OK folks, grab your flack jacket, helmet and don't even think about bringing the burro. We're going in - into the bombed-out Jr. mining sector, that is. While the price of precious metals has performed admirably in the last six months, performance among Jr. mining shares has been nothing short of a horror story. Explaining what has happened is beyond the scope of a single post. We will return with more detailed fundamental analysis this week.
For now, in summary, we will simply say that the most profound values among resource stocks are found with Jr. exploration and early-stage development companies. In fact, the shares are attempting to put in a bottom right now, with a strong bounce last Friday and a subtle sentiment shift taking place throughout the precious metals sector. It's too early to be certain an exact bottom has been seen, but we are certainly in the neighborhood.
We view gold's prospects for crossing $1,000 this year as a 90% probability event, with momentum spike trading that could even exceed $1,200 per ounce. Similarly, we believe silver will have little trouble moving past $20, a threshold we view as having 90% probability, with upside on trading range spikes well into the $20s. Even base metal prices should perform reasonably well regardless of global slowdown.
At the open, we will deploy about $60,000 into a flock of Jr. mining companies. This level of additional exposure is appropriate for a moderately high risk portfolio. At this juncture, we have a large cash position. The portfolio has a barbell quality: our equities are volatile, but with ample cash and extensive diversification throughout the sectors we invest, overall portfolio volatility will be moderated. When investing in Jr. mining companies, it's imperative to not make huge investments. Diversification provides flexibility as well as risk reduction.
On the open, we will establish the following positions:
- Animas Resources (ANI.v -- Venture Exchange, Canada): Buy 2,500 shares
- Arian Silver (AGQ.v -- Venture Exchange, Canada): Buy 7,000 shares
- European Minerals (EPM.To -- Toronto Stock Exchange): Buy 5,000 shares
- Exeter Resources (XRA: AMEX) -- Buy 2,000 shares
- Full Metal Minerals (FMM.v -- Venture Exchange, Canada): Buy 2,500 shares
- Geodex Minerals (GXM.v -- Venture Exchange, Canada): Buy 6,000 shares
- Luna Gold (LGC.v -- Venture Exchange, Canada): Buy 2,000 shares
- Mansfield Minerals (MDR.v: -- Venture Exchange, Canada): Buy 2,000 shares
- Nautilus Minerals (NUS.To - Toronto Stock Exchange, Canada): Buy 3,000 shares
- First Majestic Silver (FR.v -- Venture Exchange, Canada): Buy 2,000 shares
