when the golds all gone...

A very good read by the Gold Report interviewing John Embry, Chief Investment Strategist at Sprott Assett Management.

http://www.kitco.com/ind/GoldReport/sep122008.html

This is a small excerpt relevant to the small explorers such as EXM, the prices he mentions for in-ground vaslue sound familiar.

"TGR: But if the price of gold doesn't turn around, don't a lot of juniors risk bankruptcy?

JE: If they’re not in production and are fairly careful, they can gear back. The ones in production and losing money are at the greatest risk of bankruptcy. If gold doesn't turn soon, they won't be able to finance their operations. A lot of these guys lose money and just kept going out and raising more. They just keep losing money, so they close the mines. That’s also very bullish for gold. We're going to have less and less gold in production.

TGR: What about the juniors that aren't in production?

JE: I'm not worried about the ones that have real ore bodies and have gotten pounded down to where they’re trading at $10, $15, or $20 an ounce in the ground.

TGR: Because they’ll be taken out?

JE: They’ll be taken out or they’ve hit bottom and, as long as they have enough capital to move forward, they can gear down. Small, quality gold shares are proxies for a higher gold price. The problem is that the gold price is so severely suppressed vis a vis other commodities that the whole business has become uneconomical.

TGR: Would the balance be in producers and exploration companies?

JE: I can't pound the table for any of the large cap producers because they don't represent terrific relative value. However, when the gold price goes up, they’re going to go up in price. My view is that some of the smaller ones will go up a lot more. It depends on what your goal is. If you only want to protect yourself, own nothing but bullion. But if you want some leverage and to make some money, then you should probably get some intermediate and smaller gold stocks that have been really taken to the wood shed and pounded."