Today, and probably through at least the end of 2014, the junior mining and exploration markets are in real financial trouble. The gold price is down, profits almost nonexistent, exploration and development expenditures severely curtailed, and new money extremely hard to come by. The macro questions that investors into this sector need to answer are: 1) Will metal demand increase over the next few decades? 2) Will mining companies need new deposits to replace what is being mined? 3) Will discoveries keep up with production?

If the answers to those questions are yes, yes, and no, then, it seems obvious to me that all one has to do to make serious money is to accumulate shares in the best deposits and most competent explorers, and wait. The mining sector has always been cyclical; when we come out of the market bottom, the pressures and issues we have covered above tell me it is going to come out hard and strong.

That’s the way I see it.

Brent Cook
Economic Geologist and Author Exploration Insights.