You see, the TD calculation of estimated PE for the group is 25.5x, and price to cash flow is 16.7x. These numbers are favourable when compared to the entire spectrum of Toronto Exchange listed stocks.

So it is not surprising when they see average total returns of 25-pct for this group.

I agree with the TD analysts, so I'll make two observations about public nervousness:

(i) the public has never seen a precious metals rally like this. I have " and I think TD is conservative and prudent in their analysis and projections.

(ii) the public has been brain-washed by talking heads who primarily support the U.S. Administration (and the over-valuation of the $USD), but it is a big world out there where the usual moral suasion of the U.S. authorities has, in six years, deeply eroded as a form of influence.

What I am saying is that the USD may decline by a third over the next couple years, and the new average price of gold could move up to say $1,000. At that price for the commodity, these goldminers would be immensely cheap at today's price.

Traders should not be amazed at what is happening today in the metals sector. The fundamentals are in good shape.

I think traders should want to avoid the current high-flyers and most of the large caps in this group, and focus on the small cap companies that are bringing on new production, and rapidly drilling out prospects that could increase reserves.

There will be occasional, if not frequent, price breaks, but I feel the evidence is there that on a fundamental basis this industry is in the best shape it's been in for many years. Most companies have paid off debt and are sitting on hoards of cash for exploration and development work. And their cash flow, as I say, is in good shape with gold prices over $625 (today it's about $675).

For the record TD Newcrest picks IAMGOLD (IAG, IMG) as their top pick, based on relative fundamentals and share price at the start of the month. I apologize for the small exhibit.