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Pretium Resources Inc. Message Board

  • jj719903 jj719903 Mar 16, 2013 7:38 PM Flag

    Picking a Junior Gold Company in a Bad Market

    aheadoftheherd.....Richard (Rick) Mills
    Ahead of the Herd

    PVG stands out on his list of the Top 50 Undeveloped by Grade.

    As a general rule, the most successful man in life is the man who has the best information

    The current investment market for junior gold companies is arguably one of the worst since the United States went off the Gold Standard in 1971.

    Despite the current high price of gold (and many other commodities), investors have almost abandoned the junior gold mining sector to invest in physical bullion, ETF’s, and producing companies. The value of the TSX-Venture Composite Index, shown below, is similar to what it was in the early 2000’s when the price of gold was below US$300 per ounce.

    In 2013 I expect to see the equity market in the junior gold sector begin to correct itself and investors should currently be taking advantage of the investment opportunities resulting from the severely beat up junior sector. There presently exists a great opportunity for those investors who are “ahead of the herd” and want to invest in the market at or near the bottom.

    Sentiment: Strong Buy

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    • I think one thing about PVG that currently is not in its favor is the time factor. A lot of junior explorers that are closer to going into production, i.e. with pre-feasibility or feasibility studies completed are cheap too right now and those are more desirable than PVG right now because they will pay-off sooner. Also actual producers right now are also cheap compared to a 6-12 months ago. Additionally a lot of new investors who came into the juniors realm in 2010-2011 got destroyed in 2012 and have no interest in investing in the market again. Right now it is more of a seasoned investors' market who know what a company is worth and will try to trade it in a tighter range. This is all taking away the big inflow of demand from PVG so its pps cannot rise on volume meaning that we have to wait for a move in metals prices/costs and updates from the company itself to see a repricing to the upside/downside.
      In my opinion, PVG should not go below $7.00 again short term but it is prudent to keep some cash in reserve in case it does.
      I saw some drill intercepts from Klondex that are rather impressive to say the least. But unlike PVG Klondex is attractive from an acquisitions point of view to nearby producers like Newmont, PVG is more of a junior morphing into a producer type of scenario over the next few years.
      We need to embrace this bad market to keep adding PVG as long as we can at these prices whenever the paycheck comes in. These shares wont stay this cheap for long, maybe 2-3 more months and always think this way: "a profit is made when you buy, not when you sell".
      I would also like to see my shares I own up 50-200% from what I paid for them, but being down like 5-8% doesnt bother me because I know I am able to buy at a discount now which will make my eventual gains greater when PVG rallies.

    • Investors abhor risk, and sometimes wake up to the risks right in front of their noses. Then they take that 'flight to safety'.

      Others believe the sell-off (and their accumulated losses) in unpermitted, under-funded juniors likely facing serious dilution risks are due to some mysterious plot from market makers, and of course, manipulation from ________ [name the country of choice].

      Someone is wrong. Time will tell.

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