Commentary by Greg McCoach

April 14, 2004

One of the most difficult challenges that I face as I talk to investors is also one which Richard Russell talks about and that is the concept of major change. Some investors intuitively feel the winds of change while others seem unable to grasp that something big is about to happen that will dramatically change of all of our lives. It may be due to the fact that there has been talk like this many times before in our economy with very little damage eventually occurring. Whatever the reason, there seems to be a disposition in people's minds that think existing conditions will be permanent. Richard Russell says this: "When the market is down and dull, it's hard to make people believe that this is the prelude to a period of activity and advance. When prices are up and the country is prosperous, it is always said that while preceding booms have not lasted, there are circumstances with this one that make it unlike its predecessors and gives assurance of permanency.

The one fact pertaining to all conditions is that they will change. Once a bull market dies and a bear market takes over - then one way or another, by hook or by crook, despite the manipulations of Washington and the power elite in NewYork - the bear market will go to its conclusion. The conclusion will find investors enveloped in black pessimism while stocks are selling at great values. At the bottom of the bear market, the so called "experts" will tell us that capitalism as we know it is finished, that stocks will never rise again, and that there is no future in investing." As usual, the so called "experts" will be wrong. So the big question is "Where are we now?" Again I defer to Mr. Russell who says it so much better than I can. "How does this information pertain to the present situation? Let's recount a bit of history. We rode through a great bull market that began in 1974 and ended in1999-2000. The first bear wave of this new bear market carried from 2000 to 2002. Following the end of the first bear wave, the market turned up and a corrective advance took the market to highs in January-February of 2004. Now the upward correction is breaking up - and the top is in. The bear market has now lasted a little over four years, but the Dow is still over 10000 and the S&P is trading just below a 50% retracement of its 2000 to 2002 bear market losses. The Nasdaq recovered about 25% of its bear market losses and is now turning down again. Values in a primary bear market deteriorate through time, and as I said - the bear market is now a bit over four years old. Underlying values have deteriorated, but prices have not declined that much. For this reason the bear may want to make up for lost time. If this occurs and the top is in, then the year 2004 could turn out to be a rather nasty affair. Based on my studies, we're now early in a long journey that will ultimately take the general stock market down to extreme undervaluation. This is the change that 98% of the population is not ready for - this is the change that 98% of the population can't even conceive of."

I couldn't agree more with Mr. Russell. The coming financial debacle is not understood by the general public. The massive US debt load threatens our way of life as we have known it and yet Washington pretends that nothing is amiss. The US public, the cities, counties, states, corporations, and US Government are loaded up to their eyeballs with debt. To carry debt or pay it off you need dollars; you must have income or savings in the form of liquid dollars. If one can't carry the debt, then you face bankruptcy. As the bear market moves on, an increasing number of people and corporations will run into trouble as they try to stay afloat with their enormous debt loads. This in turn will cause other dominos to fall etc, etc.

As we each contemplate what moves we will need to make in order to protect our own portfolios, it appears we are getting closer to some major changes, particularly on the financial front. Hopefully, more and more people will begin to understand the risk they face and make the necessary changes so they can best weather the coming storm.

Company Update

New Recommendations: VANGOLD RESOURCES

Canadian Symbol VAN
Trades in the US under VANGF
Shares Outstanding 26,574,048
Fully Diluted 31,063,000
Market Cap US$16,152,760
Recent Price US $0.52
CEO Dal Brynelsen
Phone 604-684-1974
www.vangold.ca

When looking for a junior mining company with 10x potential, I sort through and talk with many companies, searching for just the right combination of circumstances that will give us the next big hit. One of the things I look for to protect our downside is a company with multiple projects and some existing resource base that we can build from. Vangold has 8 advanced stage properties. Four of these properties are along trend from world-class gold mining projects and all of them have produced exciting results to date, most with at least some proven resources. I was introduced to Vangold through their association with New Guinea Gold, which of course I had recently recommended and am now removing from our list. As I studied the factors surrounding their joint venture on Feni Island and other properties on Papua New Guinea with New Guinea Gold, I realized that Vangold has the better position and makes more sense. If a major deposit is discovered, New Guinea Gold will do very well, but Vangold would soar in my opinion.

While there are a lot of positives for Vangold, another factor that weighs heavily on my decision is the chief geologist for the company. Out of all the geologists searching the world over to find deposits of minerals, only about 5% ever get credit for a find that actually becomes a mine. Mike Muzylowski, (Vangold's chief geologist) has over a dozen discoveries that have gone into production going back to 1960 with over C$10 billion in metals produced. That is off the charts! Mr. Muzylowski obviously has the talent for finding minerals in the ground. When you are investing in junior mining companies go with the geologists that have found other deposits. This factor has served us well with following Mr. Tom Patton of Western Silver and Quaterra Resources.

I recommend you go to the Vangold website to get the full details on their many properties. Pay particular attention to the Feni Island project, which I believe has the best potential to hit a grand slam for discovering a world-class gold deposit. Van Gold has 75% interest in this project while New Guinea Gold controls 25%. Drilling is underway at Feni and is just one of several properties that could deliver us tremendous upside potential. Clearly all the things I look for in a junior mining company exist with this company.

Vangold is a strong buy at their current share price. The stock has seen some sharp up and down movement recently so try to buy on the dips.

Greg McCoach
TheMiningSpeculator
amerigold@msn.com

China is poised to become world's biggest gold consumer.