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As I write this update,
the metals market, and in particular the junior resource
sector, is being tested to the very core of its multi-year
bullish uptrend. Gold can’t fall much below $385 without
signaling an end to its run-up. In the meantime, huge gains
throughout the junior mining sector have evaporated. Lying
in the wake are many speculators who either showed up late
to the party, and/or decided not to have taken something
off the table (that’s me). These poor souls are wandering
in cyberspace, hoping to find some legitimate cause to hold
on (and many appeared to have already thrown in the towel
as wholesale dumping of shares has been evident of late).
In a game where you are only as good as your
last call, my firm stance in the bullish camp will either
prove to be incredibly smart, or I will be called the General
Custar of metals and mining.
The $64,000 question is, “What really
has changed?” While the markets are always a matter
of opinion, I see little change in the many factors that
made me so bullish.
I think we need to ask ourselves a few questions
and answer honestly. For me, the main questions are:
• Has the world become a safer place
than it was six months ago?
• Have the numerous American government
deficits gotten better?
• Have Americans stopped robbing Peter
to pay Paul?
• Did the dwindling supply of metals
reverse course?
• Has Alen Greenspan ever not been bullish?
If you answered no to all these questions
as I have, than the only thing that has changed is the price
of the commodity and shares we viewed a few months ago as
an attractive speculation to play the upside to the factors
we still believe are valid.
“Only two things are infinite, the
universe and human stupidity, and I'm not sure about the
former.” - Albert Einstein
***
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