a thought on share prices

If I get some flak for not making a note of the link to the article, then I deserve it. Somewhere on the Goldsheets news directory, i read something the other day that made some sense about why so many company shares in the juniors are so beaten down, despite gold price, production, etc. As the price of gold has risen, we have seen massive inflows of cash into ETF's. Most, if not all, of these dollars would ordinarily be finding themselves invested in producers. What has happened, though, is that the cash has gone into "buying bullion." If there is a gold bubble out there, it will be when the ETF's have to deliver on their sales. The numbers vary, but it is clear that there is a lot of leveraged paper out there.
The result has been a loss to banks, producers and the traditional marketplace for gold. Investment dollars are going into ETF promoters' pockets, making funding for juniors hard to come by. This, in turn, is depressing share prices. Like so many smoke-and-mirror games, though, sooner or later it has to come back to the mine. You can only sell so much paper when there has to be solid merchandise to back up the sale. All it takes is one run on the bullion to uncover the BS being foisted on the investing public by these funds.
My guess is that money must, at some point, begin flowing into mining company shares: it is the only sensible way to produce enough metal to keep the ETF's honest.
On a different note, we are near the nadir of the season. Don't be too surprised if we start seeing our current buying opportunities begin to get more expensive as we move into September.
Hope everyone is having a good weekend!