The Next Big Gold Rush!!!!

The Shining Tree Mining District

The Shining Tree Mining District is a relatively new mining district that was opened up to exploration after a 20 year ban in 1996. Shining Tree lies between the Timmins and Sudburyregions of Ontario and is located along the westernmost extension of the Larder Lake-Cadillac Fault that plays host to world class deposits such as Malartic in Quebec and Kirkland Lake Gold in Ontario.

Gold was first discovered in the area in 1911 and led to massive gold rush to Shining Tree, the likes that North America hadn’t seen since the 1896 Klondike rush and the California 49’ers. By 1933, Shining Tree had 3 mines in operation and Shining Tree’s largest mine, The Rhonda Mine opened in 1939 with $6M invested. Most of the mines were shut down in 1942 due to the war and were never reopened. Today Shining Tree is mostly supported by tourism and forestry products.

Shining Tree Mining District was opened up to exploration in 1996 after 20 years of inactivity due to the Temagami Land Caution. This land caution was a 2 decade old land dispute between local native bands and the government. The ban had prevented systematic exploration in the area since 1976 which meant that Shining Tree missed the gold exploration booms in late 70’s on through to 90’s. The area has potential to host Kirkland Lake and Timmins Porcupine West type deposits.

Shining tree has such a rich history of vastly underexplored gold potential that when it was opened up to staking, more than 600 prospectors raced to stake land. On the day the government opened it up to exploration mining companies used every advantage they could, including recruiting local Timmins high school track athletes to run and stake claims and ferrying runners by boat and whatever means necessary to get the most prospective land available.

Shining Tree still remains vastly underexplored as excitement for gold waned into the late 90’s and early 00's until the last 5 years. It doesn’t mean companies haven’t been doing work over that time, but little money was spent on systematically exploring the area, paying attention to only the most prospective targets and being frugal on exploration dollars. Until last year, no one had heard of Shining Tree, but that all changed with Creso’s discovery on Minto.

Creso Exploration’s discovery is still relatively unkown, but over the last 5 months since Creso has been public, excitement has been growing in leaps and bounds and I believe that there is widespread gold throughout the district. Besides Creso’s high grade discovery, a major gold bearing shear zone lies across the extent of Goldeye’s property that extends east onto Creso’s Indian Lake option onto Temex’s 1.2M oz Juby deposit grading 1.25 g/t au and beyond.

When investing in a new area that could potentially spark a massive exploration rush… ALWAYS BUY THE DISCOVERY! That doesn’t mean others won’t find gold and that there won’t be an investing or trading opportunity with other explorers in the area, but it is always wise to stick with what drew you to the area. For me, it wasn’t Temex or Goldeye. It is Creso, on top of that, no other company’s results compare with CXT. I have watched enough discoveries to know to stick with the discovery until fairly valued or one knows the extent of the gold mineralization and then look to invest in the surrounding juniors. Many companies have just started new drill programs to capitalize on the interest generated by Creso’s discovery and are drilling right now including Platinex who is drilling 11,500 meters, Mineral Mountain who is drilling their 60% jv with Golden Harp and Goldeye and Temex are drilling close to Creso’s Minto border so any gold results from these holes will make Minto that much more prospective. Prominerals is another that will be drilling shortly, although they do not have a large land position to the others, although that doesn't mean they won't find gold.

Creso’s recent discovery of an entirely new high grade gold zone below the existing zone capped off a huge rally in Creso from .28 cent low in July to a high of a $1 in August. Creso intersected 82.5 meters grading 13.3 g/t in a hole that they extended at depth. This represents a very rich zone starting at 500 meters of depth on top of 65.7 m grading 18.2 g/t and 79.6 meters grading 4.61 g/t au between surface and 200 meters. This may not be it for hole #1 either as they drilled to 900+ meters at depth and are awaiting assays of the rest of the hole. Creso also reported recently that they hit 280 meters of mineralization in the 3^rd hole of the project that targeted the new discovery at depth. 280 meters is a very extensive interval, even if it doesn’t represent the true width, the continuity of this zone will suggest that this deposit is much bigger than originally thought. Much, much bigger. When assays come back from this hole, Creso will be trading much higher than current price.

Gold is associated with pyrite at Minto and Creso announced the interval averaged between 1% and 2% pyrite so I would expect at least a 5 g/t average over the entire interval length. They also announced that they have intervals as high as 10% pyrite which would indicate some sections of bonanza gold within the interval. I am expecting good things from CXT and when the result hits the market... all the gold explorer investors are going to be comparing the interval to ARU. Could there be 14M oz's at Minto? I really have no clue because they keep needing to extend the deposit as well is define the irregular shape. What matters is that they keep hitting gold on Minto and keep growing the deposit in leaps and bounds. What is interesting is that Temex and Goldeye are drilling a jv property just metres away from the Creso property boundary. So you guys need to watch this drilling area to give hints as to the extent of the mineralization surrounding Minto. If Goldeye and Temex hit economical intervals on their side of Minto... It will be off to the races for all 3 companies and most likely will end up merging if there are multiple million ounce deposits in the area. Another clue that these guys are going to come up with the goods this winter and not just Creso... Is that some of these companies are already implementing shareholders rights plans to protect themselves from hostile takeovers.

I am telling you, Shining Tree is the next big thing in Ontario. It has the potential to be a large scale gold camp similar to other gold camps in the Timmins area. Obviously a lot of drilling needs to be done between now and then to prove up several multi-million oz deposits... But creso is on track for the first big discovery in Shining Tree since the gold rushes of the 1920's and 30's.

These are the companies in Shining Tree that I think are worth a look...

Goldeye Exploration GGY
Creso Exploration CXT
Temex TME
ProMinerals PRM
Golden Harp Resources GHR
Mineral Mountain Resources MMR
Benton Resources BTC
Platinex PTX

Below is a map of the Minto area... (They just might have to move the highway.)




Christopher Skidmore

aka WesternRookie

Gold Exploration Dollars Focusing on Ontario in a Big Way

If you haven't been able to guess it yet, my exploration theme has moved to Ontario. Yukon White Gold was a success again this summer, but like I have been saying for weeks, the northern stocks, especially the Yukon stocks which have made incredible runs this summer are overvalued and going into a slow season as the last results of the season trickle in. Yukon explorers need to be seriously looked at again starting late winter. ATC, NTR, and KAM have all made huge gains on discovery this year and the latest results that come in should be seen as a profit opportunity.

So I always say follow the money!!! And the money is going into Ontario exploration in a serious way this coming winter.

The LSG discovery has certainly heated up exploration in the Timmins region, but also across the whole province. On a daily basis I see drill programs announced and accelerated, it started with LSG, but now gold fever has spread across the province. Any company announcing a 10,000 meter drill program or better is worth taking a look at as that's a lot of exploration dollars going into a project.

After researching hard over the last month for new projects I have found some very prospective high quality plays. It is clear that a lot of the money is going into Ontario which is a safe place to park the speculative capital. There are several exciting regions that are going on.

1) The emerging Rainy River Gold Camp with latest results continuing to impress from RR and BYV. I have posted about these 2 since they announced their concurrent drill programs. Rainy River has 5M oz’s and growing and Bayfield hit very high grade results extending the ODM zone well onto Bayfield’s property. BYV.V will be taken out. It is clear that Rainy River has well over 5 million oz’s and the hole area is rich in gold.

If there is one micro cap explorer in the area, the play has to be Soldi Ventures (SOV) they have staked claims on either side of Rainy River as well as along a fault nwn of the Cameron Lake Deposit. I wouldn’t play Soldi as a takeout by RR, but more as a grassroots discovery in what I see as an emerging gold camp that will host another major discovery.

2) The Shining Tree District where Creso’s (CXT) discovery is starting to attract serious attention. I am a firn believer that his is another emerging gold camp in Ontario. There are has received little exploration as it was only opened up to staking opportunities in 1996. The area has received little modern day exploration, but over the past 2 years initial results point to a major discovery in the area.

Creso is well on track to a major high grade discovery with this lower zone which is still open and a 280 meter mineralized interval, are going to start to create a stir if they continue successful drilling. If they continue to do well it bodes well for the whole area as there are several extremely cheap companies that could be sitting on land as rich as Minto.

There are several micro caps drilling right now, Platinex (PTX) $4M capex, Goldeye (GGY) $20M capex, Pro Minerals (PRM) $3M just finished doing groundwork and drilling has been recommended.

Mineral Mountain (MMV) announced that they are drilling their 60% interest Shining Tree property with Golden Harp Resources (GHR). If Nelson Baker is in the area sniffing around, you know the whole area must show promise. I am sure success of any of these explorers will drive interest $$$ in the area, but if Creso defines a significant high grade zone which it looks like they are doing. All of these explorers will run as exploration dollars rushes into the area trying to catch the next big thing.

3) Hemlo... Hemlo is running out of gold and the search is on for the next +20M oz deposit... If there is another... Hart Gold (HRT) is on to what I think is a serious find at their Sugar Property 60km east of Hemlo with the latest samples continuing to validate their ip theory. Samples have ranged up to 82 g/t and the ip map is displaying a very large gold zone. With all trenches so far returning high grade assays in disseminated style of mineralization, it gives credence to their theory and could be on to something big on the Sugar Zone property. On top of this large and intense zone, The Sugar Property has gold showings over the entire property.

They are so excited about the project to date with the new ip survey and trench results, they are drilling next week starting with 1500 meters on the first 2 trenches. They are clearing multiple sites to drill test the extent of the mineralization.

Jiminex (JIM) is drilling their 50% optioned property from Beaufield (BFD) 15km west of Hemlo on the theory that Hemlo style mineralization exists at depth. A clue to if they do hit this coming winter is if they announce that they hit disseminated sulphides in drill cores. It doesn’t mean there will be gold in the cores but it will indicate that Hemlo style mineralization is there. This property has seen very little drilling below 500 meters where 90% of Hemlo's mineralization is. Teck has a property 2.5 km to the sw that has had impressive shallow results. Teck's mineralization to the west is shallow which would model after Hemlo as the mineralization modeled after Hemlo would be shallower to the west. Jim is a long shot here, finding 2 deposits that are identical in the way they were deposited is a long shot, but being so close to Hemlo in the same belt, it could happen. There are others what you might consider twin deposits in the world.

4) Red Lake continues to be a hot bed of exploration and Gold Canyon (GCU) is situated on some very nice assets. Since the exploration model changed from high grade to low grade, they are discovering huge potential on the Springpole property. They have increased the depth of the deposit from 160 meters to 375 meters and is open at depth and to the west. Currently drilling indicates in excess of 2M ounces with 6km of prospective rocks to follow to the south. Springpole’s Portage Zone is turning into a massive low grade deposit. With GCU stepping out this winter, it could be a very exciting winter as they add more ounces to Springpole.

5) The Pickle Lake Region is heating up as PC Gold (PKL) advances Pickle Crow and continue to discover new veins. Pickle Crow is in the UCHI Gold Belt that is famous for hosting major deposits such as Red Lake and Rice Lake. PKL looks like a great buy at current levels. If there is another Red Lake or Rice Lake type deposit close to being found, Pickle Lake has the best chance, and others are seeing this as properties get snapped up and exploration programs get announced surrounding PKL's Pickle Crow Mine. At under $1 today... PKL is a no brainer. Technically it has broken out of a flag consolidation pattern and looks ripe for a run. The latest high grade results are very encouraging. JIM is also drilling in this area as well. Still a long shot.

6) Then there is The Timmins and Sudbury regions within the prolific Abitibi Greenstone Belt. Explorers like Explor Resources(EXS) in the Destor Porcupine Region and Northern Gold Mining (NGM) in the same prolific belt with their Garrison property are showing real promise. EXS is drilling deep for LSG type mineralization and NGM is expanding a wide low grade zone at the Garrison property and has now broken out over the 200MA, so has lots of room to run this winter to previous highs of well over $1. In these conditions a company breaking out over the 200MA is a great place to buy. With 10,000 meters of drilling, lots of anticipation for EXS as they have the premiere land package next to LSG. (PX) Pelangio has a nice property 250 meters from Thunder Creek and is obviously going to be apart of Thunder Creek deposit one day. I have written up PX for their Ghana discovery that looks potentially massive in scale, this little property, just makes Pelangio a sweetener. If Pelangio continues to discover gold in Ghana, PX may be potential takeout target… only if LSG wants to go international though.

Another in the area that looks great is VG. This is a McEwen company and looks to be consolidating the area outside of Goldcorp’s Dome Mine. VG is coming out with an initial resource estimate for Paymaster and with latest results looks very promising. The next company on VG’s list might be Plato Gold (PGC), as they have strategic claims surrounding G and SAS in the east side of the region. A Lexam director joined the Plato board and with a tiny $5M capex, could really move this winter. Saint Andrew’s Gold Fields (SAS) is a near term producer, don’t let the limited reserves fool you as this area is rich in gold with plenty more to be discovered

The NGM Garrison Property is a Teck castoff because of a limited high grade resource. The low grade resource is open to the east along strike for an undetermined distance. It is also open at depth as well, but NGM is concentrating on discovering the extent of the near surface mineralization to the east to fast track a possible open pit mine. After a nice consolidation below .40... NGM could be a sleeper pick. 1M oz's and growing with a capex of $20M looks like great value for potential. Even after such a large spike. NGM remains a buy on weakness. The results of the ongoing drill program are just too good to ignore.

7) The Beardmore Geraldton Gold Camp is starting to see renewed interest with Premiere Gold’s (PG) discovery, recent results of 5.49 g/t over 53 meters at Hardrock are very encouraging. Hardrock has a historical resource of 1.735M oz. Goldstone Resources (GRC) has a 30% interest in this project and has been hitting results at Key Lake and looks like a great way to get exposure to Hardrock project.

Kodiak Exploration (KXL) has been getting some interesting results as well. Compiled with the recent discovery near Hardrock that is open to the west towards Hardrock make the whole area in prospective. KXL.V looks like a good buy at current levels for a run. Kodiak has a huge land position in the area and has been hitting gold this summer on their other projects. If PG continues to develop the old Hardrock mine into a world class deposit. KXL and GRC both will do well this winter. KXL recently drilled 24.9 m @ 9.31 g/t au at West Geraldton and and 35m @ 2.21 g/t au at milestone. Kodiak also has acquired the grade 1.6M oz Migno Mine in Wawa. Total inventory of 1.83M oz’s.

Both really look ripe for a run next week as PG continues to breakout.

Like I have been saying for the last 2 weeks now, gold being at $1300 is a psychological level for these low grade projects and at current costs, the market will on mass start re-evaluating these low grade properties. At current gold levels, these junior explorers will rise now matter what POG does in the short term. It’s just that time of year and gold clearly above $1250 makes pretty much everything look profitable. I have a good mix of high grade opportunity as well low grade development projects. The low grade projects were much ignored in the past but have great potential to be very large gold deposits.

The Osisko model at Malartic works, and now the smaller low grade projects are coming into vogue. Real opportunity for discovery and growth lies with these properties because they were not extensively explored because of the low grade nature.

When looking for growth or discovery, you now have to go to these low grade deposits, find old mines or find areas that have very little outcropping and lots of overburden, but show potential. Less and less discovery is happening all over the world, so the best chance is where explorers ignored before because traditional methods could not be used or mining was just not economical at a lower price. Not saying gold in soil anomalies or gold in till anomaly exploration is new... but is much more intensive work to define and explore for than chipping a sample out of an exposed rock.

Areas that have heavy overburden that have seen little exploration within prospective mineral belts offer the best chance at a major grassroots discovery.

Another popular method of growth is to develop old mines and the resources. Especially the explorers in Ontario drilling old mines 1000 to 2000 meters deep following the LSG pattern for success by drilling deep.

I hope you see that Ontario is the place to be for gold exploration and development projects this winter.

Lithium Producer IPO Takes Market By Silent Storm

Talison Lithium – TLH.TO


IPO @ $3.50
Oct. 7/10 SP - $4.93
Fully diluted – 102M shares
Capex - $502 million

Subscribers were alerted to Talison Oct. 7th 2010... Up 10% since Thursday alert.

Talison Lithium IPO took the market by silent storm over the last 2 weeks trading just above the IPO mark of $3.50, but after releasing strong year-end production results on Tuesday, the market has taken TLH to $4.93, a $1.15 run since Tuesday. Will things cool off for TLH or are they just heating up? Considering TLH hasn’t traded over 500k volume and is moving up, I would suggest that the market hasn’t caught wind of TLH. Being the world’s largest pure play lithium producer, TLH is certainly going to be the focus of a lot of funds as many see a perfect storm brewing in lithium.

With the electric car just around the corner, lithium is a commodity that will be in rising demand going forward. Lithium powers everything that we find necessary today such as the majority of our electronics including mobile phones and computers. It is definitely a commodity that will continue to see rising consumer demand, and if the electric car does indeed become mainstream and affordable to the general public, it will certainly put in place the perfect storm for a dramatic rise in lithium prices.

What is the best way to profit from this coming wave of increasing demand for lithium? By taking advantage of a cheap IPO and getting into the biggest pure lithium producer on the planet…!!!!

Peter Oliver, CEO of Talison says…“I can see the lithium market doubling, tripling, quadrupling, I guess the biggest issue is timing… and I don’t think anyone can predict that”

Well I think I can… Just look at how many electric cars are being produced, the rate of increase, and of course, planned production. Currently, electric vehicles only drive a negligible portion of the lithium industry, but that is seen to change soon as countries like China lead the charge in pushing towards alternative energy vehicles. China’s demand for lithium increased by 10% last year while the rest of the world’s fell off. Once you add North American and European demand to increasing popularity in electric vehicles, you will have your perfect storm as demand will then outpace supply.

Highlights…

• Biggest pure lithium producer in the world
• Produced about a third of the world’s Lithium last year
• Goldman Sachs owns 13%
• Fully financed for 50% capacity upgrade
• Largest supplier to China
• Well financed, raised $40M in a recent ipo
• Bought Salares to get control of highly prospective early stage brine project in Chile where it plans to accelerate exploration and development
• Increasing production at Greenbrushes 20% by early 2011 – 49,000 tonnes of LCE 2011 to support Chinese demand
• At current production rates, Greenbushes have 138 years worth of resources and reserves

Talison is cheap with a very low capex for producing 25% of the world’s Lithium and planning on increasing capacity by 50% at Greenbushes and fast tracking a brine operation in South America. TLH is well positioned to take advantage of this brewing perfect storm. Of course, it will only happen if and when electric car production goes mainstream.

Thoughts on Gold... New Investing Theme

I have a few thoughts on gold tonight that tie into my investment theme of buying value. Value in meaning that I am looking at low grade deposits that had good economics before the financial crisis, but have been much ignored since because costs in the gold mining industry have outpaced the increase in POG. I beleive that around $1300 a lot of these low grade projects become viable, even at a cheaper price these mines will be viable over the long term, but scarcity of capital has really hurt these types of gold deposits. A combination of skyrocketing energy prices and labor outpaced gold to $1000 but since then has leveled off and now gold is starting to outpace rising costs. $1300 seems to be a psychological level for a lot of these projects at current costs and as more and more of the market starts to understand the real fundamentals driving POG, they will start to understand that POG will never trade under $1000 again. Not until we have a true mechanism for measuring value anyway. So getting in on these low grade projects early will reap some great gains as a lot of these stocks have been much maligned since, having barely moved off their bottoms and are a long ways from their all time highs before the financial crisis occurred.

Confidence in the trend of POG is a huge reason you will see a steady climb in these stocks. Most of the market still does not understand the dynamic that is driving gold. I hear weak USD, fear, inflation, alternative currency... etc etc... Well to some extent it is all... But the #1 factor driving gold right now is the world wide debasement of currencies, which does not look to stop anytime soon. The powers that be in this world are fighting trade wars through their currencies and as long as developed nations continue to position their dollars on a downtrend by printing money to strengthen exports, falsely stimulate the economy, as well as pay back debt at extremely discounted prices; gold will continue to go up. It may seem like a good idea at the time but in the end it will be the end for these developed nations if these policies continue. Every major currency in the world is weak except for a few. The Yen being one but at 1.20 the Japanese will continue to try and manipulate the Yen downward. So really there is no alternative currency in the world that anyone will trust eventually, except for gold. As long as countries continue a policy of making a mockery out of fiat currency... the world will go back to the gold standard and they are starting to do it in droves steadily driving up the price. Currently there is no alternative and as long as there is no alternative, the gold standard is back in play. Gold and silver is the only currency in the world that you cannot print! Gold is not in a parabolic bubble, like I have heard some people predict lately, these people do not understand the dynamic that is pushing gold higher. Nor do I see monetary or fiscal policy changing any time soon. So gold will continue to steadily rise, of course with some healthy pullbacks along the way. You just can't print gold, you can mine it, but even at that you are limited to a steady supply. And at that... gold is a finite resource. You just can't pull 10 M ounces out of the ground, it takes years.

I beleive gold can still double from here over the long term to at least $2500 and from my view I think that may be somewhat conservative as gold will enter into a parabolic phase at some point and go well past its fair value. I maintain that gold is still well below fair value, concerning developed nations' monetary and fiscal policies. I also beleive that this summer, many people are starting to get a real idea why gold is going up. Its not inflation, although printing $$$ does end up as inflation in the end, its not fear, although I think many investors are fearful of being long many currencies, its not the USD... b/c the USD has been much cheaper on the INDEX with gold at much lower prices... It's the worldwide debasement of fiat currencies, which is being done for a multiple of shortsighted reasons. Gold keeps going up because its showing the weakness of all developed nations' currencies.. not just the USD. I wouldn't be getting in front of this train.

Anyway... many people are just now starting to realize that the next leg up in gold is a result of what is an emerging trade war fought with tariffs and the debasement of currencies worldwide. $1200 to $1300 is a psychological level that we now broke through where these cheap cheap cheap deposits now will get a serious look with some serious dough.

Some value names that I have on my list and mentioned over the last 2 weeks that of course have exploration and discovery upside are...

• Rye Patch Gold RPM.V 4M+ low grade oz's in Nevada with an exciting high grade discovery at Wilco $5.50 per oz
  
• Kiska Metals KSK.V 5.75M oz's and growing at Whistler in Alaska with another large discovery at Island Mountain 23 km away $13 per oz
  

I will certainly be looking to dig up some more names in this category.


Happy Investing

Is Gold Due for a Pullback?

Well, its the end of the summer... The harvest moon is out. I think its time to take some profits. Reap in the summer's hard work for the fall season. :)

I've been calling the most recent gold bull since early July saying that gold was gearing up for a nice summer run and that it would start near the end of July. I had correction targets of $1170 and $1140 and gold hit right in the middle of that near $1155 before reversing and starting a new bullish trend higher. Since then gold stocks that I have been posting about have made record gains over that 2 month period. ATC has more than doubled from the $1.87 price its in the portfolio at to a high of $7.58 (305%). Kaminak over the same period went from $1.50 to $3.85 (157%). Northern Tiger we posted about went from .26 to .72 (177%) and is currently sitting near that high at .68 as drilling is progressing well on the 3 Acre property. I expect Northern Tiger will continue to push higher in anticipation of excellent high grade drill results. The Yukon explorers are doing well, very well indeed as they discover widespread gold on their properties.

Its not just the Yukon that is hot. Yes gold fever has certainly hit the Yukon in a big way but others that we have posted about have done extremely well. Creso Exploration was one of my first picks this summer went from a low of .28 in early July to a high of $1.07 (282%). Creso remains one of our top picks and at a current price of .90 looks like a juicy buy and bottomed today at $0.85. Gold Canyon was another I posted about in early August and went from a .36 low the following trading day to a high of .89 cents (147%) early Tuesday morning incidently GCU announced a .45 PP tonight so at .74, I expect it to sell-off significantly. Bayfield Ventures BYV.V, I also posted about in early august after they announced a 20,000 meter drill program and went from .41 to $1.38 (237%). Bayfield has had an excellent drilling program demonstrating that the ODM zone on Rainy River's property extends in a very economical way well onto Bayfield's Burns Block. BYV, its just a matter of time and at $1 is a solid buy knowing full well that its just a matter of time before RR has to buy them out to develop a mine.

On my scorecard... in 2 short months I have 6 stocks that have gone at least 100%. 1 went 300%, 2 went 200%+ and averaged 260%, 3 that went just 100% averaged 150%+... Its been a great summer for Western Investor and Beat the Market Stock picks, hopefully pointing you guys in the right direction, bringing you the best returns in the market.

I also have to give honorable mentions to FAU, PEM, DEC all pennies that I have posted about having successful programs that are still gearing up.

Also VEN and CSI have done exceptionally well with VEN almost doubling from a $6.50 low to its current $11. (77%) CSI hung with VEN for awhile but VEN has really takeover as a premium south american gold asset. EAS has gotten left in the dust even with a successful program expending Miwah because of the environmental ban in Indonesia right now. This ban is aimed at the notoriously bad pulp industry and not the mining guys. Once everything gets sorter out. I am sure EAS will become a mine in Indonesia. EAS is a solid buy on weakness and anywhere in the $5 to $6 range will pay huge rewards.

There are many more in my public portfolio on my blog and over there on stockhouse that have made similar gains. I can't talk about them all so I try and focus on the best. I brought you the White Gold District, first with Underworld last year and now this year with my favorites KAM, ATC and NTR. I showed you the emerging Rainy River Gold Camp. The Shining Tree camp where Creso made their discovery last year in the Timmins District.

Seasonally, after such magnificent 2 month run though, all good things must come to an end.

When stocks have made such huge gains and over the last 2 months you know that a serious pullback can be expected. Maybe not serious but lets say and extended 2 -3 week sell-off. Goldman's $1300 target is close to being hit so you know there will be a wave of sellers coming in at $1300 the first time it hits hit. Combine that with what will be market weakness going into the beginning of October but not a frantic sell-off.. I see all asset class weakness. So going into the next few days I would be a seller of gold as well as all asset classes. I expect that gold will resume its uptrend at a mark between $1260 and $1270 and peak at $1330 later this fall. Before it pulls back again time for Christmas. I could be wrong and maybe gold goes parabolic and hits my $1330 target in the next few weeks but I think because of the trend gold is taking for the long term as well as a psychological wall put in place by Goldman at $1300... I think it is almost time for a little sell-off. We will see next week. I bet it head fakes a little above $1300 next week before we go down.

As you can see most of my picks don't take off immediately... but when they do... they sky rocket!

Happy Trading... Happy Investing...

Hopefully a great summer for you all. :)

The Hottest Gold Discovery Area in the World....

Is the Yukon White Gold District.

Since Underworld's high grade discovery last year and Kinross's subsequent takeover at an early stage in development, suggesting that K thought there was huge potential in the area and wanted to get in early on the cheap. Underworld's Golden Saddle Discovery has great potential and was still largely undefined when Kinross pulled the trigger at $2.60+ a share earlier this year. A double from where I was recommending to buy it last fall.

Since the discovery at Golden Saddle, which indicated to the market that there was potential for numerous gold-silver-copper targets among this largely underexplored area of the Yukon. Last summer 2009 we saw a mad staking rush, and now the first initial results of these exploration programs are starting to come in. This summer Kaminak and ATAC have made subsequent material drilling discoveries while others are defining large mineral in soil anomalies (which has been a very successful way of exploring in this area with large amount of overburden and little outcropping). Still others like NTR and KS are discovering numerous high grade veins on their properties that are anxiously awaiting drilling. Since NTR announced drilling of their high grade vein discovery on their 3Acre property, the stock has more than doubled to .66 from where I originally said this stock was a great buy. Klondike has discovered widespread high grade silver veining throughout their property that they are exploring under option from ATAC.

These are some exciting times for the Yukon White Gold District and the companies exploring these vastly rich mineral properties. The sp of almsot every company explorign no matter what stage is in a bull trend and as the discoveries continue to happen in this mining friendly jurisdiction of the Yukon, you will expect a premium to continue to build into the sp of these explorers.

Other companies that we have in the portfolio concerning the Yukon White Gold District are Western Copper which we added at $1 because it was extremely cheap, considering they have a total of 6.8B lbs of copper, 11.1M oz's of gold and 495M lbs of Moly.... Measured and indicated!!! At their porphyry Casino project in the Yukon White Gold District alone, they have 8.8M oz's of gold, 4.4B lbs of Copper ad 475M lbs of Moly, the project has an NPV of $1.9B alone and the stock was trading at under $100M market cap at the time. The Casino project is still open to exploration and are currently drilling another 15,000m in 2010. At its current $124M market cap, this company is cheap for what they have and with copper stock to move towards its highs of $4, copper stocks will start to move. Some already have, like companies we have followed since blog inception such as Copper Fox.

Other companies that we keep an eye on that are currently exploring at various stages in the Yukon but we think you should be aware of and to beware of... are Brookemont capital (BKT.V) who has claims that are bordering Underworld's property and are initiating early stage exploration on. BKT also announced recently they acquired claims that are bordering Canaco's discovery. Although I do recognize some management and wouldn't advise to buy this company on managements track record. Another company we watch but would be hesitant to buy is Habanero, pretty much for the same reasons. HAO.V was supposed to be a serious O & G player in the Oil Sands and became pretty much a pump and dump, so until some serious work is shown, are companies that tend to be driven be promotion rather than results and should be treated as such. Another company in the area I may wait for results before getting down and dirty with would be Cloudbreak Resources CDB.V, another land package grabber that cares little about real success as long as they are pumping a new story to gullible investors.

4 other much more serious companies that I have my eye on...

Are Arcus Development Group ADG.V which has optioned 4 properties from Atac and have identified several gold in soil anomalies as well and have further prospective results from trenches that hit mineralization over economical widths. ADG.V is very early stage and probably won't get into a serious drilling program until next summer, but have the right early stage exploration properties to work off of.

AM Gold AMG.V is currently awaiting assays from a 6,000 meter drill program at Red Mountain in the Yukon aimed at expanding their 542,000 oz inferred resource at 0.7 g/t. At that grade they will have to significantly expand the resource to even be considered for a mine. AM Gold also has 498,000 oz's gold and 269M lbs of copper indicated and another 168,000 oz's gold and 115M lbs of copper inferred at a project in Peru. At $18M market cap, AM Gold is cheap and has potential to expand their project in the Yukon.

Taku Gold Corp TAK.V is another highly prospective Yukon stock that has acquired the 2nd largest land package in the area. They are not as ahead as some of the other companies, but sometimes good things take time to put together and in Taku's case, have some extremely prospective properties.

The Yukon White Gold District is hot and will continue to be hot for the following few years as the area is seeing aggressive exploration like it has never seen before. A smart investor will position himself in the discoveries now like ATAC, KAM, NTR that are sure to have multiple massive deposits on their properties... and after delineation... reposition into the next round of plays that have had successful exploration programs, discovered viens and large gold in soil anomalies. That will be drilled in the following years.

Silver Quest Resources SQI.V is another very prospective stock that has a very large land package in the White Gold District, they are exploring.

If a company like BKT, HAO, or CDB actually makes a discovery, then I may buy, but those guys I take a show me attitude first. The others are much better buys on much more solid fundamentals than those 3 area play P & D's.

Silver about to get its due?

I am posting tonight because I want to talk about silver. It is the precious metal that still hasn't broken out and whose 3 year chart looks more like its cousin copper than its big brother Gold. Silver has grown very cheap when compared to gold as its historical ratio of silver to Gold 50:1 has now crept up to 62:1. With this current currency debasing strategy that has happened worldwide, the safe currency of choice has been gold.

At its peak in early of 2008 before the meltdown silver was trading at highs of $21 while gold was peaking at $1000.... that is a ratio of 47:1. Today while silver is just challenging those highs of 2008, gold has surpassed those highs by $275 or 27.5% and currently has a ratio of over 62:1.

I am saying that silver is very cheap compared to gold and over the next few months while gold gets psychologically more expensive, investors will turn to silver as a cheaper more volatile alternative and bid up the spot price closer to the historical level. At today's current gold price of $1275 a 50:1 ratio would imply a $25.50 silver price and at 2008 's peak would imply a spot price of 26.50. At today's prices and the current bull move that should take us over $1300 this time. Silver is about to breakout and will outperform gold over the next while.

I have 2 huge blue sky silver picks that are primed for discovery...

One in the Yukon...

Klondike Silver

KS.V is a mover that has momentum with major volume over the last couple days and at .065 is still very cheap for the potential. The momentum should follow through for good reason as they announced multiple discoveries on a property that they are exploring as jv with ATAC Resources in the Yukon and recently announced a discovery of 3 veins within a huge 600m x 1100m multi element in soil anomaly with best samples grading 3 g/t silver and 1660 g/t silver... that is almost 1 oz /t gold equivalent at current metal prices. One high grade vein they have traced for 80 meters which is significant before it disappears under overburden. At .065 this stock is cheap, has the right joint venture and is exploring in the right area in the Yukon. The story at KS is just developing and as the more investors buy silver because of its relative cheapness when compared to gold, they will start looking for high quality silver deposits that may be mines one day and Klondike Silver gives you a great chance at discovery in the Yukon.

in soil anomalies have been a very successful way of exploring in the Yukon with so much overburden and tend to be very indicative of the potential size of the project. With such very prospective silver-gold project the market is just awakening up to KS's potential.

One near Revelstoke in BC...

Mineral Mountain Resources MMV.V has a host of mineral occurrences on their property (200+) and previous mining at the turn of the century that yielded ore worth $3454 in today's prices. MMV.V is a brand new company and has Nelson Baker heading the operation who was the guy that started Rainy River Resources and responsible for bringing the project to the company. The guy has a nose for finding quality, undervalued projects with huge potential and that is what we have here with Mineral Mountain Resources and their flagship property in the Kootenay Arc. There are numerous veins that have been previously mined on the property averaging 1 - 10 meters in width and grading up to 1200 g/t silver as well as other minerals such as Pb, Au, Zn...

Mineral Mountain Resources is another must have silver stock for the coming silver revaluation to more historical levels. MMV.V is currently selling a 10M shares @ .25 or .30 for flow through so I don't think the price will go to far for now but word on the street is that these guys are drilling in October. Not sure how accurate it is as it came from an anonymous poster on Stockhouse. No matter if it is or not true because with Nelson Baker at the helm, you know he is serious about building serious shareholder value.

Time to Short the Yen...?

Or is this a bull market you don't want to get in front of?

The Japanese Yen has been in a major bull for the last 3 years and has had a few cycles within this trend but the major longterm trend for the YEN is up. It has gone from 85.0 in October of 2008 to 119 as of today. That is a 40% gain in this 3 year trend. An important factor in identifying changes in trends is to know what fundamentals are driving the price and to identify if those fundamentals are still in place to drive the price higher or if there has been a material change.

Now there are four basic factors that drive currencies: yield differential, relative economic growth, current account deficit/surplases, and relative inflation. Certainly investors aren't buying the YEN for the first 2 reasons. One reason explained for the limited selling of the YEN is that the majority of Japanese debt is held by its own citizens, thereby limiting the selling of the YEN, but certainly is not a factor in the recent buying of the YEN to its recent highs. So that leaves inflation.

Considering that the Japanese are one of the few that aren't rapidly debasing their currency, and on top of that deflation in Japan that could be as high as 2.5%... this seems to be the major factor. In a sense the the 2 safe haven currencies are the YEN and GOLD. So if I think Gold is going higher but looking for a top in the YEN... WHY?

B/c with increasingly higher YEN prices, Japanese companies are at an even greater competitive disadvantage to their Asian counterparts that are tied to the USD. At some point there will be a breaking point where authorities will have to intervene to reduce the YEN prices. An increasingly popular view in Japan is to start creating $$$ to reduce the price and since the Japanese would rather be in control of their own economy and not adjust to a speculative high priced YEN that in a normal world prices would not support, I would suggest that at some point in the future the Japanese will join the global currency debasement party.

And as more countries turn to printing money as a tool for various economic reasons, it will just push gold higher. And until developed nations stop debasing their currencies on a massive scale, I remain a solid gold bull.

At 120.00 the YEN looks exhausted, it may not be the end of the rise in the YEN, but it looks like a great trade for short term momentum to the downside to the 20MA.

Happy Trading

Gold just taking a break before next run this fall...

Gold went on a great one month run this summer which timed exactly with the cyclical season. Gold stocks then followed and we have seen some massive gains in a lot of stocks we follow including Creso Exploration going from .28 to $1, Kaminak going form $1.50 to $3.20 and several other hot gold plays that have seen steady increases over the last month to month in a half.

This is just the first part of this years run that should see gold push past $1300 for the first time ever this fall. Where it goes it is hard to predict when the yellow metal is making new highs but I would suggest an exhaustion price target of around 1330 -40 area before we see a serious sell-off again. I am not saying that the price won't go higher this fall but I am still expecting an extended gold bull market for years to come, contrary to quite a few analysts opinion's that this is the year that gold goes parabolic and that gold's bull exhaustion peak is close. I just don't buy it and will continue to go with the wall of worry that gold prices seemingly climb every year.

What makes me confident that POG is just resting is the current price level. As long as POG holds $1230, I am confident that the current gold run will continue with $1230 b e very key area to hold over the coming weeks.

Some high quality explorers that I think ave huge potential are KAM, NTR and ATC in the Yukon White Gold District. CXT at .72 is a great entry point after a huge run and FAU at .52 represents another good buy. Let me stress that CXT and FAU are investments that are at the opposite ends of the gold investing spectrum. CXT is an open deposit looking to add millions of ounces and looking for the huge discovery while FAU is a closed deposit with little chance at greatly increasing reserves, but is a fully functional turnkey mining operation that could be in production as early as next spring. The plan is to start up the mine and hopefully add ounces every year that will extend the mine life. Which is a very good possibility although what gives FIRE River gold an advantage is they are in highly prospective area for exploration and discovery. They may not add significant ounces to the Nixon Fork Gold Mine, but if they can make it profitable venture for the coming years then it gives them a good foothold to further explore and make discovery in Alaska.

There are several other stocks that I hold in high esteem and if you want to see what is on my gold watchlist... look no further than my HOT GOLD DISCOVERY Portfolio.

Click here to see what is high on my shopping list.

AG stocks surge on Potash Bid

Last Tuesday BHP Billiton announced an unsolicited bid for POTASH, for which the market promptly took POT 25% higher that day and has continued higher throughout the week. Firstly, this bid for Potash grossly misvalues Potash's 400 years worth of reserves and only gives value towards current earnings and not the insitu resource that will feed the world for centuries to come.

BHP Billiton is trying to take advantage of a pricing anomaly in this industry and buying centuries of reserves for practically nothing. BHP understands this and I believe will make another offer closer to the $200 range which will still represent very good value for POT as far as BHP is concerned.

What this all means for the industry is that while takeover speculation for POT is ripe and hot... it will continue to light a fire in the industry and give it momentum. Compile that with all the drought in the world, the natural disasters and producers refusing to buy Potash for the last 2 years has all complied into the perfect storm to push Ag stocks to all time highs this winter as a shortage of food becomes apparent this fall and winter.

A couple pennies that one could take advantage of the momentum are BOE.V and AMZ.V... Both are potential Potash operations. Another interesting company that may breakout of a downtrend is COIN. They produce organic fertilizers and has been in a terrible downtrend since spring of '08 from $12 and is currently sitting close to a year low at .47. It may be time for this company to reverse its fortunes or at least a relief rally.

Ags look like a great place to park some capital this fall as the world starves due to food shortages this year. I made up a portfolio of selected Ag stocks and added them the day BHP announced takeover intentions to track what the industry does over the coming months.

Gold Going Strong

Since Gold bottomed out 2 weeks ago and my correction buy target zone between my 2 targets of $1170 and $1140, it has gone on a steady rise to $1200, and today it broke through that barrier and all the way to the 50MA at $1200. With the way gold is trading today on Friday and only selling off slightly late day, it will break the 50MA next and start moving up to test the highs set earlier this year. Gold needed the currency hedge to unwind and now that it has and that fear trade has gone, gold can resume its cyclical bull trend.

Despite poor employment numbers both in Canada and he US and further revisions downward of last months numbers on a Friday; one thing that gives me confidence that such a move will continue even before it has broken the last area of resistance, is that on such a day the majors are giving POG positive affirmation by all being up significantly against the rest of the market. On a Friday, when everyone else is selling, investors are piling into Gold before the weekend!

Gold may test support of $1200 and a little under next week or it may not depending on market conditions Monday, but one thing for sure is that it is going to break the 50MA with authority sometime next week. Once POG is over $1200 again, investors will realize that Gold is the place to be.

With investor uncertainty in the markets, and most risk currencies set to retrace as well as a strong buying season for gold all combine to go up and break out to all time highs again in late summer early fall. One thing is certain, no matter the short term risk of deflation which I still don't believe, there will always be a long term hyperinflation environment which will drive gold higher over the long run.

Happy Trading

Gold The One Investment You Can Always Count On

When reading into and trying to understand the markets it is important to know a few things well. One cannot be an expert at everything and if you try, you will end up being good at nothing. One must find a place in the markets to park their butt, and learn.

Since I have entered the markets in late 2005, one of my first trends I identified was gold. I hopped on the gold bandwagon at the last time gold dipped below $500 and took off. That is almost 5 years ago and 150% return later, Gold is still going strong. Since that time I learned everything I could about gold, its fundamentals, its trading patterns anything and everything that has to do with gold. I learned the arguments for gold and arguments against gold. Over the last 4.5 years, basically memorizing everything to do with gold.

Now some may call me a gold bug because I believe gold is still far from peaking. But how can I be a gold bug when I have only been in the industry for 5 years? I am certainly not a gold bug and will jump off the train when the time is right, but that time is not now.

More often than not, (and after a bit of nail biting) my calls in gold are usually right. Last summer I called a breakout in gold the day Gartman claimed he sold all his gold and gold promptly went on a 4 month run from a breakout at $1000 to $1250...

This summer I called for a correction in gold, and though it wasn't as dramatic as I though it would be and it had to fail a breakout before it came down below $1200 and settle halfway in between my correction targets of $1140 - $1170 before promptly moving back to $1200. I heard so many people over the last week to get out of gold, on BNN, on Stockhouse, I even heard someone say short below $1170????

Really you can' fault these people because they don't follow gold like I do, but it proves you can't know everything and you need to defer to the experts instead of trying to know it all like most of those 'cases' on BNN. In the end they all look like fools... 3 analysts on BNN called for a major sell-off in gold. To the journalists credit, most of them gave the analysts a way out, asking about seasonal trades and timing, but all said the same thing... Sell gold. Don't buy it here.

I could not find a gold bull anywhere last week... except me. The fundamentals driving gold just won't relent and will stay in place for the time being.

I don't know much about the markets, and can often put my foot in my mouth, but one thing I know for sure is BUY GOLD!

The last 2 weeks were an excellent opportunity to buy like I said and now that we have confirmation that gold has bottomed and another breakout to all time highs is imminent, The time to buy Gold and Gold stocks is NOW!!! There is one area of resistance that needs to be broken before confirmation of this continuation pattern. This week or next, gold must beak through this last area of resistance between $1200 and $1210 to confirm the bottom that developed in gold over the last month.

I hope you took the last 2 weeks to load up on your favorite gold stocks because this fall is going to be another major run. If you haven't yet, there are still some good value for some great gold stocks.

EAS, VEN, CSI,SAS, SGR all have great growth profiles for a midcap names.

If you want more leverage and can assume more risk... CXT, PEM, DEC, and FAU are great smallcap names.

Happy Trading

30 year Bond Bull Coming to An End?

I was looking through the newswires tonight and I noticed in my mining feed that TECK has announced pricing of $750M worth of 7 and 30 year notes priced at 3.85% and 6.00% respectively. They are using the funds to retire 9.75% and 10.25% notes which gives them quite a bit of savings on the interest which would be in excess of $100M for sure. Not chump change by any means, but still, really quite a bit of mundane news in itself.

What I am taking from this news more than anything is that TECK's decision to issue new longterm notes and retire higher interest debt, has more to do with where the company sees future interests going. If one thinks that interest rates are going to rise in the future then companies are going to start making these types of corporate decisions and locking in while paper is as cheap as it is.

Are interest rates going up tomorrow? I doubt it, but as you see more and more companies making these types of decisions you know that general attitude in the corporate sector is that rates will rise. Once the global economy gets through this uncertain economic stretch and economies return to more normal levels of growth, rates will rise to keep the economy from being overheated. On the other hand, if the currency crisis reappears, rates will go up in order to support the currencies. It will become a choice of saving buying power versus stiffling economic growth at home.

At this point in time, countries are trying to debase their currencies and as long as this strategy stays in place, interest rates will remain artificially low, but doesn't mean they cannot rise from the absolute rock bottom prices where they are without that strategy being affected too much. Interest rates have to go up. If the economy gets used to cheap paper. Like a highly addictive drug. It will never get off, and when it does, you will see severe pain.

One trade that I am researching to take advantage of when it happens is to short the bond market. Interest rates have been on the decline since the early 80's to a point where they can't get any lower and as a result the bond market has been in a super bull which I believe is nearing an end. Don't go out and short the bond market just yet as a correction this fall will push the bond market up as a place to hide, but once economies return to normal or countries are forced to raise rates because of downward spiraling currencies, The SuperBull in Bonds will be over!

Markets Confirm Further Upside

Last week I wrote twice that the markets were going to go up further despite weaker than expected economic numbers and worries about high unemployment. I reasoned that earnings were just too good so far, with the majority of companies beating expectations and most expected to beat for the rest of earnings season. This set the stage for the uptrend from July 1st lows to continue. I wrote that the Dow needed to break 11600 with confidence and today it opened above that resistance level setting the stage for a continued rally to resistance of 11,900 and then a heavy bit at the 11,200 level.

It should be a good month for stocks as the global economy is still alive and well and until China and India both show signs of significantly slowing to paces under 6% growth the money will follow the earnings. Most of the companies that are beating are beating on strong international sales so with the global nature of our companies today you need to have an international outlook as opposed to just looking at fundamentals on just home soil.

What looks more certain to me than deflation, is poor to flat economic growth in the face of rising prices, which is what will ultimately happen if the developed world economies don't resume a reasonable pace of growth again soon.

One problem the US has is that it needs to encourage spending on home soil as well get credit moving through the system again. The system was designed to run a certain way and now that they are changing it all of a sudden to run a different way the the economy can't take it. It needs the spending to run, it needs it until it can encourage its industry to expand. It needs that spending to bridge the gap until industry can come and reinvest in the US economy.

I think you can have poor economic conditions and positive earnings in this day in age. Its very easy to see how. A lot of people are talking that the markets have to follow US economic conditions, I don't think so and for the first time in history you will see a disconnect between the US economy and the US stock markets because of the international nature of most major companies.

I think the markets push to at least 11,200 but in all probability may go as high as 11,500 - 12,000 where possibly in the fall a further slow down in China as well as further negative revisions of economic data could combine to take us lower.

Happy Trading :)

Extended Deflation? The China Wild Card

Today I read an article that Chinese manufacturing is slowing further. With North American economic recoveries stalling and Euro nations struggling to recover at all, this is expected. What I find significant though is that Chinese manufacturing should be stalling much more in tandem with developed nations, but this is not the case hinting at underlying strength in the global economy and the strength of developing consumer nations.

I hear many people calling for deflation because of a whole bunch of factors including decreased spending in developed nations, a tapped out consumer that has changed habits, and a China bubble because of tapped out developed economies, I don't buy it. Here is why...

I think there is a dynamic shift happening in the global economy, I can see it, I think by US policy, they see it, and are trying to line up their cards to profit from it and not become a dinosaur. Here is the big card that people don't understand and can't see more than 6 months into the future. There is only 1.3 billion people in what we call the developed world that is cutting back and changing household behavior. The rest, 4B+ live in the developing world with 2.5B living in 2 countries, China and India.

The developing world, especially in those 2 fast growing economies are starting to develop voracious consumer appetites of their own. A blatant example of Chinese materialism and consumerism is their plastic surgery reality tv show. This is an example of how these 2 economies are starting to shift from manufacturing and selling cheap goods abroad to becoming much more consumer like nations. This is just the start of a shift to consumerism that has started after creating many wealthy individuals in their respective countries. The trend for economies such as India and China is to continue to grow at a rapid pace and fill the void that the developed nations are leaving in the global economy, and in most cases expand the global economy.

This is why the Chinese are buying up commodities and investing in mining and energy projects around the world. Because their own economy is starting to develop a voracious consumer component that is going to grow and they will need the raw materials to supply this growing segment of their economy.

The arrangement of unhinging the Yuan from the USD has a mutually beneficial arrangement for both countries as the Chinese will be able to take advantage of a strong Yuan to basically horde the worlds resources to satisfy future consumer demand that will continue to grow as more and more people are demanding the 'Western Lifestyle', especially among the younger generation in the developing world. For now it will give the US a break by paying back its debt at a much cheaper rate and give US industry a chance to reinvent itself on a global scale with a cheaper buck, but ultimately we will all be dependent on China as they continue to buy up the world's resources.

There may or may not be a lull depending on if the growth in developing countries doesn't keep up with lagging demand in the developed world, but with a 2:1 ratio in China and India alone to the developed world, I doubt that the demand loss will be significant, especially over an extended period. Major consumer cultures are developing in these countries, especially among the younger generations.

I expect that if the global economy stays strong (indicating the the developing world is starting to drive the global economy), US earnings will be good although the economy may not recover at the same rate. Which will put me in the camp of a market correction this fall but not double dip. If global numbers start to decline badly, indicating that the engine still is the developed world, depending on how badly those numbers dip and don't pick up, we could see a double dip and a bit of deflation.

The Baltic Dry index is a great key indicator to watch and it took a huge break downward recently. If t continues to break below 1700 then I may be worried about the global economy.

A very negative outcome if developed nations can't grow their economies and add value is if the developing world continues to grow at a rapid pace and developed nations who can't adapt will be facing declining currencies and economies in the face of rising prices for raw materials. Not a great scenario if developed economies continue stagnant over an extended period of time.

All That Glitters is Gold

Gold stocks look to be on the move today signalling that the selloff in gold may be close to an end. Ventana Gold released excellent results with more extremely high grade results which has pushed the stock up over 13% to over $8 at its height today. If gold doesn't make it back over $1170 it will probably try and test the lows and support at the 200MA, but the way the price is acting and the way the cream of the crop gold stocks are acting today, it is starting to look like a bottom.

With stocks like Ventana reacting so well to good news it also bodes that the mood is much better for buying gold stocks than it has been at any time in the last 3 months. East Asia Minerals, another impressive deposit also took a hard turn towards the 50 and 200MA's today breaking out of its consolidation pattern. It certainly is not a declared bull again in gold but some of theses stocks look like they are not going to get any cheaper.

Today's trading looks like there is more than average buying interest for gold stocks. At least the premiere ones today. The smart investors will be buying gold stocks over the next month for a very strong seasonal run this fall.

All I know is that the 2 factors that are pulling the markets between a bull and a bear at the moment both will eventually drive POG much higher.



All that glitters is gold. :)

Happy Trading

Markets Defy all the Odds... Start to Move up Again

On July 1st, I tweeted that we had hit a possible low on oversold conditions and that markets should rally from that point for the summer before we go lower. Well the market hasn't disappointed and has made me look pretty good to date. :) At certain points I have said that we will go higher, slowly talking it up. The following week I wrote that they would continue to rise and they proceeded to blow through the 50MA rising right to the 100/200MA area where they currently sit. I am not sure if I gave a definitive target but 10,600 was where I expected next resistance.

I strongly believe that conditions are now set for the markets to take another jump up. In fact, they may even get to new 2010 highs, believe it or not. There are technically 2 targets now, one just under 10,900 and the other around 11,200 and if both targets get hit and taken out technically, the market could push higher possibly making a the head in a head and shoulders formation but that is way to far off to correctly predict. I have heard of the double top scenario, but I would suggest with continued beats and strong earnings that will give markets momentum to blow past that number around 11,200. At this point I think that is where the herd gets sucked in b/c headlines from Q2 earnings say everything is rosy and massaged economic data this fall will follow the positive earnings.

I am not sure that is the case, but certainly you can't ignore the earnings recovery for now and the momentum that markets are starting to build. Climbing the wall of worry for just a little while longer before reality does set in.

One thing of note is that I thought beige book report wasn't that bad. Something about manufacturing in there gave me some hope. Manufacturing is the engine of the economy in many ways so seeing some hope there is a positive that industry may be turning around. Which in turn will add jobs.

Currently markets are sitting on a pivot point and started moving off to the upside today but I am looking for 10,600 to be breached before we have confirmation. The Euro keeps moving up as well so I see no real fear in the market in the low volume conditions the rest of the summer. Gold is also holding steady but think it it should get another $10 or $20 cheaper. Am not counting on a much more of a decline in Gold. But who knows? Still don't believe in deflation, not even in recession.

US Markets disconnected from Economy

NEWS FLASH!!!

US Corporations profit from global growth, payout a few wealthy Americans and stiff Joe out of a job.

That should be the headline for this quarters earnings season as most companies are beating earnings expectations despite poor domestic economic growth. What this truly means that there is a disconnect between the DOW and the US economy as a whole and sets the stage for further short term recovery in the markets.

The bulls are touting earnings saying too good to miss.. The bears are touting poor economic data.

Earnings vs. Economic data... Let's put them in a cage and see who wins. A fight o the death! Hmmmm... My conclusion... earnings will propel you and give you momentum like an octane boast in your car, but economic data will always win out as everyone sees you just driving in Pinto in the end!

If corporations were smart, they would be taking those global profits and reinvesting at home not hiking dividends and buying back stock to support their share price in weakening economic conditions that the current philosophy is contributing to in a major way.

Markets look to resume bullish trend... for now

If you aren't sure where short term market direction was going, you do today with the $20 drop in POG. Gold had traded pretty much positively correlated with the markets until May when the Euro and fear hit the skids and spiked gold out of its cyclical correction period to form a rising wedge that ultimately failed when the fear that the Euro was going to fall flat this summer eased.

Gold went from its traditional inflation trade to a hedge against currencies in a day and was solely trading as a currency on Euro fears. What this all means for the markets and gold is that the currency hedge trade is now unwinding with the $20 drop in gold today signalling that there is further strength in this upswing in markets as well as riskier currencies such as the Euro. I would set at least an 11,000 target on the dow and if markets react positively to earnings we could go to new 2010 highs, possibly heading towards a future head and shoulders pattern. I have heard a double top formation but I don't think the markets will flip flop that quick.

Earnings are just too good to ignore.

One thing for sure is that if the markets do resume a bullish trend, gold will hold stable and resume its inflationary bullish trend. Another thing for sure, is if markets do fall apart because of high debt and impending default by sovereigns, gold will go through the roof as a safe haven currency. So while we are in this not so sure where we are going market, gold has absolutely no velocity, but is in a win win situation whatever way the markets take when they take it.

So until the markets get a definitive direction, POG could wane a bit further. POG has not broken the 200MA in a long while so if the price decline does not abate at the 200MA and closes below the $1130 level I would expect further price declines to below $1100 and wane for another month. Markets can move up and gold won't as long as markets don't believe the rally.

In these conditions, the majors like G and ABX got a long way to go to correct still and some of the advanced development projects prices will wane. The best place to be over the summer in the gold sector is the explorers as this is the season that discoveries are made and deposits and drilled out like swiss cheese. Explorers with successful drill programs adding value are the best place to be. Any fall in price below the $1100 level will be an excellent place to time a buy in your favorite gold stocks. But until it breaks the 200MA in a forceful way I will keep my buy target of $1140 in place.

At this point in time I really don't think the markets really know where they are going with all this confusing data. Bad domestic economic data but awesome earnings.

And the funny thing?!?! As an aside... US corporations profiting off strong global growth, distribute profits to a very few wealthy Americans through dividends and stiff the average american Joe out of a job in the process. The wealth gap is widening if US corporations don't start spending on US soil.

Uranium Sector Starting to Heat Up!!!

After being in one of the longest bear markets for almost 3 years now.... Uranium looks like to finally be turning around. The Uranium market went parabolic in 2006 and 2007 and since then has not been able to turn around after many stocks with just the name uranium in it were sent to dizzying heights as the price of U3O8 soared well past $100.

2 stocks that I put back on the watchlist a few weeks ago and immediately I saw gains were Mega Uranium and Hathor. Mega Uranium MGA.TO is dirt cheap and used to be a company that had a billion dollar market cap and is now trading around .50. This price is a steal for the amount of deposits they have and potential projects they have on the go although they are a little short on production.

Another stock that is turning the corner is Hathor HAT.V, and they keep announcing some of the highest grade and value intercepts in the entire Athabasca Basin, EVER!!! I have heard numerous calls that U3O8 has bottomed and is now moving up to prices of around $60 - $75 dollars and if spot prices move to these levels then it will start generating interest again in the sector as well as some of the riskier, higher cost projects.

Companies that will benefit from this move are the low grade projects in the midwest US such as Denision DML.TO.

Personally I like HATHOR because I am Canadian and there is no better place than the Athabasca Basin. Got in an argument last year with a guy who was still pumping UEX... Maybe UEX gets a mine but HAT is where its at, anyday of the week.

Also like Mega because it has the the biggest potential of the bunch from where it was when U3O8 prices were at their peak.

What No Money!?!?!?

There is a lot of talk of double dip, and with a jobless recovery it doesn't seem impossible, that we are just in an upswing in a bearish market than in a true recovery, some may even say that we are in a protracted recession with this its first initial dead cat bounce which will be worse and longer than the depression. That last statement maybe an over-exaggeration of where things may head, but you have reputable people calling for situations close to it. To me, I think there are too many doomsayers out there that think things are going to spiral out of control on a global scale.

One thing that bothers me and keeps me out of the bull camp for the time being is that we are having a jobless recovery where many companies are having great earnings by careful accounting, by cutting and reducing spending. They are not creating earnings the old-fashioned way of creating supply and expansion at the end of every normal recession.

So right now most companies are not playing their traditional role in this so called recovery with many sitting on records amounts of cash, refusing to spend. In every traditional recovery jobs plays a vital role into getting to that next stage of expansion. Without the jobs for expansion, you will not create the added demand for your product or service and hence you have this catch 22 developing.

When these companies cut to create profits, they are in effect killing themselves by killing their future market. If most companies are reacting to the same economic situation in the same wrong way, we could end up with even more economic choking happening. The outlook for the economy recovering by jobs will never happen and you will see a widening of the wealth gap in America between the have's and have nots.

So why is the US economy in this situation? It spent to long being a consumer nation relying on a strong dollar to buy cheap foreign goods than it did on building value in its own economy. It spent too long manufacturing goods in foreign countries selling it to americans than it did trying to manufacture goods in America to sell to the world. It saw cheap labor of the third world and sold itself out.

It sold its manufacturing industry out on a national scale, outsourced everything else, with all those jobs going to the dead end service industry, which are always the weakest jobs being the first to lose and last to hire on in economic swings. They relied on credit to spur the economy well past its means and now the American Consumer is spent out. Can't take out anymore equity on their homes that heave been devastated price wise, can't add another credit card, and in most cases are shell-shocked into savings mode that most won't come out of until their debts are paid off. That could be another 5 -10 years wait for the American economy to come back, if it relies on the consumer.

The one positive of that outsourcing has had is it has help other third world countries develop, but at much slower rates, because of using cheap third world labor. Wages in developing nations are rising fast and soon the that advantage that companies used will no longer be an advantage. Hong Kong recently introduced a minimum wage, being mostly a symbolic gesture that wages are being brought up to western standards. So there is a global incentive that is coming up that will force many companies to make a decision

In my view the government wants a cheaper dollar and is doing everything it can to get a cheaper dollar. First and foremost it makes it easier to pay off all the debt that they have acquired over the years and secondly it will help American industry reinvent itself and be more competitive on a global scale. Hopefully they can entice American industry to come home. Spend those corporate dollars in the good 'ol US which will add jobs. Obviously its a culture of corporate philosophy and thinking that has to be changed on a large scale. There is a glutton of credit available, companies are sitting on records amounts of cash.

In my opinion they have both the ability to be in the expanding areas of the world but rebuilding headquarters at home. It is a long way to recovery, but right now Corporate America is at a crossroads and if they don't choose wisely they will lose an opportunity that others will gladly step up and take. There is a market at home, but without investment, it will not recover.

All Signs Point to Ominous Outlook for the Fall

As I have been soaking up all the economic data, the markets reaction to earnings and as well as factors such as the drastic 60% fall in the $BDI to levels not seen since the market lows of early March 2009, the jobless recovery in the US, anemic credit velocity, drastic tightening of spending in Europe, throw in a slowing Chinese economy and we now pretty much have a recipe for a double dip or at least another taste of some extended bearish conditions this fall.



Not sure what the trigger will be, but I can almost guarantee that we are going to go much lower from where we are today in the coming months of September and October. If those will be the market lows, it is way too early to tell, but for certain we are setting up for a fall this fall. Already the markets are starting to take large swings to the downside and having a hard time staying above important moving averages.

One thing of note is that the $VIX looks like it is going to break out to the upside as it is forming something of a wedge and can't break support at $23. I think this would be a great place to buy January '11 calls as volatility in the markets is almost certain to increase and this pattern looks to almost certainly be resolved to the upside. It will make a gradual rise over the the rest of the summer to $47 where it will break out as poor economic data starts to come in September. Consumer confidence will be low and I doubt there will be any relief until the holiday shopping season.

We really do have a recipe for another downturn which will almost certainly be seen in the markets. Also riskier currencies will suffer another round of selling and we could very well see the Euro at parity if we do indeed enter into a double dip slowdown.

What is killing the US economic recovery is stagnant credit markets. With the system currently set up how it is there is no fix. Corporations made paper profits on international sales and cutting at home. They are sitting on records of amount of cash refusing to spend it. Since the system is set up for the big guy and the little guy gets only access to and raped in my opinion through mortgages. Of course there is no velocity.

of course there is no hiring. Hello? When a recession turns around companies have to spend, they have to hire, they are not. The US became a great economy on the American dream and was set up for the little guy to succeed. That has completely changed as now America caters to big corporations and the wealthy few. For the little guy to get a loan to start a company or expand a current business is next to impossible. The only way is through equity on a hard earned house they have paid twice for through their mortgage.

America is completely backwards to what made it strong. no one believes the American dream anymore. But if they could introduce credit to those that could and would use it, they would spend it, expand and jumpstart the economy. But they way the system is setup this is an impossible tactic. But it would work in helping to solve the velocity problem. If the corporations won't spend then give it to small and medium business and give the incentives to spend. Allow easier access to loans for legitimate business ideas and spending incentives would help alleviate this problem.

Bernanke's comments today in my opinion are also ominous. He is playing down the idea of a double dip saying they will introduce more stimulus packages but the problem is that this is reactionary and at the rate the credit markets froze up last time and the markets fell apart, stimulus will be too late. If Bernanke wants to avoid a double dip, he should be announcing stimulus now, not if things should worsen. Be proactive Bernanke.

My number one low risk trade other than my gold stocks of course is buying the $VIX at $25 I can guarantee a double to $50 in the coming economic slowdown. At the 200MA this is the lowest risk entry point you can find.

Gold hits first Correction target

Yesterday morning or afternoon depending on where you are in the world, gold hit my first correction target of $1170. Gold actually traded $1175 but it is close enough to say that it hit it and it moved off that price with authority. This represents an excellent entry point for gold, but is not a fail safe entry point as it is still halfway between the 50M and the 200M meaning that technically there is still a good chance that POG can correct to the 200MA at $1141. Any correction to $1141 should be quick and brief if it happens so be prepared to buy at that price point as well. We are technically entering into a strong buying season for where prices are seasonally strong and within super bull markets, cyclical bulls can be quite predictable and gold is seasonally strong from now until September in the very least with more strength coming in the late fall and early winter that usually extends the summer rally.

I am expecting gold to breakout above $1260 this August / September and now is the time to pick up some of these stocks on the cheap. I would enter half my position now at this point and buy the other half at $1140 if it gets there and if it doesn't would buy the other half on a breakout above the 50MA.

Some great stocks to buy... VEN.TO, EAS.V, CSI.TO, SAS.TO, KAM.V, DEC.V, FAU.V, CXT.V.