The crowd is bearish on the juniors
(and that's a good thing!)

Clif Droke JMSR snippet
Mar 3, 2008

Below is an extract from Clif Droke's current Junior Mining Stock Report.

There is a lot of fear circulating around the internet concerning gold/silver and the gold/silver stocks. As contrarians, that's exactly what we like to see. It lets us know the prevailing trend (up) is still intact and that higher prices are likely to be seen before the next interim top is in.

The fear in the PM stocks among the "dumb money" trading public almost perfectly mirrors the optimism shown by the "smart money" traders who have recently been buying the PM stocks with both hands in anticipation of another leg up in the momentum market for the gold stocks. Take for instance the latest readings in the CBOE Gold Index put/call open interest.

After several days of reading of 0.70 to 0.74, which are high neutral bordering on bearish readings, the smart money turned bullish again last week and for the last three consecutive trading days the put/call ratio has been 0.18. That's the same extremely low open interest ratio levels we saw from November 21, 2007 through the end of December. And how did the CBOE Gold Index itself perform during this period? It rose from a low of 160 to a high of just under 210 in a matter of weeks.

Another thing that's good to see is that silver has once again taken the lead from gold. That's one of the hallmarks of a strong momentum market in the precious metals sector. By "taking the lead" I'm referring to the internal momentum structure of the two market segments. The dominant interim 120-day internal momentum indicator for silver shares is actually outperforming the 120-day momentum for the gold stocks.

Check out the momentum chart below and you'll see what I mean. This chart measures the rate of change in the number of gold and silver shares making new highs and new lows. This is one of the best ways of knowing the demand for gold and silver stocks since the new highs/new lows capture the last increment in the demand for stocks.

Lots more follows for Junior Mining Stock Report subscribers, you can subscribe here.

--Clif Droke
email: clif@clifdroke.com
website, www.clifdroke.com

321gold Ltd