Tuesday, 26 February 2008

Got Gold Report – Gold, Silver Continue to Confound Short Sellers

Here's an interesting report that, amongst other things, examines the reasons why juniors have been hammered over the last few months. I know that on the London's AIM several juniors' share prices have been slaughtered by redemption selling pressure by one or more hedge funds.

By Gene Arensberg
24 Feb 2008 at 05:56 PM GMT-05:00

"The vacuum of liquidity from the speculative mining and exploration stocks has been nothing short of brutally amazing over the past four months, indeed since the middle of last year. It is especially dramatic for thinly traded companies on less liquid markets such as in Canada, relative to the HUI (and the HUI hasn’t been doing all that great either compared to gold). Compared to the HUI the smaller, more speculative mining and exploration stocks have been murdered and that’s hard for some investors to take for very long given that the metals themselves have been on a tear. Compared to the metals, spec miners have been dismembered, ground up and fed to the pigs. It’s much worse than the plunge seen in 2003.

According to old-timers in the resource biz, this could possibly be one of the best buying opportunities of the Great Gold Bull in the making for those with the stomach for it, a longer time horizon and the high-risk capital to put to work ahead of the inevitable flood of liquidity back into the sector sometime in the next year or so."

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I teach Film, Media and English Lit.