TGR: What's your strategy for finding good junior prospects?

IG: I try to find companies that will make me 10 times my money in two years. I'm not going to say that happens every time, but it has happened fairly frequently. We've had a number of 10-baggers. A few of those that give you 10 times your money can make up for a fair number that are wrong.

TGR: Where do you hunt?

IG: I look at companies that others are ignoring or have lost interest in because people feel they haven't accomplished much. I also look at companies where I really like the management—managers who are truly committed to their shareholders and not themselves. And through the years, when I invest in a company, I tend to stay in it if I can see a double in 10 months.

In 2002, I bought a company, Nevsun (TSX:NSU; NYSE.A: NSU), in a financing, at 60 cents. Within 18 months, it had gone to $9.50. I sold it at about $6.50 or $7, though, because I couldn't see it doubling within 10 months. But I did get 10 times my money.

TGR: Could you share any examples that are interesting as we look into the future?

IG: I've basically been with Timmins Gold Corp. (TSX.V:TMM) since they were doing the seed financing. They're just putting a mine into operation in Mexico, where they're going to produce between 80,000 and 100,000 ounces at just over $400 an ounce. Right now they have only about 600,000 ounces there, so it's a mine life of only about five years. However, the exploration potential there is quite significant, and I really can see that mine operating probably three times longer.

In addition, Timmins Gold also has some other excellent potential exploration properties in Mexico. So I like this company a lot; I like the management a lot. A very good Mexican contingent, including the president, gives them a lot of help strategically in the country.

TGR: Any others?

IG: There's a little company, Golden Goliath Resources Ltd. (TSX.V:GNG), that's been out of favor for a long time that I really like, and feel could do really well for investors. I did the IPO for this company in 2000. We had committed to raising $3.5 million at 50 cents based on a group of properties in the Uruachic Mining District in Chihuahua, Mexico. It was a real struggle for me. If you can believe, no one had an interest in gold stocks in 2000. Then Agnico-Eagle Mines (TSX:AEM) became an investor, and as a result we were actually able to raise the IPO from $3.5 million to $4.5 million. That was one of the things that I felt very proud about.

TGR: Are they making good progress on their properties now?

IG: The last two years they've been concentrating on a property called Los Bolas. With the help of Marc Legault, Agnico-Eagle's chief exploration officer, who is also a director of Golden Goliath, they're starting to put together a really good base, more silver than gold. According to an independent report, based on exploration to date that deposit could contain better than 100 million ounces of silver. The deposit is open at depth and in both directions and could grow substantially. And they have now discovered a new area with gold mineralization on Los Bolas, the Filo de Oro zone.

TGR: So Agnico-Eagle remains involved?

IG: Yes. Agnico Eagle holds about 10%. I like the fact that Agnico-Eagle is involved in a hands-on basis. They see it as a really important because Urihuacic is not that far from Penas Altos, the Agnico-Eagle mine that is either in production or shortly going into production. Golden Goliath's biggest shareholder is Sprott Asset Management, which holds 18.4%.

TGR: Any more companies you could tell us about?

IG: I think Underworld Resources Ltd. (TSX.V:UW), in the Yukon not far from Dawson City, has 43-101 resource of a million-plus ounces already. I like the management. I think this company's going to certainly grow its already significant gold discovery.

Another company I like is a smaller one, which may catch people by surprise because they won't recognize it. That's Lincoln Mining Corporation (TSX.V:LMG), which has properties in Nevada, California and Mexico. They are permitting for putting a small mine into production on one of their Nevada projects, where they have about a half-million ounces. The property in California is an old past-producing mine. They also have a great property in Mexico called La Bufa, which is surrounded by Gammon Gold Inc. (NYSE:GRS; TSX:GAM). In fact, Gammon has a property right in the middle of La Bufa, and then Gammon Gold staked all around Lincoln's property.

Barkerville Gold Mines Ltd. (TSX.V:BGM) is an interesting story because it's an old discovery, an historic little gold mining town in British Columbia. This company, which used to be called International Wayside, has 60 kilometers of land holdings close to Barkerville, and I think there were up to eight producing mines on its properties. Three of those mines were discovered—here we go again—in the 1930s, during the last Kondratieff Winter. It's just going back into production, small-scale production, 50,000 ounces of gold a year. But it has tremendous upside exploration potential. That's another pretty exciting one.

One more that I'd like to discuss—African Queen Mines (TSX.V:AQ). The company has a property in Mozambique, which is highly prospective. It has returned great metal values in chip samples along the 12 km belt. African Queen has also acquired the right to earn in on a Newmont property called Noyem, which is situated along the Ashanti Gold Belt in Ghana. There is already a gold resource on the property.

I think that it is important that your readers do their own due diligence on these companies. They are very speculative and may not be suitable investments for everyone. They should consult with their investment advisor before making any investment decision.

TGR: In 2008, we saw junior gold stocks, all gold stocks, go down. Fund managers were selling anything they could because they needed cash. You're predicting another major financial collapse in the U.S. Why will it be different this time?

IG: I think the run to gold will become very extreme this time around, but in many cases these gold stocks today haven't recovered from their highs of early 2008 anyway. If you look back on the past Winter, when the Dow lost 48% of its value between September and November of 1929, Homestake crashed. But in subsequent downs, Homestake went up. I feel that will happen again.

TGR: What would you do?

IG: Let me put it this way. I have almost 100% of my investment money in these kinds of stocks. I don't really have much cash sitting in my investment accounts.

TGR: How long do you think the Winter is going to continue? And when do you guesstimate this next crash will hit? When was the next rally in the last Winter?

IG: The stock market recovered 50% of its losses in a rally into April of 1930. That's very similar to the rally we went through from March 2009 to mid-January this year. Now, we're on the downturn again in the market, and I am predicting that this one will take us down to somewhere about 5250 on the Dow either this year or early next year. And then we'll get another rally. Hope springs eternal.

But then I think the whole stock market bottom will be reached in 2012. The only reason I am picking 2012 is I am a huge fan of a great cycles guy who died in 1955, called W. D. Gann.

TGR: Oh, yes.

IG: He did a lot on anniversaries and so on, and 2012 happens to be the 30th anniversary of the 1982 bottom, which was the beginning of the big speculative Autumn bull market. And it's the 10-year anniversary of the first bottom, in 2002. The market peaked in 2000 and dropped in 2002. It's also the 80th anniversary of the 1932 Winter bear market bottom, after the Dow had dropped 90% from its 1929 high.

That's why I wrote a piece on my website called "This is It" in 2007, and one of the things that convinced me was when I saw those Bears Stearns funds sort of going bankrupt in July 2007. That was the 20-year anniversary of the '87 crash, the 100-year anniversary of a big market crash back in 1907, the 150th anniversary of a big 1857 crash. All these Gann kinds of numbers came in at the same time in 2007. That was so compelling that I was absolutely convinced that 2007 was the end. And that's proved to be correct.

TGR: So you're saying the market is going to be drop by half this year.

IG: Yep. I think we're going to have a crash in stock prices this year. But I am staying long in my gold stocks.

TGR: Will this Winter end in 2012 then?

IG: No, it's just the bear market bottom. Remember the bear market bottomed in 1932. But the Great Depression didn't really end until World War II. The Winter continued even though the bear market had bottomed.

By arrangement with: www.theaureport.com

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