As I write gold is down another US$80 to US$1571, having reached an all time high earlier this month, of US$1921 - that's a fall of over 18 per cent in about three weeks! It must be remembered that even after the falls gold has climbed something like six-fold since the year 2000.
What does this mean for small caps gold miners?
Some gold miners are getting hit more than others because investors hate uncertainty, as implied by the volatility of the gold price. One thing to remember is that right now the importance of owning a producer/explorer rather than an explorer is crucial. These companies are being priced cheaply based on their gold reserves and resources; but when the gold price does stabilise and investment in equities in general stabilises, the market will realise the absolutely awesome amounts of cash these companies are either making or are set to make. This separates them from explorers, which have massive uncertainty whatever the scenario. Right now you can get Aussie and off shore gold producers at small cap prices. This is what we at Under the Radar look for.
Look out for our next investment newsletter and the share tips to see some good little producers - you sould also look at the last issue released last week.