Dear CIGAs,

These are stressful times for anyone holding shares in both the gold and broader marketplace. Even gold stocks were hit today despite sharply higher gold prices and the prospects for even larger gains in the weeks and months ahead.

Physical demand for gold in coin and bullion form is almost unprecedented. In fact, some of the world's largest gold mints (including the US Mint) are having a hard time keeping up with demand. As gold prices move higher, I am confident that gold equities will recover and when they do I believe it will be a sight to behold.

Keep in mind that established gold producers are benefiting from lower oil prices which is a major component in production costs (about 25% by some estimates). So you have production costs going down and the metal's price moving higher - a perfect storm if there ever was one. Might we see gold companies as the only entities reporting meaningful profits in the marketplace? It's not as far fetched as some might think.

When the gold market stabilizes and gold stocks trade again on solid fundamentals, I can see them leading the market out of its current malaise. The gold investors I am talking to are putting their money on low cost producers with good production leverage and on well financed gold explorers with drill-stage properties that are consistently producing good results. It's a formula that is bound to pay huge dividends in the long run.