Yearly Archives: 2013

Is The Uranium Price Forming A Potential Double Bottom Breakout?

Is The Uranium Price Forming A Potential Double Bottom Breakout?
While most of the resource market has been in red, I am witnessing one of our sectors, the uranium miners (URA), solidly in the green. They are being led by one of our long term uranium recommendations. Recently one of our long term recommendations announced good news that they were granted $20 million from the State of Wyoming to fund completion of construction at Nichols Ranch. In today’s market environment where resource capital is hard to come by, to see this form of support through non-dilutive and low interest rate loans is truly remarkable. This is a testament to the quality of the companies assets and the management team.
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Turning Point For Uranium and Rare Earth Miners?

Turning Point For Uranium and Rare Earth Miners?
This recovery in the large rare earth miners may prove to be a turning point for the junior rare earth developers of critical and heavy rare earths. In 2010, rare earth prices exploded as diplomatic tensions built up with China. The demand for these metals are rising exponentially as they are used for smart phones and TV’s which is just entering the emerging world. In the Western World, there are more than seven screens per household. In China there is less than one.
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Look For Bullish Reversal In Uranium Miners As Electricity and Air Pollution Rates Soar

Look For Bullish Reversal In Uranium Miners As Electricity and Air Pollution Rates Soar
The uranium price is down 40% percent since the Fukushima disaster in March of 2011 as Japan and Germany made a political, knee-jerk reaction to shut down reactors and rely heavily on natural gas. Many investors continue to look backwards, contrarians like us take a look forward. Natural gas is above $4.25 and rising. It has doubled over the past year. The Fukushima reaction may have been a boom to natural gas in the short term, but utilities are passing on the high costs to consumers. Japan and Germany who have relied on importing natural gas now have some of the highest electricity costs in the world and this is causing a major backlash from domestic industries. Consumers are being crippled by these high rates. Voters have elected in a pro-nuclear government in Japan and may oust Germany's Merkel as the economy is on the brink of recession.
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Why Platinum and Palladium Should Continue To Outperform

Why Platinum and Palladium Should Continue To Outperform
This pullback in the metals complex may give an opportunity for investors to diversify into platinum and palladium, which have both a practical use as a monetary hedge against inflation and as a critical industrial component for clean automobiles. In addition to automobiles, PGM’s are used in cell phones, jewelry and computers. Supply for Platinum group metals may be at an all time low, while increasing demand for clean automobiles, investors and consumers will need addition platinum and palladium projects in stable mining jurisdictions. Recycling can not fill the supply gap.
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Some Junior Gold Producers May Be Safer Than The Senior Miners

Some Junior Gold Producers May Be Safer Than The Senior Miners
Barrick's $8.5 billion Pascua Lama Project has been a disaster with soaring costs and jurisdictional disagreements. It is an albatross and Barrick must cut their losses. They should look to invest in Nevada where their properties especially in the Cortez Trend have some of the highest margins in the business. Over the past year, Barrick's risky moves into questionable projects and jurisdictions have hammered down its share price. Sometimes well managed juniors may actually be safer than some of the majors. Remember there are smaller but more efficient junior producers who could compete with the clumsy larger players in terms of its ability to expand their gold and silver production and at the same time reduce costs. Keep this growing junior producer with cash flow to grow.
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The Worse Things Were For The Mining Sector, The Better They Will Get

The Worse Things Were For The Mining Sector, The Better They Will Get
Gold and silver may see physical shortages hit and that is when attention will be paid to the growing gold producers significantly expanding cash flow. Demand for precious metals have soared on this pullback. We should witness a powerful bounce after the recent shakeout. This should boost the beaten down large producers and eventually the early stage explorers.
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Short Covering After a Bear Attack on Gold and Silver

Short Covering After a Bear Attack on Gold and Silver
It appears Goldman Sachs is covering its short on gold as it rebounds above $1400. Meanwhile, they have helped confuse and misdirect the investment community out of gold. This was a classic shakeout and bear trap which is going to start major short covering. Be ready to see increased short covering combined with record physical demand. These are the elements for a price spike and breakout higher in both gold and silver.
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Caveat Venditor: Gold and Silver Investors Beware Of Selling Shakeout

Caveat Venditor: Gold and Silver Investors Beware Of Selling Shakeout
The Venture is cheap priced at $400 au/oz. This is a ten year low testing 2003 levels. Gold is more than 50% higher than its pre credit crisis highs, the S&P 500 is now breaking through 2007 highs and the Venture is still discounted more than 70%. The Venture appears historically mispriced and discounted indicating its buying time for long term value investors, definitely not selling time.
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Major Bear Market Low Forming In The Junior Miners?

Major Bear Market Low Forming In The Junior Miners?
One of the ways to look for a bear market low is to look for panic selling and capitulation after an extended downtrend. Since 2013 began the Venture has had 3 months of losses compared to the Dow Industrials. Remember that just as parabolic rises forecast major tops, cascading waterfalls, capitulation and panic selling usually marks major bear market bottoms. Value investors try to buy near a major low and look for panic selling where fundamentals and balance sheets are disregarded. This may be exactly what is occurring in the junior mining investment arena.The resource area may be in the midst of a three month capitulation and major rotation. Old, tired players are trying to sell at any price making room for the next fresh group of value investors and entrepreneurs picking up discounted assets.
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