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This week I had yet another email from an investor who wanted to vent his frustrations. He had assembled what he thought was a good solid portfolio of junior resource companies. Unfortunately the value of this portfolio today is only a shadow of its former self so to speak. He was upset and wanted my opinion as to why. As he started to list off the companies he had invested in, I quickly realized the error of his ways. As I told him, before taking a position in any junior company, there are questions that you must ask. Here are some:

Who Are You ?:Who are the main players in the company? Do they have any technical education in Geology or Mining? What sort of career experience do they have? If the principals in the company are a bunch of former bankers with no technical background, think twice about investing.

Where is the Project? Geopolitical risk is a major factor in today’s world. Witness events of late in Ecuador, Mongolia, Romania, Venezuela. You quite simply do not want to get involved in countries where some leftist leaning government may deny project permits. Stick to those countries that have a solid track record in mining like Mexico, Chile, Peru, Canada and the more stable parts of Africa.

What is the Infrastructure? Lack of infrastructure can kill a project even if it happens to be in a good country. Mining takes electrical power to run crushers and ball mills. Mineral processing takes water. If the nearest power line is 100 miles away, you best think twice about getting involved with the company in question. If there is no road access to the project, you had best think twice. If the nearby water resources are slim to none, think twice. I can compile a long list of good looking projects that unfortunately lack infrastructure. Will these companies ever get the infrastructure? At a huge capital cost, maybe….someday.

What about First Nations issues? If the project is located on First Nations land, do your homework. Witness events of late in Labrador, Canada where First Nations peoples voted to halt mining development on Uranium projects for the next several years. If the project is located on traditional First Nations lands, do your homework. Ask pointed questions to learn more about the process for consulting with these First Nations groups so as to obtain project approval.

Why is the Company there? Ask why the company in question is in the area that it is in. Is there a compelling geological reason that has drawn them there? Are there other mining operations in the immediate area? Is there a historical resource on the property? If you find that the project is simply a “grass-roots” speculative venture, you may wish to think twice before investing.

What are the Drill Results? How much drilling has been done? Is there enough drill data to start compiling a resource estimate? When will the resource estimate most likely be released? If there is only a limited amount of drill data available or if drilling has not yet started, think twice before investing.

Don’t make the mistake that far too many folks make and buy a bunch of stocks that you think sound good or that give you a warm fuzzy feeling. Do your homework. Don’t end up being like the investor who emailed me this week. Play the game smart and ask the tough questions.

If you are interested in getting a Pink Sheet listing or "Blue Sky" clearance, read the last paragraph.

Malcolm and I had a chance to attend the Hard Asset Conference in New York. I had the opportunity to meet with a few clients, a few advertisers, and a few of you we might be doing business with soon. I left New York with many impressions, but I would like to first say how much I enjoyed meeting everyone in person. It is great to place a face with a name, and to get to know each of you personally.

My first impression, judging from the crowd, is that we have hit bottom in the market. One of my mentors (Dennis Leontyev, who manages over a billion dollars) says that a primary indicator is sentiment. And the negative sentiment is currently palpable. When you factor the price of commodities relative to the price of stocks, you have a bottom. We now fully expect that the commodity stocks (especially the juniors) will outperform the commodities themselves. And the stocks are where the real value lies.

Secondly, the stocks that have the best stories and tell them clearly will obviously do the best. And this makes a lot of sense. Money flows down. It starts with the big boys in the industry, since they are most well known. It then goes to the mid-caps and then finally to the smaller guys. So it is essential that the small-caps and juniors position themselves well to take advantage of the current conditions.

Thirdly, I am amazed about how many companies do not know the laws and regulations for marketing in the U.S., and how many "consultants" and IR firms prey on this lack of knowledge. For starters, if you wish to gain exposure to American investors, you need to make sure you are "Blue Sky'd" in most of the states and you need get your Pink Sheet listing. This is NOT so investors can buy you over the counter. Many of the funds and investors that we consult with would rather buy you on the TSX. However, in order for a financial adviser or broker in the U.S. to recommend your company, you have to be either "Blue Sky'd" or have a Pink Sheet listing. Otherwise, advisors and brokers can be sued if your stock tanks. I know of many companies that spend tens of thousands of dollars to attend such events and shows at the advice of their contracted IR firms, but do not have a listing. If this is your case, you are wasting money.

Finally, if you are looking to get a Pink Sheet listing or "Blue Sky'd", please let us know. We can save you thousands of dollars and plenty of head ache. True story, one of our advertisers at The Market Traders was quoted by a consultant at the New York show that he would give him a "deal" around $20,000 in stock options to get the listing. He told us about this so we referred him to one of our contacts that offered to do it less than $3,000.

Hope to meet you in person soon.

Andy