By Louis James – Bill Bonner’s Diary (USA) –
If you want maximum returns on gold and are willing to take the necessary risks, the junior gold space is the place to focus.
A junior resource company is simply a very small resource company. Most are exploration companies, looking to discover a rich deposit of oil, gold, freshwater, etc. The term also covers small producers: companies that have already discovered a resource and are extracting it or tapping into it but are still small.
Juniors often have market valuations of less than $10 million for the whole company. Most have no net income and no meaningful asset value.
When the market is way down, some juniors trade for less than cash in the bank. That means that the total price of the company’s shares is less than the company’s cash on hand.
Mainstream investors dismiss juniors as “penny stocks.” They think they’re too volatile to touch.