yes, a precious metals portfolio should start with gold and silver bullion and coins. after that the larger companies that are growing and can replace their reserves, like goldcorp, agnico-eagle, yamana, silver wheaton, and so on.

then if you can take on more risk, there are juniors, but they aren't for everyone. there are companies that have the capital they need to go into production, and do not need financing, so they will not be affected by the credit crunch, yet their share prices have been trashed.

as an example, anatolia just began construction of its copler mine in turkey. they have all they cash they need, they have a tight share structure, they will become a mind-tier producer in two years, they are unhedged, and their stock sells for $1.50!

esperanza silver has a clear path to production of its san luis project, it still holds a 20% interest, but its jv partner will pay all of the costs of construction, and it will become a producer in eighteen months. its shares sell for 75 cents.

these are companies that are doing everything they're supposed to do, and there is little doubt that they will become producers, but the market is painting all of the juniors with the same brush. those companies are being valued as though they are explorers that own moose pasture in siberia.

most the juniors will fail, but the ones that survive will be stronger because equipment, labor and other resources are more available now. a year ago it was very hard to find a drill rig, and now you can find ten of them. skilled people are easier to find, and will work for less. the companies that make it through this downturn will also be able to buy up prospective projects from the ones that fail.

i don't know when the market for juniors will return to favor, but i expect it will happen without any warning. these shares are so thinly traded that when money moves in, they can go up 50% in a single day.

i think the $60/oz price of this transaction was an abberation due to the perfect storm of collusion, corruption, and incompetence of the parties involved, but we will see. i own shares of the companies i mentioned, so do your own due diligence.