1. It apparently has become very difficult to impossible to buy physical gold either in bar or coin form. I was told last Thursday (in separate conversations) by two highly sophisticated Vancouver based investors that they had been unable to buy physical gold for immediate delivery, and that they had to pay for the physical gold they wanted to buy at last Thursday’s spot price plus vendor commission – and that delivery was promised in greater than six weeks. I tested this out last Friday by calling the Toronto Head Office of one of Canada’s largest banks. At 1:30 p.m. last Friday that Bank had a grand total of 17 one ounce gold bars for immediate delivery at the spot price plus vendor commission. Apparently where gold coins can be found they are being bought and sold at significant premiums (antidotally I was told in the order of 30%, although I have been unable to verify this) to the spot price. Finally, it was reported last week (again I have not been able to verify this) that the European Central Banks sold 7.6 tons of gold (about U.S.$250 million)

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in the week ended October 10. If this is true, that ought to have put downward pressure on the gold price. In any event, it strikes me there is a disconnect between the current market demand/supply equation and the futures market where gold is quoted this morning at under U.S.$760 per ounce, down from approximately U.S.$900 approximately two weeks ago. As best I know, the price of gold should gain ground in uncertain economic times – which we certainly are in – and it is not doing that as this is written.

2. I have heard a continued litany of the negative effect investor cash calls on mutual funds and hedge funds are having on stock market prices. My observation is that there are some extraordinary ‘stock bargains’ – particularly among the gold stocks that ought to do well if and when gold is priced higher than it is now. I suggest you subscribe (at no cost) to StockResearchPortal.com to help you find such companies more quickly and conveniently than I think you can do elsewhere on the Internet. To screen for such companies, click on Compare & Rank Companies (on the main Navigation Bar), select Mining >> Gold >> Explorers >> Canada (or another geographic area of interest to you found in the drop-down menu) >> Market Capitalization $0 - $250 million. Then click on Quarterly Statistics, and create table columns by clicking on ‘Cash & Equivalents’ and ‘Interest Bearing Debt’. You immediately can find gold exploration companies with cash on hand and no debt, and can visit each ‘Company Page’ in the website by clicking on the each company name in the table (see below).

On the company page you will be able to access Press Releases and Corporate Documents that address whether the Company has NI 43-101 Resources or Reserves. In my view it is these companies that may represent ‘hidden and under priced’ gems in this current market. If you have taken the time to read this far, I suggest you read a post on this Blog dated Augsut 14 titled Junior Mining Explorers in the Current Market. That Post sets out the criteria I believe are the important ones to consider when deciding whether to invest in a gold exploration company in this (or for that matter, any) market condition.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. See Legal Disclaimer.

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