(From our correspondent Chuck Cohen, a NYC-based fianancial consultant who specializes in gold investments, here’s an assessment of two mining companies that he thinks merit the attention of Rick’s Picks readers.)

Let’s look at two exploration companies which are linked by their being undervalued and by their locations in Quebec, one of the most mining-friendly places in the world. Becanse these companies operate in Quebec, the market will assign a premium to their respective share prices. Plus, in both cases the infrastructure is also very positive, a detail not to be ignored. Please remember that for any stocks I recommend, I suggest that you go to their web sites to familiarize yourself with the companies. Don’t be lazy, but be a student of gold. Their respective URLs are Maudore.com and Niogold.com

What I mean by “leverage” is the potential of a company reckoned by comparing the amount of gold it might eventually possess to its current market capitalization. Leverage is really a “what if” consideration.  For instance, what if gold goes to $2,000, and what if a company’s resources grow dramatically during this time? Then, the value of the company will rise sharply because of both factors. Most of my junior recommendations fall into this category, because my central assumption is for an enormous increase in the price of gold and silver. The larger companies will do well, but the smaller exploration companies will benefit most. If you can, please review the other articles that I wrote for Rick and see why I prefer the juniors. Or write me  and I’ll e-mail them to you.

A key principle for these small companies is to buy them are when they are quiet and apparently ignored.  If the price of gold suddenly takes off, or if a junior comes up with unusually good drilling results in this point in the cycle, these companies could take off without dipping down to your bid. If you want a shock view of what can happen, consider the chart of Ventana (VEN.V, or VENGH on the OTC) above. Ouch!

Playing the Odds

No, I don’t own it, and I never even touched the stock when you could have bought it for around a nickel or a dime last November. Remember, you are playing odds here, and the odds shift in your favor as gold goes up. As improbable as it might seem, you could own a stock like this one. As I have said here many times, we are entering a once-in-history market, and there are going to be many such stocks. At this point in the parabolic cycle, I wouldn’t try to finesse my buying too finely. Just do it!

Why are these stocks apparently so cheap? Basically, it has to do with the herd mentality of the stock market. As an example, back in the early 1970s, there was a group of big stocks known as the Nifty Fifty. Some of you might recall these companies. Back then, every institution owned them and every advisor recommended them. They included such world-beating, recession-resistant growth companies as Polaroid, Xerox and Eastman Kodak. Problem was, they were overpriced and overexposed, and when the recession hit in 1974 they began a lon-n-n-n-g decline that has persisted to this day. Today’s equivalent to the Nifty Fifty would  include IBM, Microsoft, Exxon, Proctor & Gamble, Wal-Mart and Intel. Everyone owns them but they never go up. The lesson here? To really hit it big you must try to find the areas that are underexposed and have great potential. Sure, you are taking a chance, but “sure things” usually are not so sure.  The underexposed opportunities at this point in history are the smaller gold exploration companies.

‘Tremendous Potential’

Here are two speculative plays with tremendous potential, especially if you remain patient. Of the two, Maudore Minerals is the more certain right now, and perhaps the better bet. But be careful when you buy it, since it is tightly held and traded very thinly. Maudore trades on the Vancouver Exchange under the symbol MAO.V, and on U.S. over-the-counter market as MAOMF.  The second stock, NIO Gold, is Vancouver-listed as NOX.V, but it is called Moreno Partners and listed under the OTC symbol NOXGF in the U.S.

Maudore Minerals

Here are the key points to consider for Maudore:

• It has a large land package in Quebec.
• It has an outdated resource report of over 500,000 ounces, but it should be much higher in the next report.
• It has increased its property by 400% in the past couple of years,
• It has very smart management
• Its market cap is small, C$57 million, on 19 million shares
• Since management has declared that it does not want to be a producer, it will mostly likely be taken over.
• The results continue to be very high grade.
• It has successfully drilled deeper and wider on its property.
• It is one of the juniors that has held up even during the terrible decline of 2007-2008
• If they come up with 3 or even 5 million ounces, at 2,000 gold the stock should do incredibly well.

NIO Gold

Here are the key points to consider for NIO Gold:

• It is also in Quebec.
• It has a current miniscule market cap of about 12 million C$
• Unlike Maudore, it hasn’t yet moved.
• It has a huge land package of 100 square kilometers in the Albiti region in Quebec, plus some other perspective holdings.
• It has a relatively small defined resources of 342,000 ounces but it should increase on the next report, and more importantly because there has been a lot of gold mined there before (27 million ounces,) there is excellent potential for eventual big resources
• As of last report they have C$3.3 million on hand.
• Agnico and Osisko have large very active projects near there.
• Like Maudore it will be a candidate for a takeover especially once gold breaks clearly into new high ground. That should be very soon.
• In other words, it’s a good spec, if you are patient. Please be patient with the juniors.

One more piece of advice:  I try to buy when the stocks are down or quiet. I prefer not to buy when there is an up gap. But if you are not in the juniors yet, I would not hesitate or look for any sizable pull back.  If you need professional help, please contact me at ikiecohen@msn.com