The problem for the junior miners as I see it, is that they are locked into selling their metal at prices below spot, since they do not produce pure bullion, but instead a dore or concentrate. So they realize a discount to the manipulated spot market prices.

Investors know that one cannot buy gold or silver anywhere near the spot market price. But smelters are paying far less.

The obvious solution would be for the producers to tell the market to go to hell and withold production from the market. This is not an option since the companies are already so squeezed in their operating margins that they do not have the cash to afloat without the ongoing revenues from selling their production. So the manipulation in the spot market wins, because the production continues to flow so the end users are getting the metal cheaply, but investors and speculators are locked out due to lack of small bar bullion. AND we get screwed if we invest in the juniors because the stocks are in freefall in sympathy with the decline of the metals prices.

Believe me, this issue is going to be resolved as more mines go out of business, and a lack of new project development comes online to replace the existing mines. That will be little comfort to us today if a few years from now all the metals are going ballistic because the worldwide mine supply is far below demand. Even during the boom years when record investment flow into the juniors created an exploration frenzy, there was still just barely enough metal in inventories to meet worldwide demand. Contrary to what some people want to believe, the world is not coming to an end, and metals demand will not go away even with a severe recession in the US. This situation is sure to grow more acute as the cycle grinds on.

cheers!

mike