Friday, October 4, 2013

Junior Mining Stocks got hit very hard


TGR: You've talked about how U.S. stocks are overpriced compared to economic reality, but what about the junior mining market where the disconnect between the prices of gold and equities is the opposite?

Marc Faber : Junior mining stocks got hit very hard, for sure. I am on the boards of several exploration companies, and I can tell you that gold mining is a very tough business and it requires a lot of capital. One problem is that exploration companies have no cash flow. Every month, they bleed more cash to keep on drilling and to maintain overhead. If gold and copper prices do not recover, then a lot of exploration companies will simply not have the money to continue operations.



Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

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