"..OK you'll say but what about the junior exploration companies? They have been trading like if gold was trading at $400 instead of $900, what is going on over here? Should we sell our juniors and swap them for rock solid producing entities or is there some light at the end of this long dark tunnel?
Sure enough I got a lot of questions coming my way asking what to do with our juniors since the general attitude seems to be that most juniors will have a hard time to survive the on-going liquidity crisis.
The argument is that due to the liquidity crisis it will be harder and harder for juniors to raise money and juniors not able to raise money for their exploration adventures are doomed to file for chapter 11 rather sooner than later.
Although I understand such logic I simply disagree with it. My point is that it only requires such a tiny percentage of the total amount of invested money to flow into the gold share sector in order to skyrocket all gold shares into spectacular new highs.
Remember that in 1980 about 5% of all invested money was in gold and gold shares, we're nowhere close to even 1/10 of that today!! You get it? Even a small amount of money flowing into the gold share arena will blow it up big time.
Juniors sitting on a significant amount of proven resources will do well since there's a huge demand for new resources by the senior producers.
Right now the huge sell-off among the juniors is driven by fear which has driven the entire junior sector into extreme over-sold territories.
The good news however is that such extremities never persist for a long period of time and in order to work off that extremity the gold price has to come down sharply or the junior sector has to catch up sharply.."
Full article at http://www.kitco.com/ind/Hommelberg/jan292008.html
CQT Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
