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In this exclusive interview with The Gold Report, the first of a three part series, Dr. Michael Berry shares his expertise for identifying winners early in the game often long before the market recognizes their value. Learn about his favorite gold and silver mining companies and why he thinks they have what it takes. A pioneer in the field of discovery investing, Dr. Berry researches companies in natural resources, high technology, and biotech and publishes Morning Notes, which are available when published on The Gold Report's home page. Today's Notes (March 25) have been posted.

TGR: Can you give us some background about Discovery Investing?

MB: Here's how I recommend people look at discovery investing. I divide the universe into three types of stocks: The first is the incubator stock, a company at the very front end of the discovery cycle. These are normally penny stocks. They're very risky and usually fairly illiquid. A company such as Terraco Gold, Inc. falls into this category.

TGR: And the other two categories?

MB: The other two categories are mature discovery stocks, such as Midway Gold Corp. and legacy stocks, such as Apple, Inc or Boeing Co. People should understand that discoveries happen across the spectrum. Boeing used discovery technology to produce the 787. Apple discovered the iPod and the iPhone and created tremendous wealth. They are what I call legacy stocks because they aren't as risky, and you can hold them for a long time.

TGR: But you put Terraco Gold into the incubator category?

MB: That's right. Terraco owns the Moon Valley property in Nevada, near Lovelock. The company announced the drill results from its first 15 hole program, which included mineralization on 8 of the 15 holes. This property is in a prolific silver district, just over the ridge from Midway Gold's Spring Valley property, which has 700,000 ounces of silver. I like Terraco because it's a 30 cent stock, and it has two of the best geologists in the business Charles Sulfrian and Ken Snyder, both of whom have a lot of experience working with the big mining companies.

Todd Hilditch is one of the best young CEOs. Management likes this property. When the [recent] drill results came out, people said, Well, these are disappointing. I said, Wait a minute. This is the first time this property has ever been drilled. In the discovery process, if you're not patient, if you don't do your due diligence, and you don't have the courage to stay in the game, you won't make the great discoveries. The discovery doesn't always happen right away. Ken and Charlie are very happy with the results. They're planning to start their drill program in May of this year on the same property. So, I think it's got great potential.

TGR: And at 30 cents, it's very affordable.

MB: That's right. That's what's so great about the incubator phase, the stock is still cheap, so you can buy a lot of it. You have to own enough of the stock to make a difference. Terraco Gold is a fabulous opportunity right now because I think the company has a chance to make a major discovery in the next year or two. The results certainly indicate silver mineralization. Silver is selling for $16.99 now. Two or three years ago silver sold for $6/ounce. We have an amazing price increase going on now in the precious metals game even with the recent pullback in commodities. Terraco is a great play on both gold and silver.