Distressed Asset Funds

Distressed Asset Funds

By VultureAlert.com

We've been hearing from many of our market pro's that groups are putting together investment funds to buy distressed assets within the junior mining space. This type of thing usually happens once it is generally accepted by the investment community that a sector is undervalued.

Not sure that we can be so bold as to predict a market bottom but we see this as a positive step.We heard from one group today that has ties to Vancouver that they are putting together a $500M+ fund to buy into quality projects with proven resources. We heard from an investment banker today who was off to China to present several near-term gold producers to funds in Beijing who have at least $450M CAD to buy into the right project or projects. It has been at least a few months since we've heard from anyone thinking about buying proven pounds or ounces in the ground. 

This is a situation that we're going to continue to monitor. This doesn't mean that you should necessarily run out and buy stock in juniors with resource reserves but it does mean that a new source of cash that has been sitting on the sidelines may be re-entering at a very crucial time and at a very crucial phase. As some members of this site like "hunter49" have written recently, proven reserves have been acting like liabilities to companies of late. They seemed to be the stocks that held up the longest in terms of share price but as commodity prices have slid, so have they.

We'll keep you posted but thought this would be an interesting topic for some of you. What are thoughts? We welcome all comments.

Thanks,

VultureAlert.com