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Gold/Mining/Energy : Precious and Base Metal Investing
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To: russwinter who started this subject3/19/2002 8:30:14 AM
From: russwinter  Read Replies (4) of 39344
 
In response to this PM from Lefty:
<I am beginning to think that the majors will be the first beneficiary of a rising gold price, the junior miners will lag behind. Do you agree? How are you allocating your PM portfolio between the major and junior miners?>

Don't agree at all, as this already happened in early 2001. If you were to go back through my remarks over the last nine months or so I comment regularly on this. The HUI (unhedged)mid tiers especially have had big moves already, and in my mind are somewhat over priced.
finance.yahoo.com^HUI&d=c&t=2y&l=on&z=b&q=l
The hedged producers like ABX, AU and PDG are as much insurance companies as gold companies, so I can't see the rationale for them moving much at all in a gold bull market. Most of the quality juniors have had strong moves as well since November.
finance.yahoo.com^TGL&d=c&t=2y&l=on&z=b&q=l

Actually I can't identify any "class" or "type" per se that will be a beneficiary. Therefore the next winners will be company specific and require good stock picking. IMO a key element of picking winners among both majors and juniors will be low cost reserve replacement either through shrewd purchases or successful exploration. As production dwindles, smart gold stock investors will need to look more and more at longevity issues. The only group that is really doing that or who will benefit from the purchases are the juniors, but even on that front one must discriminate.
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