http://news.goldseek.com/Zealllc/120...

Junior Golds and CDNX

In the gold production lifecycle the exploration, discovery, and development phases are where the juniors play such a critical role. And with global gold production continuing to fall, the need for new mines to replace those with depleting resources is dire. Juniors exploring for gold should be highly sought after not only as acquisition targets for the senior miners but from investors looking to leverage their resources.

But odd is it may seem, even in an environment of $800+ gold the juniors are cast out as the lepers of the gold stocks. And this has been endlessly frustrating for a lot of folks. So much so that it has created a sentiment storm that continues to feed on itself and grow bigger. And this sentiment storm is overshadowing the stellar fundamentals for junior gold stocks. Provocatively I believe the second question above is a self-fulfilling prophecy for the first.

As an analyst I receive a lot of valuable feedback, both positive and negative. In recent months I’ve heard from individual traders running small trading lines all the way to hedge-fund managers. And sentiment is indeed rotten! A note from a long-time gold stock investor sums it all up:

“Well here we are with the biggest run up in gold and silver in history. Yet in the last 8 months the juniors have gone sideways to downwards. This is like water torture! First it was just losing a penny here and a few cents there, but now I feel like I’ve missed out on this historic run up! This is making me mad and a little nuts!!! I keep thinking it will turn at a point for the juniors but the trend just never seems to change for them…why haven’t things worked this time around?”

This dialogue is actually tame compared to some of the feedback I’ve received. And I’ve heard from many folks that assure me they never plan on trading gold stocks again. The fear that is out there today is staggering! And now more than ever gold stocks are the consummate contrarian play.

Ultimately the pain junior-gold-stock speculators have endured since August has fed this storm to create a giant sentiment snowball that keeps getting bigger and bigger as it rolls down the hill. So far most traders are scattering from the path of this snowball not willing to fall victim to the carnage of the junior gold stocks.

But eventually this snowball will hit a wall and explode, and those speculators positioned in the elite juniors should win legendary gains.