Hi CD, you were saying:
"You left out the part about juniors doing el zilcho during the big run up in the gold price last fall and winter. No sign yet that's changing any day soon."
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I would maintain that the juniors doing el zilcho during the big PM run-up is a big part, maybe the biggest part, of what I am calling the capitulation.
Nearly everybody has thrown in the towel on junior golds and uraniums.
That sets both groups up for huge rallies, probably to be inspired by a few takeovers.
Think about the profits that the gold producing majors are racking up right now, and their need to put projects into the pipeline. While uranium producers have had more problems, they are getting to the same point. Witness Denison's latest quarter and their projections for the year end U308 production in Utah.
This is the cycle. It is still working. It is just taking longer than crazed Internet-message-board happy "investors" want it to take. Bottlenecks in getting drill rigs and assays have helped slow the cycle, as has the global credit crunch, which is scaring everybody away from risky deals.
But as always, inevitably, the producers will accomplish the needed pipeline-building task by buying juniors. Yamana did some already last year, by buying Northern Orion, which was a junior.
Who knows, but Kodiak could be next. In Beardmore-Geraldton, I could see the sense of a deal like the one Virginia Gold Mines did with Goldcorp in 206. Goldcorp swalled Virginia whole, just to get Eleonore, then spit out the parts it didn't need into a new Virginia, then invested in the new Virginia.
I see this here, and I see it on the specialty boards like Kodiak at Agoracom. All day they are writing about when they think the next release is coming out. LOL. Meanwhile Kodiak is drilling 60,000 meters this year. That kind of reminds me of Virginia just before Goldcorp, too.
Meanwhile, you've got probably the best gold prospect outside of Ecuador selling for a quarter of a billion dollars on the open market (88 mm shs times c$2.60 = $229 mm). And it is next to all kinds of infrastructure, right there in safe old Ontario.
So let's recap. Gold backs off from $1,000 all the day down to $860 and is circling $900 again. Higher than it has been for 20 years, creating huge profits for miners that were already doing ok. The producers are making money hand over fist. And there are these cheap little juniors sitting on gold mines.
Tick, tock.
Michael |
