Eva - I think Embry did a nice job describing what the landscape is for juniors at the moment. Sounds real familiar:
"DAVID DESLAURIERS: Considering the lack of interest in junior miners, is it best to stick to companies for the time being, that are attached to metrics that must be paid heed, like production, cash flow, etc.? It seems as though all of these companies can raise money, but the follow through is nil. How might you account for this?
JOHN EMBRY: It depends on your time frame. I’m more comfortable right here buying juniors because they’re depressed, I don’t have a lot of competition, and I’m getting them at prices that I think are sort of reflective of a really bad condition of the gold business, which I think is dead opposite – I think we’ll have great conditions in the gold business going forward. I would say in many instances some of these juniors are trading at valuation metrics not terribly dissimilar from where they were when the bull market in juniors started back at the end of 2000. I think they’re really cheap, and if you’re playing the gold market you’re going for maximum upside, and I think the maximum upside is clearly in the juniors. But I can’t tell you that it’s going to pay off in the next three months, if you’re a short-term trader you probably have a better chance playing the bigger ones, because that’s where investor money flow is going right now.
But one part of the question which really deserves a response and irritates me a bit: It seems like all of these companies can raise money – and that is a problem because a lot of these companies they don’t even believe in their own properties, because they are raising far more money in my estimation than they have to, and that is creating a problem because it is soaking up investor money that might be otherwise used to drive up the price of these companies in the market.
I think this will all be addressed when the gold price breaks out, there will be more than a sufficient flow of investor money that will lift the whole sector, and that will basically solve the problem in the short run here which has been irritating because juniors have done so poorly - I think that will be behind us. I think we need a clear breakout into new high ground, like beyond $511 to get the degree of confidence so that people will flood into the juniors." |
