Agoracom

Highlights:

• Gold correction most probably over (bottomed out at $850)
• Junior sector just recovering from deepest over-sold condition since late 2002
• CDNX has started outperforming gold over the last few weeks
• Previous bottoms in CDNX/GOLD ratio were being characterized by sharp up-moves that lasted for many months
• CDNX/GOLD ratio charts leave plenty of room for a giant up-move that could last for more than a year
• Sentiment in junior sector has hit an all time low. This is a dream scenario from a contrarian perspective.

Reasons why juniors will be watched (by major gold producers and investors):

• The industry is not replacing the reserves it is mining every year
• High grade mines are running out of ore.
• Even with gold at $1000/oz , it still takes four to seven years to open a mine.
• The industry isn't going to be able to respond immediately to higher gold prices.
• Reserves will be depleted in less than 10 years at current annual production rates
• The industry needs some major new finds desperately. Since 1999 only a very few world class gold deposits have been found.
• Majors are forced to acquire juniors because of the need for more reserves
• Juniors making discoveries are phenomenally profitable.