Victoria Gold Corp VITFF

resource boom

[freequotesl]

WILL JUNIOR RESOURCES EMULATE THE DOT-COMS? KWR explained that many of today's investors were around during the days of the Dot-Com investment craze. "That phenomenon went on far longer and showed far more upside on less tangible fundaments than the resource mania now emerging," Rabin and MacDonald insisted. Meanwhile, a number of investors who did not get involved in Dot-Coms may "make sure that they do not miss the boat this time around" by investing in resource stocks, they suggested. Nevertheless, Rabin and MacDonald warned investors to be really careful when making new investments in junior resource stocks. "One has to acknowledge the illiquidity and speculative nature of this sector of the market. ...We would also caution anyone seeking to get involved to start off small and to spread their capital over a number of names or mutual funds and consider phasing in over time. ...If one remains too focused on individual names or a few choices, the resulting portfolio represents more of a high-alpha gamble on the circumstances surrounding a particular country, firm, mine or management team, rather than a diversified play on the overall junior market." As liquidity comes into the cash-starved energy and mining sectors, KWR suggested that "we are likely to see an acceleration of the consolidation now emerging." With the growing interest of larger institutions in the natural resource sector, "larger companies and entrepreneurs now have the funding and incentives necessary to invest in longer-term productive assets that have struggled under less-capitalized players," Rabin and MacDonald noted. "In addition, investors are far more prepared than they have been in decades to allocate capital and reward these firms through higher valuations." JUNIORS WILL YIELD BEST RETURNS KWR's analysis concluded that "one is likely to find the best returns at the exploration and junior end of the sector. Unlike the majors, these companies now seem to be valued more from a corporate finance and M&A perspective than one based on their short-term trading performance. Ironically, in some ways at least to date, this seems to be making them less prone to the tendency of the majors to trade up and down with every movement in the price of the underlying metal or commodity price." Nevertheless, Rabin and MacDonald warned investors that junior miners and explorations remain "highly speculative and should only be purchased by investors who can deal with the potential for large losses, this allows the chance for much greater appreciation." "While one can count on heightened volatility, shakeouts and continuing corrections--and one might wait for these opportunities to take on additional exposure--the underlying trend is likely to remain positive and reward the patient investor for many years to come," the men emphasized in their report.