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Frank Holmes concerned with the frothiness in junior gold & mining stocks

Frank Holmes, Chairman & CEO, U.S. Global Investors, interviewed on ROBTV, Thursday, November 06.
He's very concerned about the frothiness with these junior gold stocks and mining stocks that are trading at 10 times their cash value per share, with no resources in their balance sheet. People have to be careful not running in and buying the latest deal, cause they missed this run. Stay with companies undervalued compared to their peer group with growth in resources.
We could have a good correction cause US dollar due for a rebound as it has been beaten up so much. Psychologically would be good to have a correction. Would provide a wonderful opportunity to acquire gold stocks.

There are special stories out there that merit tracking and following. He cited three, Endeavor Capital, "intellectual property very deep ... they understand mining ... massive discount from their NAV"; Northern Orion, when they report earnings, "new awakening in the market place" of the stock; and Bolivar Gold, "strong fundamentals ... with deposit that can double, triple from here based on drill program". Kinross would be "not as dramatic" as these three.

Remarked that this is a long secular bull market on commodities.

On the question of strategy and what should people do now: take profits if more than 10% of your holding were in gold stocks and now become 30%... on dips, reposition.
Those who are late in the game, got to be careful not buying juniors with no resources and lots of hype. That's when correction comes, those would fall even more dramatically and gave the industry a bad rap.
Looking for a 15% correction in gold itself, translate to a 20-30% correction in gold stocks, creating good buying opportunities.

Made a reference on Jim Grant's interesting theory that gold price should equate a good suit at Brooke Brothers.

He added that the big factor--- watch what takes place in China. He spoke of a massive reform for farmers. Government going to transfer 150 million hectares of land to 210 million farmers and then drop tax on agricultural products, [lending to] a huge broad base consumption pattern; and they believe in gold...
Demand for coal, copper, gold, platinum, oil ... very strong from China.


The streaming video can be viewed at http://robtv.com/channels/hubs/pastprograms_highlights_thu.html
Go to 11:10 AM ETBusiness Morning
Gold
Frank Holmes, Chairman & CEO, U.S. Global Investors
Duration:5m 38s
It will stay there until 11/13.