Hi, Ron. It is amazing that two kids could play on the same playground for so long and yet never have had a chance to meet.
Considering the circumstances, I thought I might take the opportunity to run some of my own thoughts by you for some intellectual exercise.
Please give me your feedback as I am a long standing fan of yours.
The bottom line, then.
The Dow is overdue for a serious correction to the downside. We appear to me to be in the midst of that decline. There may be a "dead cat bounce", but the correction will very likely be more long lasting than many would like to believe. The bottom could be significantly lower.
Gold bullion has evidenced weakness in recent months. The reasons for this decline appear to be based upon three major factors. The practice of "selling forward" by the central banks. The outright sale of gold by the central banks. The current attitude that always prevails in the latter stages of any bull market that "cash (and gold, by inference) is trash".
The instability of paper assets and unbacked paper currencies may change the prevailing attitudes of the average investor and/or the central banks. (Keep in mind that the single best predictor of an increase in the price of bullion is increased purchases of bullion by the general public.) Gold appears to have considerably more stability, less downside risk and more upside potential than do the broader markets at this time.
The Canadian Junior Mining sector recently took a big hit on year end selling and the margin calls that resulted from this as well as the Bre-X debacle. In a very real sense, this may have inadvertently been a Godsend to investors in this sector.
The blunt reality is that despite the outrageous and unfortunate nature of the circumstances that caused it, the fact remains that most of the excesses have already been eliminated from this market. Unfortunately, at the expense of many innocent investors.
Consequentially, the current strong price revival of quality junior mining companies with strong underlying fundamentals provide a potentially highly lucrative alternative investment strategy for investors and fund managers who are now confronted by an aged and deteriorating bull market.
It just may be that juniors such as Pacific Rim, with strong fundamentals such as: known deposits, involvement with a major, lots of cash, highly prospective multiple properties, great management, low risk political environment and active drilling programs may present more preferred and lucrative investment opportunities during this year, or longer.
It is also my firm belief that PFG may well be developed into a major mining company in the not too distant future.
Confronted by the distinct possibility of a major market downward correction, I had to askd myself, where would I rather have my money, in an aged bull market, or a strong uptrending company in a presently under valuated and up trending market whose underlying commodities are sitting just above cyclical lows?
None of this is meant to imply that anyone should just go out and do any particular thing. Reactive investing is stupid and self destructive investing. And, I am most certainly no professional by any stretch of the imagination.
The point is that it now appears particularly important that every investors's downside risk be minimized. No matter how this is accomplished.
How to do that is, of course, an entirely personal matter.
Of course, if the Dow decides to go back up and continue to achieve new heights, none will be any happier to say I was wrong than I.
Good fortune and God bless.
Warm regards,
JED
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