I have been expecting a major long term bottom in the precious metals after major capitulation. The liquidation may have occurred this week as investors sold out of panic and fear rather than take a look at the long term fundamentals. Across the board many of the weak hands had to sell quality assets for pennies on the dollar. Smart resource investors expecting capitulation have had some of their bids filled at ridiculously low prices. Fortunes are made by the brave who pick up real assets when the majority is not interested in them. I expect a major bounce at 2008 credit crisis lows and the 2003 breakout on the HUI Gold Bugs Index at $150. I told my premium subscribers I was buying Pershing Gold (PGLC) at major lows at or below $.30. I believed that the company was due to break its downtrend and 50 day moving average. Now a few weeks later it appears Pershing has broken above the 50 day moving average and has broken out on a relative strength chart versus the Junior Gold Miner ETF (GDXJ). See charts by clicking here...
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Uranium Spot Price Breaking Out, Junior Uranium Stocks Ready To Bottom?
The commodity equities are selling off as The Fed halts QE3. Commodities, metals and the junior miners are hitting multi year lows and falling below 2008 credit crisis levels. This is not a time to panic but continue to accumulate as the bear market may be reaching the final capitulation stage. This decline may be a sign that the quantitative easing may have lifted stock market indices, but it did little to improve demand and growth in the economy reflected by demand for energy and metals. I just returned from the New Orleans Conference which was headlined by Alan Greenspan the former Federal Reserve Chairman from 1987 to 2006. It is interesting to note that Greenspan has become bullish on gold. He believes that quantitative easing did not accomplish what it was designed to do. It helped lift the stock market and stabilize the real estate market, however it fell short as the US economy is not really recovering like it should have. Gold is the best hedge against this uncertainty.
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Chart Shows A Potential Double or Triple in the TSX Venture
Clearly, the strong global economy purported on CNBC has not yet been reflected on the TSX Venture Exchange yet. However, that may change over the next 3-5 years and now may be the time to buy up the best resource assets at historic lows. Over the past decade, The TSX Venture has at least doubled or tripled from these historical low levels where it is currently trading.
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Gold and Silver Still In Major Uptrend On Long Term Charts
The Chinese and Russians were some of the largest acquirers of physical gold. Also large hedge funds some managed by industry giants such as Paulson, Soros, Rogers and Einhorn began buying ETF's and junior miners. This led to a parabolic and overbought move in precious metals, which I cautioned my readers about in the referenced article above. It should be noted a few days after this article was published silver topped at $50 and gold rolled over a few months later at $1900.
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Toll Milling in Mexico Could Generate Near Term Cash Flow
This junior miner just announced that they secured a 100 metric ton per day flotation plant which will immediately be used to offer toll milling to other miners in the area. At the same time revenues from milling could provide cash flow to develop the Las Cristinas Project where they are hitting on excellent drill results.
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Why These 2 Junior Miners Tripled in 2014 Despite TSX Venture Decline
After a great start in 2014, the TSX Venture which is the index largely comprised of junior miners has headed into negative territory in 2014 down 2% in 2014. Don't be surprised to see the US multinational corporations face headwinds from dollar strength. Already the Homebuilder ETF (XHB) is already rolling over and breaking below the 200 day moving average as US real estate becomes more expensive for overseas investors. The financials could be the next one to correct. The rising dollar is putting pressure on commodities priced in dollars. Gold and silver is struggling in new low territory. However, some US focused mining assets critical for domestic manufacturing and industry could actually be an area of strength. Despite the major dollar rally and selloff in commodity related mining stocks, two of our featured companies have done exceptionally well this year up 308% and 231% in 2014.
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