Article (SLI mentioned) The Gold Bug Chronicle
By Lex Vector
With continued stock market turmoil, uncertainty in Europe, and rampant debt threatening to bring down the entire financial system, the fundaments for gold have never been stronger. Among the backdrop of historically high gold prices and record profits for gold producers, gold equities however have badly under-performed—many languishing at their 52 week lows. Junior gold explorers and developers as a group haven’t fared much better, most having shed an average of 62% since their highs only two months ago. Gold equities have quickly become an asset class completely unloved by risk-adverse investors. So what is the would-be gold investor to do in such a hostile environment? I recently sat down with Lawrence McDonald of Ewen Equity Management to discuss his radical new approach to investing in gold equities.
LV: Thank you for joining me today, Mr. McDonald.
LM: It’s my pleasure. The times we live in are truly extraordinary. With all the toxic debt in the world now unwinding and with governments attempting to print their way out of the mess, I encourage your readers to protect their wealth, and the best way to do this is to not buy gold.
LV: Not buy gold? What do you mean?
LM: Well I could not buy the physical metal, of course, but I’m looking for a little more bang for my buck, so I’m currently looking at over-priced junior explorers that have promising gold projects.
LV: Sounds reasonable. Do you have any current favourites?
LM: St. Elias Mines’s Tesoro project comes to mind right away. While I caution your readers that Tesoro is still an early stage project, initial drilling indicates an enormous lack of gold—perhaps one of the largest. Our first look at drill results showed average gold grade over very small intercepts—completely uneconomic—which is exactly what you’re looking for when investing in a no-gold company.
LV: Wow that sounds really exciting.
LM: It is. I’d just like to remind your readers that exploration projects like Tesoro are often very hard to prove definitively to be barren of gold, which adds to the risk, however, St. Elias has significantly de-risked the project by drilling their most prospective targets first. Although we could see a hit out of the blue, I think this one is a legitimate slam-dunk for those looking to expose their portfolio to no gold.