Hi Lou,

 I used to send you email about Hillsborough and a few other good decent juniors that turned out to be good winners. Anyways, do you like gold and RN’s prospects on TSX? They got some interesting warrants that expire in 2015 if gold is the sector one wants to be in.

Cheers,

Dave.

 

Hi Dave,

 

Thanks for your bird dogging over the years! Your questions help generate ideas for me and the other readers of this site. Rio Nova Gold Inc.( RN TSX) just recently come to market raising over $40M to further their business plan of developing their properties in Brazil. Notwithstanding how RN does over the next five years I am of the opinion that gold goes higher by 2015.

 

Here’s a look at the ten year chart for gold.

 

Can you say nice move to the upside? Yes there was a pull back from early 2008 to late 2008 but everything was under pressure at the time because of the credit crisis.

 

 

If you discount the period early 2008 to late 2008 you can see that gold has been moving higher since mid 2001.  That’s a trend not to be trifled with. My personal call is that we see gold at $2,000 by 2015.

 

The three year chart provides a closeup on the recent action in gold. A golden cross surfaced in March of 2009 and  a break above resistance at $1000.oo in October of the same year. In May of 2010 gold broke above resistance at $1,200.

Many will be concerned about the health of the advance in gold. Will it continue? Will it give way just as you take a position? Don’t let those doubts cloud your decisions. The trend is your friend till it ends. You need to watch your investments everyday and you need to make decisions every day.

 

If you like gold and believe that it has more gas in the tank then RN and the warrants have a place in the speculative portion of your portfolio. Management is set on drilling over 40,000 metres on their Almas and Guaranta gold projects by the fourth quarter of 2010. Seven drill rigs have been assigned to the task so you can expect news to be flowing between now and December.

 

The chart for RN since it went public has seen steady selling with a strong reversal last week. If you have a 5 year time horizon, have taken the bit on a continued advance in gold, and have an appetite for risk then the warrants offer a reasonable reward for the risk you are taking.

 

Happy Capitalism!