The catalysts this time will include the rebound of silver, as investors flee from formerly "safe" investments in financials, homebuilding, and even cash in the bank to safer havens gold and silver and other hard assets. With the Fed doing whatever they can to make money cheap again, hard assets will increase in value. As MMG drills up the silver polymetallic side, they'll likely give investors one of the biggest increases in silver resources per dollar invested, backed up by the world's premier zinc project.
Also, decreased zinc supply from big zinc mines running out of ore and shutting down, along with the shutdowns of high-cost zinc mines and projects, will start to be reflected in the zinc market, with a huge supply gap approaching. The near-maximum capacity shorts that have helped drive the zinc price down in thin LME trading will eventually need to buy to cover those short positions, giving the zinc price a nice boost (like oil is getting in today's record rally). Investors who recognize the coming supply gap will look for the projects best suited to take advantage of this situation. MMG's premier project should get more and more attention as the sector comes into focus.
Finally, the junior mining sector should recover strongly from this decimation if the world is to have anywhere near enough metals in the future. Adam Hamilton does a good job describing in detail the junior mining sector devastation since the May 2006 peak in this article posted on Friday, "Junior Mining Stock Crisis":
kitco.com
But now, after this brutal selloff, I am really getting interested in buying the best juniors again. While prices could always go lower, when they get to such excessively oversold levels the odds start to wildly favor a big rally to return some rationality to this sector. The bargains that exist today in the fundamentally-strongest juniors... are staggering. |
