Hard to believe this is trading at a current p/e of 7.5. but there you are the sector is completly out of favour.

I guess we will soon see who is right. Armstrong or Sinclaire.

As much as PM and mining investors think of themselves as contrarian, in the end most of us are trend followers, and in the absence of a clear trend we sit and wait. That's what I've been doing, and on the theory that I'm nobody special, I reckon many others are doing likewise. That is, those that weren't flushed out completelly in 2008/9. Myself, I've pared back to where only 10% of risk capital is invested - the rest is sitting in cash.

The other factor is demographics. Based on what I've seen at gold shows, I'd say many if not most iof us are older types near the end of their careers or already retired, thus the time factor of risk/reward comes into play. You only have so many years to recover from a bad hit, so caution tends to rule our decisions. Not losing money is always the prime directive, it just takes on more meaning as you get older.

Then there's the overall backdrop of the markets, if you can still call them that. Nothing's been resolved as far as debt levels, if anything there's even more leverage than before, especially in bonds and derivatives. Meanwhile no one's gone to jail or even to trial for what had to be the biggest financial fraud in history, so how much confidence is left out there? Not much I'd say.

I tend to go with Armstrong - people see corruption, a stacked deck and desperate governments taxing everything in sight and they just withdraw their capital. Money goes into hiding, or into hard assets out of government reach and liquidity and velocity simply dry up. The knee-jerk response is to shovel more money into the system which draws fewer and fewer players back into the game each time that hand is played. We're now into year 5 of ZIRP, QE and all that other nice stuff, and still no recovery. To me, that says this is structural and not something that can be managed with monetary policy, Keynesian or otherwise.

I don't know when it all ends but I'm pretty sure it ends badly. I think Buffett buying Heinz is telling us something. I expect he'll buy Kraft next as man cannot live on beans alone - you need Kraft dinner as well, if only for variety.