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The Company's Eagle Gold Project in Yukon Canada hosts a National Instrument 43-101 compliant Reserve of 2.3 million ounces of gold.

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Message: Bullion Record High - Top Tier Jr Gold Exploration Co's Lag; IMO will Catch Up
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Bullion Record High - Top Tier Jr Gold Exploration Co's Lag; IMO will Catch Up

posted on Oct 08, 2009 05:51PM
Don't, for a moment, think you have missed the capital gain opportunities in the top tier junior gold exploration stocks. Gold bullion has taken out its record
highs while the Mc Ewen Junior Gold Index (which is composed of a list of 40 top tier junior gold exploration stocks) still remains down 50% from its highs in Oct 2007. Gold bullion at that time was trading in the mid $700 area and is presently up 40% since Oct 2007. In the later phase of a bull market in gold bullion, history has shown
us that the junior gold exploration companies typically out perform gold bullion and senior gold producers by wide margin. McEwen's Jr Gold index is presently on
a double top buy signal; however, it has yet to break out above its bearish resistance line which presently resides at 10.50 (see diagonal "x's"). We will need a print at 11.00 or higher before this index reverses into a major uptrend. IMO, this will happen very soon. Victoria Gold during this same time peaked out at C$1.60 on Dec 11, 2007 - at its current price C$.53 is it down 66% from its highs.
Bottom Line: Top Tier Junior exploration stocks are down 50% from their highs in 2007 and Victoria Gold is down 66% from its highs in 2007; however, gold bullion is up over 40% during this same time frame. IMO, the junior gold exploration companies remain significantly undervalued. I believe in the not too distant future, the performance of the junior gold stocks will easily surpass the appreciation that we have already seen in gold bullion. For that to happen, junior gold exploration companies would have to appreciate by more than 90% - assuming gold stays right where it is today.
Now lets see how the top senior unhedged gold producers have done since Oct 8, 2007. The HUI Gold Bugs Index at that time was @ 388. Today it is trading @ 452 -
up 16.5% vs. a 40% increase in gold bullion. Historically, senior gold stocks - do to their inherent leverage to higher gold prices - typically go up 3 times the amount that bullion rises. This has not happened yet. In my opinion, the senior gold producing companies remain significantly undervalue relative to the price of gold bullion, but the junior gold exploration companies are even more undervalued.
Mc Ewen's Junior Gold Index
18.50 X x
18.00 B 0 x
17.50 x 0 x
17.00 x 0 x
16.50 x 0 x
16.00 A 0 x
15.50 x x 0 x x
15.00 x 8 x 0 x 0 x
14.50 7 0 x 0 x 0 x x
14.00 x 0 x 0 1 0 2 3 x
13.50 x 0 x C 0 x 0 x
13.00 0 x 0 x 0 x
12.50 0 9 0 x 0 x
12.00 0 0 0 x x
11.50 4 x 8 x
11.00 0 x 0 x
10.50 0 5 0 x
10.00 0 0 x
9.50 0 6 x
9.00 0 x 0 9
8.50 0 x 0 8
8.00 9 x x 0 x
7.50 0 x 0 5 0 x
7.00 0 x 0 x x 0
6.50 0 x 0 x 0 x
6.00 0 A 1 0 x
5.50 0 x 3
5.00 0 x
4.75 0 x
4.50 0 x
4.25 0 x x
4.00 0 x x 0 x
3.75 0 B 0 x 0 x
3.50 0 x 0 x C x
3.25 0 x 0 x 0
3.00 0 x 0 x
2.75 0 0
2.50
07 08 09
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