That's all fine and dandy but it does not address how the Juniors are going to react over the short term as this current upleg cycle in Gold & Silver draws to a close over the next week and a half. Are we to believe the Juniors are actually going to rise as the underlying Precious Metals enter a consolidation phase that will either chop sideways or downtrend at a slight incline for a month or two? I doubt it yet I also believe that unlike previous corrections, the Juniors will hold onto most of their gains this time around as the HFs shift their long-term holdings strategy away from the short side and onto ours.

If the Hedge Funds are to shift their Junior long-term positions from short to bullish stance later this year as I suspect, then the share price trend beginning the second week in March will offer clear evidence that the tide is indeed changing and the Juniors are the place to be through 2009 and perhaps way beyond. I note volumes are up in the small caps lately so this might be a preliminary sign of HF covering that is sorely needed but it is still too early to tell for sure until a solid price trend is in place.

In a nutshell, I am confident the consensus outlook for Juniors is on the verge of a watershed shift change that will lead to a repeat of the spectacular multi-bagger gains many juniors experienced a few short years ago. This PM bull market is gearing up like never before with no end in sight and the small caps have a lot of catching up to do versus bullion. In my view the time has come for juniors to shine in this sector just as they inevitably do in any investment arena after a bull market has been running for years and the uptrend becomes entrenched and indisputable.

There is no denying the poor US economic backdrop will continue to fuel this Precious Metals market for quite some time, and thus I have every reason to believe the Juniors have nowhere else to head but to much higher levels over the next year. One must realize the HFs used to pile on the short side of Juniors playing on the hope of an imminent economic recovery but this time none is in sight, so there is the reason to short us any longer.  As I wrote yesterday evening, the world is shunning paper and embracing tangibles and PMs are the ultimate preferred choice tangible reserve asset. Large caps are overvalued and need the Juniors (which are down in the dumps) to replace their dwindling ounces, so this should become the primary (positive) focus driving the PM small caps going forward replacing the current negative sentiment which no longer cuts the mustard.  At long last the cards are lined up as never before, so buckle up as our time in the sun has arrived with a turbulent Financial system providing gale force tailwinds.

 ESL