What would it have taken to stay happy today while owning decent gold spec stocks, with gold rocketing up to a new high of $459 and many (but not all) juniors crashing simultaneously?
Some of the stocks followed here were simply victims of sector rotation taking place in thin markets. In plain english, the fast money crowd was dumping some juniors which still have promise in favor of the stocks the bigger mutual funds are allowed to buy: goldcorp, silver standard, pan american silver, newmont, etc. Or, people were just switching horses, dumping one junior to pile into another.
when one person sells 20,000 shares of a mid cap like Silver Standard "at the market," the market can shrug it off. but when one person sells 20,000 shares of Corex or New World "at the market," any shareholder with a pulse feels it! the bids and asks simply aren't there the trade goes off for a pittance!
I see where not all the gold specs followed here were deadly to own today. For example, anatolia rose 3.6 percent and entree tacked on 8 percent. Viceroy exploration rose 11 percent and Palmarejo gold made what looks like a 17 percent jump. Virginia Gold, after falling out of bed a few days ago, has made a swell recovery as people came to their senses sooner on that one, and the tremendous value that its eleonore mine site represents.
So my take is this: you'd have done ok today if say, 50 percent of your gold-silver portfolio was in biggies and the other 50 percent was chopped up into a diverified group of specs.
A mild diversification plan worth thinking about as we move toward $500 gold.
Later on, after gold makes the cover of Newsweek, some of these same specs that are having problems this week will be back in the saddle, as joe sixpack "discovers" the gold stock market.
but let's not fight the tape in the meantime! at least buy a cheap producer like silver wheaton or kinross and have some fun in between visits to the critical care ward!
Regards to all on this fine board! Michael |
