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WELCOME!

The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Tuesday, November 11, 2008

Update

Thank you to those who have been emailing and asking me to post my thoughts.

I've been very busy lately and the Gold Stock Strategist has had to take a back seat. Apologies to my readers.

That said, fundamental analysis is pretty worthless in the current macro environment. And until the macro environment improves, my fundamental analysis on the Gold Stock Strategist isn't useful.

I still hold my investment stake in Metanor and Gold-Ore Resources and my portfolio has suffered with the severe stock price compression. They are both still producing gold. Metanor appears to have solid plans for expansion next year. Gold-Ore will likely need a refinancing in the coming months, but they are also producing gold--even increasing production month over month. The fundamentals for these two companies haven't changed with the exception of expectations for the price of gold going forward.

Realistically, the emerging junior gold producers need a sustained price of gold over US$1,000 to move up in share price given the current uncertain macro environment. And I thought that would happen this year given the credit crisis.

What happened was the deleveraging away from equities--including emerging junior gold producers--to US Treasuries (UST) as a safe haven play put a tremendous lift under the US$. Capital moving to UST as a safe haven would in past decades have gone into gold bullion. No gold analyst I am aware of predicted this global capital action into UST rather than gold.

As I have always believed, emerging junior gold producers were speculative plays. The logic in favor of this sector still holds in the near term if capital begins to see gold as more of a safe haven in financial crisis than US Treasuries.

I expect the price of gold will remain range bound between $675 and $825 an ounce. But no one really knows how gold will behave in the future and I could be wrong.

Good luck to all,

The Gold Stock Strategist

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