andthere’s everything to be excited about.

Take the August low against the high of the next 18 months — there willbe an extraordinary difference between those two and an outstandingbuying opportunity is setting up now.

TGR: So you’re looking at the bottom; this is not a trend.

DB:Oh, absolutely — this is a pullback in a bull market. The bull marketis likely to carry to the TSX Venture Index (^JX:CA) to new all-timehighs; it’s likely to carry the GDX (Market Vectors Gold Miners ETF,AMEX: GDX), which is the major gold mining stocks, to a new all-timehigh as well. It is likely to take gold to around $1,035 at a minimum,and silver to around $25 at a minimum. And I would say the odds arebetter than 75% that that will be the case.

IfI am incorrect, and, in fact, it turns out that the March '08 highs ofgold and silver, and the March highs in the XAU and the GDX turn out tobe the all-time highs, I am still highly confident of at least one moresignificant rally to attempt to breach the highs. So, any way you cutit, I believe this is a great buying opportunity, and the worst casewill be a substantial short-term profit. By short-term, I mean asix-week to six-month profit opportunity.

TGR:What factors should gold investors be looking at to try to determinewhether it's a short-term six-month profit or a continuing trend thatmay reach an all-time high within 18 months?

DB:That’s a good question. I would say that two consecutive closes over a$1,035 price in gold, or two consecutive closes over any of those majorindices, will signal that the game is on and that we’re definitelygoing higher. In which case, for example, you could see gold in the$1,200 to $1,400 range. You could see silver in the $28 to $35 range.And likewise you could see the TSX Venture going to a new all-timehigh, perhaps 30% to 60% higher than its previous all-time high.

TGR:Very interesting. So if we breach the March highs for two consecutivecloses, you’re predicting that we’re going to continue to rally?

DB:That will be indicative that the previous all-time high was nothingmore than a stopping point on a very long-term bull market. Theinteresting thing in all of this is that the TSX Venture, which isindicative of the performance of junior mining, micro cap and small capmining stocks, actually topped in November '07, significantly beforemining stocks in general, and they’ve basically collapsed since thatall-time high. I waited until late April '08 to get back into themarket. That was the first buying opportunity of '08, and this Augusttimeframe is the second major buying opportunity of '08.

Ithink the average of those two prices—the late April lows and theAugust lows— is going to look like a fantastic place to have been abuyer in these stocks.

InNovember '07 there were significant problems in the TSX Venture andmore problems followed in January for the underwriters of thesecompanies in Canada. The combination of those two things really, reallyhave hurt the TSX Venture stocks, and there are a lot of companies thatwould have been thought of as great companies a year ago, in mid-2007,which are now not going to be able to refinance and are not going to beable to get funding. So, the criteria for picking junior mining stockshas gotten a lot more specific – you’ve got to be a lot more carefulthan you could be in mid-'07.

TGR: And what would that criteria include now in mid-'08?

DB:You’ve got to have a company with a significant project and cash for italready in the bank to move it forward at least to the next significantlevel, and a tight share structure and a smart management team. Priorto this, cash in the bank was not that important because a companycould easily finance the next round of funding. That is not the casetoday. They’re not going to be able to simply go out and say, “Hey, weneed 2.5 million more dollars to do our next set of drilling.” Themoney is just not going to be there; they have to have the moneyalready in hand.

It’s afinancing problem. And it’s a terrible problem because these are notoperating companies. The only way they advance is by working in thefield, which either can be by drilling, or induced polarization ormagnetometer work, etc. Something has to be done on the geology or thegeophysics to move the property forward, and that takes cash andcapital. If they’re not generating capital internally through cashflow, then they have to raise the money in the stock market; if theycan’t raise the money in the stock market, they’re dead. Their stock isjust going to keep going down, and they’re going to have to sell theirproperty to a stronger, better company, or they’re going to have tojoint venture it with a major on what would have been consideredunreasonable terms. Something like that is their only way out.

Onthe other hand, a company with a great property and $5 million in thebank, with $2.5 million worth of drilling over the next months, willprobably be just fine.

TGR:In the short term, how would you compare investing in a junior, whichis capital intensive, versus a producing company, which does have cashflow to carry it through over the trough of the stock market?

DB:Well, there are some exciting stories in the major mining companiesbecause they've been so slaughtered. Some companies are just going tokeep making money, and they’re just going to do great whether gold isat $800 or $1,000; although obviously it’s better for them if gold isat $1,000. But they’re going to do just fine.

Andsome of these have come down so much that they are now low-P/E stocks,which is unheard of in mining, because most major mining companies arevalued on assets in the ground and the new gold that they find. They’revery rarely valued on an earnings basis.

You have to have a long-term perspective and wait until these sell-offsstart to go to the upside. Watch for this rise, combined with thenormal seasonal pattern such as in August, and you can buy these stocksat once-a-decade prices or even once-in-a-lifetime prices. You can dovery well over the next 16 to 30 months. That’s what I give the bullmarket in gold and other metals —16 to 30 months more before it topsout.

TGR: How would you balance your portfolio between majors and juniors?

DB:First of all you have to start with an overall understanding of yourportfolio and at what level gold stocks and silver stocks play in at.The typical investor might have 5% in gold and silver mining stocks,and I think for a person like that I would say three or four-fifths ofthat in majors, and one or two-fifths in juniors. I think given thestory of opportunity that is available today, I might divide thatfifty-fifty, and I would put half in junior mining shares and the otherhalf in the majors, because we have such a significant opportunity atthis timeframe.

TGR:People say gold is influenced by the value of the dollar. Now Russiahas invaded Georgia, and there’s still talk of conflict between Israeland Iran. Will those events impact the price?

DB:No, I don’t believe in looking at markets that way. That might sound abit strange, but in the short term I think that stories are justexcuses that pundits use for why things go up and down. As an example,Russia invades Georgia. Gold goes straight down. What if the oppositehad occurred and gold had gone straight up? It’s very possible thatgold could have gone up $30 today instead of down $30. There’s noreason why not. Then people would have said, “Oh, gold is going upbecause of the instability in the world because Russia invadedGeorgia.” Likewise, Israel announces something with regards to Iran,and if gold goes down, it’s ignored; if it goes up, it’s pointed to.

Theseare really just excuses. Markets are made by very much larger factorsspecifically related to the metals themselves. So, for example, golddemand is pretty much ruled by dentistry, electronics, the Indianwedding season, the Christmas buying season in the West, and the timeframe when jewelers buy physical gold. That is why gold tends to pickup after August. If you’re going to make a bunch of gold jewelry tohave at Christmas, you need the actual gold in your hand in Septemberor October to get it into the stores in December. So, it’s things likethat that actually rule, and the rest of it to me is just stories.

Iwill reference two things for your readers; they may not go back thisfar: take a look at a chart of gold from 1979 to 1982; it is a rollercoaster of huge advances and huge declines over a three-year period.And there’s no reason why we’re not in one of those again. Also, take alook at the development of the Hemlo district in Ontario in the earlyto mid-1980s, and the stocks that came out of the development of theHemlo.

From the first discoveryhole in 1982, 1983, to 1985 when those stocks achieved their highvaluations of their discovery holes, you had stocks that ran from 40cents to $4 and then back to $1.50, and then up to $6, and then back to$2, and then eventually going to $24 or $32. So, in a major discoveryit’s not always straight up.

DarrellBrookstein was a leading financier and newsletter writer on juniormining shares 1980 to 2001. His books and newsletters include theclassic, "Small Fortunes in Penny Mining Stocks" (with Doug Casey),"The Prospector," "Nanotech Fortunes" and "Best of the NanoWeek. " Toreceive his free e-mail alerts, request at darrell@nanotechnology.com for Nanotech Insights and/or to darrell@resourcedevelopment.comfor Mining Insights. Currently, Managing Director of leading “small”technology financier and advisory focused on The TSX Venture, TheNanotech Company, LLC at http://www.nanotechnology.com/.

After graduating from Duke, he specialized in trading and researchrelated to gold, silver and copper. Named by Doug Casey as “the sourcefor junior mining shares” in his classic, "Crisis Investing," and beingthe premier U.S. broker in Canadian mining shares in the 1980s, Mr.Brookstein made use of top geologists and geophysical consultants, anddeveloped important relationships with Rick Rule, Robert Friedland,Adrian Day, Bob Bishop, the Coffin Brothers, Brien Lundin and Paul VanEeden and others 1982 - 1997. During that period he called the Bre-Xfraud early and was among first to call the Delgratia fraud. Hissubscribers made exceptional profits in names like Pennaco Energy,Galactic Resources, Sonora Gold, Cornucopia, Ultra Petroleum, TempleMountain, Metallica Resources, Wavecrest, Gold Standard and dozens ofother names, many of whom were also financial PR clients of his