Below is a question regarding GNH asked by a subscriber in Jay Taylor's May newsletter which was released today. Personally, if I was a new investor, I think GNH would be great buy at these prices; however, I bought at significantly higher prices (.47 cents) and just don’t have the stomach and cash to purchase any more GNH shares. I sometimes feel real stupid about purchasing GNH shares, but I am smart enough to be patient and not sell at these prices. Hopefully, Frank and team can turn this thing around. Anyways, enough of my personal rumblings.... please see write up below:

QUESTION: I don’t know if this is the proper place to ask a question about a portfolio stock, but here goes anyway: Jay, Golden Hope Mines’ price is about 60% less than when I bought it. Should I look at this as a buying opportunity to pick up more shares cheaply, or is there enough risk so that I should just hold tight with the ones I have? My position isn’t very big, and overall my accounts are doing pretty well. Thanks if you have advice.

ANSWER: My thinking is that this is a higher risk exploration story than many others but it also has the potential to come up very big. The kind of higher gold prices we have now (assuming the “real” price of gold remains high in an inflationary environment), means this project has a real shot. One of the main problems is that there is a significant nuggeting effect on the property, such that a fair amount of bulk sampling is required to be able to determine grades with statistical accuracy. I visited the company’s property about a year ago and I think the upside is big.

Depending on your level of risk, if you are one to roll the dice, you might want to add to your position, now that the stock is so badly beaten down. Also if you are a risk taker and you don’t have much of your portfolio allocated to this stock now, I would suggest now would be the time to add to your position. The company has had some good drill results since January. I actually like this stock as a speculative buy at its price, which closed at $0.18 today. The main concern here as with so many of these junior mining stocks when they get beaten down so badly is that the dilution factor begins to eat shareholders alive. The company has in excess of 115 million shares outstanding, including 4.8 million flow-through shares sold in January at $0.53 and 1.25 million shares sold at $0.40. Drilling since then has provided some good results, such as 4.36 grams over 1 meter, 6.49 grams over 6 meters, 2.72 grams over 3 meters, and 7.57 grams over 10 meters. I should try to take a closer look at the significance of these numbers. But in general, my sense is that this stock is very undervalued, given the existing junior gold share markets.

April