TTR), which closed at 5.9c on Friday.

This junior will next week kick off a road show to bring attention to its Phillips River project, located south of Ravensthorpe in Western Australia, where the company's drilling has lifted the gold resource from 94,000oz to an impressive 850,000oz.

The deposit also contains an estimated 9.8 million ounces of silver, 85,000 tonnes of copper, 120,000 tonnes of lead and 74,000 tonnes of zinc.

But the challenge is to find more to get the estimated mine life extended, according to some analysts.

Since listing in 1993, Tectonic has produced gold over three years from its Mt Miner operation and then ran the successful RAV 8 nickel mine between 1999 and 2005.

A broker last week made the point to Pure Speculation that the one factor usually omitted in research reports is any comment on the quality of management.

And, he added, that's usually the first thing you should want to know about.

We've all seen floats in recent years where exploration boards are top heavy with lawyers, accountants and financiers.

Look around the Tectonic board.

Chairman Hamish Bohannan ran the former Gallery Gold and lifted market cap from $20m to $300m by the time Gallery was acquired by Canada's Iamgold Corp.

MD Steve Norregaard ran the underground division for mining contractor Macmahon Holdings (MAH), while director Andrew Czerw was senior geologist at the Vatukoula gold mine in Fiji and director Tony Martin was chief executive officer of Westgold Resources (WGR).

http://www.theaustralian.com.au/business/mining-energy/