JOE FOSTER, PORTFOLIO MANAGER: We saw the Fed enact QE3 back in September. The market reacted very positively and what that did was bring the focus back to the U.S. All year long we have seen turmoil in Europe around their debt problems and that was supportive of gold, but gold didn't really react strongly to that. Gold reacts strongly to what happens in the U.S., what the Fed does, and the impact that has on the U.S. dollar and the U.S. economy. The advent of QE3 and, equally as important, the Fed telling us that it is going to keep rates at zero through the middle of 2015, which translates to negative real interest rates, is a big driver of a gold bull market. These things are going to continue to drive gold in the future.
JUNIOR MINERS OUTLOOK
The junior gold miners should outperform a lot of the other companies. They are the ones that have been beat up the hardest, and mainly because they have been restricted from the capital markets. We are actually, just recently, seeing some financing take place. The capital markets are starting to loosen up for the juniors, and we expect that to continue as long as the gold price remains firm.
Silver has outperformed gold in this rally that we have been in for the last couple of months, and silver is sort of a leverage proxy for gold, in my mind. It is doing its job and the silver miners are benefiting from that. It is moving for the same reasons that gold is and the silver companies have been under the same cost pressures that gold companies and other mining companies have been under. They are getting the added benefit of very nice performance on the silver price and also we believe that costs will moderate over the next year; they should benefit from reduced cost and maybe even some margin expansions as we move forward.
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