Around the year 1650 A.D. the word highwaymen entered our language.  It referred to robbery committed on a public road against travelers.  Now we use the phrase “highway robbery” for which we pay the tolls to travel on modern day roads.  The highwaymen alas are among us and we have elected them.  At such times it would not take much more in the destruction of mining equities to make investors feel as if they have been seduced by sweet talk and abandoned to the wolves of Wall Street by latter day highwaymen.

Simply put it has been one in which the elites have shrugged their collective soldiers, leaving the rest of us bewitched, bothered and bewildered.   There are no safe havens unless one reaches for the carrot dangled on a stick in the form of treasuries (TLT) and dollar bills (UUP).

It is as if investors who have played the game fairly are uneasily realizing they have been dealt a series of sucker blows from the elites who in essence have fixed the game.  Investors believe that treasuries and cash will protect their capital.  This may be a conclusion founded on quicksand. 

Many investors could face significant losses should yields rise in the U.S. as it has done in Europe.  Due to the volatility in the global equity markets, investors have maxed out their portfolio holdings in cash and U.S. treasuries.

If bond prices drop resulting in rising yields we could see a mass flight out of bonds into the oversold commodities (DBC) and miners (GDX) which are trading at a record discount to the global equity market.  How can so called experts call a gold bubble (GLD) when gold equities are trading at historically cheap valuations?  Could it be that the real bubble is in the U.S. Treasury market where investors are actually receiving negative returns?

A growing fear of the financial system is increasing similar to 1933 when FDR was elected.  Fears that FDR would devalue the currency caused a bank run where investors withdrew their cash to buy gold.  Could something similar be brewing in Europe with the election of Hollande in France and Greece threatening to leave the Euro?

We learn that our elected U.S. officials have indulged in profiting from insider trading for which we citizens could have done hard time.  Imagine buying VISA for $46 and the next day making a handsome profit at $64 on 5 million shares.  This actually happened and continues to occur as a matter of lifestyle for our elected officials.

Then there is the chutzpah of Freddie Mac and Fannie Mae coming before the public requesting $1.8 million dollars for a Christmas Bonus for non performance and downright destruction of a major mortgage institution.   Then there is the $191 million dollar loss in MF Global trading European Government Bonds.  There is still $1.6 billion of client’s money missing.  Then we have the wife of Switzerland’s central bank chief who went long the U.S. dollar right before he imposed a cap on the Swiss franc.

Similarly we had the $2 billion+ carnage experienced by JP Morgan and Jamie Dimon.  Here we have a team of the best and brightest minds on Wall St. screwing up gloriously trying to time the short term.  This may be a cautionary tale for those who try to play the markets in the short term particularly in the arena of wealth in the earth assets where long term stratagems pay off in hundreds of percentage points.  The MF Global and JP Morgan (JPM) debacle may be adding to the volatility of the sell off in commodities and mining equities as they may have had to cover their bad bets in European Sovereign Debt.

What does this all mean for tax paying investors who are constrained to play according to the rules.  Joe Louis famously said, “You can run, but you can’t hide.”

WIth the market covered with crimson yesterday it might appear that our natural resource selections in gold, silver (SIL) rare earths (REMX) and uranium (URA) miners are a thin blanket for a cold night.  Since when has wealth in the earth not experienced breathtaking corrections as they continue in their upward trajectories?   Remember there may have been selling to satisfy a deluge of margin calls.

It is folly to look at the day to day gyrations of our wealth in the earth selections.  There are those critics who might question the absence of risk management in precious metal selections.  They miss the basic point completely.  Play that game with miners at your own risk.  Just as swiftly as they go down, so is the consequent upside.   Investing in resource stocks is a risky game.  Only the most disciplined market participants can manage to play the swings profitably.  So hold on for what has been this tumultuous ride.  The markets are swept by waves of fear and distrust of the Western Capitalist System.

Delayed until 2012-2013 will avail us little except postponement of the inevitable.  What was really needed was a plan of attack to bring our debt levels down.    One would’ve thought that our well payed solons could have come up with a better solution.  Instead, they will be forced to monetize the debt and pay it off with cheap dollars.  Sooner or later, this is eventually a win-win situation for investors in precious metals and tangible assets.

Do not underestimate the intelligence of the investor.  Are our elected representatives waiting for a Tahir Square to take place on American and European Streets?  It is growing late in the game.

The Iranian situation which we continue to highlight is simmering to a boil.  The United States and its allies Britain and Canada are using the outmoded tactic of gunboat diplomacy to wag warning fingers at an Iran that ignores us and grows stronger everyday.

Is this not an admission by the West that they lack the financial wherewithal to undertake another military expedition?  This is all part in parcel of the disintegrating situation which lack of leadership and American resolve has brought us.

Are we facing the stark reality that the Emperor-America has no clothes?  Hopefully, this is not the case.  But the markets are speaking differently.  Thus the disconnect between mining equities and bullion.  Now the clarion call is “cash is king” as the herd rushes for what seems to be the latest safe haven fad.

Of course the mouse thinks that the cheese will always be there, not realizing that it is the bait in what may be a fiscal trap.   Ergo where do our subscribers go from here?  The answer may be what it has always been from the days of Babylon to the present…wealth in the earth natural resources which are fungible into food and shelter.

____________________________________________________________________________

Jeb Handwerger Editor and Chief Strategist at Gold Stock Trades will be at the Vancouver Conference Center East, June 3rd and 4th, 2012 for the World Resource Investment Conference brought to you by Cambridge House International.

• Sunday June 3 @ 9:30 AM – PANEL: Graphite & Critical Metals with John Kaiser, Lawrence Roulston and Mickey Fulp (Moderated By: Chris Berry)
• Monday June 4 @ 3:30 PM – WORKSHOP on “Death or Resurrection Of Commodities”

In this pre-event press conference, Cambridge House chairman Joe Martin tells us why now is the investment opportunity of a lifetime. Do not miss this conference.  Click here to register for free…

This deal will allow Cameco, the largest publicly traded uranium company to deliver 52 million pounds of uranium to China by 2025. The contract is worth about $2.5 billion in sales. China is hungry for nuclear with dozens of reactors planning to be built over the next 10-15 years.

Investors are well aware that the agreement between Russia and the United States expires in 2013. New demand is rising rapidly
as stated by the World Nuclear Association who expects world uranium consumption to grow and new demand will require double the amount of current production by 2020.

Cameco and Rio Tinto is predicting a supply shortage within 18 months. The last time this happened the spot price of uranium rose to $138 per pound.

Today there are 435 nuclear reactors in operation all over the world. Add to this another 100 nuclear reactors are under construction or on the drawing boards.

Projections by the World Nuclear Association expects 650 nuclear reactors over the next twenty years. Saskatchewan, Canada may turn into “The Next Saudi Arabia” over the next twenty years. Nuclear power is reemerging as the go to energy source for expanding Asian economies.

Recently, Prime Minister Harper signed a deal with China that brings almost $3 billion dollars worth of energy supply which includes uranium from the Athabasca Basin to satisfy China’s insatiable hunger for its expansion into nuclear power. Now may be the right time to look for uranium explorers in the Basin.

We have expected to see an increase in Mergers and Acquisition activity in this region for some time. We observed the transaction by Rio Tinto who outbid Cameco in 2011 for Hathor Exploration’s Roughrider Deposit, Denison and Energy Fuels recently signed a deal to create a large U.S. producer. Fission Energy just acquired Pitchstone Exploration for its 13 Athabasca exploration properties. These are all signs that M&A activity is on the rise.

Uranium stocks have pulled back after a significant rally in the first quarter and we believe that now may be a good time to look for junior uranium explorers in the Athabasca Basin such as Athabasca Uranium (UAX.V or ATURF) who is delivering on its stated exploration goals and making excellent progress this year, yet the price has surprisingly remained around $.18.

We believe Rio Tinto bought out Hathor as a strategic move to gain a presence in this mining friendly region, free of rising resource nationalism, geopolitical risk and lower grade uneconomic uranium mines. Different sources within the Basin are mentioning that the big boys are looking at potential projects for acquisition or joint ventures.

CITIC Group, which is a Chinese tentacle, are interested in uranium explorers in the Athabasca Basin. The interest from them in the Athabasca Basin is evidenced by the signing of large future supply contracts with Cameco. The recent spin off of Denison’s Canadian assets specifically its Wheeler River Deposit, (higher grade and larger than Hathor’s Roughrider) partnered with Cameco may be indicating that Denison is setting itself up as a potential acquisition target.

The big boys such as Cameco, Rio Tinto, Sovereign Asian Funds and possibly BHP are realizing that large profits from uranium production will come from the Athabasca Basin. This is where deposits have grades tens to hundreds of times greater than conventional projects worldwide.

The majors are having problems dealing with the ever rising threat of resource nationalism as exemplified by their experience in Namibia, which is making noises that they may institute a super tax on miners. We have witnessed the uprising in Mali and growing Black Empowerment movements in South Africa. Of these aforementioned entities Rio Tinto and China is finding a warmer welcome in the mining friendly Athabasca Basin.

This brings directly into focus a small company Athabasca Uranium (UAX:TSXV or ATURF:OTC) which stands out as a promising uranium junior explorer. Remember that this Basin is different than the conventional deposits found around the world. The deposits may be smaller in size but have grades hundreds of times greater.

Looking at the map, Athabasca Uranium is surrounded by hungry giants such as Cameco, Rio, Denison, AREVA among others. The maps reveals that the majors such as Cameco, Denison, AREVA engulf UAX prospects. The Keefe Lake area is undergoing active exploration by this company which has encountered massive alterations zones for which results have currently been released

Indeed, this young company has made sure that they retained Dr. Zoltan Hajnal who was the seismic exploration expert for Hathor. Hathor’s exploration success was based on a the use of seismic data to efficiently pinpoint targets. The success rate of their drilling rose to approximately 70% which heretofore had been much less. Dr. Hajnal played an integral role in the Roughrider Discovery.

Now with Athabasca Uranium he has been instrumental to help the company already pinpoint promising targets.  On their first drill hole the company hit uranium alteration and mineralization.

Recently Athabasca Uranium reported that two holes encountered significantly anomalous alteration and another containing chloritic alteration at various intervals below the unconformity, a common feature found in the host rocks containing uranium mineralization. The identification of a quartzite lithology and uranium metals in the sandstone validated work done by UAX’s geological team.

Recently Athabasca Uranium just released news that they found additional uranium mineralization at its flagship Keefe Lake Property demonstrating that the alteration zone is widespread and that continued exploration is necessary.

Regarding the assay results, Gil Schneider, President commented, “The discovery of additional uranium mineralization found within the Keefe Lake Alteration Zone is extremely encouraging for Athabasca Uranium. The basement alteration style encountered at Keefe Lake is widespread and seems to be unique, thus representing an excellent opportunity for continued research and discovery.”
Athabasca Uranium is currently drilling its Keefe K-2 (Volhoffer Lake) targets, 7.7 kilometres to the south. Athabasca Uranium CEO Gil Schenider commented “Given the potential of the Volhoffer project, we felt compelled to implement a first pass of exploration drilling of the ground conductors.”

The development prospects appear to be a ground floor opportunity to acquire shares at bargain basement prices here below $.18. Athabasca Uranium is oversold and finding support indicating an upward reversal possibly very soon.

We expect with the geological progress they are making that the project will be carefully looked at by the big boys. We would not be surprised of a joint venture or a buyout of this fast growing explorer.  Relating to financing and corporate development, Athabasca Uranium recently announced the appointment of Kim Goheen to its Professional and Technical Advisory Committee.  Mr. Goheen recently retired from Cameco, the largest publicly traded uranium producer as Chief Financial Officer, where he played a pivotal role in Cameco’s growth.

On his appointment Mr. Goheen commented: “I remain quite bullish on the longer term prospects for nuclear energy and look forward to helping UAX continue its growth in the highly prolific Athabasca Basin.”

Gil Schneider, Athabasca CEO also commented: “We are very excited at Kim’s decision to join our Advisory Committee.  He brings a wealth of direct uranium experience to the Company, and we feel his joining us is a strong endorsement to the Company’s vision.  We look forward to capitalizing on his considerable experience in the uranium field.”

With Mr. Goheen, Thomas Drolet and Dr. Zoltan Hajnal on the Advisory Committee, this company is being transformed into a junior powerhouse with the right people on board to rapidly develop this company. The company has shown success with the use of Dr. Hajnal’s seismic interpretations.

Gil Schneider, President commented, “The value of the surface seismic survey and subsequent interpretation by Dr. Hajnal has exceeded all expectations.  With the first drill hole at Keefe Lake, we encountered massive alteration and uranium mineralization. Downhole geophysics should further enhance our resolution and accordingly increase our chances of making an early discovery.”

Listen to my recent interview with Reza Mohammed, Exploration Manager for Athabasca Uranium, where he explains the significance of hitting alteration in the basin and some of the exciting developments taking place.

Disclosure: Long UAX and Athabasca Uranium is a Featured Company on Gold Stock Trades.

It would seem as if there is a new darling in the minerals market, as investor interest in graphite was seen rocketing over the past year.

From a total of about four listed companies making it their business to supply hungry markets with the carbon allotrope in 2011, the number of listed firms had increased to about 30, with most listings taking place since the beginning of the year.

Analyst Jeb Handwerger said that during the year, graphite had performed strongly, outpacing the generally depressed market.

“Graphite stocks have hit new highs and have recently pulled back, while gold and silver miners have hit two-year lows. This demonstrates excellent relative strength in an overall weak natural resource equity environment,” he said.

For example, AngloGold Ashanti, Africa’s biggest gold producer, fell 4.2% to R269.50 a share in April, the weakest in more than two years, while Gold Fields, the world’s fourth-biggest gold producer, dropped 5% to R100.73 a share during the same period. On Friday, silver miner Minera Atacocha, the Lima-based zinc and silver mining company, fell by 5.4%.

He expected global demand for graphite to increase exponentially from the current production of about 1.1-million tons over the next few years, possibly reaching 1.6-million tons in five years on the back of the rapid adoption of smart phones, laptops and hybrid-electric cars – all using lithium-ion batteries….

However, there are not many new serious development-phase projects coming on-stream soon, with the last significant graphite mine built 30 year ago.

“There are not many graphite mines outside of China. Large economic deposits are rare and right now most operating mines in North America are small. We could see the need for 30 to 40 new graphite mines over the next decade,” Handwerger said.

Read the full article at Mining Weekly by clicking here…

Subscribe to my premium service to follow the nascent graphite space and to learn why we may soon be hitting a bottom in the Venture…

Why are graphite stocks outperforming?  Global demand for graphite is expected to increase exponentially over the next few years.  Rapid adoption of smart phones, laptops, hybrid-electric cars is fueling the demand for lithium ion batteries.  Each electric and hybrid car requires over forty pounds of graphite.

There are not many graphite mines outside of China.  Large economic deposits are rare and right now most operating mines in North America are small.  We could see the need for 30-40 new graphite mines over the next decade.

Most of the supply comes from China which produces about three quarters of the world’s graphite.  Similar to other strategic industrial metals, China is increasingly cutting back on exports and looking overseas for large flake graphite as they need the material for their own manufacturing sector.  They have added tariffs on graphite exports. For this reason both the European Union and the U.S. have classified graphite as a strategic mineral.

For several weeks we have highlighted Standard Graphite (SGH.V) to outperform some of its more advanced competitors as the company provides excellent leverage to the rising price of graphite as it is focussed on exploration.  Unlike other commodities, graphite exploration is cheap as it shows up easily on electromagnetic surveys due to its properties of being a great electrical and heat conductor.  Most large flake graphite mines show up at surface and does not require capital intensive deep drilling exploration programs.  The timeline to production from discovery is significantly quicker than rare earths, uranium or precious metals.  This offers an excellent advantage to companies looking to acquire and develop potential graphitic properties.

Standard Graphite has 12 graphite projects in Quebec and Ontario.  One of their key players is Antoine Fournier who has over 20 years of graphite exploration experience including being involved in the advanced stage Lac Knife Graphite Discovery.  Another significant appointment was announced recently with the addition of Mr. Gascon who will be specializing in marketing and sales expertise.

Unlike precious and industrial metals, graphite miners must negotiate with industrial end users.  Mr. Gascon was President of Stratmin Graphite.  Stratmin owned one of North America’s only producing graphite mines.

Standard has a very experienced team with specific graphite experience whose goal is to create a producing large flake economic graphite mine.

The graphite boom may be just beginning.   Standard Graphite doubled and has since pulled back to our buypoint.  We wrote in early April after the price shot up that we may witness a healthy consolidation after this powerful upward move.  We have welcomed a healthy pullback for reentry points or for new purchases.

Recently Standard Graphite had excellent results from their properties in Ontario specifically the Little Bryan and Black Donald Properties.  We hope for similar results from Quebec, where it has just been announced that they acquired additional properties.

Standard announced that it has successfully signed a Definitive Agreement for the acquisition of the Mousseau East Deposit. The new property is located within 50 kilometres of Timcal Canada Inc.’s producing Lac-des-Iles Graphite Mine.

Chris Bogart, President and CEO comments: “We are extremely pleased, having achieved this important milestone. This most recent acquisition advances Standard into a different category and brings the Company one step closer to production”.

Benoît Gascon, Senior Vice-President, Business Development, further adds: “Given the amount of work done on it by Graphicor, a then graphite producer, and my knowledge of the market and the industry, I have a high level of confidence in its potential to provide graphite products suitable to meet the current and future requirements of the market.”

Standard Graphite made a bullish engulfing reversal yesterday on moderate volume.  This was the first bullish day after four consecutive weekly declines.  It has pulled back to our February 13th buy point and showing strong support at $.40.  It is reaching a record oversold position giving investors an opportunity to possibly jump on board an exciting sector just beginning to be understood.

At the end of last month we saw a large increase in investment interest in the graphite space with the largest volume since our 2-13-12 report.  Since that time other newsletter writers have also been highlighting this small sector causing a short term overbought condition.  We saw an accelerated move to $1 on record volume where we began to see some healthy profit taking.  Now we are reaching record oversold positions and witnessing daily hammer reversals indicating that the correction may be over.

Listen to my interview with Chris Bogart, CEO of Standard Graphite discussing recent developments and goals in 2012.

Another interesting graphite company, which has recently come across our radar that we will begin to highlight is First Graphite (FGR.V).  First Graphite recently acquired the historic Henry Project in Saskatchewan, which is close to Noble Bay Mining’s and Strike Graphite’s Deep Bay Projects.

This project has had work done on it for several decades and it is known that there is about 30 meters of graphite content.  However, the graphite was never developed due to cheap Chinese exports and low prices.

We don’t live in the 1970’s anymore and the times have been changing.  Prices for large flake graphite is increasing exponentially and there needs to be additional supply outside of China in the near term.  China has restricted exports and are already in deficit of the large flake graphite, which they hardly produce.

The First Graphite team has been working diligently to acquire quality large flake graphite projects with the Zimtu Capital (ZC.V)team.  Zimtu is one of the early pioneers in the graphite space and are way ahead of the curve researching prospective projects for emerging graphite companies.

First Graphite is going to begin a survey that will examine the entire project and update the findings that were done decades ago.  First Graphite is doing all the preparations which are needed to begin an exploratory drill program in the third quarter of 2012.

The company feels that the Henry Project could rival nearby Deep Bay West which has a non 43-101 resource of 1.8 million tons with a grade of 10.32%.  First Graphite feels confident that they will bring a major graphite discovery to the market in the near term and believe the Henry Project has significant upside potential.

First Graphite’s Henry Project has two major highways and a railroad within 10 kilometers.  First Graphite has an excellent share structure with less than 20 million shares outstanding and a very strong management team with the financial capacity to aggressively explore these projects and acquire additional advanced graphite projects in Canada that is near existing infrastructure.

We observed a very exciting move in graphite in the beginning of the year and over the past few weeks in April the first correction.  Some investors may have felt that they missed the boat on the first run up in prices.  Now with this recent correction we may witness a new wave of participants who have been waiting on the sidelines to jump on board as prices pull back to support.  The decreasing volume in First Graphite appears to show that the profit taking is waning reaching an oversold condition.

Notice the large volume accumulation in Standard and First Graphite at a time when the Venture is reaching record lows versus the S&P 500.  This may be a signal that the graphite sector is just beginning to take off attracting smart money at an early stage.

Eventually, Standard and First Graphite may draw the interest from end users as they realize the growing importance of graphite for clean energy applications and the hunger for additional supply in the West.  Standard and First Graphite may provide significant leverage to the rising price of graphite through their aggressive exploration programs and project acquisitions.  Stay tuned to my premium updates on developments in the graphite sector.

Disclosure: Long SGH.V and FGR.V

European leaders have been unable to manage debt loads. Austerity measures are failing.  The U.S. is in an election year as well.  It seems doubtful that European governments and Central Bankers will allow conditions to worsen without stimulative interventions.

We may see further moves before the U.S. election which could keep interest rates low and at the same time stimulate growth.  The tool at their disposal is extension of Operation Twist or a new QE or a new LTRO by June should the economy weaken or should unemployment rise.

Spain is experiencing their second recession since 2009.  We are seeing failed austerity measures.  GDP decreasing and debt loads increasing will force the ECB to form another round of LTRO to refinance troubled banks. Spain may also consider fast tracking some precious metal assets to provide jobs and revenue to the country.  Spain has around a 25% unemployment rate.  We have been looking at precious metals and commodity assets specifically in Spain as we are observing a positive change for mining to boost jobs and the economy.

There is a strong interconnection between US banks and European Banks ergo we have a rising fear of debt contagion which could put pressure on the U.S. Economy.  Bernanke is well aware of this and changed his tune at the last meeting where he stated that Central Bankers stand ready to add stimulus should the economy demand it.  This was definitely a hint at QE3 where the Fed prints dollars to buy bonds keeping interest rates artificially low so the government can pay down its rising debts, stimulate growth, and devalue the currency to punish savers.

Gold and silver is forming inverse head and shoulder patterns and appear ready to breakout

The winners will be investors positioned in tangible assets such as gold, silver, uranium and strategic metals.  Austrailia cut interest rates more than expected from 4.25 to 3.75%.  This is the biggest reduction in three years.  As long as inflation is lower than expected, Central Bankers the ability to to make accommodative moves.

Does this possibly mean we should sell our mining
assets trading at historic discounts to their asset values for propped up
banks and housing stocks?…No, this may be a trap.

Indeed the large gold miners have been underperforming, but gold, silver,
the juniors, uranium, rare earths are bottoming and have not violated their
2011 lows.

Graphite stocks have made explosive moves higher indicating
investors are growing increasingly aware of how basic commodities are
essential for a pump-primed economy where we may see soaring inflation.

All of our technical indicators are showing that we are nearing the end of a basing period in gold and silver.  Gold has been basing between $1900 and $1600 for eight months.  Silver has been consolidating for 12 months and has not broken 2011 lows at $27.50.  We believe both gold, silver and the miners are undervalued and oversold presenting a buying opportunity.

For the first time in many years, the gold miners are at their cheapest
levels when compared to the general equity markets and to the underlying
metal. Precious metal assets are on sale and it is now a buyers market not
a sellers.

Wall St. tends to attract investors to stocks that the crowd is
bidding up, while ignoring companies that are trading at significant
undervaluations to their peers and to the overall market.

One company which is currently trading at a significant discount is International Tower Hill Mines, which is developing one of the largest mother-lodes of gold
(20+ million ounces) right here in the United States in the mining friendly
area of Fairbanks, Alaska.

Currently investors are valuing THM’s resource
at $17 an ounce. This value is way below their peers.
The company has just announced a district wide exploration program
commencing at Livengood.

For many months we have been waiting for this news
of an aggressive exploration program. “With our Money Knob deposit sitting
at over 16.5 million ounces in the Measured and Indicated, and 4.1 million
ounces in the Inferred, resource categories, it is important for us to look
in new areas of our land package to see if we can find additional gold
deposits,” stated Jim Komadina, Chief Executive Officer. “In addition, as
the Livengood project progresses toward permitting and development, it is
crucial to begin engineering data acquisition so that regulatory and
community engagement can begin. The condemnation drill program is designed
to enable Tower Hill Mines, Inc. to be ready for these important
discussions in the first quarter of 2013.”

In a recent interview with Jim Komadina, CEO of Tower Hill Mines (THM or ITH),
we discuss why Livengood has a good chance of coming into production.

Livengood will be one of the primary deposits to be developed. The real
challenge behind Livengood is one of scale as it is one of the few marquis
20+ million ounce mines in North America.

Livengood is an economic orebody and will produce gold in the future. Tower Hill is currently doing their homework on the metallurgy as it is crucial for permitting and the economic impact is huge. A pre-feasibility study should be produced by the third
quarter.

Click below to listen to the interview:

Disclosure: Long THM

This may be very bullish for precious metals and mining shares as they represent safe havens. For many weeks we have been calling for a rotation from overbought equities into precious metals and miners, especially the juniors.

Junior mining stocks are at record oversold levels, rarely seen by investors.
This may be representing a historic bargain basement buying opportunity. Long term
mining investors are aware that the rate of new gold discoveries is
decreasing despite record exploration expenditures.

Enter center stage, a rising project generator such as Miranda.

Nevada’s Cortez Trend may be the flagship for a major miner such as
Barrick, which has plenty of cash, but is constantly in need of new blood.

Miranda may well be fortunate to have at its helm such experienced
exploration mining men as Joe Hebert. He knows the territory, having
explored Nevada for decades. Joe was instrumental in what is now Barrick’s
multi-million ounce flagship discoveries while he was at Placer Dome.
Barrick bought out Placer and acquired the Cortez properties.

Miranda just announced that Ramelius Resources, their partner at Big Blue, has started the 2012 drill campaign.

Ramelius has returned for a third round of drilling.  This shows confidence that they are getting closer to a discovery.  Read the full press release by clicking here…

In a recent interview with Ken Cunningham, CEO of Miranda Gold (MAD.V or
MRDDF), we discuss Miranda’s other major Nevada Target, the Red Hill project which is on trend with Barrick’s Red Hill/Goldrush discoveries. Miranda’s drill hole BRH-013 is  the most significant intercept outside of Barrick’s holdings in the Cortez
Trend. A positive development so close to Barrick could possibly generate
interest.  Watch the interview below.

Disclosure: Long MRDDF and GST Featured company
Please do your own due diligence before investing.

The great Scottish Poet Robert Burns described the current market by writing, “the best made plans of mice and men go oft astray.”  He also observed “alas in this world there is more offal than poetry.”  But poetry hardly pays and compost does.

Gold Stock Trades (GST) tries to tell it like it is.  We do not use the technical jargon of the engineers and the economists that serve more to confuse and obfuscate the investor.  In fact it was Einstein who stated, “the nth degree of complexity is simplicity.”  GST attempts to cut away the fat from the meat.  So how do we direct you through these present swamps of despond and misdirection?

Remember the October 4th low and our GST reversal signal at 1074 on the S&P 500 made a “V” turnaround and vaulted to a new 52 week high. It remains to be seen whether the rally we have called will mark a rotation into the resource markets and precious metals.  If blood is not flowing for mining investors, they are certainly coloring our screens red, while the moribund banks and housing stocks soar driving the S&P higher.  Fundamentally something is just not right.  The U.S. debt crisis is far from over and this basing period in precious metals and commodities may turn out to be an exceptional buying opportunity as investors rotate from overbought U.S. equities, treasuries and dollars into high quality wealth in the earth assets.

In such a scenario, the U.S. dollar and long term bonds by comparison looks attractive when stacked up against the crumbling currencies of the Eurozone.  The chart shows an anomaly occurring.  In 2008 and 2010 during the credit crisis and sovereign debt crisis, the dollar and treasuries rallied together.  In 2011 and 2012, treasuries hit record highs, yet the U.S. dollar is not at comparable levels.  This may indicate that the greenback is losing the safe haven appeal of yesteryear.

We note with interest that in 2011 the Chinese Metal Exchange in Shanghai made ominous noises about raising the margin rate on silver.  It would seem that the bankers consistently choose to handicap silver and gold while favoring U.S. bank stocks, dollars and treasuries.

Eventually we believe this suppression of precious metals can only be kept down for a discrete period of time before the pressure mounts in the favor of gold and silver, as if and when Bernanke and his European colleagues return to the printing presses as they have done before and are now indicating to do again.

The miners (GDX)  are once again declining and are testing two year lows creating a firesale discount on blue chip producers.  The miners are trading at a significant discount to gold at less than $1200 an ounce.  Some top notch mining assets in the United States are trading at less than $17 an ounce of resource.  This indicates investors are forecasting lower gold prices.  We disagree and believe the crowd is wrong here.  We are actually near a bottom in precious metals and miners.  A turn around should be coming sooner rather than later.

For many months GST has said that there may be a master Keynesian strategy that is being followed to revive the moribund banks of Europe and the United States.  This is an ideal time to make this move, the U.S. dollar appears to be stronger for the time being, U.S. bonds are selling at relatively record low yields, unemployment remains high, commodities/precious metals have significantly corrected and the risk of inflation has abated.  In fact, they may be already printing LTRO 2 to staunch the Eurozone collapse.  Just as QE2 was used by the Federal Reserve Board to staunch the bleeding of the Eurozone in 2010, it is entirely possible that they will institute the latest version of can kicking down the road.  Let us hope they “follow the yellow brick road” and we may witness a rotation from overbought equities into tangible assets, commodities and mining equities.

Today an important news item comes across the wires which is related to one of our select companies Denison Mines.  Energy Fuels and Denison Mines Corp.  today announced that they have entered into an Agreement to complete a transaction which will create the largest 100% U.S. Pure-Play Uranium Producers.

For several months we have been alerting our readers to an increase in M&A activity especially in the undervalued U.S. uranium miners.  This new entity will hold one of the largest NI 43-100 compliant U.S. resources of close to 50 million lbs. of measured and indicated uranium.

Our readers are well aware of the already growing deficit in uranium ore in the United States.  If it was not for the Russian “Megatons to Megawatts” program which converted nuclear bombs into nuclear fuel, the United States would already be in shortfall.  This program may be terminated in 2013, causing a major supply shortfall.

We are seeing greater interest from the big boys to secure U.S. domestic uranium production.   One must remember that the U.S. consumes 55 million lbs of uranium, whereby only 4 million lbs is supplied by domestic production.  We believe this will be just the beginning of further consolidation of U.S. uranium near term producers.  This transaction may be momentous for the entire sector and may be just the beginning for future M&A activity.

Steve Antony, President and CEO of Energy Fuels commented, “This transaction is transformational for Energy Fuels and reshapes the landscape of the uranium sector within the U.S. It combines the highly strategic asset of the only operating uranium mill in the U.S., White Mesa, with a significant resource base that substantially increases White Mesa’s available feedstock. The result is an unmatched production growth profile and the opportunity for both Energy Fuels and Denison shareholders to benefit from the clear operational synergies that result from this transaction. I look forward to working with Denison’s U.S. team to maximize the benefits of this important combination.”

Ron Hochstein, President and CEO of Denison added, “This transaction is an important step forward for Denison. The Company has evolved on two parallel but different tracks, being both an exploration and development entity with a global footprint and an established producer in the United States. We are pleased to have the opportunity to combine our U.S. operations with such a complimentary set of assets and people. I’m excited about the opportunities that lie ahead for both Denison and Energy Fuels shareholders and believe that this transaction only serves to strengthen the operations of both companies.”

Our  main recommendation over the past few months has been Uranerz Energy Corp and I still believe it may be the next major takeout target for either Denison, Cameco or Uranium One.  It hit a low in October; it has rallied since that point over a 200% move and has recently pulled back. I still don’t think it’s been recognized that it is in construction at its Nichols Ranch Project and should be producing 600-800 thousand pounds of uranium annually.

Its grades are substantially higher than its near term producing peers and it already has a processing agreement signed with its neighbor, Cameco. I think we’re still early stage.

Uranerz is well funded and fully permitted for construction on its Nichols Ranch Project in the Powder River Basin, which is scheduled for production of uranium ore by the end of this year.

It is important to note that Uranerz’ land position is strategically surrounded by hungry majors such as Uranium One and Cameco, which has stated that its production needs are beefing up. . .Cameco was willing to pay a premium for Hathor, which had nowhere near Uranerz’ immediate potential. It may be occurring to Cameco that Uranerz might make a desirable acquisition that will enable the company to expand profitably in domestic U.S. uranium production.

Disclosure: Long DNN and URZ