The article below, IMO, has profound implications for investors interested in investing in junior gold companies. Robert McEwen, former president of Gold Corp. - one the largest and most successful gold producing companies in the world - now President of US Gold - has created a new internal index to track junior gold companies performance in relation to other gold indexes that include only the large cap senior gold producing companies. The index at the present time can only be accessed via his web IMO, it won't be long before it will be published on Kitco's Bullion Web site along with the HUI and XAU indexes that track the performance of the large cap producing gold companies. More importantly, I believe McEwen will create an exchange traded fund that will traded on a national exchange that will give investors the opportunity to buy shares in an index that represent the cream of the crop when it comes to junior gold companies. In stead of tying to figure out what junior gold company to buy, all you will have to do it to buy a share in the index fund that will represent an investment in the top 21 junior gold companies. Thus you reduce the risk of picking the wrong junior gold company due to the diversification. Also an exchange traded fund will provide the liquidity to buy and sell in size without having an adverse impact on the price of a single junior gold stock. Most junior gold companies have very little liquidity in the market and it is very difficult to build a large position without driving the price up and by the same token, it is very difficult to sell a sizeable position in a junior gold company without the sale significantly affecting the price you are able to receive in the open market. Not only will a junior gold exchange traded fund generate a tremendous interest in junior gold companies, but the liquidity will also create institutional sponsorship- something that is lacking today because of the low stock prices for junior gold companies and their lack of liquidity. An exchange traded fund will also provide investors with the ability to hedge their positions via options that are usually available for exchange traded funds. These options can be used to generate income and minimize risk, and they can also be used to increase the financial leverage in junior gold companies. Bottom line: IMO we will see a junior gold exchange traded fund in the future which is bound to increase investors interest in this sector. It should be the desire of any junior gold company to be included in this new index because stocks that are added to an index invariably sell at a higher price once they are included in an index. I know Victoria Gold's President and CEO has an objective to be amongst the cream of the crop when it comes to junior gold companies. Now it will be ever more important to achieve that objective so that their stock can be eventually be included in the junior gold index that I expect will become a reality. http://www.mcewencapital...

Submitted by cpowell on 06:53AM ET Saturday, June 20, 2009. Section: Daily Dispatches
By Peter Koven
National Post / Financial Post, Toronto
Wednesday, June 17, 2009


Twenty-one companies were put into the index. They read like a who's who of Canada's junior mining sector: Osisko Mining Corp., Rubicon Minerals Corp., Detour Gold Corp., Fronteer Development Group Inc., and of course US Gold.

In selecting the cream of the crop, Mr. Ball said there was a realization that many junior golds with weak balance sheets are trapped in penny-stock territory and will not go up, no matter what the gold price does. "Most of the juniors are still dead," he said.

So for the index, the focus is on companies with good cash balances, trading liquidity, and an actual discovery of some note. For the most part, this small group has defied the rest of the junior sector and rallied strongly this year alongside the gold price.

"There's a brat pack of junior companies like ours that seem to be getting most of the attention. They've got strong management and strong cash positions," said David Adamson, Rubicon's chief executive.

The index has been publicly available for a couple of weeks, but McEwen Capital has much broader hopes for it. The plan is to build up a following, get listed on the Kitco bullion Web site alongside the HUI and the XAU, and possibly launch an exchange-traded fund that tracks it.

In the shorter term, the company hopes to make background data to the index available so that investors can build their own models, and offer more charting material.

"We just haven't spent the money to have the real-time charts created, because we have to buy the data from the exchanges and it does get a little expensive," Mr. Ball said. "But we're slowly getting there. This started for our own amusement, but we do think there is a need out there for it."