I was surprised to log on this morning and note that most of my PM juniors were down slightly, despite the strong action into the close yesterday, and despite the nice tailwind for the metals today. It seems that most people are not even paying attention to the juniors, and do not perceive the current share price range as value. Among the tiny minority of investors that do participate in the sector, there are still many on the sidelines who are dreading a big spring correction, and I still read commentary everyday from analysts and advisory letters that think we have new lows ahead for the metals.

The fact is that the sector is not going to go higher until people begin to believe that the metals prices are for real. We are now seeing the O&G sector going through the second raging bull market in 4 years on the basis of that same recognition. The media is all over the high oil story and we are getting some acceptance that this price is sustainable and not just about greedy speculators bidding up the price. The PM sector is going to have a similar paradigm shift sometime ahead.

My guess is that the inflation data will represent the wake-up call. No matter what lies and spin may come from officially generated numbers, people are beginning to appreciate that inflation is much worse. Everytime they fill up their cars or buy food the reality hits home. This growing awareness will create a shift into the PM stocks as money rotates out of other sectors.

The most important fact to remember through the difficult months is that not all investors are in trouble. There is a mountain of cash parked on the sidelines, and sitting in bonds and treasuries. As the mainstream stocks lose value, money will still look for a home. The PM sector is tiny and just the hint that things have turned the corner will create a reaction very quickly as money plows in. For 2 years it has been just the goldbugs who were invested and even many of them have dropped out during the corrections. Things are going to change and I am seeing some encouraging signs that the tide is coming back in.

ECU will move with the rest of the sector when the money flow turns positive. I do not have to watch individual stocks. I am just patiently holding on for the flood of new money that will lift all the good juniors higher.

cheers!

mike