TGR: What type of equities should speculators consider in terms of juniors versus explorers versus seniors?

PG: Pure exploration companies are going to have a far more difficult time moving forward than operating mining companies. Therefore, majors in general are likely to do better as a group. Best of all for the foreseeable future are emerging producers, companies that have clearly gone past the exploration stage. And they have potential to increase their production because of the size of the deposit, or other deposits.

Those are the companies that I think one has to have at the top of the list. They would come ahead of pure exploration companies that have some very promising drill holes, etc., but aren’t well on their way to defining very big deposits yet.

TGR: Do you have any favorites in the emerging producer sector?

PG: The first would be ATW Gold Corp., which has already poured its first gold in Australia. It’s expanding its current deposit and drilling off another deposit that could add more production. Another one is Taseko Mines Ltd., an expanding and growing copper producer in British Columbia that now is attempting to bring on-stream a gold deposit of 10 million ounces plus.

Another one would be Hawthorne Gold Corp., also in British Columbia. It is developing and hopes to be in gold production. We need to look at where companies are developing their deposits. This is very important because political risk is more evident now than at any other time since I have been in this business. So Hawthorne Gold would be another of those emerging producers located in a politically stable jurisdiction.

TGR: And they also give you your Canadian dollar play. Are you looking at any plays in Africa?

PG: Oromin Explorations Ltd. comes to mind. IAMGOLD Corporation has taken a very large position in Oromin. It’s in West Africa, which has not seen the unrest that some other areas have seen. So, yes, there are places in Africa that to look at.

The safest country in the world today to explore and mine, though, is Canada. Mining is just a natural way of life in provinces such as Quebec and Ontario; their governments even pay back part of the money spent on exploration. In contrast, in most of the United States outside of Nevada and Alaska, most people are anti-mining.

TGR: Do you have any favorites in Quebec or Ontario?

PG: Eastmain Resources Inc is developing multiple deposits in Quebec. They have significant partners with majors. As they move forward and up the scale of assets and reserves, you can see one or more of those majors make a move on them.

TGR: Any more thoughts about juniors?

PG: We’re supposed to have an ETF made up of juniors soon. That could be a very, very positive influence for the junior market. What’s been missing for quite a few years now on the junior market is widespread interest. The general public usually avoids it, and has especially avoided it in these tough times.

But I think if money flows into it and people could see the returns juniors offer—5:1, 10:1, 20:1 or more—that speculative money could really lift the market. If it does, more money flows into exploration, and eventually more exploration leads to more discoveries, which makes people interested in small exploration companies in general.

TGR: Any other advice in terms of looking at investments?

PG: The longer you can survive and have cash, the stronger that cash will be as time goes on. More things will become more attractive because a lot of people really have been holding on by their fingernails in hopes of this great turnaround that’s been promised. If I’m correct and that turnaround doesn’t occur, their optimism will turn into disgust, and we’re going to see assets devalued even more.

So you want to buy things on the cheap, and I think things are going to get cheaper in the general equity markets.

The untold story that isn’t in the media now but will be six months from now, is the impact on the individual states in the United States. California has been in the news, but people are realizing that California isn’t the only basket case. Many states are unable to balance their budgets, and therefore municipal bond funding problems will continue and also will cause interest rates to rise.

So the whole interest rate picture in general is not good. Bonds are not going to be a good place to have money; because you don’t want returns of 2%, 3% or 4% for the next 20 or 30 years.

TGR: California is not only facing the increase in interest rates but also of taxes.

PG: I think the California has the sixth or seventh biggest economy in the world. Here we were six months ago talking about economic peril worldwide, and the sixth or seventh biggest economy in the world can only give out IOUs to continue business. That strongly suggests to me that my fear about things getting a lot worse is going to happen.

I don’t think California is the exception to the rule. It may be a bigger story, but other states have as much difficulty. New Jersey, for instance, has the biggest underfunded pension system; state workers who think they’re due certain things when they retire and the state doesn’t have the money to pay for it.

So I think the next big economic issue is going to be not only problems on a federal level but on a state and municipal level. That is where the next big economic crisis will take hold.

TGR: That’s in the U.S. Earlier; you mentioned some of the BRIC countries recovering faster. But are you still looking at recession worldwide for the next couple of years?

PG: Places like China, India, Brazil, even Canada, because of much more conservative fiscal policy, could see flat to limited growth as early as next year. But I don’t think we’re going to see the world at large get out of this absolutely horrific downturn, as many people predicted, by the end of this year. I think the reality is going to hit home fairly soon that that’s just not the case. We could have at least another 12 to 24 months of global slack to negative growth.

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