There is the exploration company that begins production and therefore moves up the scale toward the category of junior producer. Usually this is accompanied by improvement in price as many investment entities will not buy non-producing exploration companies….

At the beginning of a gold bull market it is gold itself, then Major Producers that perform….

As gold makes its way past $1000 to $1650 and beyond, the order up to now has been Major Producers and the top half of Junior Producers benefitting with while the short attacked the bottom half of Junior Producers and all of Gold Exploration entities. Watch closely now as a shift takes place….

No short of any viable gold share can be happy this evening even though across the board they are still short and in some cases still sitting on the price…..

The leverage is always on the bottom side of the category scale, so I anticipate that the bottom half of Junior Producers and the viable companies in Gold Exploration entities to outperform the top half of Junior Producers and Major Producers as the price of gold continues higher in late 2009 and 2010.

History tells us this is how it has always happened, and I believe it will again.

That is called leverage coming out higher gold prices, high in ground values, higher profits in the start up mining and in many cases much less shares outstanding than in the Major Producers and the top half of Junior Producers.

Gold shares presently in the more leveraged categories have practically no participation compared to other hard asset equities such as energy thanks to the action of the shorts.

In general it is more than likely the wrong time for a long suffering long to throw in the towel, but many are and will.

That is also the way it happens and explains the deluge of questions coming in today about the more leveraged gold shares.

Respectfully,
Jim