The big problem holding back the juniors right now is that most people do not believe the price of gold can hold these levels, let alone move higher. The majority of commentary that I see suggests that gold is bubble, its trading with an artificial risk premium, its approaching the end of the cycle, etc. Never mind that this sort of thing has been the mainstream opinion for years, and that the same people have been wrong year after year... The junior mining stocks already have a label of high risk attached. While the world is getting nervous about the fallout of the subprime scam, most people are more interested in reducing the risk level of their PFs. So you have limited buying in the juniors because people think gold is going lower, and you have increased selling presure because people are moving away from risk. Its a bad combination for the juniors.

I think gold has much higher to climb. And as for risk, I try to load up on juniors that are either profitable producers, or else explorers that have a huge cash position like KXL. So its a waiting game for me. As gold rises in price, money that is parked on the sidelines will want to get leverage to that. Just look at the O&G sector a few years ago. People never wanted to believe that high oil prices were here to stay either. As the reality sinks in, then money flows back into the sector, and the stocks have a great catch-up rally.

cheers!

mike