Arni’s Insight

A change is coming, that is guaranteed!

It's the summer of 2008 not the summer of 1999 when gold traded slightly below $254 /oz. As investors we ALL love to speculate and hypothesize about the “what if's”. However it is much more prudent to live with clarity and then examine and invest “in the facts”. Trends are very real there's no question just look at Uranium and Potash two great examples of momentum driven markets (both up and down). Uranium by the way is very far from being over (more on that in future commentaries).

To the facts: the US economy is slowing, the US dollar is weakening, the banks have lost the confidence of global investors and the biggest threat of all global investment liquidity is declining. There is a flight to security, without question capital is searching for safe havens, and this continued interest for financial security will be the underlying driver for gold. All commodities are driven by supply and demand. So if demand is increasing what does the supply side of the balance sheet look like? Short Answer: it's declining…

The risk in the world today for finding a gold deposit is massive. Political risk trumps all risk as witnessed through recent developments in Ecuador. Gold producers are finding it more and more difficult with skyrocketing capital expenditures and increasing timelines to bring on new production. Combine these economics with decreasing market caps of near term producers and investors will soon see a very strong MnA (mergers and acquisition) market. Significant investment opportunities are starting to emerge for these near term producers in politically stable countries, as they will no doubt burst onto the radar screen of much larger companies seeking proven resources, cash flow and skilled labour. The theory of letting juniors companies spend the early stage risk capital in search of proven #'s is nothing new and has stood the test of time. That's the business model of most if not all major mining companies pay a little more but eliminate the risk and when there's a sniff of success they come in and come in hard.

Bottom Line: I strongly believe Gold will rally off this recent pull back and continue to higher prices, for me these are the facts. In today's market the near term gold producers that do exist are INCREDIBLE opportunities. Remember stock and commodity prices never go straight up: likewise they never go straight down. A change is coming that is guaranteed!

Arni Johannson is the founding partner of Canadian Nexus Ventures Ltd. based in Vancouver, B.C., Canada. Canadian Nexus Ventures is a team of financial and market experts whose combined skill sets, experience and international contacts provide a unique advantage in identifying, building and sustaining risk capital and business development opportunities. It is a privately held company that develops projects for both the private and public markets. For more information, click here to http://www.canadiannexus.com/