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Gold/Mining/Energy : Gold and Silver Mining Stocks

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To: lbs1989 who wrote (1236)	6/3/2001 10:02:51 AM
From: que seria	Read Replies (1) of 4051

There is something to be said for Buffett's approach of having fewer stocks and bigger positions than most funds opt for. Theory: Have enough to matter if it moves, and maximize the move by concentrating funds in what you think are the very few best companies meeting your criteria. Diversification ordinarily is crucial if you buy junior gold shares, given downside risk. I believe an exception is a company that has a very low cost deposit already economical at current gold prices, the promise of more there or elsewhere, and very little cash burn as it waits on the gold price and a buyout. But it has so much cash that it can fund considerable activity from interest income, and could develop its property if it had to. So Francisco Gold is my only gold stock--about 15% of the portfolio. I'm not recommending such concentration to you, but with $50k or less I'd buy no more than 5 stocks, and not see cash as trash. My own view is that I've picked a vehicle likely to deliver a high return if gold moves, I have exploration and buyout upside even if it doesn't, and I have some low-cost deposit protection if gold stagnates or falls. Agree with Bob Johnson about silver.

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