What is up with Gold? Markets continue their stimulus drug induced rally but gold is starting to rollover. The dollar is relatively flat so that argument is not valid. I still like gold as long as it stays above $1000. Even if it drops it is a buy considering gold is in a secular bull market.
While I still am holding on to my gold position (10% of total portfolio) I am much more interested in the junior miners. These stocks are still down 60-80% off their 2006-2007 highs. In the next few days I am going to present a list of these companies that I am looking at. Just a preview though--I only like project generator companies rather than the pure explorers. The business model is much more efficient and economical. The business model is pretty simple. You come up with a theory about where you think there is a potential gold deposit. Next you do some preliminary analysis and take the idea to another company and Joint Venture (JV) the project so that you still have a 30-40% stake in venture while the other company has to spend money to earn into the venture. This is a great deal for the prospect generator. The other company spends millions drilling and developing feasibility studies. This model allows you the shareholder to benefit if the JV hits a big deposit and spreads the risk. Another benefit is the reduced dilution you suffer which is a serious problem with junior miners and explorers. The major gains during this bull market in gold are going to be made in these juniors.
Black Swan Insights
While I still am holding on to my gold position (10% of total portfolio) I am much more interested in the junior miners. These stocks are still down 60-80% off their 2006-2007 highs. In the next few days I am going to present a list of these companies that I am looking at. Just a preview though--I only like project generator companies rather than the pure explorers. The business model is much more efficient and economical. The business model is pretty simple. You come up with a theory about where you think there is a potential gold deposit. Next you do some preliminary analysis and take the idea to another company and Joint Venture (JV) the project so that you still have a 30-40% stake in venture while the other company has to spend money to earn into the venture. This is a great deal for the prospect generator. The other company spends millions drilling and developing feasibility studies. This model allows you the shareholder to benefit if the JV hits a big deposit and spreads the risk. Another benefit is the reduced dilution you suffer which is a serious problem with junior miners and explorers. The major gains during this bull market in gold are going to be made in these juniors.
Black Swan Insights
