The silver lining is that equity valuations remain near historic lows and we believe that investor sentiment towards gold equities remains cautious at best. We estimate that the large-cap equities are trading at 0.76x NAV (at spot gold), a 30% discount to the 1.10x average since 2008. Given that expectations are very low in our view, we suspect that a rebound in the gold price (i.e., QE3) could have an outsized positive impact on share prices. Our top picks are Eldorado, Franco-Nevada, Goldcorp, Yamana, B2Gold and

Alamos among producers. Within the junior gold companies, we like Continental

and Belo Sun.