Scrap the juniors!! ?? Good article follows:
THE GOLD REPORT
What to Buy and Why!
Enrico Orlandini
Lasco Report
29 Dec, 2005
I wasn't the first to recognize the Bull Market in gold, but I was on board early. Originally I loaded up on gold stocks, mostly juniors, in late 2001 and held on to them until November 1, 2003. Much to the amazement of my clients, I proceeded to liquidate everything and sat on the sidelines for the better part of six months. I threw out the baby with the bath water! Golden Star, Glamis, Bema, Durban; they all bit the dust. In all honesty, I did it on instinct. It was pure luck that the market topped out less than a month later and then began a long, painful decline. Once out, I sat down and tried to define just what it was I wanted and for how long I wanted to maintain the new position. The latter was easy; I wanted a portfolio that I could ride to the end of the Bull Market. The former was a lot more difficult to determine. I finally decided that I wanted liquid Blue Chip companies with the best balance sheet possible and I also wanted good dividend potential. That, by its very nature, ruled out juniors. Most juniors are only liquid on the way up, their balance sheets are usually terrible, and they never pay dividends. At this stage, juniors are only interesting if you think they are potential takeover targets and that's like going to the casino as far as I am concerned.
After several months of study, I finally narrowed my selection down to six companies. Five gold producers (Buenaventura, BVN: Goldcorp, GG; Glamis, GLG; Newmont, NEM; and Royal Gold, RGLD) and one silver mine, Hecla (HL). On April 1, 2004 I determined that the secondary decline had run its course and I took the plunge. You can see the results in the charts below
321gold.com |
