Junior Gold Stocks to Watch : TMM, CFM, RMX, SFF, VGO, BRD

Junior gold explorers from British Columbia to Colombia are poised to pounce. And they are not your ordinary explorers. The Ubika Gold 50 Index has uncovered one explorer that also produces; another has a "fully earned option" with Goldcorp. In this exclusive interview with The Gold Report, Vikas Ranjan, managing director and principal, Ubika Research, reveals why these companies make a compelling case for success.

The Gold Report: Vikas, given the recent agreement to shore up banks in the Eurozone with a $1 trillion eurofund, do you still believe the world is on a path to a soft recession?

Vikas Ranjan: I think recent developments tell us that the risks are lower than a couple of weeks ago. The current economic problems, particularly in the Western countries, are more about policy than economics. The Greece debt bailout announcement could mitigate the potential of a hard run on other European countries, and it will have an impact on banks and the financial system in general.

TGR: Gold went up on the news. How do you explain that?

VR: That is a bit of a conundrum. Historically, gold goes up on uncertainty and other things go down. Over the last three to five months, we have seen more harmony; every asset class going up or going down together. The exception is U.S. Treasuries, which seems to be the only asset class people swarm to when things really are murky.

To some extent, gold has become a levered play. There are a lot of derivatives, a lot of exchange-traded fund-based trading in gold. Gold prices are decoupling from the fundamentals of demand and supply, purely from a physical gold perspective. That could explain, from a trading perspective, why things are looking good for asset classes in general; gold is simply one of those asset classes.

TGR: People seem to be exiting bonds for equities. Do you see that trend continuing?

VR: I would say so. There was a lot more pessimism than was warranted in the market in the summer and early fall. People had a panicky reaction. They flocked into U.S. Treasuries. We feel there will be a shift away from bonds and into equities and other riskier assets, such as copper bonds. That will be good for the global economy. (more)