Volume XXXIV, Issue 4 / April 2013

Bad News is Good News But Only for the Bold

Dear Speculators, By now, youve probably heard about the free Downturn Millionaires webinar were hosting next Monday, April 8. As a reader of this newsletter, you already know a lot of what will be covered, but the subject is extremely important at this particular time, so I do encourage you to help spread the word, and tune in next week. Sneak preview: the webinar was prompted by an email from Rick Rule, saying he was more excited by market conditions today than hes been since the early 1990s. Buying during that downturn set the scene for many of his most profitable trades ever, and hence an enormous increase in his net worth. Now, anyone whos heard Rick speak know hes very careful with what he says; he enunciates very clearly, ensures his remarks comply with regulatory requirements, and works through his material with a calm and usually understated wit. I have never heard him raise his voice in the 15 years or so that Ive known him.

In This Issue

Click on the link to jump directly to an article.

Bad News Is Good News New Recommendation: Balmoral a Discovery in Process Company Updates: Recommendations for the Bold Stupidity Watch Questions for IS: Latest from Readers End Notes: Upcoming Events, Term of the Month and More Parting Thought: Fortune Favors the Bold

So, when Rick sent us that almost-gleeful email about conditions ripening for true market capitulation, we here at Casey Research got to thinking: A) hes right; and B) this is a truly exceptional opportunity. The widening disconnect between prices and value in the junior resource sector the very basis of speculation needs to be highlighted, explained, and acted upon. The situation reminds me of Doug writing at the very bottom of the market in 2001 saying hed call his readers brokers and place the orders for them, if he could. Thats how strongly Doug, Rick, I, and all the other webinar faculty members feel about the opportunities were facing. Prepare for the ride of a lifetime.

Copyright Casey Research LLC - Unauthorized Disclosure Prohibited. Use of content subject to terms of use stated on last page.

Cyprus Redux
In case you missed my recent comments on the Cyprus crisis, I want to reiterate that I see this as a tipping point, far more important than most people yet realize. The naked grab at peoples savings is being dismissed because Cyprus is small and remote, and much of the money targeted is claimed to belong to Russian oligarchs. Indeed, what should have been an emperors new clothes moment is instead rapidly becoming something that polite people dont talk about. And yet The eurocrats not only contemplated but actually attempted to implement a plan to plunder ordinary people directly and in broad daylight. This tells me things must be much closer to the edge of the abyss than they will admit. If you havent seen the screenshot of what a modest Cypriot businessmans bank account looks like post-confiscation, its worth a quick look. Smart people around the world get this, and have been contemplating the fallout if such a thing were to happen to Spain or Italy or France or anywhere else the dominoes tumble. Vast numbers of people across Europe who have long known theres a man behind the curtain must have been hit with the sudden realization that hes a much more clear and present danger to them than theyd thought. Things may well calm down until the next time the ongoing crisis turns acute, but people have just been painfully reminded that all is not well in Mudville, and that fear wont disappear overnight. In this context, it seems unlikely that well see a major retreat in gold in the near term. Im not going to predict exactly what the price will be or do in the near term, but it seems unlikely that large numbers of investors will decide to sell their gold in the wake of Cyprus.

Todays Resource Meltdown

In contrast, people are selling gold and mining stocks like they have no tomorrow. The resource sector in general and the gold market in particular has entered an exquisitely agonized state of tension. This happens when the inevitable becomes much less imminent than desired. Even those who fully understand what drives gold are having doubts about the inevitability of their conclusions. Ive taken some good-natured ribbing for the various meteorological metaphors Ive used lately, so lets mix things up. Imagine the global financial system as the proverbial camel. On his back is an unbelievable house-sized pile of hay bales, like something youd see an emerging-world farmer pile on a scooter, but ten times larger. If you look carefully, you can see that the camels knees are trembling so badly theyd make a loud knocking noise if they were closer together. Those knees look set to buckle at any moment and yet, there the camel stands. Until the straw that breaks his back alights, everything seems manageable. Normal, even. The global economy has always been able to handle another straw, so the powers that be keep printing up more. I wince every time they do it, knowing somethings gotta give, eventually but the camel remains standing, and people ask what Im so worried about. Every month that goes by and the Fed stacks another 80 billion straws on that poor camels back, I have to turn my head. Alas, the camel is universal, and there is nowhere I can look to avoid the sight. Its like blowing up a balloon; no matter where I turn my head, my face will get stung when it pops.

CASEY INTERNATIONAL SPECULATOR APRIL 2013

This sort of heightened suspense is so intolerable its no surprise to see most people give up. Fair-weather gold bugs are leaving our market sector in droves, trashing share prices in great companies as they go. You, my dear international speculators, are not like this. You understand that the key to speculation is contrarianism. You know that in order to buy low, you have to buy at times when others have given up the market capitulation Rick is looking for, and may be shaping up even as you read this. Assuming youre with me on this, the question wed all love to know the answer to is: How long can the camels back last? How long before inflationary policies among the worlds major powers start manifesting as obviously as in Argentina and Venezuela? How long before one of the larger EU economies thats just as distressed as Cyprus knocks that house of cards flat? How long can the Chinese economy grow at phenomenal rates when its customers economies are slowing or even shrinking? How long can the US print and borrow before the market demands higher interest rates to compensate for ballooning fiscal obligations and debt? Or, really, when does the gold correction stop? If I could answer that one if I could time the market and be 100% certain I was right Id borrow every penny I could from every source available, and Id pawn everything not bolted down to go massively long at the perfect time. But of course, I cant. And I would not recommend going all in to anyone, because as far as our market has fallen, it can still go lower.

The Bad News

Could shares trading at a 90% discount from a year ago really go any lower? Sure. And many of our shares have not fallen nearly that much. A few have even risen as the market has fallen. We have not seen true market capitulation yet, but if we do, another 90% haircut from here would certainly be possible, which is exactly what we saw in 2008. Here are some things that could bring on capitulation in our sector in the near term:

A wave of bad press from junior companies running out of cash and shuttering their doors could disgust and alienate many lightweights in our field. That would cause them to throw in the towel on the good as well as the bad, not to mention the outright ugly. Objectively, a wave of de-listings is a good thing, eliminating many companies that are little more than distractions, if not actual frauds. But the psychological impact of the bad news could weigh on the whole sector. More bad news from the EU could push the USD up. Those who still mistake USD strength in foreign exchange markets against other disintegrating currencies for an actual increase in value may sell some gold. If this happens, wed expect some Europeans to look for protection in gold, not just USDs, and that could offset the harm but the effects of those two factors may not become visible at the same time. As we go to press, this issue seems to be driving gold down; whether it sparks a true panic or not remains to be seen. Whether its one of the above factors or another scenario, something could spook investors who put a lot of stock in technical analysis. If gold drops below what such investors consider an important support level, it could prompt many of them to sell, creating negative, self-fulfilling prophecy momentum. But only for a while. Fundamentals always trump momentum, and usually sooner rather than later. 3

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If Doug is right about the global economy exiting the eye of the storm this year or whenever that poor camel just cant take another straw there will be chaos in all markets. That is ultimately bullish for gold and bearish for industrial minerals, but the immediate consequence will be leverage turning into illiquidity. As we saw in 2008, everything people can catch a bid for will be hit, including gold. The resulting sell-off will be short-lived for gold and an excellent buying opportunity but it would put a near-religious level of terror into many investors in our sector.

The Good News

First, at the risk of sounding too clever for my own good, I have to say that the bad news is also the good news. Should any of the above materialize and we see true market capitulation, well be going long with all the cash weve got allocated to speculating in this field. Great companies with plenty of cash, projects of genuine merit, and even some with cash flow, would all go on sale for pennies on the dollar. When they rebound, as they always do, they will produce the kind of life-altering returns that put Rick and Doug where they are. Both of them and your editor as well are absolutely convinced that this is whats coming. Remember: metals and mining cannot go away. Our civilization depends on them. We would literally have to return to the Stone Age to do without. No amount of regulation, taxation, or confiscation can change this. And, as the saying goes, the cure for low prices is low prices. Our sector faces many challenges, but at the end of the day, good mining projects will deliver, because modern life would end without them. As for the near term, there are positives for investors now:

The bottom may actually be behind us. Thats not a promise, but it is a distinct possibility. My reason for saying so is not that we saw a rally in March, nor any technical consideration, but my view of gold as a fear barometer. The man behind the curtain tells the world to pay no attention to Cyprus Russian oligarchs cant possibly have come by their money honestly, right? but the cat is out of the bag. I doubt the shot of pure terror-induced adrenaline Cyprus just pumped into the market will wash away completely, not with the chronic crisis ongoing in the Eurozone. Whether or not the bottom is behind us, there is real value out there now for the disciplined investor. Consider the case of Strategic Metals (V.SMD) in our portfolio. It has premium management that has delivered significant discoveries and handsome profits to investors many times. It also has a highly prospective portfolio and a large stake in sister company ATAC Resources (V.ATC) with considerable upside. And its trading for less than cash and securities. Investors who buy cream-of-the-crop companies like this will come out well in the end, regardless of whether shares go lower before heading higher much higher. The fragility of the global status quo is hard to overstate. Italy, Spain, France each has its own flock of black swans. On the opposite side of the planet, North Korea has declared a state of war with South Korea. Everywhere in between, the party continues But is the laughter we hear joy or hysteria? There are so many, many sources of trouble in todays interdependent economic world. Even if we cant predict exactly what will go wrong next, its a very good bet that something willgo wrong, and it wont be long before it does. Theres no end in sight for this trend.

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If the global economy manages to somehow stay perched on its one-legged stool for a while, that wont stop the panic each time the stool wobbles. This will provide support for gold until the old system finally crashes and sends everyone panicking into gold. Meanwhile, as long as the party lasts, the reflation of the economy is bullish for base metals and other industrial minerals. However it plays out, our recently rediversified portfolio should do well this year... and beyond.

What to Do
I stand by the general recommendation I made in my Daily Dispatch on Cyprus. I believe in Dougs formula regarding crisis investing: liquidate, consolidate, speculate, and create. I wont repeat all I wrote, but I want to highlight what I said about my own actions: Personally, I just sold my sports car and consolidated down to one vehicle. We really didnt need two, and Im using some of the proceeds to speculate on an emerging gold producer that has the potential to return ten times my investment. I plan to speculate on more great companies in the months ahead, especially if the market goes into a true panic, which it has not yet. Saving in gold has long been my practice, so thats nothing new for me. As for the future, I plan two things: A) invest in technologies and companies I believe have great potential, starting with some of those covered by the Casey technology division, and B) work hard to keep myself from becoming obsolete. In other words, I mean what I say, and Im putting my money where my mouth is. But let me stress again that I am not saying we should throw caution to the wind and go all in. I sold my sports car, not my family car. I am doing everything I can to go as long as I can without risking my solvency or putting myself overweight in one sector (note, again, the words above about making some tech-sector investments). Im accumulating cash to deploy, not skating out on thin margins. I do not recommend, encourage, condone or have much sympathy for recklessness. But worse than losing some money on speculations that dont work out would be to miss the most spectacular market surge in decades missing the perfect pitch after seeing it coming. So I plan to swing for the bleachers this time. I recommend the same to all my readers, friends anyone who will listen. What to buy? The general guidance we offered last month stands, but as youll see in our recommendation updates, weve narrowed down our Top Picks to a shorter, more manageable list of the Best of the Best specs we see on the market today.

Also in This Issue

We also have a new gold exploration pick for you, because whether the market has bottomed or not, the market always loves a discovery, and this company looks poised to deliver a spectacular one. And as always, we have our usual departments to enlighten and entertain you.

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Id like to bring this discourse to a close with one more highlight from my Daily Dispatch on Cyprus. Im running the same cartoon below, because Ive never seen a better visualization of what resource speculation is like. As I said last month; to win you must persevere. Stay the course. Doug has taught me to rely on my gut; and my feeling is that we are fast approaching a moment like that in the cartoon. Dont be like the guy in the bottom panel. Sincerely,

Louis James Senior Metals Investment Strategist Casey Research P.S. I wrote the article above last week, before the big retreat in gold of the last couple days. Some of the bad news I wrote about is already materializing. Just remember that for contrarians, fortune favors the bold. We cant time the bottom, but we can buy when offered stupid prices for great companies. And we intend to.

The nature of success and failure in speculation: discipline and perseverance matter much more than strength or speed. Its necessary, but not sufficient, to be right you have to stay the course. Back to Table of Contents
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New Company Recommendation: Balmoral A Discovery in Process

For some time now, weve shied away from early-stage exploration plays in this letter. They are, as Doug likes to say, nothing but burning matches, offering only a hope of lighting the fuse on something greater and a certainty of dilution along the way. That said, exploration needs to start somewhere, and when a company goes from having nothing to having something anything of measurable value the transition is dramatic. The joy of participating in a significant discovery is hard to match in any other kind of investment. When the resource sector turns bearish, however, its very hard to raise money for junior exploration companies. Their share prices can fail to respond even if they deliver very solid results. Hence our caution. So why pick an exploration play now? Because this one has what looks to be a world-class discovery in the making, and were serious when we say that the way to buy low is to buy when no one else is willing. If the market turns upwards later this year, as we expect, these shares will do well but even if not, the kind of drill results this company can deliver should drive the share price regardless. Disclosure note: this company was previously recommended in our alert service, but due to the market correction that was at a significantly higher share price than you can get today, and before the drill results that make us more positive that this is going to be a big one.
Balmoral Resources V.BAR, BALMF.OB www.balmoralresources.com Share: C$0.70 MCap: C$59.4M On: 4/2/13 SO: 84.8 million FD: 91.8 million As of: 3/15/13 UnEx: 348,000 C$1.15 10/4/13 Open: 6.6 million C$1.00-C$1.25 11/18/15-2/6/18 C$13 million Burn: C$875K/mo. On: 3/2013

Price Shares Warrants Options Cash

BUY FIRST TRANCHEBalmoral is a Quebec and Ontario exploration company focused mostly on Quebec, with reported drill intersections that point toward another big, high-grade Canadian gold discovery in the making.

People
Balmoral was set up by Darin Wagner and the West Timmins crew after that company was taken over by Lake Shore Gold (T.LSG) at a tidy profit for International Speculator readers. This past success gave Balmoral a significant premium right out of the box, which enabled it to raise a lot of cash at good prices, buy good projects, and hit the ground running. However, just having made money betting on Darins team before is not enough. So we sent Louis off to northern Quebec, where he met many of Balmorals technical people and upper management. We have been nothing but pleased with the results theyve been getting ever since.
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In short, these People are a known quantity to us, and they own about 15% of the companys stock, so we have high confidence that they will continue to deliver for shareholders.

Property
Most of Balmorals land, and the area where the company has been getting the most exciting drill results is to the east of, and along the same major geological structure, that hosts Detour Gold Corp.s (T.DGC) Detour Lake gold mine now the largest gold mine in Canada. The properties include Detour East (immediately to the east of DGCs land), La Martiniere, Fenelon, and Grasset. On the next major structural trend to the south, Balmoral also has the N2 property, which has a historic (not 43-101-compliant) resource of 790,000 ounces of gold averaging 1.48 g/t, immediately adjacent to Maudores Vezza gold project. However, its along the Detour trend that Balmorals big discovery is shaping up. The main focus is on Martiniere, where past wide-spaced drilling hit both high-grade and bulk-grade mineralization. The companys drilling has discovered half a dozen new zones here along 2,000 meters of the Martiniere Trend and along 400 meters of the perpendicular Bug Lake Trend. The system is high grade and wide open for expansion in every direction. Best results thus far have included:

272.79 g/t gold over 3.9 meters 195.5 g/t over 1.0 meters 5.1 g/t over 21 meters 5.93 g/t over 13.6 meters 22.89 g/t over 4.1 meters 21.6 g/t over 6.3 meters 7.94 g/t over 19.7 meters

The intersection of the Martiniere and Bug Lake trends is significant, as such cross-cutting structures often open up more space for mineralizing fluids to spread through the rock this is the kind of geology that made Red Lake the monster gold system that it is. Another important feature of such deposits is that their longest dimension is usually vertical, not horizontal, and the cumulative horizontal strike is already close to 2.5 kilometers. This is the basis of our speculation. Theres no 43-101-compliant resource in this yet, but the drilling thus far shows how big it could be, and 40,000 meters of drilling planned for this year should tell us whether the mineralization is consistent enough to be economic. Whether or not an official resource estimate results from this drilling will depend on those results, but if they are good, it could be that we see one by the end of this year and itll be big and high grade. Its worth mentioning that farther east along the Detour Trend, the company has a known, bonanza-grade prospect called Fenelon. The not-so-good news is that the bonanza-grade areas are not highly consistent. That doesnt mean more wont be found wed bet more will be, but it will take a lot of drilling (read: time and money) which, at this stage, wed rather see someone else spend. We think management agrees and
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would be happy to see a JV partner take it on, or maybe sell the property outright to a small- to mediumsized producer that wants to put the known, shallow, high-grade zone into production. Same story with N2. Balmoral has its hands full along the Detour Trend, where we can get more bang for our bucks. So, we see both projects as sources of cash for Balmoral, enabling the company to keep adding shareholder value with minimal dilution. Another project worth mentioning is Balmorals JV with GTA Resources on the Northshore property in Ontario. Northshore yielded market-moving drill intercepts last year, starting with 149.5 meters of 3.21 g/t gold, followed by 240 meters of 1.41 g/t gold. It remains to be seen how much of this mineralization there is, and GTA has the right to earn 70% of the project, so the lions share of whatever is discovered will go to GTA, and thus we dont place too much weight on this play. However, it is a significant discovery and exploration is being paid for with Other Peoples Money, so were happy to have free exposure to whatever value GTA can prove up.

Politics
Quebec recently rocked the mining community boat as a result of politicians talking about raising mining royalties. Clearly not good. However, thats not a done deal, and even if it does happen, we doubt the province will take it to levels that will seriously harm economic development of its vast northern territories where there is almost no economy other than mining. This bears monitoring, but for now Quebec remains one of the best mining jurisdictions in the world. Ontario is also a top jurisdiction. Enough said.

Push
Winter drills have already been turning on Martiniere, so we expect results soon, to be followed by more drill results throughout the year. Drilling has started on Northshore as well, and we may see new deals made on some of the companys non-core projects. The big news later on will be the first-pass resource estimate, but given some of the bonanza grades already intersected, there is potential for spectacular results that could really move the dial before then.

Paper & Phinancing

As you can see from the capital structure table above, the company has enough cash to deliver on its next milestones, and options for further cashing up with minimal dilution. This contributes to a relatively tight share structure, which has helped share prices respond well to good news. The stock is all free trading, trades with decent volumes, and all of the warrants and options are priced well above current market. Clean bill of health here.

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Price
Because of managements strong track record and excellent drill results, Balmoral shares have done better than most through the current gold correction. They are, however, off sharply from recent highs, despite the high-grade hits that drove them there. That makes the current market price a good entry point, and the pending drill results are a good reason not to wait for lower prices before taking a first tranche. If the market does go into full capitulation, well be happy to back up the truck for larger blocks of shares at lower prices. If not, we think those who buy now (or average down if in at higher levels) will come out very well in the not-too-distant future. First Tranche: Buy Second Tranche: Buy under C$0.60. Stink Bid: C$0.40 or less. Back to Table of Contents

Company Updates: Recommendations for the Bold

Last month was actually a relatively good one for most of our shares, many of which showed signs of a rebound beginning. Then, right after April Fools day, gold made one of its larger daily fluctuations and put the scare back into the market. By the time you read this, share prices for almost everything in our portfolio will be lower than when we ran the numbers on them, as in the tables below. However, we have adjusted our individual company recommendations, which you can see on each companys individual portfolio page, as usual. Our general guidance remains as it was last month, with the main difference being that we urge all readers to pay particular attention to our market sector this week and next, as we may just see some of our wildest stink bids filled:

Hold all existing positions unless a company has no money or runs into terminal trouble on the ground. Buy First Tranches at current levels if you are new to this market or are still fleshing out your portfolio with initial tranches. Stand by with those stink bids some might be met in the very near future.

Thats our context for making this months recommendations. Many of our stocks are on sale and great buys as is, but weve been asked to narrow the field of Top Picks to a few of the Best of the Best, so thats what weve done. It hurts to cut great companies for which we have high expectations from our Top Picks, but you cant ask all the boys and girls to dance, so these are the ones wed start with.

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THIS MONTHS TOP IS PICKS: Best Buy, gold producers: Atna Resources (T.ATN) Best Buy, silver producers: Silver Wheaton (SLW, T.SLW) Best Buy, developers: Banks Island Gold (V.BOZ) (Technically still an explorer, but building a mine) Best Buys, explorers: Almaden Minerals (AAU, T.AMM) Pilot Gold (T.PLG) Best Buy, industrial minerals: Mason Graphite (V.LLG)

Specifics on all our picks below, or in BIG GOLD. Valuations and prices are as of April 1, 2013. Please click on company names to see the detailed recommendations. Newcomers may want to read ourguide to valuationusing our tables.

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Company ALEXCO (AXU, T.AXR)

Price C$3.61

SO 60.5M

FD 65.7M

MCap C$218.4M

Rec C$3.25, 5/06

Gain 81.1%

52-week C$3.19-C$7.79

HM: Ag, Au, Pb, Zn / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDAlexco delivered several extremely high-grade hits (1,640 g/t silver over 4.0 meters) from its exploration projects near its existing mines. On sale. ATNA RESOURCES(T.ATN, ATNAF.PK) C$0.91 145M 155.5M C$132.M C$1.10, 9/12 -17.3% C$0.76-C$1.46

HM: Au, Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDAtna hit some interesting bulk-grade gold at its Reward project in Nevada, but the start of production at Pinson remains the driver here. On sale. CAPSTONE (T.CS, OB.CSFFF) C$2.30 381.5M 399.4M C$877.5M C$2.50, 2/13 -8% C$2.03-C$3.17

HM: Au, Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDCapstone is a new recommendation, unchanged. Its a profitable miner with financing arranged for its next project. Now on sale. ENDEAVOUR MINING (T.EDV, EDVMF.PK, EVR.ASX) C$1.49 412.4M 477.9M C$614.5M C$4.04, 9/12 -63.1% C$1.58-C$2.67

HM: Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDEndeavour unchanged, but hit hard by fearful market and now a better value than ever. Price now trumps risk. ENDEAVOUR SILVER (EXK, T.EDR, FRA.EJD) C$5.33, US$5.19 99.7M 105M C$531.4M C$10.81, US$10.84; 11/11 -50.7% (C$) C$5.54-C$11.05

HM: Ag, Au, Pb, Zn / HOLD/BEST BUY FIRST TRANCHENo word on labor negotiations, but theres been no strike, making this a great spec right now. First tranche if not long. SEE BIG GOLD FOR COVERAGE. ENERGOLD (V.EGD, PK.EGDFF) C$2.31 46.2M 49.7M C$106.7M C$3.91, 7/12 -40.9% C$2.36-C$5.68

HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDEnergold remains in the dog house, as is to be expected in a stock thats a proxy for a market thats down, but they are making money and growing. FIRST MAJESTIC (T.FR, NYSE. AG) C$15.59 116.8M 121.7M C$1.8B C$1.85, 2/05 419.2% C$12.26-C$24.18

HM: Ag, Au, Pb, Zn /HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDFR is on sale for no reason to do with the company; it remains a great value with lots of growth on tap. SEE BIG GOLD FOR COVERAGE. FORTUNA SILVER MINES (T.FVI,PK.FVITF) C$3.90 125.2M 131.3M C$488.3M C$2.13, 12/09 117.1% C$3.03-C$6.82

HM: Ag, Au, Pb, Zn, Cu / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDFortuna has held up better than many, but is still on the low side of its trading range and a great deal. SEE BIG GOLD FOR COVERAGE. GREAT PANTHER SILVER (T.GPR, NYSE.A.GPL) C$1.20 137.9M 144.2M C$165.5M C$2.87, 9/11 -58.2% C$1.20-C$2.55

HM: Ag, Au, Pb, Zn / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDGPR has less dramatic growth ahead, but its a good company that makes money, and now has a shot at a double in 12 months simply for being cheap. SILVERCORP (SVM, T.SVM) C$4.38 170.7M 174.8M C$747.7M C$6.30, 5/06 -30.5% C$4.02-C$8.23

HM: Ag, Au, Pb, Zn, Mo / HOLDSilvercorp is still making lots of money, so were not selling. The scare is overdone, but the scare is not going away, so were not buying either. SEE BIG GOLD FOR COVERAGE.

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SILVER WHEATON (NYSE.SLW, T.SLW)

C$31.06

354.2M 359.4M

C$11.B

C$3.18, 2/05

523.1%

C$23.11-C$41.18

HM: Pure Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDBest leverage to silver on the market and on sale a great value today, but vulnerable to further market weakness. SEE BIG GOLD FOR COVERAGE. SPROTT RESOURCE (T.SCP, OB.SCPZF) C$4.19 103M 103.5M C$431.6M C$3.99, 12/11 5% C$3.50-C$4.72

HM: Au (+oil and ag) / HOLDSprott hit with the rest of the market, but has had no bad news. If it gets much cheaper, we may start buying again, but for now, were holding.

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Company CARPATHIAN GOLD (T.CPN, OB.CPNFF)

Price C$0.27

SO 555.4M

FD 589.5M

MCap C$150M

Rec C$0.44, 12/11

Gain -37.9%

52-week C$0.24-C$0.44

HM: Au, Cu / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDCarpathian unchanged: on track to complete its RDM gold mine in Brazil. Shares have not melted down as others have, but still offer great value as is. DETOUR GOLD (T.DGC, DRGDF.PK) C$19.32 117.9M 139.8M C$2.3B C$30.11, 12/11 -35.8% C$18.45-C$29.07

HM: Au / HOLD/BEST BUY WITH STINK BIDDGC unchanged; the company has poured its first gold, but we dont know yet if they are making money. The shares have dropped with gold and are close to stink bid levels. GUYANA GOLDFIELDS (T.GUY, FRA.GG3) C$2.76 126.1M 134.6M C$348M C$8.69, 6/11 -68.2% C$1.67-C$4.40

HM: Au / HOLD/BUY WITH STINK BIDGUY raised a little money at a premium and hired an engineering firm, but otherwise unchanged and on sale.

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Click here to enlarge.

Company ALMADEN (AAU, T.AMM) Price C$1.91 SO 60M FD 65M MCap C$114.6M Rec C$0.78, 3/03 Gain 278.2% 52-week C$1.56-C$3.25

HM: Au, Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDAlmaden sold some non-core assets, a smart move. Cash is over $30 million. Ixtaca is growing, drilling has started on El Cobre. ATAC RESOURCES (V.ATC, ATADF. PK) C$0.97 103.6M 113.5M C$100.5M C$2.85, 12/11 -66% C$0.98-C$3.50

HM: Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDNo news from ATAC: still on sale. The company has over $14 million in cash and is getting great results, so we expect it to deliver. BANKS ISLAND GOLD (V.BOZ) C$0.65 34.4M 42.5M C$22.4M C$0.53, 9/12 22.6% C$0.45-C$0.97

HM: Au, Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BID/WATCH FOR PPBanks is building roads and preparing to mine its near-surface high-grade gold. Has half of capex in hand. BAYFIELD (V.BYV, BYVVF.OB, FRA:B4N) C$0.27 74.1M 106.4M C$20M C$0.55, 9/10 -50.9% C$0.24-C$0.59

HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDBayfield has $4.0 million in cash, which is enough to drill this year. Takeover may or may not be imminent, but does look inevitable. COLUMBUS GOLD CORP. (V.CGT, CBGDF.PK) C$0.29 102.8M 135.4M C$29.8M C$0.87, 2/11 -66.7% C$0.25-C$0.75

HM: Au / HOLD/PREPARE STINK BIDCGT has $4 million in cash, which is enough to work on the 5.4-million-ounce Paul Isnard project, but not for a major drilling campaign. Great asset, worth holding.

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CORVUS GOLD (T.KOR, CORVF. OB)

C$0.79

56.7M

60.8M

C$44.8M

Free, 8/10

C$0.79

C$0.67-C$1.83

HM: Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDCorvus has $6 million in cash and $5 million coming from sale of Terra project; enough to advance North Bullfrog. Great project, on sale. EXETER (XRA, T.XRC, FRA:EXB) C$1.15 88.4M 100.3M C$101.7M C$2.74, 6/07 -3.5% C$1.05-C$3.19

HM: Au, Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDExeter optioned two new gold projects in Mexico, but were more excited about the new look at Caspiche. Over $50 million in cash. GOLDQUEST (V.GQC, GDQMF. PK) C$0.41 143.3M 155.1M C$58.8M C$1.56, 9/12 -73.7% C$0.04-C$2.03

HM: Au, Ag, Cu, Zn / HOLD/PREPARE STINK BIDGoldQuest delivered 138 meters of 1.33 g/t gold, a good hit, but not what the market wants. The $17 million cash is plenty to do what needs to be done. INTL. TOWER HILL (THM, T.ITH) US$1.54 98.1M 106.4M US$147.2M US$1.21, 11/08 50.2% US$1.53US$5.18

HM: Au / HOLD/PREPARE STINK BIDNo news from THM. It has about $30 million in cash, plenty to prove up the economics of Livengood, but may not take them to project financing. Watch closely. KAMINAK (V.KAM, KMKGF.OB) C$1.07 82.1M 88.6M C$87.8M C$1.50, 1/13 -28.7% C$0.94-C$2.62

HM: Au / HOLD/BUY WITH STINK BIDKaminak has about $16 million in cash, more than enough for the work this season, which should add a lot of value. On sale. MASON GRAPHITE (V.LLG, OB.MGPHF) C$0.80 57.4M 74M C$45.9M C$0.80, 2/13 0% C$0.54-C$0.95

HM: Cu, Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDMason delivered exceptional drill results, as expected. About $5 million in the till, enough to deliver next milestones. MATAMEC (V.MAT, OB.MTCEF) C$0.19 120.3M 129.3M C$22.9M C$0.17, 2/13 11.8% C$0.13-C$0.38

HM: Cu, Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDOn track to deliver BFS in Q2. Met results show the company has solved major choke points. $3M in cash, but using mostly OPM. NGEX RESOURCES (T.NGQ, OB.NGQRF) C$2.88 168.6M 174.2M C$485.6M C$2.75, 2/12 4.7% C$1.54-C$3.52

HM: Cu, Au / HOLDNo news, but has huge resources and $40 million to advance them with. Great company, but unfortunately vulnerable to Argentina risk, and has not yet gotten cheap again. PILOT GOLD (T.PLG) C$1.69 85.2M 105.1M C$144M Free, 4/11 169% C$0.81-C$2.40

HM: Au, Cu / HOLD/BEST BUY FIRST TRANCHE/STINK BIDPilot delivered more silver hits over their growing gold discovery in Turkey (94 m of 69 g/t silver) but has gone on sale. $40 million in cash. PMI GOLD (V.PMV, ASX.PVM, OB.PVMGF) C$0.60 413.4M 426.6M C$248M C$0.52, 7/11 69.2% C$0.57-C$1.36

HM: Au / HOLD/PREPARE STINK BIDPMI/KGN merger derailed. PMI now needs rest of money to build Obotan. We understand that may be in hand, but will hold until we see the deal. PREMIER (T.PG, PK.PIRGF) C$2.57 149M 159.5M C$382.9M C$2.48, 7/08 38.3% C$2.75-C$6.79

HM: Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDPG added to its Red Lake position, which Goldcorp immediately joined in on, a very good sign. Made $30 selling its royalties. On sale.

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PRETIUM RESOURCES (T.PVG, PK.PXZRF)

C$7.56

96.5M

105M

C$729.5M

C$6.42, 2/11

54.9%

C$7.53-C$17.96

HM: Au / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDPretium cashed up over market (about $26 million in the bank now) and continues advancing its super-high-grade gold project. On sale. RENAISSANCE GOLD (V.REN, PK.RNSGF) C$0.46 30.7M 32.4M C$14.1M Free, 11/10 C$0.46 C$0.42-C$1.10

HM: Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDREN will see more drilling than last year, even in a down market, mostly paid for with OPM. Has $6 million in cash and many ways to win. RYE PATCH GOLD (V.RPM, OB.RPMGF) C$0.31 146.1M 155.6M C$44.6M C$0.54, 5/12 -43.5% C$0.27-C$0.71

HM: Au, Ag / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDRPM hit low-grade results on two projects, typical early-stage exploration. Has $7 million to keep working with. Legal case pending. SANDSPRING RESOURCES (V.SSP, PK.SSPXF) C$0.34 132.4M 144.5M C$45M C$2.19, 6/11 -84.5% C$0.31-C$1.29

HM: Au, Cu / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDSSP reported encouraging surface work, but the pending PEA is the main value-adding event ahead. Over $10 million in the bank. STRATEGIC METALS (V.SMD, SMDZF.OB) C$0.58 90.1M 96.6M C$52.3M C$1.39, 12/11 -58.3% C$0.60-C$1.46

HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDStrategic waiting for winter to end, but has $70 million in hand and is trading for less than that. The market is simply wrong about this company. SUNWARD RESOURCES (V.SWD) C$0.67 143.3M 193.7M C$96M C$1.14, 12/10 17.1% C$0.66-C$2.29

HM: Au, Cu / HOLD/BUY FIRST TRANCHE/PREPARE STINK BIDSWD reported very encouraging metallurgical test results, very important to low-grade projects like Titiribi. $30 million in cash. VIRGINIA (T.VGQ, PK.VGMNF) C$9.67 32.5M 34.3M C$314.3M C$5.80, 2/07 78.2% C$8.32-C$11.25

HM: Au, Ag, Zn, Pb, Cu / HOLD/PREPARE STINK BIDVirginia has over $40 million in cash and its share price has not fallen, as most others have. Great company, but not cheap. XTRA-GOLD (PK.XTGR.F, T.XTG) US$0.67 46.5M 49.9M US$30.2M US$1.90, 4/11 -64.8% US$0.65US$1.45

HM: Au / HOLD/PREPARE STINK BIDXtra is working on the surface to make sure it drills the best targets. They have almost $3 million to do this, but need good results. Buy only with stink bids.

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Stupidity Watch
We note several disturbing developments that could affect our investments in this months Stupidity Watch, so we want to caution readers not to overreact. Sadly, government short-sightedness grasping for revenue at the expense of economic growth is par for the course everywhere in the world. Thats why we call this column Stupidity Watch. As Doug says, you can run, but you cant hide. With taxes going up everywhere, the increased costs will eventually be passed along to consumers, and mining will go on. We are not saying that increased state rapaciousness should be ignored, just that it cant be avoided especially with most mine plans lasting decades, while administrations, legislatures, and regulators change all the time. So the focus has to be on the most stable and workable jurisdictions over time. When a major shift for the worse does occur, we have not and will not hesitate to let you know. Remember Mali: we took our lumps. Remember Argentina: we got out before things got crazy. At the moment, we dont see such risk on the horizon at least as far as our portfolio is currently structured, so its steady as she goes. Were on the watch.

Trouble in Canada
With so much of the worlds exploration and development capital being raised by companies listed on the Toronto Venture Exchange, the TSX-V is a crucible for everything good or bad with resource juniors. Some of the hardships that have hit the sector are the result of action by regulators, not market forces. Hence the creation of the Venture Funding Crisis Committee (VFCC, a group of companies and individuals heavily involved in exploration, mining, and venture capital markets) to advance the interests of the junior resource sector. In a Financial Post interview, VFCCs representative Don Mosher laid out the groups vision and goals. One of the immediate issues VFCC is working to resolve is the so-called trade-based exemption. If a related British Columbia Securities Commission (BCSC) initiative passes, nonregistered finders will not be able to raise funds from high-net-worth individuals and accredited investors. The BCSCs plan is opposed by the TSX-V, among others about a thousand people have signed a petition VFCC launched on its website. The issue is important. Mosher says that about C$4 billion was raised on the prospectus-exempt/ private placement basis on the TSX-V in 2012 alone. A separate study found that nonregistered persons participated as finders for at least a portion of the financing in 30-35% of all deals. Now, were not particularly fond of finders fees, but raising capital for junior resource companies is hard enough, and should not be made more complicated during a severe market correction. We believe the BCSC should support the TSX-V, especially in times like these.

Chilean Stupidity
MercoPress reports that construction of a large thermoelectric power plant in northern Chile that would have supplied electricity to various mining operations was put on hold by a court order.

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The initiative to shut the construction down came from the local fishermen and was supported by the local environmental authorities. Federal officials had allowed the construction, provided the company made certain changes. With a lower courts current decision to halt the project, the developer (Endesa) has an option to bring the case to the Chilean Supreme Court. However, last year that court rejected a similar project, so the chances look grim. The environmental concerns may or may not be legitimate, but even if they are, the construction phase is not the right time to address them. Mining and energy companies deal with cumbersome construction and operations permits constantly, and a global operator like Endesa must have submitted endless reports and studies in the permitting process that was when concerns should have been addressed. We dont have the details of the case but can say that this sort of capriciousness can drive investors away from major value-adding endeavors and damage local economies. Its disappointing to see this happening in Chile.

Uncapped Stupidity Risk in Nevada

Mineweb reports that Nevadas State Senate Committee on Revenue has approved a constitutional amendment that would lift the current 5% tax cap on net proceeds that mining companies pay. Proceeds from the tax increase or the drain on the mining industry are estimated at US$600-800 million. Some of the state senate members have cautioned that the tax may drive mining companies out of Nevada, but that didnt stop the committee. Perhaps thats because none of the committees members represent Nevadas rural areas, where most of the states mining occurs. Be that as it may, the proposal is not likely to be voted on by the legislature before 2015. Other mining tax measures, however, may get enacted earlier, in 2014. We dont doubt that Nevada will do what it can to increase its take, but we also think itll do so in measured steps, trying not to kill the goose that lays the golden eggs.

Stupidit Quebecois?
As we noted in Mondays Daily Dispatch, Quebec once widely regarded as the worlds top mining jurisdiction is considering substantially increasing taxes on mining. Its just a proposal at this stage, and nothing may happen for some time, but we will keep an eye on the situation. As with Nevada above, we dont think the province will do anything that will kill mining, but we dont like surprises.

Estupidez Mexicana?
Weve seen reports that Mxico is considering a mining royalty, which it currently does not have. As with the Quebec and Nevada news above, nothing has changed yet, and nothing may change at all, but we need to take note when things like this pop up. Also as with the other top mining jurisdictions above, we think those in power in Mxico today are too smart to kill of the mining industry, but with everyone else doing it, we would not be surprised to see Mexican authorities seek to increase the states share in the mining boom going on in the country. Well keep an eye on this too. Back to Table of Contents

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Questions for IS: Latest from Readers

Q1: Can you please advise when the Financial Armageddon predicted will happen? During October 2011, I sold my conventional stocks, and after recommendation by one of your subscribers, I decided to invest my money in gold, silver, and PGM, and subscribed to the International Speculator. I.e., I am almost all in on gold, silver, and PGM. The current status sees [broader] stock markets looking very rosy. My previous stocks are soaring. I am now looking at a significant deficit as compared to last October. I have read, with diligence, your reports and comments and predictions, all indicating a Financial Armageddon, and quotations such as if these shares hit $5 then back the truck up The reality is that, for me personally, there is now no cash to back the truck up and put anything in the truck. Things are going to get worse, and many, many of your subscribers are probably looking at very significantly deteriorating values in their stocks. The predictions for $2,000 an ounce for gold by January 2013 have never materialized. We are constantly reminded of the manipulation of our G and S stocks, by external influences, e.g., JPMorgan, et al. I am sure many of your subscribers feel the same way. I sometimes wonder whatever possessed me to even consider changing direction in 2011 and subscribe. For reference, the back the truck up shares are/have been in the mid-$2 range; not the kind of thing investors like to see as recommendations. Fantastic advice. Also, I acknowledge that I am responsible for my own actions, but why I ever listened, sold, and changed direction is a mystery to me. Maybe one of the worst financial decisions Ive made. Up to now. A1: First and foremost, were glad to read if we understand correctly that you have not given up and realized losses on what we still see as good companies. Whatever else you do going forward, we strongly urge anyone in a position like yours not to throw in the towel unless its on a company that runs out of money or suffers some other likely fatal setback. This is not the case for any companies in our portfolio today. We believe our comments in our publications have addressed most of the issues you bring up, but understand that that doesnt change the grim present reality of being underwater and how it makes you feel. And you are certainly right that you are not alone in how you feel. So, well say again that the thing to do for those all in is to Hold. Nothing has changed in the fundamentals. Yes, this correction has gone longer and deeper than wed expected, but that doesnt change the underlying trend. The worst thing you can do now is give up. As bad as you may feel at present, imagine how youd feel if you did give up, took big losses, reinvested in the mainstream, and then the disintegrating EU tipped China and Japan over, followed by Wall Street and you took even more losses just as gold resumed its upward trajectory. No, we cant tell you when financial Armageddon will hit and we never claimed to be able to time the market. The question you have to ask yourself in deciding whether to change course is not whether your stocks are up or down, but whether you believe in the trend or not.
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If you think we called the trend wrong, or if you think the trend has changed in a way weve missed, then you should change your strategy accordingly. Note that if your stocks were all doing great, price-wise, you would still want to exit those positions and redeploy in the new direction you think best. Of course, we hope you wont, because we still think were right and we will still think that if our sector melts down even more in the near term. Short-term price fluctuations simply do not mean anything as far as underlying trends go. For you, and other subscribers in your situation, we strongly recommend watching the free webinar mentioned above in this issue, Downturn Millionaires, which airs on Monday, April 8, at 2 p.m. Eastern. The main reason for this online event is to address anxious precious-metals investors. You can register here to save your spot. If you do decide to leave us, we hope youll check back on us in the future. If we are wrong, we all the key people at Casey Research will have taken huge personal losses, and youll get to see us admit we were wrong. But if we are right, there should still be time to rejoin the party before its over. Q2: Today I read a very disturbing news in the Gold Report about the Venture Exchange. I send you the Report, and please read it. The article mentioned the PI Financial as well, which I highlighted for easy reading. I had chosen the PI Financial Corp. as my brokerage firm as Casey Research recommended. I would like to know what will happen with the brokerage. What will happen with my shares? Please, give some relief words or some advice; what can I do and when? A2: The article referenced was an interview in which Vancouver insider Don Mosher decried increased regulatory intervention in the market. We have commented on the latest BCSC initiative and Moshers response in the Stupidity Watch article elsewhere in this issue. We are no fans of government regulation, so we oppose such measures as a matter of principle. However, it seems premature to conclude that the regulators are about to kill the market. The effort to ban unregulated finders, for example, will upset a lot of industry insiders who depend on finders fees, but we dont think that will end all financing activity and put the brokerages out of business. The big firms will just find ways to comply with the new regs and pass the costs along. Will your particular firm be hurt? Maybe, we really dont have access to the kind of inside information wed need to be able to say, but we doubt it. Will your shares be at risk if your firm does go out of business? Well, in the wake of MF Global, we should all pay a lot of attention to counterparty risk. We do keep tabs on our recommended brokerages and will revise the list as evidence comes to light that requires changes to be made to it. At this point, we see no reason to remove any of the companies from our list. But as with everything, we are all ultimately responsible for our own due diligence, and you should not do business with a broker you dont trust. Q3: While reviewing the valuation tables in the latest edition of the International Speculator, I decided to review the valuation metrics. I understand that some of the metrics would be different for the different classes of mining operations, but would like to better understand how you decide which metrics to use for which class of mining operation. I reviewed the Valuation Table Users Guide that was linked to in the article, but this does not contain definitions of all the metrics in current use, and it doesnt explain why certain metrics are used for certain classes of mining operation.
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A few examples: 1. The cost metric is cash cost in all tables, but cash cost is not listed in the key below the table, and cash cost is not listed in the users guide. The user guide defines all-in cost. Has only the name changed, or has the definition of the cost metric changed somewhat? 2. For producers, the output ratios use asset value in the denominator. For the developers, the output ratios use mine value in the denominator. Also, in the past (Oct 2011, same issue that includes the Valuation Table Users Guide) the output ratio for the producers used mine value. Why is asset value now used for the producers instead of mine value? 3. Total capex is a metric in the developers table, but not in the producers table. Why? Also, Is the total capex simply the total amount spent to date, or something else like anticipated total capex to get into full production? How should I use this metric? I dont mean to nitpick. Im just trying to make sure I understand the tables. A3: Youre not nit-picking at all; these are fair questions. The short version is that yes, the tables have evolved, and thats an ongoing process, as we seek to improve the utility of the information we deliver. As for your specific questions: 1] Weve added a definition of cash cost. 2] The asset value vs. mine value change was addressed in our January issue: Please note that we have changed MV to AV (Asset Value) in the Producers valuation table below. AV, defined in the footnote, is a better metric for us to apply to both mining companies and stocks like Energold companies that have book value connected to current reality. Comparing MV/EV from the previous issue to AV/EV, youll notice that in most cases they are very similar. Weve left MV in the Developers table since their book value is not as telling as producers. Specifics on all our picks below. Valuations and prices are as of December 31, 2012. Please click on company names to see the detailed recommendations. Newcomers may want to read ourguide to valuationusing our tables. 3] Total capex is included into the developers table but not in the producers, because the developers dont have an actual mine yet. MV is an estimate of the undiscounted present value of the companys earnings from the sale of its gold, while AV is an estimate of the assets value. Thats it for your questions this time. As always, remember: you can send us your questions to info@ caseyresearch.com. Back to Table of Contents

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End Notes
Upcoming Events
Sovereign Society Global Currency Expo Bud Conrad will be speaking at the Sovereign Society Global Currency Expo, at the Hilton San Diego Bayfront, San Diego, CA from April 5 to April 7. For more information, call 866-459-5978 or se the event web site. The World Money Show Vancouver Marin Katusa will be speaking at the upcoming World Money Show, Vancouver Convention Centre East, April 18 -19, 2013. For more information, call 800-970-4355 or see the event website. The MoneyShow Las Vegas Marin Katusa will be speaking at The MoneyShow Las Vegas 2013, at Caesars Palace, Las Vegas, Nevada, between May 13 and May 16. For more information, call 800-970-4355 or see the event web site. The Liberty Forum Bud Conrad, Jeff Clark, and Terry Coxon will be speaking at The Liberty Forum, St. Kitts, West Indies from May 15 to May 18, 2013. For more information see the event web site. World Resource Investment Conference Louis James and Marin Katusa will be speaking at the upcoming World Resource Investment Conference at the Vancouver Convention Centre West, Vancouver, BC, May 26 - 27, 2013. For more information, see event website. For more events of potential interest, please see our events page. You can also follow some of Louis James adventures on his Facebook page.

Term of the Month: High-Grading

Commodities tend to cycle. Commodity-driven stocks all the more so. One of the more predictable and profitable cycles in the sector is that when the going gets tough, the big companies decimate their exploration programs; when they enter survival mode, they cut every expense they can and just focus on generating income. A common sight at old open-pit mines is a variety of trenches and lateral excavations left behind by the past operators trying to squeeze whatever money they could out of known high-grade portions of the deposit. This practice, called high-grading was usually a sign of desperation imminent bankruptcy as it ruined the average grade of the deposit to have the richest parts mined out first. The interesting thing is that companies dont just do it with deposits; they often cannibalize themselves when they feel their survival is threatened. If a company has no choice but to stop spending on its less profitable mines and focus on its richest cash cows, well, it has no choice. But mines deplete, and you can only high-grade for so long before your company has no future.
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Thats pretty obvious, but just as important, if less obvious, is the danger associated with cutting back on exploration. Again, mines deplete. Its the very nature of their operation. A mining company that cuts back on exploration is like a technology company that cuts back on R&D. Sure, they may boost profits in the short term, but sooner or later the competition will overtake them and they will become history. Would any mining company be so short-sighted? Well, yes. Many of the bigger ones do it almost as a matter of course when the market turns bearish. IAMGOLD, for example, recently announced a costreduction program that included a $40 million reduction in exploration expenditures. As shareholders, wed rather such companies cut dividends and keep money flowing to secure future growth But we know there are other shareholders with different views. Be that as it may, theres a silver lining two, in fact. First, when big companies high-grade themselves, either temporarily until the market turns around, or right out of existence, they release a lot of valuable assets into the market. This is how smart juniors pick up many great mineral exploration projects that lead to rapid discoveries. Also released are human resources, making top-notch people available to small companies that can give them the latitude they need to create a lot of value for shareholders. Activity like this usually peaks when long commodities cycles trough, but its happening to some degree right now as well. Second, after cutting back on exploration for some time, the bigger companies realize that they wont be bigger companies for long if they dont discover or acquire new deposits, and fast. Discoveries are never guaranteed and after cutting back on exploration, are all the less likely so the majors turn to acquisitions. This year has been a slow one for M&A so far, and that may well persist for a while. It cannot, however, last forever; sooner or later, the majors have to start buying the successful juniors, or they will cease being majors. And when (when, not if ) market sentiment turns positive again, that shift could come much sooner than they are expecting.

Laugh or Cry Department

Francisco dAnconias Money Speech This audio recording is of Ayn Rands famous money speech, given by her character Francisco in her magnum opus, Atlas Shrugged. The original is much more moving and powerful than any subsequent versions. Weve linked to the text before, but find this reading clear and well done easy to listen to. Doug Casey on Stupidity and Evil In case you missed Dougs famous speech given while smoking under a No Smoking sign, heres the clip. Warning, this is Doug uncensored and unrestrained not for the humor-impaired. Back to Table of Contents

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Parting Thought

Bearing in mind the courage needed to take bold action when theres blood in the streets to buy when everyone else is selling Ive been thinking about how well-chosen the motto of our Explorers League is: Fortune favors the bold! Apparently, this was already a proverb back in ancient times, appearing in Virgils Aeneid, among other classical references. Par for the Casey course, given Dougs love of classics. When I told my then-fiance this, she said: Of course. In Russian, we say, Who dares not risk, drinks no champagne. And then she smiled and added: Faint heart never won fair lady. With the caveat that one must never confuse necessary boldness with reckless foolishness, here are a few more quotes on bold action to remember, going forward. It requires a great deal of boldness and a great deal of caution to make a great fortune, and when you have it, it requires ten times as much skill to keep it. Ralph Waldo Emerson The bold are helpless without cleverness. Euripides Stand upright, speak thy thoughts, declare The truth thou hast, that all may share; Be bold, proclaim it everywhere: They only live who dare. Voltaire Avoiding danger is no safer in the long run than outright exposure. The fearful are caught as often as the bold. Helen Keller No great discovery was ever made without a bold guess. Isaac Newton He is the best man who, when making his plans, fears and reflects on everything that can happen to him, but in the moment of action is bold. Herodotus Be bold, be bold, and everywhere be bold. Herbert Spencer Back to Table of Contents

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