Hubsters:

Watching the hourly/daily up down pitching and rolling of the markets will make anybody seasick. You have to keep your eyes on the horizon.

Below is a Monty Guild excerpt from Jim Sinclair's website http://www.jsmineset.com/ to remind you we're in the right place. This should help you sleep tonight.

Zzzzzzzzz Rawkstar

(bolding mine)

At the same time, we’ve grown increasingly bullish on gold mining shares. Our exuberance stems from the strong belief that gold mining shares could rise without any increase in gold prices, but as gold goes higher from here the mining shares could move up even higher as well.

Historically, many big gold mining companies have done stupid things. Many sold forward gold futures to fund their operations, thereby capping their revenues. Then, they experienced big increases in mining costs so even with higher gold prices their profits were not able to see any substantial growth. Some small companies unwisely financed their growth with gold loans collateralized by their future mined ounces. This behavior has been a prescription for disaster, and many gold mining stock investors were wiped out. ETFs took market share instead.

To be fair, not all mining companies have acted unwisely in the past. Some companies adroitly avoided selling gold forward and then having to buy it back at higher prices. The quality companies that deserve to be owned have also avoided the big debt that eventually forces management to sell shares at low prices and excessively dilute the ownership of existing shareholders.

To analyze gold mining companies properly, smart investors need to look for the following clues:

• operators with large current gold reserves not yet recognized by the markets,

• operators with big potential reserves and with drilling results and geologic reports outlining newly discovered reserves.

Just as with an oil company, a gold company tends to fare well if it combines the discovery of new reserves with the ability to find a partner, buyer, or if internally it has the ability to mine and exploit reserves at a reasonable cost per ounce. So investors should look for companies with the ability to mine cheaply, or to sell the company to those who can mine cheaply.