Quality Companies with Significant News Should Do Well This Summer

Resource Stock Digest (05/20/2009)
"Gold has pretty much traded in a tight range as we suspected in our last letter. We expect a sideways action in the quality juniors with deep-pocket investors looking to get bigger positions over the summer during weakness with anticipation of a strong late summer/fall rally. Quality companies with significant news should do well during this time as many of the broken juniors are no longer sucking capital in the sector.

We are often asked about these less-than-a-dime stocks with no money but an asset that commanded much higher premiums in the bull market. It is our experience that 9 out 10 times these are not long-term quality buys. Management usually looks out for themselves before shareholders when the next Bull Run does occur (think rollback, amongst other things). If you are a trader this might be different but we focus on a longer-term idea of buying assets on the cheap.

There are a number of good new articles on the resources sector on the website. Mickey Fulp had a very interesting article on what to expect and look for when investing in less-than-favorable resource exploration jurisdictions. There were also a number of well-reasoned articles on the price of gold.

We continue to see more articles on rare earths and believe that the investing public will be taking a much bigger interest in this area as they begin to see the value in the ground and the strategic nature of the rare earths. The Chinese certainly are."

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