Here is an article I found on Yahoo quotes. It says it's best to stay away from goldmine stocks for another 2-3 months. If you return in the market by then big profits can be made.
Thursday April 17 9:56 PM EDT
Busang gold fallout seen curbing Canada mine investment
By Darren Schuettler
TORONTO, April 17 (Reuter) - The fallout from the Busang gold controversy has tarnished Canada's junior mining sector and
wiil scare off many investors in 1997, investment advisors said on Thursday.
But they predicted a healthier industry will emerge in early 1998 after the Bre-X Minerals Ltd BXM.TO meltdown has faded
into history.
"The Busang bust, no matter what the outcome of the Strathcona report, has killed this particular junior resource market cycle,"
John Kaiser, editor of a financial newsletter, told a Toronto mining investment conference on Thursday.
If they have not already done so, fund managers will reduce their holdings of junior mining stocks in the wake of the Bre-X
saga, said the editor of Kaiser's Bottom-Fishing Report.
"The juniors will face a funding drought that will likely last through the rest of the year. Retail investors will stick to the sidelines
because they know this market cycle is over," he said.
But Kaiser predicted the bull market will return in 1998.
"By early 1998, the Canadian resource juniors will be ready to emerge from the bear market trough into which it is now
sliding," he said.
Toronto-based Strathcona Mineral Services Ltd is conducting an independent audit of Bre-X's Busang project which was
thrown into doubt last month.
Bre-X has heralded Busang as the gold find of the century, but preliminary tests by its partner Freeport Mcmoran Copper &
Gold Inc indicated the deposit may contain "insignificant" amounts of gold.
The announcement prompted panic selling of Bre-X shares last month, lopping almost C$3 billion, or more than 80 percent,
from the company's stock market value.
Bre-X firmed C13 cents to close at C$2.30 on the Toronto Stock Exchange on Thursday.
The Strathcona report is expected in early May.
Other investment gurus at the conference said Busang has not dealt a fatal blow to Canada's junior mining sector.
"I don't give it (the depressed market) much more that 90 days or 120 days. We'll be back in business after that," predicted
Brian Fagan, editor of the Asian World Stock Report, a newsletter focused on the mineral exploration sector.
Last month's Busang-driven selloff in Canadian junior mining stocks has served up some bargains for investors. But they won't
pay a high premium anymore.
"The companies are still good, but people are not willing to pay more for them," Fagan said.
James Dines, the California-based editor of The Dines Letter, admonished Canadian investors for turning sour on the gold
sector as a whole.
The stampede to sell all gold stocks was just lemming like. There is nothing wrong with your gold industry. It will survive
Bre-X," told the conference.
Kaiser predicted a more sophisticated investor will emerge when the junior mining cycle turns upward again. The Busang saga
will also force analysts to take a more critical eye at junior mining companies and their projects.
"Dowm the road we will credit the Busang bust with launching a revolution in the way Canadian juniors get covered," Kaiser
said. |
