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Nuclear Revival Spur Uranium Miners Higher, Uranerz (URZ) Leading Sector

In Featured Company News, Market Analysis, Stock Movers on February 3, 2012 at 8:09 pm

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We are in the midst of a powerful rebound in our select uranium miners such as Uranerz (URZ).  The charts indicate an explosive 220% rebound since October lows.  For months we sent out reports that Uranerz will outperform as they are well funded and have already initiated construction on their Nichols Ranch In Situ Uranium Project, which should be producing uranium by the end of the year.  They also have agreements with Cameco and Exelon, two major nuclear players.  In fact Uranerz is leading the sector over the past three months regaining its 200 day moving average and rallying over 225% from October lows.

See the map of their enviable land position between Uranium One and Cameco by clicking here.

I wrote to my readers back in October, “In relative performance to the S&P Uranium stocks returned to 2009 levels, extremely oversold and demonstrating negative divergences for several months.  Keep your hands on the nuclear plow.  If one has not invested in this sector, this is a chance to buy wholesale.  The coming months will give geometric gains as safe, modern, clean and affordable nuclear reactors come online.  Stay steadfast to reap the coming rewards.”

Check out the recent interview with Dennis Higgs, Executive Chairman of Uranerz, discussing the uranium market and updating us on current developments in the Powder River Basin in Wyoming.  For Dennis Higgs bio as well as the other experienced managers and directors click here…

Gold Stock Trades will not regale you with the growing presence of nuclear facilities throughout the world despite the German and Japanese negative stance.  It is well known that reactors are going to come online in increasing numbers and that uranium will be in rising demand.  In fact, several reactors are being built right here in the United States as well as all over the world.

The U.S. Nuclear Regulatory Commission is scheduled to approve Southern Co.’s application for the first construction permit to build modern nuclear reactors in more than 30 years.  Southern is planning to build two new generational reactors and the NRC is considering a license to build additional newly designed reactors in South Carolina.     Nuclear power accounts for 20% of all electricity being produced in the United States and is expanding with the construction of new safer, efficient and cleaner nuclear reactors.  This is being done all over the world.

The once in a millennium earthquake and tsunami in Japan has triggered a knee jerk panic driven reaction from politicians especially in Germany and Japan.  However, the U.S. Nuclear Regulatory Committee released a study nearly a year after Fukushima stating “Public health consequences from severe accidents are very small…successful implementation of existing mitigation measures can prevent reactor core damage or delay or reduce offsite releases of radioactive material.”  The study, called the State-of-the-Art Reactor Consequence Analyses (SOARCA), looked at worst case scenario situations and its impact on health.  This means the U.S. is going full speed ahead on nuclear while Germany and Japan continue with skyrocketing electricity costs.

It is to be noted that four of the giant Japanese nuclear builders are aiming their sights to countries all over the world especially the emerging nations, which are constantly seeking inexpensive and clean electrical energy.  They are responding to this global need by sending teams of experts to sell the building of a new generation of reactors.

Japan wants to sell nuclear reactors abroad to boost their exports.  The companies that are participating are Hitachi and Mitsubishi Heavy Industries among others.  The Japanese claim that emerging nations can learn from the Japanese Nuclear Experience.    The Giants do have a vocal opposition at home who are criticizing this outreach by calling it hypocrisy and the setting up of double standards.

Japan is impaled on the horns of a nuclear quandary, weighing their thirst for exports against their own domestic naysayers.  Money talks.  The Japanese Nuclear Industry posted an annual profit of over $3 billion dollars which made a welcome addition to their balance of exports.

They have gone so far as to offer interested emerging nations not only the building know how, but they are offering them loans to assist them in this pursuit.  It’s almost an offer that these young nations will find hard to resist in their search for efficient and affordable, clean electricity.

Moreover, there are reports that Germany and Switzerland are fast coming to the awareness that the costs of locking up their nuclear plants will cost large amounts of capital.  Siemens published a report that it would cost Germany more than $2 trillion dollars to wean off nuclear by 2030 causing major deficits.  Imagine they are placing their trust in foreign providers.  It is going from wholesale to retail at great costs to their economies.  Capital will flow to countries that make sane, rational decisions with regard to nuclear.

Recently, Russia and the United States have taken a page from this Japanese imperative.  Formerly at loggerheads during The Cold War, they are now uniting cordially to ensure that nuclear fuel is available for the growing number of new generation of nuclear reactors.

We have remained steadfast in highlighting the importance on our select list of uranium miners right here in the United States.  This means jobs and new ancillary industries rising to accommodate the increasing uranium output.  We are speaking about new cranes, highways and even cities.  We are talking about a U.S. nuclear revival.

How does all this relate to our subscribers?  It is evident that nuclear power in not only here to stay but will proliferate as world demand keeps on growing.  Our select uranium stocks have been rebounded considerably after being left for dead only weeks ago.  Our subscribers are having their patience rewarded.

The German and the Japanese liberals will reconsider their knee jerk political reaction as their policies weaken their once proud credit rating and economic standing.

Disclosure: Long URZ and Featured on http://goldstocktrades.com

 

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Uranium and Rare Earths Leading Market Rebound

In Featured Company News, Market Analysis on January 31, 2012 at 6:52 pm

As we predicted, our uranium and rare earth selections are amongst the leaders during this market rebound.  Their underlying fundamentals are strong enough on their own to propel this move.  In addition, the shorts may be running for cover here.  Lastly, the supply demand equation may be taking hold.

The month of January is a harbinger for what may happen in the year 2012.  This month we have seen both uranium stocks and rare earth stocks outperform the general market despite negative news.  This means the naysayers are having less of an impact as shorts are rapidly covering.

About a year ago we did a series of articles called the “Chinamese Twins”.  This related to a private candlelight dinner held in the White House between the industrial-military leaders of both nations.  (See archives)  The purported arrangements allowed for a strong yuan and a cheap dollar benefitting the interests of both parties at that time.

Fast forward to today, our kaleidoscope reveals a changing situation.  The world economy is affecting previously reached agreements.  The Chinese and the Americans have altered the requirements in the present economic picture.  The Chinese have tried to maintain a strong yuan while the Americans adhered to a cheap dollar.

This brings into focus the specter of the escalation of trade wars with China.  In the 1930’s, it was the Smoot-Hawley Act that exacerbated the Great Depression.  One must believe that the Chinese and the Americans will try to avoid this outcome.

We can only hope that both sides can reach a modus vivendi to avoid a return of the Smoot-Hawley protectionist nightmare which plunged the world into the Great Depression.  Associated with this burgeoning trade war  is the Chinese manipulation of the rare earth quota system of which they are in command.  We recently heard the ruling from the World Trade Organization against China’s export restrictions of critical raw materials.  This may only exacerbate the underlying issue.

Such a trade war goes far beyond economic aspects, but reaches into the very sinews of American national security and defense.  Our phlegmatic Congress should’ve acted long ago to green light and fast-track the development of a domestic source of these critical heavy elements.  Hopefully, they will awaken from their long torpor and rise to the challenges of the times.  Certainly, Alaska has awakened and included Ucore in its 2013 state budget.  Click here to read the press release.  

Another company which is witnessing support from European consumers is Tasman Metals (TAS or TSM.V) who controls Europe’s only 43-101 compliant heavy rare earth asset.  These companies are progressing rapidly to produce a preliminary economic assessment in the near future.  Listen to my interview with Mark Saxon, CEO of Tasman.

The kaleidoscope is a fascinating child’s toy consisting of constantly changing designs when held up to the eye.  Today’s market can best be characterized by the potpourri of unpredictable sequences of objects, which fascinates the eye of the observer by constantly changing patterns.  The combinations and permutations of the designs are infinite and subject to unpredictable eventualities.  The marketplace is very much akin to this device with its infinite unpredictability.

Gold Stock Trades views the current marketplace always trying to make some sense out of the melange.  In early October, we called for an unexpectedly vigorous rally which is still in progress.  While there is a pervasive air of pessimism in the marketplace, nevertheless the rally continues.

 

We feel that this move, particularly in our natural resource sectors, is apt to be a surprise to the naysayers.  In our field of view we observed the record short position in many resource stocks which may be undergoing short covering thereby accelerating the upward moves in a number of our rare earth and uranium mining selections.  Be assured that we are constantly monitoring this situation.  Our projection is based on technical interpretations that indicate a continuation for the S&P500 (SPY) to challenge 52 week highs.  This short term target in the general markets represent a significant milestone in this move.  Should it breakthrough this level, it will have formed a breakout, indicating a continued advance.  One caveat is that sufficient volume must accompany this upward move.

As always we will be monitoring technical developments to determine whether early October’s reversal was the inception of a significant upward move into new highs.  We reiterate that the daily marketplace will do its devious best to confuse and obfuscate the speculator.  The price of lucrative profits is eternal vigilance as we progress along the upwardly rising road of the long term super cycle in precious metals and our natural resource sectors such as rare earths and uranium.

Disclosure: Long TAS and UURAF

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Long Term Trend Up In Gold and Silver Is Intact, Look For High Quality Exploration Companies

In Featured Company News, Market Analysis on January 27, 2012 at 11:34 am

At the end of 2011, Merkel and Sarkozy got together for an unusual emergency meeting.  They pledged to come up with economic salvation.  Immediately the equity markets mounted a year end “Halleluyah” rally.   Bernanke followed Europe’s footsteps in 2012 and expanded the horizon of record low interest rates from Mid-2013 until Late 2014.

 

We respond judiciously to this euphoria.  Politician’s promises are usually a thin blanket for an upcoming cold night.  We have concluded since October that a surprisingly potent rise may occur which would be in reaction to the application of the stimulative paddles.

The European resolution was a response to the Franco-Belgium travails of the widely held Dexia Bank, which has tentacles into France and Germany’s economic foundations.  If this were not enough, the chronic Greek malaise indicated that Zorba was in need of another oxygen mask to rouse him from his hedonistically induced torpor.

A potent upward move in gold and silver in addition to the oversold miners (GDX) is just beginning to occur.    Our scenario was to maintain our long term core precious metal positions even though such a posture was temporarily painful as many analysts concluded wrongly that deflation, bonds and the U.S. dollar were the only safe harbors.

What about the U.S. dollar now?  Note all the media hoopla that regaled us with strength of the dollar recently.  News from Europe and Washington appears to be melting the U.S. Dollar under the cover of all of this stimulative warming.  We have called for this surprise rally we are observing in the face of all this dollar and treasury hoopla.  How uneasy must be the shorts who have been caught by this recent rise.  Short sellers went into October’s market with the largest short position since 2008.  Such a one-sided posture is often punished as the shorts run to cover and thereby add to the upward move.

Technically there have been gaps from 2011 that need to be filled on the upside in precious metals and miners.  We note that institutions have been hit hard by the gold’s price decline.   Hedge funds must’ve been selling stocks that they held in common in order to meet margin calls.  Additionally this consideration may have influenced collateral damage among investors.    Perhaps the current rise may indicate the recent downtrend has been broken to the upside.

 

Silver (SLV) appears to have found support at its 2011 lows.  There are downside gaps that should be filled to the upside.  Silver will encounter resistance around $38.  Silver has reached a record oversold level indicated by the RSI and MACD in 2011.  This indicated an interim bottom in silver.  Monitor the bullish crossover on the MACD which confirmed the already constructive reversal on the stochastic and RSI.

Gold appears to be making a reversal at oversold and long term support levels breaking a 5 month downtrend.  Notice the strong volume accumulation as The Fed announces negative interest rates until late 2014.  This is bullish for precious metals.  In early August through October we advised a hold and urged caution.  Since it pulled back it provided two secondary buypoints where we said it is buying time while others preached that the gold and silver market bull market had ended.  Now gold appears to be bouncing off our buypoints similar to January 2011 and regaining its 50 and 200 day to the upside.  Now the weak hands will come back at much higher prices.

Stay tuned to my free 30 day trial to my premium newsletter for market timing and stock selection.

One company I wrote a report on last Thursday in my premium service is engaged in nine joint ventures some of which are with the big boys such as Agnico Eagle at Ester Dome near Fairbanks, Alaska, which has just announced encouraging drilling indications.  Some of which are right next to the big boys in the world famous Cortez Trend in Nevada, where Barrick is continuing to announce world class bonanza discoveries as their own. In September, Barrick announced that Red Hill and Goldrush were two significant discoveries.  Barrick said on 9-7-11, “These two (Red Hill and Goldrush) discoveries highlight the potential value and opportunities that can be created through a well structured and disciplined exploration program.”

Click here to check out this project right next to Barrick’s Red Hill and Goldrush discoveries in Nevada.

 

Rare Earths Breaking Downtrend To The Upside

In Featured Company News, Market Analysis on January 25, 2012 at 8:21 pm

Years ago when Steve Jobs came up with the idea of personal computers for the masses he encountered opposition and discouragement to his vision.  Similarly, Gold Stock Trades has identified new concepts in the rare earths at a nascent state of development that will revolutionize the modern industrial world.

China recognized the potential and importance of the rare earth sector as an emerging concept.  This was in the 1980‘s!  The Chinese were aware even then that there will be a growing need for rare earths in devices that would change the face of modern industry.  Decades ago both Steve Jobs and the Chinese were able to foresee taking the computers of a large room and miniaturizing them for everyday utilization within the palm of your hands.  Visions do become reality, but it takes patience and fortitude despite occasional setbacks.

Would the Arab Spring have occurred if it were not for kids with smart phones communicating with each other?  These smart devices envisioned by the early pioneers such as Jobs would only have existed in the fertile brains of a handful of scientists in the absence of rare earths.  What once were huge block long computers in the hands of a few corporations, now are carried in the pockets and purses of the average individual.

Even today the role played by rare earths in these Iphones and Ipads is only beginning to be understood by society.  Sophisticated readers of Gold Stock Trades are well aware of the myriad uses of rare earths without which new concepts from solar panels to wind turbines to portable nuclear reactors to hybrid autos, could not enter current scientific concepts.

Humanity is only now entering a new era, the threshold of ideas that will change daily life as we know it.  This is why investors should take today’s headline in the Wall Street Journal with a grain of dysprosium.  The headline reads, “Rare Earth High Fliers Find Lower Orbit: Now Prices Are Under Pressure”.  The reporter is caught up in the daily need to sell newspapers and fails to have even the faintest concept of the very complexity of the rare earth universe.

Not all rare earths are created equal.  Each element both heavy and light possess idiosyncratic qualities, which have specific uses in today’s world and the universe of the future.

There is an exciting scene in the beginning of the film “2001” where a group of early humans sitting around a camp fire learn how to use their prehensile thumbs for self defense.  In celebration, they throw a bone in the air which morphs into an orbital satellite in a future millennium.  As Columbus could not foresee that his trip from Spain could one day be accomplished in minutes instead of weeks, so man can only begin to dream the limitless potentiality of the human mind.

Steve Jobs was prescient, while his youthful contemporaries in Berkeley were demanding revolution, he saw the hand held computer as the new emancipator.

We can safely conjecture that Jobs could also have seen the Whole Earth catalogue featuring “The Star Child” from The Space Odyssey on its cover.  Jobs quoted the publication at the conclusion of his address at the Stanford Graduation in 1995 where he said, “Stay Hungry…Stay Foolish.”

Stay hungry doesn’t mean to go to a restaurant.  Stay hungry means to develop the mind to its fullest potential.  Stay foolish means possessing the inquisitiveness of the star child in exploring the limitless possibilities of the human adventure.  There is a continuum between the mind of Steve Jobs and the unlimited potential of the rare earths to move man into a future that only a few of us can even begin to perceive.  The Classical Greeks had a saying, “Onward and Upward To The Stars.”

What is the significance of all of this Vonnegut time tripping to GST’s faith in the future possibilities of rare earths?  It is difficult to not get caught up with the daily fluctuations of the marketplace.  Again it is the exciting developments that are yet to take place in the fascinating new world of rare earths.

This is why we continue to explore the development of rare earths and resist being seduced by the daily marketplace which tends to confuse, misdirect and obfuscate.  We are looking for geometric profits in rewards for our patience.  Jobs refused to be swayed by temporary roadblocks in his overall ability for astronomic profits.  This brings us to today, the rare earths are breaking out of bases.

Some of our featured rare earth stocks in our select list such as Ucore (UCU.V) and Tasman (TAS) are making significant progress as they advance into mine development and are just beginning to break out of bases.

Disclosure: Long UURAF and TAS

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Silver Breaks Downtrend, Junior Miners Outperforming Majors

In Featured Company News, Market Analysis on January 22, 2012 at 3:49 am

On January 3, 2012 I wrote to my readers that silver would begin outperforming gold similar to what we saw in 2010.  On Friday we saw a major gain in silver of close to 5%, breaking the 50 day moving average for the first time since the Operation Twist decline in September.  This was an attempt by the Federal Reserve to manipulate commodity prices lower while artificially inflating U.S. dollars and bonds.  It appears that this temporary fix may be reversing to the benefit of undervalued junior miners of both precious and industrial metals.

On January 3rd, 2012 Barron’s wrote an article based on the premium report I sent to subscribers.

“Silver has corrected by roughly 50% from its highs, while gold has fallen less than 20%, Gold Stock Trades’ Jeb Handwerger reminded clients on Tuesday. He traced much of the previous downward move in precious metals to the fluctuations in the U.S. dollar. An index comparing the greenback to a basket of other major currencies was at last glance down 0.7% on the day at a 79.63 valuation. The ICE U.S. Dollar Index touched its lowest level since Dec. 21.

“The U.S. dollar is reaching key resistance at 81, while gold, silver and the miners test support at oversold conditions indicative of a major rebound move,” Handwerger said in an interview. “In addition, silver — which up to now has been an orphaned child — is making up for lost time outpacing gold and equities.”

Big end-of-year bets against gold and silver by speculators are likely to start reversing as managers try to cover their short positions, he believes. That should fuel an even more expansive run, says Handwerger, who has been cautious on silver since April and gold since September.

He changed his tone considerably Tuesday:

“We could be setting up for the biggest move in precious metals and miners during this 10-year bull market run.”

Handwerger is now viewing silver — with duel roles as an industrial and precious metal — as especially well-positioned for an upturn as manufacturing demand picks up.

“Silver has a much bigger upside than gold at this point in the cycle,” Handwerger said. He added:

“This market looks to be setting up a lot like what we saw between August 2010 and April 2011 when spot silver prices jumped 177% an ounce, strongly surpassing gold’s 58% rise in that same period.”

Silver, which has more industrial uses than gold, jumped Tuesday on stronger manufacturing data from India and China, which are leading consumers of precious metals. Silver for March delivery rose 5.9% to settle at $29.57 an ounce, continuing a rebound after futures last week touched their lowest levels in 13 months. February gold, the most active contract on the Comex, rose 2.2% to settle at $1,600.50 an ounce.

Meanwhile, Handwerger figures that the so-called January Effect — in which stocks get a boost from investors and managers refreshing their portfolios at the start of a new year — could be another underlying factor fueling miners. He noted that small-caps in particular seem to get a bump during this time of year (averaging around 4.4% over the past 32 years), which could bode well for GDXJ.

“Today, the junior miners are off to the races, outperforming the larger gold miners and moreover surpassing bullion,” Handwerger observed.”

Read the full article at Barron’s by clicking here…

On another note, the Euro is sinking into new lows, which has benefitted the dollar momentarily.  Paradoxically, a cheap Euro attracts foreign capital seeking to acquire European natural resource assets inexpensively.  We have witnessed the acquisition by Eldorado Gold (EGO) of the Greek European Goldfields as well as the recent $150 million merger between Astur Gold and Gold Ore Resources.  This indicates that European mining is gaining attention and moving in the right direction.

One company we have featured is sitting on a very attractive asset in mining friendly Spain, which is desperate for jobs and mines.  We believe that 2012 may be a significant year for this company which is only valued at $30 million!  As they advance a full feasibility on the project, major miners may gain interest to enter an undervalued European mining asset as Eldorado did in Greece.

Subscribe to my free 30 day trial of my premium service by clicking here to read the full reports.

 

 

 

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Uranium Miners Break Through Critical 200 Day Moving Average To The Upside

In Featured Company News on January 19, 2012 at 8:53 pm

When it was not fashionable to advocate uranium miners, we recognized that nuclear power remains a viable contributor to inexpensive electrical energy vital to the needs of not only major industrial nations, but to developing countries throughout the world.  We refused to succumb to the uppercuts of pessimism that were battering even the champions in the sector.

We continue to see the powerful resurrection of the entire nuclear energy sector especially our rising stars.  Now uranium is beginning to see increased interest and has powerfully rebounded off of late 2011 lows.

One of our featured companies just broke through its 200 day moving average to the upside and just announced that they received better than expected uranium grades in holes drilled for well-field installation.  This uranium miner is located right here in the United States in the Powder River Basin which has been producing uranium for over five decades.  The company is well funded and fully permitted for construction.  Take a look at their latest press release by clicking here.

Check out their recent progress on construction by clicking here…

 

To see a full updated report on this company which has nearly doubled since October lows click here to subscribe to my free 30 day trial of my premium service.

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Recovery In Mining Stocks? Breakouts Out Of Downtrends And Bases Beginning

In Featured Company News, Market Analysis on January 18, 2012 at 9:04 pm

The end of 2011 and the beginning of 2012 greeted investors with spooky market stories to scare investors. A prominent cartoon in the Wall St. Journal depicted a pretty lady shrieking, “The DOW Sank 17%”. Another balloon read “The US Loses Its AAA Rating”. She is screaming, “Who Will Fix Europe?”. Another caption reads, “$71 Billion Yanked From U.S. Stock Mutual Funds”. Another hysterical cry exclaims, “I Want Treasuries!”. As if that cartoon wasn’t enough to scare readers, the headline read, “Spooked Investors Seek Safety: Volatile Quarter Leaves Market Victims Wondering What Is Next”. Another ghastly pronouncement we wrote in early October to the surprise of many was, “Beware Of Stock Market Rallies Ahead”.  See the video below from early October predicting a major rally.



There was altogether too much gallows talk in circulation when we sent out the above chart on the S&P500 (SPY). We were brief and to the point and expected a potent rally especially in our oversold uranium (URA) and rare earth miners (REMX). In early October, we noticed positive signals on our indicators suggesting that an impressive rally was in the offing especially in our deeply oversold industrial metal miners(DBC).
Cutting straight to the chase we have witnessed a potent rebound where many of the oversold miners rebounded impressively in 2012. This demonstrates that there is plenty of cash waiting on the sidelines to continue supporting a strong rally. As we said, “When the need is sorest, so the answer comes soonest.” Suffice it to say, that the rally in the undervalued junior (GDXJ) and industrial (REMX) miners has begun and is continuing.  Capital will continue to flow out of treasuries into equities.

As we write Bernanke is testifying that the “Federal Reserve is ready to take further actions to spur growth”. They are meeting next week and may announce a transparent horizon of accommodative actions. This is in keeping with our expectations of a potent, surprise rally.
The recent rally in the U.S. dollar (UUP) and the long term treasuries (TLT) represents a thin blanket for a cold night that is not going to last. This liquidity crisis is presenting a buying opportunity for promising, oversold and beaten down natural resource equities which have been pummeled in a merciless market. Since early October, we are continuing to watch this impressive rally and the breaking out of many quality companies into new uptrends.
Gold’s accelerated move to $1900 prior to the decision past overhead resistance indicated the market was waiting for an inflationary QE3. The market got a surprise as Bernanke announced a tepid twist. Negative news which causes a temporary decline with a rapid recovery indicates resilience. The precious metals market appears to be finding its footing and now may return to close some of those downside gaps created in 2011.
The recent selling panic in gold and silver bullion at the end of 2011 has abated and reversals are beginning to occur.

 The uranium(URA), silver(SIL), copper (COPX) and rare earth stocks (REMX) appear to be breaking downtrends and out of bases. The juniors (GDXJ) look like they are beginning to outperform the majors(GDX). The smaller miners have reached compelling valuations that long term, contrarian investors can use to their benefit by adding to positions or initiating purchases in favorite stocks or sectors which one has not participated in yet. We must understand the long term trends and realize this is a rare opportunity to pick up resource stocks just beginning new uptrends and breaking out of bases. Don’t ignore this recent rally.

Stay tuned to my free newsletter for any developments.

Check out my recent interview with Jim Mckenzie from Ucore Rare Earths (UCU:TSXV or UURAF:OTC) which possesses the largest 43-101 compliant heavy rare earth asset in the United States.  We discuss recent developments, news and how the company is moving ahead into mine development in 2012.

Disclosure: Long GLD, SLV,GDX and UURAF

 

Why Uranium Miners Are Soaring In 2012

In Featured Company News on January 17, 2012 at 2:02 am

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Is The Resurrection Of Undervalued Miners in 2012 Beginning?

In Market Analysis, Stock Movers on January 6, 2012 at 9:14 pm

Once again at the end of 2011 we heard the voices of negation sounding the fear of the bursting of the commodities bubble.  The naysayers come out with their Cassandra calls whenever commodities go into a characteristic and salubrious selloff.  They never really learn to respect the importance of gold (GLD) and silver’s (SLV) role in the long range secular multiyear ongoing rise.

Gold Stock Trades emphasized the importance of avoiding knee jerk reactions when precious metals experience healthy pullbacks.  Today the commodities (DBC) are rising across the board as they return from the premature grave to which the naysayers have assigned them.

One wonders how the short sellers are enjoying this periodic resurrection in vital metals such as gold(GLD), silver(SLV), rare earths (REMX) and uraniums(URA).

Attendant to a new rise in these vital commodities, the economic base should be prepared to receive them.  On January 24th-25th the Federal Open Market Committee will be meeting once again in Washington.  One of the areas on which they will be focusing is the travails of the U.S. Housing Market and new methods to bring down the high unemployment rate.  The Fed is promising a transparent horizon of record low interest rates to provoke the banks to lend money.

It is important that the Eurozone malaise undergo corrective measures in order to restore Europe to health.  Recently Christine Lagarde, Head of the International Monetary Fund, has expressed broad generalities toward the need of fiscal reforms.  It is hoped that Lagarde will not be a laggard in the birth of the “EuroTarp” by whatever stimuli to be applied.

It is important that a coherent plan of attack be formulated rather than the indiscriminate printing of Euros(FXE), which we are currently witnessing.  The Euro is rapidly losing value.  This procedure of currency devaluations is counter-productive unless corrective measures are instituted such as serious spending restraints, permanent tax rate cuts and regulatory relief.  In plain language, the Europeans and the Americans can’t print more dollars (UUP) without building on a base of budgetary restraint.

How does this affect our selected precious metals stocks(GDX), rare earths (REMX) and uraniums(URA)?  This week the rare earths are emerging from their  second half 2011 slumber.  It is felt that they will lead the upcoming recovery.  This week certain of the rare earths are producing impressive percentage gains as an augury of things to come.

As of this writing we believe Tasman(TAS) and Ucore(UURAF) are leading the pack.  These stocks possess unique features to which attention must be paid.  Ucore owns a mountain of high grade heavy rare earths right here in the United States.   Tasman dominates the European Continent as the only possessor of a 43-101 resource with heavy rare earths and a high percentage of the vital element dysprosium.    Rare Element Resources (REE) released news that they have just expanded their resource to show potential for heavy rare earths.  The market is reacting favorably as it has nearly doubled in one week.

Ucore, Tasman and Rare Element Resources have broken downtrends on record high volume the first week of 2012.  Molycorp (MCP) has underperformed and still needs to break above resistance as it is lagging the sector.

China is playing a dual role not only for their own domestic needs but in establishing a quota system for exports to other nations.  This emphasizes the importance for the West and Japan to establish an independent role in their own destiny.  No matter what happens in the pending appeal with China at the World Trade Organization, The West has learned a valuable lesson in geopolitics as the external industrial nations recognize the importance of rare earth independence.

The uranium sector is enjoying a profitable day as well.  No other area has had to come up from taking a count so many times.  The press has obscured, misrepresented and sensationalized the true story about the role of nuclear energy(NLR) in a modern, industrial world.  The media has relegated uranium mining to the status of selling newspapers and  TV commercials.  The truth be damned.  Imagine when the true story is finally told.  Not once have the talking heads mentioned that reactors that are being built are portable, economical and safe.  The truth can not be suppressed much longer.

Uranerz (URZ) is within 12-18 months of producing yellowcake at a profit even in the less than ebullient marketplace.  Remember that Hathor (HAT:TSX) a mine far removed from production has been bought by Rio Tinto (RIO) who outbid rival Cameco (CCJ).  This emphasizes the undervaluation of our nuclear miners especially Uranerz, which is the next U.S. producer of uranium.  It must not be forgotten that over 90% of uranium in the U.S. is imported.

In conclusion, our sectors and recommendations are once again emerging from their long bases.  Reiterating the long ascendance of these sectors, patience is paramount albeit painful.  We have been advising our readers that this correction in commodities would be far from terminal and represents a classic buying opportunity.

Stay tuned to my up to the minute premium daily bulletin free for one month by clicking here.

Disclosure: Long GLD, GDX, SLV, UURAF, URZ and TAS

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Gold, Silver and The Miners Will Rise Again in 2012

In Market Analysis, Stock Movers on January 3, 2012 at 2:20 pm

Rarely has such technical destruction been visited on stalwart sectors such as gold, silver and the mining stocks (GDX).  The silver charts reveal technical damage not seen since the destruction of 1984.  It can only be conjecture that can account for a once in a generation obliteration of a once hallowed sector.  It must be remembered that both gold (GLD) and silver (SLV) had major moves earlier this year to the $1900 and $50, surpassing overhead resistance and reaching overbought territory.  This may be the reason why the decline in precious metal is overextended and extremely oversold.  We urged caution back in April for silver and in September for gold. Silver has characteristically corrected close to 50% from its highs, while gold has fallen less than 20%.  Pullbacks are normal and restorative in a secular bull market in precious metals especially after explosive moves.

Unless such technical destruction is reflective of an upcoming geopolitical news development, we must look for more mundane causes.  When the woods are ablaze, the fire obliterates the sequoias at the same time they incinerate the pines.  The recent declines may be the result of a rush to the U.S. dollar (UUP) and treasuries (TLT).

Fukushima’s can be explained rationally as a result of a millennial event consisting of fire, wind and flood.  The chaos through which we are passing defies explanation.  It is as if the inmates of the asylum have taken over Wall Street.

Unless there is an underlying exogenous catastrophe that lies ahead, what is being witnessed is a tale of sound and fury told by an idiot.  We believe that the markets are reacting irrationally to rational fears of deflation compounded by a flight to cash in fear of risk.  Gold Stock Trades has reiterated on many occasions that it is inadvisable to fight the Fed.  On numerous occasions we said with one stroke of the pen the Central Bankers could reverse the entire market.

This year’s surprise twist resulted in reversing a precious metals market that was on the verge of a runaway upward move.  Deftly the dagger that accomplished the twist was thrust through the rising precious metals market and resulted in stiletto downward moves.

There was also a coordinated effort by the Japanese (FXY) and the Swiss (FXF) to boost the dollar and devalue their supposedly, safe haven yen and franc over the past few months and at the same time revive their own struggling economies.  It may be that the Fed wanted to lower gold and silver prices and lift the dollar before instituting its next round of QE3 in the 2012 election year.  This year may not have been the right time to weaken the U.S. dollar, especially as Europe struggles with its own debt crisis and China deals with its own weakening economy.

To avoid a domino contagion effect in Europe and to prevent nations from collapsing, actions were taken by the Fed to stall rising commodities, prevent a collapse in the U.S. dollar and keep a cheap Euro so peripheral nations have an easier time paying down debts.  Best to save the PIIGS, through a cheap Euro and reserve QE3 for later.


The question arises: What will it take to cause a turnaround in what is the most severe correction in gold and silver in several years?  Public sentiment and momentum indicators are hitting multi- year oversold levels indicative of a reversal.  Heretofore, gold and silver have been safe havens, but not recently.  Ergo it is hoped for that positive events in 2012 may serve to control the blaze.  The U.S. dollar is reaching key resistance at 81, while gold, silver and the miners test support at oversold conditions indicative of a major rebound move.  We could be setting up for the biggest move in precious metals and miners during this 10-year bull market run.

It should be mentioned that this entire decline is the possible result of an assault by market manipulators who have gone short on the traditional repositories of value, exactly at the end of the year, thinly-traded holiday period.  The move to the downside is overextended and could indicate selling capitulation.  There will be a turn around very soon.  Shorts will cover.  Gold and silver will rise again, benefiting the source of bullion, the gold (GDX) and silver (SIL) miners.

Further declines and tax loss selling may be in the offing, but are great bargain opportunities as gold, silver and the miners have reached record oversold levels.  There is a rule that reactions to exogenous news items that create technical gaps down will be filled to the upside in a Newtonian equal and opposite move higher for gold, silver and the miners.

Stay tuned to my free newsletter for up to the minute developments in our chosen sectors of precious metals, uranium and critical/strategic metals.

Disclosure: Long GLD, GDX, SLV

2011: To Understand The Present, We Must Review The Past

In Featured Company News on December 30, 2011 at 10:59 am

This has been a momentous and volatile year with multiple black swans.  Here are the most popular articles over the past 12 months.

January 2011

Don’t Be Blinded by Current Equity Market Euphoria

“Even though the markets are hitting new highs, don’t be blinded by the current euphoria on equity markets. Bullish sentiment is reaching new highs, surpassing the pre-credit crisis top. Herds are selling their precious metal investments to enter US equities on the hope of a recovery.”

February 2011

Fronteer Bought Out By Newmont, Readers Up Over 120%

Even though January of 2011 brought a lot of profit taking to mining stocks and precious metals, the leadership of Newmont (NEM) has used this pullback to purchase one of my long term favorite recommendations Fronteer Gold (FRG) for a 37% premium.  I believed Fronteer was a great candidate for a takeout and mentioned it on thestreet.com over a month ago.  My premium readers have gained 120% since my 8-4-10 buy signal.

March 2011

Malaise in Municipal Bonds, Nosedives in Nuclear, and a Green Light for Gold

“It is crucial to monitor this market and minimize risk as the S&P has reached my measured move after the end of August 2010 reversal. One can predict a move or where the next critical juncture will occur by using this technique, and I often use it to force myself to take profits as it reaches a target. I wrote several weeks ago when equities were reaching record overbought territory to be cautious and not to be blinded by market euphoria.”

April 2011

What’s Driving Silver Prices?

Investors have been scrambling to own silver and gold. What a difference a few weeks make. In July of 2010 and January of 2011, we saw two major buying opportunities for precious metals investors to position themselves at discount prices. Now gold and silver prices are selling at a premium. Silver is reaching extremely risky levels, yet miners are still poised to breakout. Remember that I am recommending partial profits if your winnings enable you to play with the house’s money and you are still holding silver from our August Buy Signal.

May 2011

What Will Happen As QE2 Ends?

The euro continued to press higher on the hopes of a recovery from July of 2010 until May of 2011. The decline in the euro is due to expectations of further bailouts in Europe and the European Central Bank taking a very dovish position by not raising interest rates. Greece is on the brink of default and Portugal may receive additional assistance. We are witnessing pressure put on the euro and capital flowing into the US dollar which has forced some UD dollar (UDN) bears to cover their aggressive short positions. This short covering rally in the US dollar has caused a commodity (DBC) de-leveraging forcing hedge funds to raise cash reducing their exposure to commodity-related equities.

June 2011

Gold Soaring In Comparison To Stocks

The S&P is showing negative divergences between price and momentum an indication of further price decline.  The absence of relief rallies over five weeks in equities and the outperformance of gold indicates investors are interested to hold hard assets going into the conclusion of QE2.

July 2011

Time For QE3? Gold and Silver Miners Reversing Higher

This dollar bounce and mining stock selloff is providing one of the best opportunities for long term mining investors to enter the market during this short term liquidity crisis.

There is currently a short term consolidation and pause in the US dollar decline. This is a phenomenon resulting from the extreme weakness of the Euro and the need for liquidity rising from the potential exit from QE2.

Looking forward to the rest of the summer and the 2012 election it may become evident that a QE3 – in whatever semantic guise – may have to be instituted to buoy the economy, improve employment, and postpone a financial crisis. Already President Obama has told the nation that he will propose a massive infrastructure stimulus after today’s horrendous jobs data.

August 2011

Mergers And Acquisitions In Mining Stocks Heat Up

It is precisely gold’s linear bull trend as opposed to a geometric blowoff which indicates the longevity of this millennial move in gold. As the metal surpasses resistance we anticipate and welcome the customary healthy pullbacks on this rising arc. The risk off trade will transfer capital from the extended gold price to the undervalued mining equities.

September 2011

Compelling Values In Gold, Silver and Miners After Correction

We are adamant in the signal that the marketplace is sending us.  There has been a disproportionate ratio of down stocks to up stocks.  Usually a ratio of 10 to 1 indicates an immediate turnaround.  At this point the disproportion may be setting a record.   Unless this action is forecasting dire catastrophic events, there are no places to hide.

At this point the marketplace will accept even palliative measures as long as the downward descent is halted.  We expect Bernanke and Trichet to  come up with more powerful measures.  It may not walk like QE3, or talk like QE3 but in the very least it will act like QE3 by whatever means necessary unlike the twist.

October 2011

Snapback Rally In Metals and Miners?

We may now be testing a bottom that may furnish us additional entry points. The current crisis may be just the excuse that the Federal Reserve has been waiting for to inject additional stimulus. Do not be dismayed by violent corrections as investors are forced to sell natural resource stocks in order to meet margin requirements. These liquidity traps may result in declines of 50-90% which are characteristic in the life cycle of junior mining companies.

November 2011

Gold Mining Stocks On The Rise

Investors may well be running from the Euro(FXE) into the U.S. dollar (UUP) and long term treasuries(TLT). It is curious that the Euro is not being buoyed by the Swiss intervention. This may be signaling trouble in Eurozone survival. The U.S. dollar is undergoing a rise which we believe is a cosmetic response to the weakness in the Euro. All short term currency manipulations produce technical gaps which inevitably is filled.  At the same time, the gold miners (GDX) are approaching interim upside targets as the upward breakout in the miners accelerates as it reaches new all time record highs.

December 2011

Gold, Silver, Miners Finding Support Despite Gloom and Doom

Our mission statement is to encourage investments in wealth in the earth situations that are significantly undervalued.  Short selling is a perilous pursuit.  Bonds(TLT) and the U.S. dollar (UUP)  are dangerous investments in light of record debt levels.  Difficult as it may seem we continue to be riders on the storm.

At this time our sectors are down, margin calls abound and tax loss selling continue to skew most stocks and precious metals to the downside.  Do not be dismayed, one does not go short now.  Our wealth in the earth stocks are inexpensive, undervalued and oversold and once again reason will prevail and sanity will return to the marketplace as it always has.

Subscribe to my free 30 day trial of my premium service by clicking here…

Gold, Silver, Miners Finding Support Despite Gloom and Doom

In Market Analysis, Stock Movers on December 26, 2011 at 1:46 pm

Those of us who are buyers and believers in the long term continuing secular rise in resource equities are going through a time of testing.  The marketplace will present participants with years such as 2011.

We reiterate our guiding principles at precisely these times that tests our basic mission statement.  First and foremost is the avoidance of margin.  Mining stocks are characteristically volatile and subject to turbulent corrections.

Being able to buy and hold in such maelstroms rewards the brave with eventually impressive profits.  The commodity arena has never promised us a rose garden.  In order to reap the rewards of speculation one must know the territory through which one is passing.   This year we have crossed a lonesome valley of mining investments.

The challenges are immense.  The rewards are even greater or else why do we endure the slings and arrows of outrageous fortunes if not  to enjoy substantial profits.

To be right in the market, the consensus has to believe that you are wrong.  Everything is down across the board in the junior mining (GDXJ) sector, yet we begin to detect what we forecasted a few months ago. Bernanke and the European Central Bank has arrows in their quivers, but in 2011 they have certainly chosen questionable ones.

The markets have voted to criticize their choices as being inadequate.  Now we have seen the investors vote a resounding “No!” to both Obama, The Federal Reserve and The European Central Bank.

What is needed is debt reduction, entitlement reform and a coherent approach to taxation that does not punish the entrepreneur and the middle class in order to correct the market malaise.  Until the leaders adopt rational policies instead of making empty speeches and blaming one another, such ambivalence will be regarded as just what it is, bromides and banalities.  All the rest is commentary.

Plain talk and common sense are required here.  Beware of making decisions based on panic and fear.  There are monsters aplenty to frighten and confuse us off of our course.  Precisely now we reiterate our basic motif.

1)Margin is to be avoided at all costs.  We can not repeat this enough.

2)Mineral resources will continue to represent value and essentials for the survival of modern, industrial societies.

3)Mankind has not come this far in order to reenter the caves from which we came.  Truly we are endowed by Our Creator with “certain inalienable rights”.

4)Rare earths (REMX) will continue to be needed for its manifold uses.  It should be represented among the winners in the next market rally.    Downtrends feel like they will never end, but they do.

5)Gold (GLD) and Silver(SLV) will continue as standards of value as they have for the past millennia.

6)Nuclear energy (NLR) will stand as the central pillar of energy provision alongside solar and wind power.

7)The ascent of civilization continues to progress upwards.

With the above provisos firmly in mind, how do we apply these halcyon concepts to the here and now?  The battlefields of mining equities (GDX) are awash in a sea of red.  Yet we detect some positive developments to be used as milestones.    Gold (GLD), Silver(SLV) and mining equities (SIL) are finding support despite all the doom and gloom and year end tax loss selling.  This may qualify as a valid divergence from which a turnaround may occur.  Whether such a turnaround represents a new bull market in mining stocks or just a relief rally remains to be seen.

Rallies do occur even in the most negative of markets.  In early October, the advance-decline ratio on the NYSE was almost 10 to 1.  This may have marked a selling climax at our confirmed October 4th low in the Dow Industrials (DIA) and the S&P 500(SPY).

See the video from early October predicting a major rally by clicking here…

It remains to be seen how our chosen select sectors will act in this ongoing rise.  It is hoped that the recent negative action of gold and silver represent forced selling by marginal players who frequently throw in their winning positions to offset their tax loss selling.  It will not be too long before the European Central Banks recognize the store of value of gold that they will add to their coffers.

As for uranium miners (URA), we feel they are priced far below value.  Nuclear plants continue to be built all over the world.  In fact Russia stated that not only are they building new plants but that they are increasing the lifespan of their existing reactors by fifteen years.  Moreover, the Japanese Premier Noda is actively pushing for the restarting of Japan’s nuclear plants in order to avoid industrial collapse.

Technically, the uranium and rare earth charts look extremely oversold as they test 2011 lows.  It gives dispirited holders reason to walk away, exactly at the wrong time in view of the positive aspects noticed above.

Our mission statement is to encourage investments in wealth in the earth situations that are significantly undervalued.  Short selling is a perilous pursuit.  Bonds(TLT) and the U.S. dollar (UUP)  are dangerous investments in light of record debt levels.  Difficult as it may seem we continue to be riders on the storm.

At this time our sectors are down, margin calls abound and tax loss selling continue to skew most stocks and precious metals to the downside.  Do not be dismayed, one does not go short now.  Our wealth in the earth stocks are inexpensive, undervalued and oversold and once again reason will prevail and sanity will return to the marketplace as it always has.

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

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2012 Outlook: Recent Interviews On Gold, Silver, Rare Earths and Uranium

In Market Analysis, Stock Movers on December 23, 2011 at 2:29 pm

Happy Holidays!

Check out Jeb’s recent interviews with CBS Marketwatch, Barron’s, Thestreet.com, stocknewsnow.com and The Financial Survival Network.  Please click on the links to read the full articles.

By Myra P. Saefong, MarketWatch

The recent selloff in gold prices has come despite a bullish outlook for the metal.

“The ‘cash is king’ crowd is at the heights of [its] popularity,” said Jeb Handwerger, editor of market analysis provider GoldStockTrades.com. Investors have been selling precious metals, hoarding cash and Treasurys instead. “That will change.”

“Already, the European Central Bank is literally seducing troubled financial institutions, dangling newly printed money before their waiting eyes,” he said. “Essentially, the ECB has inflated their books by 20% and this may only be the beginning as the moribund European economy will probably require further oxygen.”

The ECB isn’t the only one likely “cranking up liquidity” for 2012, the U.S. Federal Reserve is too, Mladjenovic said, predicting that Europe will be doing more bailing out, and a third round of quantitative easing in the U.S. is gearing up for an election year.

Jeb Handwerger is the Editor of GoldStockTrades.com, where his Newsletter Subscribers can read about his “up to minute” technical analysis of the markets, and he is also a Rare Earth Element Think Tank Member. Jeb stopped by SNNLive at the Hard Assets Conference 2011 in San Francisco to discussScreen shot 2011 12 12 at 5 44 53 PM Rare Earth Element sector. In this Rare Earth Element Wall Street View, Jeb wants, “investors to realize, most technology applications and smart phones, hybrid engines, require rare elements“, however, “most of the supply is coming from China”, as he states in this interview.

Mr. Handwerger claims that, “the biggest growth sector in rare earths right now is the permanent magnetwhich is used in wind turbines, which is used in Hybrid engines. Those permanent magnets require specific rare earths, specifically neodymium and dysprosium. These are the two elements that are really really in demand that are in a shortfall. Investors should look for companies that have neodymium, dysprosium and the heavy rare earths“.

Jeb goes on to discuss how he would like the United States to develop its own domestic supply of critical rare earths because, as he states, “By 2015, the Chinese have stated that they will no longer be exporting heavy rare earths.” Jeb concludes by saying, “right now, through my research, there is only one 43-101 compliantheavy rare earth deposit on US soil, that’s in Alaska, and that’s a company called Ucore Rare Metals“. Ucore Rare Metals was featured on the cover in the Quarter 2, 2010 edition of the Micro Cap Review.

By Murray Coleman, Barron’s

“While GLD remains below its 200-day moving average, SLV is holding above its late-September lows denoting “critical” near-term support levels, Gold Stock Trades’ Jeb Handwerger told clients on Wednesday.

He also pointed out that the Market Vectors Gold Miners ETF (GDX), which finished Wednesday down 0.1% at $52.96 a share, continues to remain above its 2011 lows around $52 a share.”

By Alix Steel Thestreet.com
“Jeb Handwerger, editor of GoldStockTrades.com, recommends International Tower Hill(THM) in Alaska as a good way to play this take-out theme. International Tower Hill has what big miners want — 100% ownership of the 20th-largest gold deposit in the world, Livengood. It ranks in the top 2% of gold discoveries over the past 20 years. The mine could produce an average of 562,000 ounces of gold over a 23 year life, delivering 664,000 ounces of gold during the first five years.

The company has 7 more years of feasibility, permitting and construction ahead of it before it will start producing gold. Although it has $116 million in cash and no debt, its capital costs will still reach $1.6 billion — all preproduction cost. Costs might be helped, however, by a new development. Tower Hill recently bought the land rights to an area near Livengood originally used for placer gold mining — gold that was originally at Livengood but has been moved over decades by rain and now lives in valleys at the base of the deposit. Tower Hill now owns that land.

Due to the concentration of gold, the grade is 3 to 4 times higher than the average grade at Livengood, according to the company. Tower Hill is working on a preliminary economic assessment which will provide cash costs and production capability, but the company now has the ability to become an overnight producer and use the cash to fund construction and production at Livengood. This might eliminate the need for Tower Hill to issue shares to raise cash and might make it even more appealing for a major searching for gold.”

Jeb Handwerger of www.GoldStockTrades.com joins us for a wide ranging interview covering Rare Earth Metals, Uranium and the intractable US Budget Deficit. Jeb has been following mining stocks for many years and is an authority on Rare Earths, Uranium and other mining sectors. He explains why it’s crunch time for the Western World to break China’s monopoly on these metals which are vital to modern life as we know it. Rare Earths go into just about every electronic item that we require in our daily lives, from cellphones, to computers, to windmills and automobilies.

His view of Uranium is quite compelling. Are you aware that there is a treaty between the US and Russia to dismantle Soviet Era nukes that provides much of the nuclear fuel consumed in the United States? This treaty expires in 2013 and may lead to almost immediate shortages of Unranium around the world. The Chinese are seeking supplies from any place they can find them.

Finally, we conclude with Jeb’s concern and ideas for limiting the Federal Budget Deficit. He believes that the problem can only be addressed by revitalizing America’s core manufacturing and mining sectors.

Subscribe to Jeb’s free 30 day trial of his members-only, premium up to the minute analysis on precious metals, uranium and rare earths by clicking here…

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Year End Sale On Gold, Silver and The Mining Stocks

In Market Analysis, Stock Movers on December 16, 2011 at 1:26 pm

This is one of those times that we have inveighed about so often.  It is a typical “COM” week where markets are designed to confuse, obfuscate and misdirect the players.  All thirty DOW stocks and commodities were down as Europe and Bernanke disappointed the markets with what they did not do.  The markets were looking for a morsel of guidance, what they got was further silence and ambiguity.

The screens have been awash with a sea of red, protestors are taking to the streets in both the U.S. and Europe waving flags representing defiance.  Green is hardly to be seen as many indices are near their lows of the year except the U.S. dollar (UUP) and long term treasuries(TLT).  There are few places to park money where they are safe.  The only havens are those by default.  Thus the U.S. dollar and U.S. debt appear to smell like roses in a field of weeds.  Hoarding dollars and U.S. debt is no way to promote a recovery.

The Debt Tragedy of the West commands the market stage.

We are witnessing counter-trend rallies in the U.S. Dollar and precious metals.  Gold (GLD) and silver (SLV) are getting ready to indicate points of reentry as it retreats.   The U.S. Dollar and Long Term Treasuries are overbought, while gold and silver have registered their characteristic volatile selloffs and shakeouts.

The long term trend higher has not been violated.  Fear and panic are the twin refuges of short sellers and naysayers.  They are having their week in the collateral damage spurred on by tax loss selling.  It must be remembered that Greece is smaller than the state of Colorado and that Spain has a higher percentage of gold holdings vs. their GDP than the U.S. does.  If there is a default in Europe it may be contained.  If there is a government shutdown, or another credit

downgrade in the U.S., where will capital turn from the overbought dollar and U.S. Debt?  Perhaps the recent activities are being overdone of shorting the Euro (FXE) and going long the U.S. dollar and long term treasuries.  The U.S. debt bubble is the real danger about to burst.  Eventually, we believe the capital on the sidelines will seek precious metals, miners (GDX) and eventually gold and silver junior explorers (GDXJ) as they attempt to exit a sinking ship.

We acknowledge that precious metals and the miners are underperforming the U.S. dollar and long term treasuries and have made a bearish technical turn momentarily.  However, our gold and silver selections are pulling back in a volatile correction and may soon be reaching support levels as silver and the miners test their 2011 low and gold pulls back to its July 2011 breakout after making record gains in both 2009 and 2010.

It is difficult to believe that the Central Bankers will opt for a deflationary scenario in a world which are taking to the streets.  Do not forget that at any time the Central Banks can come together and print themselves out of trouble.  Long term safe havens for investors should eventually include the mining stocks in gold and silver which may be hitting support at the 2011 low from which an upside reversal occurs.

No doubt the patterns tell us that we are testing support levels and that technical damage has been inflicted on most stocks including the precious metals.  The weak hands inform that the golden bubble may have been broken and the warning inscription written on the entrance to hell “abandon all hope, yea who enter here” may be applicable.  We do not agree and may be considering this recent move a fake out and that we may witness a reversal sooner rather than later.

We are witnessing irrational prices characteristic of the end of the year tax loss selling.  This should be regarded as purchasing plums and holiday gifts.   The red that is seen on the screens may be the color of the week.  The current coloration in the past has been subject to volatile change.  Stay tuned to my premium newsletter for any up to the minute observations.

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Industrial End Users Are Partnering With Rare Earth Miners To Break Free From China

In Market Analysis, Stock Movers on December 14, 2011 at 1:49 pm

It has been a long contention of ours, that large industrial entities will seek productive rare earth mines in friendly jurisdictions. Yesterday, Toyota signed a memorandum of understanding with Matamec (MAT:TSX Venture) in friendly Quebec. Expect more of these overtures by leading industrial end users as they strive to break free of the Chinese dominance.

Toyota urgently needs heavy rare earths for their hybrid and electric vehicles which are growing in increasing demand. Other western nations will awaken to the need to seek sources of heavy rare earths.

Recently, Korea made a deal with Frontier Rare Earths (FRO:TSX). This may put into question those analysts who cautioned erroneously that these rare earths can be produced in labs or substituted by other elements or engineered out of automobiles. So much with the irrational views of those pundits who may be representing the acquirers buying rare earths inexpensively.

Read the full article on rare metal blog by clicking here…

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Why The Smart Guys Are Buying Uranium Miners

In Market Analysis, Stock Movers on December 13, 2011 at 5:59 pm

It has long been a guiding principle of Gold Stock Trades that requires constant reiteration. “To know how to wait is the great secret of success.” At one time in the history of the United States there were great Americans who had little education, but they were endowed with a native intelligence. Will Rogers was one of them. One side of his family was pure Cherokee, the other side was plain hard scrabble Cowboy. When asked from where he got his material, he would look you in the eye and say, “Shucks, I just read the newspapers.” Speaking about investing he would say, “Invest in inflation its the only thing that’s going up.” These words were written in a time very similar to that of today. Political dishonesty, crony capitalism and downright immorality were features of the everyday landscape of his time.

Taking a leaf from Roger’s modus operandi we come across two significant developments involving nuclear energy. Russia and The United States have reached an agreement of safe, compact, economically viable development of the nuclear (NLR) industry globally. Thus two former adversaries are joining in the peaceful growth and development of nuclear power. This serves to vindicate the watchful, waiting policy of Gold Stock Trades in refusing to be panicked by the scare stories of the media. Our ongoing faith in nuclear energy’s future continues to be upheld by history.

Part of the Russo-American entente is the assistance that they will be giving in the building of reactors in such countries including Vietnam, Bangladesh, Turkey among others. These are tough economic times. Emerging nations can benefit immensely from such an economical, clean carbon source of energy. Note that the media hysteria leveled at nuclear energy is virtually absent in the developing world. After all its difficult to sell refrigerators unless they are wrapped in the shrill repetition of doomsday scenarios.

Don’t be so quick to nuke nuclear (URA). If you want power for growing major industrial nations, nuclear is the only viable option. The media was wrong in circulating horror stories of nuclear’s demise.

Germany (EWG) has been reduced to being a client nation ironically receiving nuclear energy from France and Russia. Look at the German economy whose economy has been affected adversely from closing down reactors. Poor Merkel has lost six consecutive regional elections to the Green Party. She is running scared, not smart. In doing so she is depriving the Eurozone with the assistance that a once productive, nuclear Germany was providing to the rest of the continent.

On the other hand, Japan (EWJ) has elected a new Prime Minister who states that Japan can’t survive as a major industrial nation without nuclear power. He is saying like it is and is not swayed by the strident voices of the environmentalists. Angela might well note this instead of caving in to an anti-capitalist opposition bent on reducing Germany to impotence.

What about those voices who claim that Germany will now become a demonstration model to the world extolling the benefits of solar (TAN), wind, coal (KOL) and gas(UNG) in lieu of nuclear energy? Noda states that the costs of the switch over would be ruinous to Japan. Merkel seems oblivious as to the source of capital for such huge projects. She would be well advised to have lunch with Noda of Japan, Wen of China and replicate the all important agreement entered into by the United States and Russia to furnish safe, economical, clean and compact nuclear power to the world.

Despite the underlying fundamentals, some of the prices of uranium mining equities are astonishingly cheap. For commodity investors looking for value there is no sector that has been so pummeled into oversold and ridiculously undervalued situations. Our focus is on U.S. near term producers and believe the bargain basement values now presented comes rarely maybe once in a generation. This is partial vindication of what Gold Stock Trades has been printing for the past months. Cameco, the largest publicly owned uranium company, warns that there will be a shortfall in the availability of uranium as the world increasingly reveals the supply shortage for nuclear ore. Companies have been frustrated raising capital for new projects. Increasingly, this has limited potential supply. Add to this the ending of the Russian HEU Agreement in 2013, which will further limit uranium supplies to the United States, which happens to be the largest consumer of uranium for its nuclear reactors.

HAT.TO Hathor Exploration Limited

Remember that Cameco (CCJ) has just backed away from the Hathor deal after Rio Tinto (RIO) trumped their bid. Hathor has made fantastic gains since the takeover battle began. We expect other near term uranium producers to make similar mover. Cameco has stated publicly that this will not deter them in their ongoing quest for producing nuclear ore right here in the United States. Stay tuned as I will be publishing an update on uranium miners which appear to be making key reversals in 2012.

Listen To My Recent Interview With The Critical Metals Report at the San Francisco Hard Assets Conference in late November 2011.

“Is It Too Late To Buy Rare Earths?  What catalysts can reverse the recent downtrend?”

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Major Buying Opportunity In Gold and Silver Explorers

In Market Analysis, Stock Movers on December 12, 2011 at 2:37 pm

The financial press reveals the bipolar state of the global economy. One report questions whether the cash exists to bail out the PIIGS. This morning there is a conflicting story which reports that the major banks of the United States, France, Germany and Japan will provide the liquidity to effect support for the troubled nations. Remember Gold Stock Trades oft quoted trope, that the markets will do whatever it must to confuse, misdirect and obfuscate the lay investor. The daily dose of contradictory reports serve only to tangle the web. Einstein formulated, “The nth degree of complexity is simplicity.”  Gold Stock Trades has absolute abhorrence for academic blather.

One day the Professors in the European Central Bank (ECB) tell us that funds are limited for bailouts. On the very same day we read of a meeting of the ECB pundits assuring The World that there is plenty of cash.  Its enough to turn a wise man’s beard gray.

Cutting surgically through the divergent boloney, what does all this imply for GST subscribers?

A direct answer might be that Bernanke at the upcoming meeting on Tuesday will in essence opt for an even more accommodative approach as will the European Central Banks acting in concert with the Princeton Professor.

The accelerated move in gold was due to a panic in the markets in August where we placed a hold after the price exceeded overhead resistance and technical targets. Since that time we have had a 12 week bullish symmetrical triangle consolidation, which we believe will resolve shortly to the upside. This pullback to the long term support trendline should be used as a buying opportunity.  Remember the chart of the yellow precious metal is strong, despite short term pullbacks.

For many months GST has been straightforward in reiterating that the monetization of the debt by helicopter is the way out of the economic mess the Western Nations are facing.  This is uncharted territory and we would not be surprised to hear about further QE before the end of the year.

Keynesian Theory has never really been proven. It has relied on wars and military adventures to provide a bailout. Now where can we go as we print dollars in the face that we are running out of the money to fund military placebos. We are running out of wars as a solution for pump-priming.

Look at the pictures on the front pages featuring citizens taking to the streets of Italy and Greece to protest implementation of severe financial measures. It can happen here.

The Professors and Bankers are playing for time.  Look for quantitative easing with whatever moniker. They can use the Madison Ave. approach to jazz a stagnant if not moribund fiscal picture.

Stimuli can be twisted into whatever shape that will serve as a band-aid for the time being. The Marxists were famous for their five year plans. We may go down in history as being famous for our five-month plans. The bankers are running scared and are willing to settle for a temporary reprieve. Its the old tactic of putting off until later as long as you avoid upheaval today.

Ergo we may witness many stimulative reincarnations in a questionable attempt to prop up the economy of The West. Expect the French, Germans and others to keep the printing presses pumping.

The markets are going through the Euros turn to take center stage as the precious metals and miners wait in the wings ready for their time to shine.

This may represent a major buying opportunity in the long, upward secular arc of gold, silver and precious metal miners. At the very least this is not the time to sell, it is a time to look for adding to existing or discovering new positions. We are purchasing certain promising precious metal equities. Major investors are moving funds raised from the sale of gold bullion over the past few weeks to emerging miners.

We have been calling attention to a growing divergence between mining equities vis a vis bullion.

Since that time miners have been forming a bottoming formation and have successfully tested 2009 lows. Gold and the miners have enjoyed a healthy 12 week consolidation and is more than entitled to this period of rest after such an accelerated move. The world may be turning to emerging miners. It is fast becoming the miners turn, profits should be multi-fold. Be sure that we will keep you posted to promising developments, secondary buypoints and any new promising situations by clicking here.

Check out this recent interview with Jeff Pontius, CEO of Corvus Gold (KOR:TSX or CORVF) discussing exploration and development in Alaska and Nevada and why exploration companies are very exciting right now.  Formerly Jeff was CEO of International Tower Hill Mines, where he discovered over 20 million ounces of gold, right down the road from Kinross’s Fort Knox Mine.  He is one of the few geologists with several multi-million ounce discoveries in North America.

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Recent Radio Interview With Jeb On Rare Earths, Uranium and The US Deficit Crisis

In Market Analysis, Stock Movers on December 7, 2011 at 9:51 pm

Listen to Jeb’s interview today with The Financial Survival Network on 1490 WGCH Greenwich, CT hosted by Kerry Lutz by clicking here…

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Why You Must Not Give Up On The Rare Earth Sector

In Market Analysis, Stock Movers on December 6, 2011 at 1:47 pm

It is important to highlight what must be said in this sector so essential to the economic survival of the United States and The West. We will not belabor our readers knowledge of the importance to our industrial survival especially of the critical rare earths. It is agreed that these elements are the very lifeblood of national growth as a modern nation.

It is well known that as our corporate society evolves, these elements are vital for countries to stay competitive with the Chinese who are actually making constructive advances in this area. Just think of the benefits that could accrue to the Japanese Auto Industry if they didn’t have to go hat in hand to their Chinese neighbors who are exploiting the rare earth issue asking for more a la Oliver Twist.

Not only do the Chinese have a twenty year lead on what was essentially our native domestic wealth, but they are issuing declarations that they will be importing these elements for their own industrial base. Adding chutzpah to injury they are inviting foreign entities to set up factories in China! This is a Catch-22, in that along with the Chinese seduction will come all of the intellectual property from the West.

Read the full article and see chart on raremetalblog by clicking here…

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Is Gold Going to Hit $2000 By 2012?

In Market Analysis, Stock Movers on December 2, 2011 at 9:12 pm

Quoted In Barron’s

“The world is navigating troubled waters,” observed Jeb Handwerger, editor of Gold Stock Trades. “What we … witnessed the day after the rally (yesterday’s session) was a technical day of rest before the upward move of the DJIA and the S&P 500 resumes their upward trends.”

At its current pace today, GLD’s headed to a 3%-plus weekly gain. Likewise, SLV’s working on a better-than 4% advance for the week.

But consider the small-cap focused  Market Vectors Junior Gold Miners ETF(GDXJ). At last check, it was falling by 0.5% on Friday. Still, it’s looking at around a 10% gain on the week. By contrast, the large-cap dominated Market Vectors Gold Miners ETF (GDX), which  was falling 2.7% on the day, was moving towards more than a 5% weekly uptick.  The Global X Silver Miners ETF (SIL) was trading down 0.9% this morning, but still looking at a better-than 9% advance on the week.

In futures markets, gold for February delivery — the most actively traded contract — was trading up by $14.20 to $1,754 an ounce. Silver for March delivery on the Comex was up 54 cents at $33.30 an ounce.

“Gold bullion appears to be forming a bullish symmetrical triangle (technical pattern) on the verge of breaking out to the upside,” Handwerger told clients today. “After 12-weeks of consolidation, a move above the descending resistance line on strong volume could indicate a potential upswing to the $2150 (an ounce) area.”

Read the full article at Barron’s by clicking here…

Subscribe to my free 30 day trial to my daily bulletin by clicking here…

Check out recent chart analysis.

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Potential Breakout Forming In Gold and Silver

In Market Analysis, Stock Movers on December 2, 2011 at 2:46 pm

The market does whatever it can to confuse, misdirect and obfuscate the investor.  It is entirely possible that a grand strategy underlies Bernanke’s game plan.  With recent markets creating more skies of gray than any Russian play can guarantee, there are plenty of storm clouds hovering over head to throw the investor off his track.  This is exactly when the markets may be forming a base for a surprising upward market move.

(Check out video from early October highlighting potential reversal in the S&P 500)

The Federal Reserve will accelerate its counter attack on deflation by continuing to introduce liquidity into the market place.  It will be no surprise to observe him follow through his oft stated promises to use whatever monetary arrows he carries in his formidable quiver.  Already QE3 is being discussed as unemployment levels stay dangerously high.

He is a Princeton PhD whose doctoral theses is based on mitigating deflationary depressions such as the one that occurred in the 1930’s.  It was a period which resembles the traumas through which capitalism is now progressing.

Not withstanding the many negatives that confront global investors such as the Eurozone convulsions, rising U.S. unemployment and swollen bank overhangs—These may be the obfuscatory factors to throw panic into the psyches of speculators. Cash abounds in the treasuries of American corporations such as Apple, Google and other industrial coffers.  If we are indeed facing a rally it may be comparable to a change of speed thrown by a pitcher to confuse the batter who was used to 98mph fastballs.

Gold Stock Trades focuses on sectors that may in the future be buffeted by deceptive curveballs.  Using this metaphor the batter adjusts his swings to keep his eagle’s eye on the ball and a firm grip on the bat.

We reiterate the coming rally will be substantial especially in precious metals, uranium and rare earths.  Watch silver.

Silver is just beginning to breakout of a consolidation and is moving above its 50 day moving average.  Gold Stock Trades believes it held long term trend support.

Gold (GLD) is forming a bullish consolidation for eight weeks after hitting its early September high.  Look at the rising trend and the pattern of higher lows and increasing momentum.  This indicates a possible breakout forming.

At present the Fed has more moves at its disposal than existed in those dark days of The Great Depression.  Monetization of debt will be continued as a “Bernakian Tactic”.

Do not be be hasty in throwing in the towel concerning our oversold and undervalued rare earth and uranium sectors.  It may be exactly the wrong time to move into the U.S. Dollar and Long Term Treasuries, which is precisely what the herd is doing.

Recently the Swiss National Bank moved to put a floor on the Euro to prevent the safe haven Franc from continuing to appreciate.  So far this action appears not to be working as well as expected. Cheap currencies will increasingly be the order of the day, not only in Europe, Brazil and Japan, but in the American monetary system.  This may well have been a tactic designed to push up the U.S. dollar in advance of Bernanke’s QE3 pronouncements as investors panicked out of undervalued mining equities and moved into the grossly overbought greenback and long term treasury market.

What does all this mean for GST subscribers?  Sooner or later attention will have to be paid to real wealth in the ground hard assets.  The masses may leap from Yen to Franc to Greenback, eventually monies will be attracted to real mineral wealth in the form of gold, silver, rare earths and uranium.

The road upward particularly in the rare earths and nuclear sectors may try investors patience as they complete bases.  Technically the longer the horizontal base, the more profitable the rise from that foundation.

A valuable characteristic of point and figure charting is the base count, which has invariably indicated the broader the width of the base, the more elevated the potential objective.

In addition, there is a large short interest position in many of the GST chosen rare earth and nuclear situations.  The short sellers will in time be “hoist by their own petard”.  They will be compelled to cover and the consequent run should be dramatic on the upside.

Consider the ever increasing growth of the cell phone industry worldwide.  Smart phones are no longer luxury items in today’s world…at least not in the minds of teenagers who live on Itunes.

Rare earths are going to be in increasing demand by not only the new high tech devices but a host of other nascent industries such as hybrid autos and military applications.  Rare earths and nuclear energy represent not only the waves of the future, but the essentials of the present.

The world is not coming to an end despite the sea of red that we are currently progressing through.   The extreme pessimism as represented by current market developments and bearish, myopic analysis from banks presage a bottoming formation which is requisite for potential turning points.

Gold Stock Trades will be watching the events unfolding as Bernanke reaches into his quiver to produce arrows of stimulation in whatever guises necessary.   Remember the worst thing were the better they got.  Stay tuned to my free newsletter with up to the minute market analysis, interviews with leading executives in the mining industry and sector updates in precious metals, rare earths and uranium by clicking here.

Check out this recent interview with George Salamis, CEO of Edgewater Exploration, a new company that is rapidly developing assets in Spain and Ghana.

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Precious Metals, Rare Earths, Uranium Soar As Banks Boost Liquidity

In Market Analysis, Stock Movers on December 1, 2011 at 5:54 am

GST Quoted In Barron’s

“Jeb Handwerger, editor of Gold Stock Trades, told subscribers much the same. He’s also bullish on silver, noting that prices have moved past their 50-day moving average, a key short-term technical indicator of momentum. SLV finished at $32 a share, whiskers above its $31.79 line-in-the-sand. He’s eyeing a move up towards $50 a share with expectations that silver will follow a surge in gold.

Just as significantly, the large-cap Market Vectors Gold Miners ETF (GDX), which closed up 7% today at $60.41 a share, has also “regained its important 200-day moving average,” Handwerger noted.”

Read the full article at Barron’s by clicking here.

Subscribe to my premium members only content with new updates and recommendations during this exciting time by clicking here.

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The Day Is Coming For Nuclear and Rare Earth Stocks

In Market Analysis, Stock Movers on November 23, 2011 at 9:09 am

Our carefully researched select rare earth and uranium stocks are actually becoming more attractive to hostile takeovers from foreign entities who recognize the true value of our national resource assets. Realize that the Russians and Chinese have donned their cowboy hats and own large chunks of uranium in Wyoming and Molybdenum in Nevada.

Do not be surprised that at this moment of transient disappointment, we may be on the verge of mergers, acquisitions and hostile takeovers. These companies have been offered large premiums at today’s prices, which they have been steadfastly rejecting. Witness the recent bidding war between Cameco and Rio Tinto over Hathor. This week the Chinese offered a 73% premium for Jaguar Mining.

These are signs that the day is coming when the true value will be recognized of these extremely bargain priced assets. Timid investors race from the battlefield even before they whiff the smell of gunpowder. Our chosen sectors of uranium, rare earths and precious metals require patience, whose payoff will result in geometric gains.

The markets have spoken in response to the failure of the Super-committee to reduce spending in Washington with a major decline. This is less than a stellar review for currently elected officials going into the 2012 election. At this point, the marketplace is saying that the “Emperor’s Have No Clothes”. The word emperor is deliberately chosen. Latter day royalty comports behind the scenes in collegial collusion. It is not too far fetched to suspect the unbelievable. The fix may be in.

Isn’t democracy wonderful? When the cameras are on its a different story. There the class struggles continue for the edification of the masses. Behind the scenes, it is buddy time, while the middle class undergoes what is either benign neglect or outright betrayal. The real economic issue is that we are being overly regulated into legislative paralysis. We guardedly hoped for our leaders to come up with visionary vistas. Instead, they have concocted a compote of pap. Washington got there one year payroll tax cut, a few jobless benefits and a few more jobless benefits. This is not what was needed. The impact on job growth will be tepid at best.

Look at what happened to the 2009 stimulus of $800 billion. This did not help job creation. Unemployment went up where today the government publishes statistics of 9.1% unemployment and a rise in national debt to $15 trillion.

The morning after the super committee failure has left investors with a profound sense of disappointment. Washington is proposing a puerile prescription in the wrong pharmacy. Washington could seize the moment to propose truly heroic measures by a simple stroke of their pens to remove the regulatory impediments from essential American resources in the areas of rare earths (REMX), uranium(URA) and precious metals mining(GDX).

There is a need for the fast track approval of our own American critical assets on which our economic future is dependent. We have a national debt of over $15 trillion dollars. Imagine if these U.S. assets in the Earth would be unshackled. The fast track emancipation from regulatory restraints would result in thousands of jobs and go a long way to wiping out our enormous deficits.

The reality is that Washington is aborting job growth and simultaneously going deeper into debt. It is time for us to disenthrall ourselves from hoping that our leaders might seize the day by simply removing the bureaucratic road blocks preventing the development of our country’s mineral wealth. What we got instead was palliative pie in the sky, temporary stalling and political campaign moves for the 2012 election.

As long as Washington continues to treat vital American mining interests with benign neglect, the resultant impact on growth will be modest to say the least. We continue to be a nation in executive denial. Instead of throwing dollars at loyalists that can not be translated into domestic growth, how much more productive use could these monies be better utilized and a truly spectacular return on investment? At the same time it would make this country stronger both fiscally and defensively with a lucrative resource base of precious metals, rare earths and uranium.

What does this mean for investors? Never have so many road blocks been thrown into the paths of uranium and rare earths. Nevertheless, we maintain our buy strategy in the face of this excessive doom and gloom. Sooner or later the realization must dawn on our leaders that these sectors represent true wealth and the most profitable places to invest stimulus funds.

In conclusion, we are aware that the areas of nuclear and rare earths are out of fashion. This is not a time to cash in chips that are going through an artificially induced bottoming area as the result of administrative inaction and the manipulations of the short sellers.

Click here for a free 30 day sneak peak of GST’s members only market surveillance report.

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Gold and Silver, Oversold and Reaching Long Term Support

In Market Analysis, Stock Movers on November 21, 2011 at 8:04 pm

The Dow and S&P 500 is reversing lower as leaders in Washington fail to make the necessary cuts. Whether this is a new leg lower in a confirmed bear market remains to be seen. For the time being the downward move in equities might cause a decline in gold and silver bullion as well as the junior miners.  Investors may be forced to sell the good resource stocks with the bad stocks.

For several months we have seen Europe’s Debt Crisis worsening. The large caps in Europe are down close to 30% going into the second half of 2011. In September we alerted our readers that Gold has reached overhead resistance and investors should continue to be prepared for a healthy pause. This is the chart we sent them on 9-13-11.

Gold’s accelerated move past $1600 to $1900 indicates we were seeing a path similar to December of 2010. After that move gold retreated for two months to the 150 day moving average. Gold Stock Trades indicated an extremely overbought condition not seen since late 2010 and maintained a hold recommendation as gold failed to break $1900.

Right now gold and silver are selling at long term support levels, which GST considers to be on discount and a secondary buypoint.

A healthy consolidation has provided additional buying opportunities as gold and silver has pulled back and is ready for its next upward move much like a runner who must push back in his starting block. We may see investors return to precious metals as a safe haven as they question the viability of U.S. debt.  Could the current convulsions and irrationality in the markets anticipate further accommodative measures or QE3 by the end of the year? To reiterate, normal and healthy profit taking in gold and silver is characteristic of this market. Both metals are oversold and at support indicating potential reversals in gold and silver.

The Eurozone Crisis continues to trouble global markets and now the United States is having trouble making the necessary budget cuts needed to avert another market meltdown. Many want to sell their miners and bullion in favor of U.S. dollars and treasuries. The consortium of solvent banks in Europe state that they are ready to create Eurobonds for yet another bailout for the PIIGS.

Not to be upstaged, Premier Wen Jiabao from China has offered his good services in offering money to the Eurozone. Such altruism is sure to be well rewarded.

History is replete with cautionary tales of The Trojan Horse, which was built by the Greeks and deposited at Troy’s Gates. The Trojans regarded this as a gift and brought it into the city, not knowing there were thirty elite soldiers hidden inside the magnificent horse. Once inside under cover of night the soldiers were able to open the gates to allow the Greek Army to enter and defeat The Trojans. Modern wars are fought with fungible fiat money without a shot being fired.

What does this all mean to Gold Stock Trades subscribers?  Refer to my previous articles where the concept was introduced of the “Chinamese Twins” where it was suggested that there was a grand design entered into during a secretive candlelight dinner.

The conclave was attended by the respective heads of state and representatives from both countries major industries. We feel that is within the realm of possibility that the elites of both nations have a good thing going enjoying “la dolce vida.”

What both sides may want is the dividing of the global spoils. The West needs cheaper currencies to monetize their horrendous debts and to increase exports. The U.S. dollar and the Euro are in similar binds in that they are facing further stimulative moves to increase liquidity. However, these measures may operate on a quid pro quo…one hand washes the other. The Chinese need entree into the Western Marketplace. They have plenty of U.S. Dollars, Euros and U.S. Treasuries which they would prefer translating into the form of Western wealth in the earth mineral assets.

Regardless of any deals that were made at the dinner, there are always daily wheeling-dealing to confuse the herd. Nevertheless, the eagle uses his dual vision to keep both the panoramic view as well as the immediate view in perspective. The near view reveals the Hanlong Bank of China standing accused of underhanded short selling. The possibility exists such sovereign banks may be complicit in shorting so many of the mining stocks.  The Chinese Financial entities have been accused before of this slight of hand, shorting resources assets to be able to purchase them for pennies on the dollar.

Such recent actions on the part of corporate takeover attempts reveal the extremely underpriced and downright cheap valuations in the miners. Our technical charts indicate mining assets will eventually leap ahead at many times their present prices. The waiting game continues and has ever been thus, it is not a question of if, it is a question of when these assets will be fairly priced in the marketplace at many times their present value.

Stay tuned to my free newsletter for up to the minute technical and fundamental analysis in precious metals, uranium, oil and rare earths.

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Molycorp Stumbles, Avalon and Lynas Delay, Ucore Shines

In Market Analysis, Stock Movers on November 18, 2011 at 4:48 pm

Our service is growing increasingly aware that Ucore (UURAF) is the little David that has the potential of besting the Goliaths in the rare earth area. Recently, we took a field trip out to Alaska’s Mt. Bokan to assess the situation with our own eyes. This was followed by a trip to Hazen Labs in Denver to determine the economic viability of extricating the heavy rare earth concentrate from the underlying rock.

It is all good and well for companies to deluge investors with hyperbole. After all this is the source of the word hype. Today the rare earths claimed by other companies in this sector are having to make embarrassing readjustments to their elaborate projections. Thus Molycorp (MCP) comes out with disappointing numbers that expose their inability to meet their own projections. What about Avalon(AVL)? They have been forced to fall on their own swords as they admit delays on their feasibility study due to issues involving metallurgical processing so important to the economic viability of their project.

Lynas(LYSCF) has local opposition against their processing plant in Malaysia .  Investors are growing cautious as these companies have to face the bread and butter realities incumbent on bringing rare earths into production away from the Chinese players.

Certainly, little David (Ucore) appears to have a certain advantage over the cumbersome and much larger behemoths on the field.  Ucore was called to Washington in an advisory capacity as an expert source for the edification of the Senate Energy and Natural Resources Committee. Our representatives are beginning to awaken to the urgency of developing a domestic rare earth supply chain. At last our representatives are realizing the importance of taking the Critical Minerals Act off the shelves and making the bill a fait accompli.

We are talking here about national survival as heavy rare earth metals such as dysprosium and terbium are essential for the growth of our domestic industrial base and our national security. The Committee was made aware that it was not enough to mine the material and send it to China for separation. America has to produce magnets on U.S. soil or face becoming a client state of Beijing.

Paradoxically, the rare earths were once an American resource.

Somewhere along the way the Chinese twenty years ago were able to coop American know how. Ucore brought this urgency to the awareness of the committee. Ucore’s CEO Jim Mckenzie emphasized, “…Restarting the rare earth supply chain within the United States is essential not only for national security and clean technology, but also as a means to putting American-based ingenuity back to work and avoiding further degradation of the country’s industrial base.”

Ucore is talking jobs here and American independence.

Interesting how the Chinese have turned the precepts of Adam Smith against us. There is a good reason why Ucore was asked to enlighten the committee. Ucore owns the highest grade and largest 43-101 compliant resource of critically essential heavy rare earths.

We now find that purported giants such as Molycorp, Avalon and Lynas have over-claimed and are facing an embarrassing retreat from their projections. Molycorp missed guidance, Avalon delays their feasibility due to metallurgy and Lynas has got their own problems of having to operate in a questionable jurisdiction in Malaysia.

There is much noise here and little substance. These companies have multi-billion market caps that are questionable and

have shown meager results. Ucore has only an $80 million market cap but presents a rare instance where the little guy can slowly but surely present a superior case. Ucore has certainly gained market share on Molycorp in 2011 and may continue to do so in 2012.

The reach of the giants have exceeded their grasp. It is not enough to claim colossus advantage if you are bucking up against unfriendly jurisdictions, questionable logistics such as roads or ports, high capital costs, environmental opposition and resistance from

indigenous groups. Today, the Goliaths are stumbling as they finally have to come up against their moment of truth.

Ucore is moving ahead quietly and surely with the support of the entire Alaskan political representation including the Governor, Senators and Congressmen. “Little David” (Ucore) has a few more stones in their slingshot such as the advanced X-ray approach of extricating the heavy rare earth ore from the waste rock and what is hoped to be a positive Preliminary Economic Assessment(PEA) expected in the first quarter of 2012. Additionally the metallurgical results from Hazen have been extremely favorable and hopefully will continue to yield increasingly positive results.

Make sure to stay tuned to any developing news in the rare earth space by clicking here…

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Gold Mining Stocks On The Rise

In Market Analysis, Stock Movers on November 15, 2011 at 2:50 am

Bullets are flying in what has become the new warfare. In the old days wars were fought with Pearl Harbor surprises and outright takeovers of territorial assets. Previously the capital markets have been content to don jackboots and military strikes to control economic developments. With the advent of the nuclear deterrent now being possessed by an increasing number of nations, contemporary wars are morphing away from bullets and bombs. The elites have a good thing going. It is to their interest that the nuclear option be avoided at all costs. Ergo bonds, yen(FXY) and francs have become the new bullets. The Keynesian option has never really worked and has resulted in a series of conventional wars that have had questionable results. Now nations can be brought to their knees by skillful currency manipulations.

FXF Currency Shares Swiss Franc Trust

Witness how Soros became wealthy by his operations in crippling the Malaysian and English Currency. Such a maneuver is a poignant display that economic stimulus based on Lord Keynes socialist/palliative measures are at best doomed to eventually fail. It is sad to see the Swiss being mobilized to put a futile floor under the Euro. However, they are being drawn into the swirling vortex of the Eurozone currency convulsions.

In reality, we question the sustainability of the German and Swiss interventions. In fact, the markets as we speak have responded with severe volatility in the general equity markets over 2011. A rally has been expected in equities, however, this incredible market rebound since our October 4th buy signal may indicate that investors are getting wise to the efforts of the European and U.S. Central Bankers to prime the pump.

Investors may well be running from the Euro(FXE) into the U.S. dollar (UUP) and long term treasuries(TLT). It is curious that the Euro is not being buoyed by the Swiss intervention. This may be signaling trouble in Eurozone survival. The U.S. dollar is undergoing a rise which we believe is a cosmetic response to the weakness in the Euro. All short term currency manipulations produce technical gaps which inevitably is filled.

GDX Market Vectors Gold Miners

At the same time, the gold miners (GDX) are approaching interim upside targets as the upward breakout in the miners accelerates as it reaches new all time record highs. It is now playing catch up to the underlying bullion which we have been predicting for several weeks. There will be a shrinking of the divergence between miners and bullion to the advantage of the miners.

Although we may see some short term profit taking in the miners this extended 12 month base may lead to a more extended long term move. In 2010, we did not see this decoupling of gold miners from equities in such a dramatic fashion. But that fear driving investors away from mining stocks may be reversing as miners regain safe haven status.

It has become a common occurrence to see general equities down yet the gold(GDX) and silver(SIL) miners up significantly. This demonstrates investors are beginning to look at the gold miners as leaders in a market which is desperately looking for strength.

As gold reaches these technical conditions it is important to remind readers of the gold:silver ratio. Silver may go up in a higher percentage terms than gold in this inflationary environment over the long term and has done so over the past three years. In 2011 silver has been in retreat. Nevertheless, we are confident that silver will also gain recognition as a hedge against global financial instability sooner rather than later.

Gold (GLD) and silver (SLV) have undergone one of its characteristic declines in the month of September. As a runner settles backwards in his starting block in order to propel himself forward so does precious metals undergo healthy corrections in order to once again move into new highs in what is its upward secular pattern.

The world is beset by a deluge of multiple macroeconomic problems ranging from the Eurozone Crisis to the Middle East Cauldron, which the media either mischaracterizes or totally ignores. These issues are long term concerns and will not be solved overnight. Add to this list of woes, rising U.S. unemployment and the malaise in housing and we have the perfect storm for precious metals as a long term haven.

President Obama is slated to present his ideas to hopefully institute corrective measures to extricate the floundering global economies from its quagmire of fiscal quicksand. Bernanke comes to bat again in a few weeks. The 2012 election is right around the corner. This might be an inflationary signal.

We refuse to be thrown off the bucking bull of precious metals. We share such sentiments as do astute buy and hold investors such as John Paulson, John Hathaway and Ron Paul whose portfolios are represented by a large percentage of gold miners which will be discussed in an upcoming essay.

What about the U.S. dollar? The Swiss National Bank has put a cap on the Swiss Franc which had been viewed as a safe haven. This leaves the field up to gold/silver as well as the U.S. Dollar. The dollar might move upward as it represents the best of breed in a tepid brew of weak currencies. Remember the U.S. dollar’s status of safe haven is an optical illusion in comparison to a backdrop of tired, old, fading beauties such as the Euro. Currency interventions produce gaps which are inevitably filled. Therefore we will continue on our long term path of wealth in the earth assets in the form of miners in gold(GDX), silver(SIL), rare earths(REMX) and uranium(URA).

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Gold and Silver Miners On Upward Move

In Featured Company News on November 8, 2011 at 7:52 pm

Investors in mining equities are finally being rewarded for their patience and fortitude.  The Gold Miners (GDX) ETF is making a challenge to all time highs at the $64 area after basing for close to a year between the $52.50 low and $64 high.  What is the cause of this impressive move in gold, silver and the miners?

The unemployment numbers continue to show that the economy has produced not that many jobs.  The Fed will be forced to implement accommodative measures through the reinstitution of quantitative easing.  Investors are now factoring in a QE3 by whatever guise necessary.

The unemployment rate is already high.  Elections are looming.  The politicians in Washington will do whatever they must if they want to have a chance at being reelected.  Bernanke in his statements assured us that he has a number of arrows in his quiver.

Another Ben with the name Franklin famously wrote, “The only thing that is certain is death and taxes.”  Bringing this aphorism up to date one could add economic stimulation and inflation to his observation.

Gold Stock Trades continually annunciates the mission statement of our service.  Stocks are very carefully selected as candidates that may experience major gains which far exceed the negative interest rates given by your friendly neighborhood bank.  The miners (GDX) have vindicated our motus operandi.  They are on the move…upward and onward!  Excelsior!

Wealth in the earth assets are similar in ways to other crops.

As Solomon advised, “There is a time to sow and there is a time to reap.”  Recent developments may serve as our vindication.  Despite the cavils of the naysayers in early October who recommended cash and treasuries GST repeatedly counseled, “Stay the course and hold fast to the wheel in precious metals and natural resources!”  In fact on 9-27-11 our gold timing indicator went from a hold to an aggressive buy.

When gold and silver declined, we bought and advised patience and fortitude despite the large presence of naysayers calling for a major deflation bringing down precious metals and commodities.  We are well aware that the natural resource arena that we have entered is capable both of astonishing rewards and gut wrenching descents.  One must take the opportunity to fight the herd at those extreme levels of emotion.

Many investors misconstrue the very nature of The Bourses.  The casino must do whatever it can to send most people home as losers.  There can only be a minority of winners in order for The House to make a profit.

Stocks in general are not the get rich quick game.  It is instead the age old story of the transfer of wealth from the guys who take the bus home to those that go home in limousines.  The ascent upwards is more often gradual than meteoric.

Along the way in the upward progress of our precious metal selections there will be times as Winston Churchill often stated, “…this is one of those days of the Black Dog.”  It is important for our readers to understand the game.

Markets will do whatever they must to shake the weak leaves off the strong tree.  Jesse Livermore wrote, “Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting.”  Ergo we select, then wait for the fruits to grow in time.

Many of the “experts” came on the table to sell their precious metals and mining stocks so they can enter the so called safe havens of treasuries and cash in late September, early October.  We stated firmly that it was sowing time, not selling time.   The weak summer-autumn season was rapidly coming to a conclusion and the fourth quarter has generally been very strong for the industrial commodities we follow such as copper, molybdenum, rare earths, lithium and uranium as well as precious metals such as gold and silver.  Additional monetary easing should act as a catalyst for these sectors as well as increasing tensions in the Middle East especially Iran.  The fourth quarter comeback in gold, silver and the miners to close September’s downside gaps has been a surprise to many.

In late April and September, mining stocks attempted to break into new highs on low volume and failed.   Mining equities and natural resource stocks began their consolidations breaking long term trendlines and moving into a major area of support at $52.50 a key line in the sand. Precious metal investors ran to the underlying bullion and long term treasuries as a means of a safe haven and aversion to any market risk.

We believes capital will begin flowing back in from treasuries and cash into first precious metal miners and critical wealth in the earth assets as economic stimulus is reintroduced into the market.  As Omar Khayyam wrote centuries ago, “Come, grow along with me, the best is yet to be.”  Look for temporary pullbacks and sell offs as opportunities in the long upward ascent of precious metals.  Stay tuned to my free service for flash bulletins.

Check out this recent interview below with Peter Dougherty, President & CEO of Argonaut Gold(AR.TO), one of the few gold miners significantly outperforming their peers in 2011 and hitting new 52 week highs.  It should be noted that the current management team at Argonaut previously served at Meridian Gold which was sold to Yamana for $3.5 billion dollars.



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Rare Earth Miners: The Most Exciting Sector of Our Time

In Market Analysis, Stock Movers on November 2, 2011 at 5:31 pm

Sophisticated readers are well aware of the media’s tendency to twist the news to fit the fashions of the day. Many members of the press earn their daily bread by manipulating the news with sensational headlines sure to grab readers, but unlikely to thoroughly inform the public on an admittedly complex issue. Bloomberg’s recent article by Sonja Elmquist, “Rare Earths Fall as Toyota Uses Alternatives,” is characteristically misleading.

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First of all, this reporter fails to differentiate between the light and the heavy rare earths. They are lumped together in a misleading compote. Truth be told, if you open the hood of a Toyota car or truck, about 50 points use dysprosium as a prominent role and it would be next to impossible to economically and effectively replace the size and weight of the car itself. In an age where fuel efficiency—and thus automotive body weight—is of vital consideration, substitution for heavy rare earths is close to impossible, and would likely result in an automobile more like a 1970 Buick, a car that was popular when gas was $0.50 a gallon and chrome was as thick as rush-hour traffic.
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A bulky, heavy vehicle such as this would fare very poorly in today’s efficiency-conscious auto market. Light rare earth elements are commodity driven, and heavy rare earths are largely unique and thus inimitable. The automobile manufacturers depend on heavy rare earths, and the cost of replacement is prohibitive. However, the Japanese must maintain a straight face in this global poker game and fake that they don’t need any of the rare earths.

But Japan’s latest bluff is just one round in a tournament that has been unfolding for decades. China recognized the emerging importance of the rare earth sector as early as the 1980s, aware even then that need for rare earths would grow along with devices that would change the face of modern industry. Decades ago, both Steve Jobs and the Chinese were able to foresee taking the computers from a large room and miniaturizing them for everyday utilization within the palm of the hand. These smart devices envisioned by the early pioneers such as Jobs would only have existed in the fertile brains of a handful of scientists in the absence of rare earths, which made compact technology and its mass production possible. What once were huge, block-long computers in the hands of a few corporations are now carried in the pockets and purses of the average individual.

Even today, the role played by rare earths in these iPhones and iPads is only beginning to be understood. Sophisticated readers of my newsletter are well aware of the myriad uses of rare earths, without which new concepts from solar panels to wind turbines to portable nuclear reactors to hybrid autos could not have come into being.

Considering the vast and continuing influence these resources exercise on modern life the world over, investors should take a recent Wall Street Journal headline, “Rare Earth High Fliers Find Lower Orbit: Now Prices are Under Pressure,” with a grain of dysprosium. A daily headline cannot begin to encapsulate the complexity of the rare earth universe.

The real issue at hand in REE-dependent industries is supply shortages. While alternatives cannot be found for all uses, it is necessary for companies to evaluate their needs and the resulting costs. Because not all rare earths are created equal, it is now necessary to consider the idiosyncratic qualities these different metals carry, and what purpose each serves. Both heavy and light rare earth elements have specific uses, and companies’ ability to find alternatives must be determined on a case-by-case basis.

It is difficult to not get caught up with the daily fluctuations of the marketplace. But we must continue to explore the development of rare earths and resist being seduced by alarming media buzz that tends to confuse, misdirect and obfuscate. As investors, we are looking for geometric profits in reward for our patience. Quibblers and naysayers hungry for their 15 minutes of fame will nitpick details in the daily newspapers that next week will be used to wrap fish. To them, we say good luck, but you are missing one of the most exciting sector developments of our time.

For those convinced of the revolutionary power rare earth elements offer, there are many opportunities on the horizon for this sector in flux, some of which do end up making mainstream news. A few days ago, Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) impressed the rare earth sector with a highly favorable metallurgical report. Indeed, the company was informed by Hazen Labs that it could separate 85%–90% of the rare earths from the ore. Immediately, other players in the sector issued competitive announcements. However, Ucore maintains sole possession of the most advanced heavy rare earth deposit on United States land. They have already identified an NI 43-101 resource on American territory and not left it to vague hyperbole. Ucore is rapidly advancing with its Preliminary Economic Assessment. Recently, Ucore was mentioned on CNBC as being an attractive takeover candidate for Molycorp Minerals (MCP:NYSE), Lynas Corp. (LYC:ASX) or Great Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX). Ucore was also featured in a Businessweek feature article by Daniel Grushkin entitled, “Alaska’s Billion Dollar Mine.” Little Ucore is at long last hitting mainstream media. We have been singing this particular song for a long time.

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Meanwhile, it remains to be seen whether sector giant Molycorp can specify the quality and quantity of the actual heavy rare earths they are going to produce. Molycorp or Lynas might be well advised to acquire a heavy rare earth asset at these low valuation levels in order to present a complete catalogue of rare earths to the investment world. We will all have to watch the headlines to find out.

Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst who is syndicated internationally and known throughout the financial industry for his accurate and timely analysis of the equities markets—particularly the precious metals, rare earth and nuclear sector.

Market Rebound Should Benefit Gold and Silver Miners

In Market Analysis, Stock Movers on November 1, 2011 at 3:27 pm

Agreed bullion  has outperformed the miners throughout 2011, but that may soon change. The gold and silver miners and especially the junior explorers are especially oversold and are in a long range base from which up moves occur. The rising price of gold has significantly boosted the revenue of gold miners this year. Many miners have boosted their dividends to shareholders. Eventually these bullish fundamentals will be expressed in their share price. Gold Stock Trades senses that a lateral pass from the bullion quarterback to the miners wide receiver may be a viable option.

We are seeing the stirrings of such a game plan developing. A temporary resolution out of Europe may help the risk on rally benefitting miners of precious metals.  This may possibly predict things to come where the miners take the field over the long standing supremacy of gold bullion. In early 2009 after the Obama bailout miners outperformed gold by a substantial margin.

We have observed this underperformance of the miners for for several months and alerted readers to view this as a buying opportunity in the miners.  Over the long term the mining stock equities tend to return to the mean in the golden see-saw. There may be an equal and opposite outperformance in the miners compared to the underlying bullion. This counsel may be beginning to pay off as the underlying equities begin to catch up as investors “risk on” appetite increases as a bailout plan solidifies out of the Eurozone.

The world was waiting for solutions to Europe’s crisis such as increasing the size of the rescue funds to bailout the weaker countries. A temporary solution was reached with China’s assistance. The unexpected “risk on” rally continues for the time being.

Gold Stock Trades has repeatedly called for a readjustment of the bullion to miners reciprocal relationship. The past few weeks have revealed the potential reversal of the precious metal equities and the general market. Technical charts indicate what may well be a golden crossover of the miners as well as the general equity markets as they penetrate the 200 day moving average to the upside.

While death crosses were plaguing many sectors, the major miners as well as the general equities (SPY) are making intermediate term reversals as they cross above the 200 day moving average.  If the miners and equities are able to hold the 200 day we could see the death cross (50 day crossing below 200 day) transmuted into a golden cross (50 day crossing above 200 day) a very bullish sign for the general equity market.

At the same time, the hundred year old Dow Theory which flashed a red light confirmation that the generalmarkets were heading down in August is being reversed to the upside.  According to this theory a sell signal was given as the Dow Industrials and Dow Transports broke decisively through the June lows. The powerful  bounce in the general markets breaking through these critical levels indicates a new bull reversal may be forming.

Some of the junior precious metal miners have been affected short term as these promising selections were thrown out with the bath water in order to meet margin calls.  Our miners are in mature bases from which positive breakouts occur. Recent declines should be reversed with the powerful up moves which we are witnessing.

In conclusion, within the precious metals market itself the gold and silver miners may be entering a new era of respect in a kind of second coming within the overall rubric of the bull market in gold and silver bullion.  As the markets rebound we expect the miners to be the leaders. They have earned respect with large profits and now are rewarding dividends to shareholders.

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How will the Eurozone survive with Germany’s economic future in doubt?

In Market Analysis, Stock Movers on October 26, 2011 at 9:17 am

Germany (NYSE: EWG) has taken the path away from nuclear following Fukushima by shutting down their reactors and importing natural gas from Russia (NYSE: RSX) and nuclear energy from France (NYSE: EWQ).

This move away from nuclear is no way to run a modern industrial nation which has heretofore been the strongest economy in the Eurozone area continuously bailing out their debt ridden neighbors.  After this move we hear news that the once burgeoning German economy is grinding to a halt due to a “sharp drop in energy production after the government shut down eight nuclear plants after the Fukushima reactor disaster in Japan.”

This is not a surprise we were aware of this potential black swan.  Merkel buckled to the demands of environmentalists run amok by halting nuclear power generation thereby causing a large drop in domestic energy production causing rising prices in other energy venues.  Industries closed up shop as Merkel abandoned economic growth for a few votes.  Germany’s leading companies have been protesting as they are being strangled by increasing costs that has consistently risen for the past decade.

Germany was the first major country to abandon nuclear power following Fukushima.  Merkel’s move is in contrast with the U.S., China, Turkey, India, Russia and many other countries who are continuing full speed ahead with safe and next generation nuclear reactors.

China (NYSE: FXI) just concluded a nationwide safety inspection following Fukushima of nuclear plants and will begin approving new reactors as they seek to multiply their energy capacities.  China finished the inspections post Fukushima one month ahead of schedule indicating their eagerness to satiate increasing energy demands from its growing economy.  China will likely adopt the AP 1000 design being the first to adopt next generation standards that are safer, economical and efficient.

Germany must understand that a modern industrial nation must utilize nuclear power to satisfy its energy needs. Now we are witnessing the consequences of Merkel’s move away from nuclear and how it may be a serious blow to future of the Eurozone.  Germany, the once industrial giant has become a client nation as domestic energy production dropped in the second quarter impacting negatively their GDP.

Eurozone banks are in serious danger of collapsing. Unfortunately Germany is involved in financing these troubled entities. The question arises, how will the Eurozone survive with Germany’s economic future in doubt?

Deutschland’s experiment is a failure and now the world has observed the economic consequences of abandoning nuclear.   Months ago, the leaders of German Industry wrote an open letter stating, “that the ending of German Nuclear Energy with such unprecedented haste gives us increasing worry.”  Merkel may have destroyed Europe’s most advanced modern industrial machine as the only country supporting the Euro finally succumbs self destructively.

Germany is swimming against the tide as the rest of the world says, “Yes” to nuclear energy.  There are 443 operating reactors, which does not include new plants coming online. There are currently 62 modern and efficient power plants being built all over the world including 27 in China, 5 in India, 11 in Russia and even 2 in Japan among many others that have elected to continue turning on nuclear power.  In fact, uranium is fast approaching a supply-demand deficit and there is a possible shortage in uranium ore which may benefit uranium miners (NYSE: URA).

The prolonged basing period in uranium is rapidly approaching its conclusion.  Last year we saw major demand in uranium as prices soared and many nuclear miners made large gains during the fourth quarter.  Now many of the uranium miners are drastically oversold reaching long term support.  This year we are experiencing a prolonged basing period due to the aftermath of the millennial tragedy in Japan and The Western Sovereign Debt Crisis.  An extended consolidation leads to powerful up moves.  There are signs the rise in uranium miners may begin shortly.  There is a nuclear renaissance globally especially in North America.  Witness the recent announcement by Rio Tinto Plc. (NYSE: RIO), who is making a “Friendly” offer on top of Cameco Corp.’s (TSX: T.CCO) and (NSYE: CCJ) “Hostile” bid on Hathor Exploration Ltd. (TSX: T.HAT).

The feeding frenzy for Hathor is only the beginning of major mining interests who recognize that nuclear is a logical and economical energy source for America’s future electricity.  Expanding nuclear into the energy equation will diversify our power demand and produce inexpensive electricity for our nation far into the future.    Our homes, businesses, and environment will be the beneficiaries.

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Downward Move In Gold And Silver Should Be Short Lived

In Market Analysis, Stock Movers on October 24, 2011 at 6:31 pm

Do not be in anyway daunted by this recent correction and volatility in gold, silver and the miners.  The upward ascent in the precious metals drama requires not only patience, but the awareness that 20-30% pullbacks in bullion are characteristic and frequent.  One should’ve been prepared for short term downward moves in precious metals, which we have recently witnessed as gold exceeded overhead resistance in early August.

We are on the verge of The Fed implementing some form of stimulus in order to revive an economy which is undergoing cardiac arrest.  It matters not how the Central Banks disguises this shibboleth.  The important instrument is the application of a kind of defibrillator to jumpstart a moribund economy, which will serve to revive patients on both sides of the Atlantic…for the time being.  This will not be a permanent thing, there will be more stimulus down the road.

The sharp downward move in gold and silver bullion should only be interim.  There will still be market uncertainty, the travails of the PIIGS, possible credit downgrades and the influx of mad money into the irrationally, uncertain havens of long term treasuries  and the U.S. dollar  in a purported flight to safety.  The benighted lemmings jumping into the supposed safety net of treasuries are buying still more treasuries as they go over the cliff!

What do all these gyrations mean for GST subscribers?  The implications will be tough on a beleaguered middle class upon whose tired soldiers will fall the need for payment for all of this.  We are talking increased taxes and the entire Keynesian rulebook.        Eventually, default of the United States becomes an increasing possibility.  The hard working investor is finding few places to hide.  Now we may see what we have said all along that the large and junior miners  may increasingly become a valid safe haven away from fiat money.

We may see a rotation from overhyped treasuries into the neglected, beaten down miners and bullion.  This event should come sooner rather than later.  We attempt to direct rational investors to miners which represent the parent source of bullion in an insane, irrational and hysterical fear driven market.  Remember the market will do whatever it can to confuse, misdirect and obfuscate the intelligent investor.

Hedge funds and banks do not enjoy the advantage held by the individual speculator who can ride through the attempts of the bucking bronco of chart patterns as they attempt to unseat us.  They are less flexible than individuals as they can not keep positions in volatile markets.  That is why it is said that the individual investor has the advantage over the big guy in being able to hold on to a potential winning position.

What does this all mean?  Avoid margin, stay the course no matter how difficult.  The markets are rebounding, whether this is a technical bounce or the inception of the long move upward remains to be seen. When the market regains its footing and as the panic recedes, we expect the miners and precious metals to continue outperforming the general market.

Silver is slowly overcoming the punitive COMEX margin increases that occurred over five months ago.   Gold Stock Trades is confident that gold and silver will fill the downside gaps due to increased margin rate hikes and the surprise twist instead of QE3.

Again we reiterate that we have been prepared for QE3 in whatever guises necessary.  There is an increasing chorus of investors who are pleading for constructive moves by Bernanke and The Fed to stop the pain and bleeding.  We await “Helicopter Ben’s” to give us some indication that our prognostications are going to be fulfilled.  He still has ammunition and will do whatever he can to battle deflationary forces through the printing press.  Stick to the long term trends despite short term volatility.

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Beware Of Debt Bubble, Hedge With Gold and Silver Miners

In Market Analysis, Stock Movers on October 18, 2011 at 8:37 pm

We have alerted our subscribers on many occasions during the past two years that global credit downgrades of sovereign nations were inevitable. It does not take a prophet to have foreseen the turbulence in the global marketplace that we have witnessed since the expiration of QE2. Standard and Poor’s cut the rating one level from AAA to AA+. This action sent shockwaves reverberating throughout the financial world as irrational investors sought U.S. treasuries for liquidity. These days of reckoning will be with us for a long time as investors flee from deteriorating paper after an artificially induced debt bubble to undervalued real wealth in the earth assets such as the gold  and silver miners.

Unfortunately, the American middle class is being rapidly disenfranchised. The economy has been pillaged by appointed officials who have received lavish bonuses from TARP monies instead of prison sentences. The very same miscreants who raided the hen house were appointed to reconstruct the chicken coop. The hard working Americans who pay the taxes and go to work every day have scant recourse but to accumulate miners and hopefully elect ethical representatives who will put a halt to ruinous printing of fiat money. It’s about time that the American investor awakens to this fiscal insanity. We believe there is a great opportunity in this growing divergence to pick up overlooked and undervalued mining equities and bullion after the recent selloff.

The G7 nations published a statement that they will take all needed measures to support stability in the global markets. Merkel and Sarkozy pulled out the big guns saying they would prop up shaky European Banks. Do not be surprised if Bernanke comes up with a similar quantitative easing approach to pay down American debts and avoid another crash. When Bernanke did this with QE2, in August of 2010, the markets took off and many of our selections in natural resources soared with doubles and triples.

Subscribers must realize that what is going on is a version of pump priming of whatever means necessary. Our firm has continually stated that we are being programmed with weak economic data and fear mongering by the media for additional stimuli to revive the economy.

Some readers are concerned that small miners may not be able to raise capital in these tight credit markets. Although there will be short term pullbacks and increased volatility like we have witnessed, the trend for Central Banks to stimulate the economy through whatever guises necessary should continue. Wealth in the earth assets and gold (GLD) and silver bullion (AGQ) will move higher over the long term. These healthy corrections are characteristic of mining stocks and the precious metal arena.



In conclusion, the recent upward reversal in the markets is an opportunity for subscribers to stay the course. It is only a matter of time before the upward move in bullion is reflected by the miners as they represent the source of bullion itself. Do not get caught up in the current panic and use this pullback as an opportunity to add or initiate positions in precious metals and natural resources mining equities.

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Snapback Rally In Metals and Miners?

In Market Analysis, Stock Movers on October 7, 2011 at 1:17 am

Right now treasuries and the U.S. dollar are viewed as refuges of safety, while gold, silver and miners are sold off. The perceptive investor notes that these U.S. debt instruments are forming a parabolic move as the herd tilts the see-saw in an unsustainable direction.

Again it is Mackay’s “Madness of Crowds” repeated over and over again. The panic is reaching such irrational heights that the masses are willing to give their hard earned cash to the Federal Government at negative interest!

What greater folly can there be than investors  putting their hard earned savings into U.S. debt for the next 30 years? Our country is bankrupt, the money of investors is being sunk in a bottomless pit of a government that can not manage its own finances.  Hard earned investor money that may never be seen again are disappearing into the maws of government incompetence and downright malfeasance. Talk about an irrational bubble!

Instead, such a money losing procedure would be better invested in palpable mineral assets in the ground. Here we have the spectacle of panic and fear propelling hard working middle class investors willingly leaping as lemmings into one of the most risky assets of them all U.S. Debt and selling real mineral assets for pennies on the dollar.

U.S. debt should’ve been downgraded a long time ago, but for the failure of their crony rating agencies to act in a fiduciary manner. They have a bad record.  Remember the subprime fiasco which is one of the causes of the impoverishment of our entire country. Talking about kicking the can down the road-it is a can of worms.

Foreign agencies are questioning the validity of the U.S. credit rating being assigned increasingly shaky assets, yet investors flock to them in search of liquidity.

A more rational approach would be to purchase a quality gold and silver producers who are posting increasing profits quarter by quarter, return on equity and a growing pipeline of development opportunities.

Gold Stock Trades sees a snapback occurring imminently. Do not be confused by the machinations of the Wall St. institutions in their age old process as they steer the small investor away from situations which they themselves are picking up at bargain basement prices.

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We may now be testing a bottom that may furnish us additional entry points. The current crisis may be just the excuse that the Federal Reserve has been waiting for to inject additional stimulus. Do not be dismayed by violent corrections as investors are forced to sell natural resource stocks in order to meet margin requirements. These liquidity traps may result in declines of 50-90% which are characteristic in the life cycle of junior mining companies.

To reiterate, we are possibly being programmed by the authorities to accept yet another stimulus. Recently Bernanke said, “…The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support.”

It is the old law of the casino: there can not be 100% of winners at blackjack. Perhaps 20% of the winners walk away with the losses of the 80% who go home with empty pockets. Joseph advised the Pharaoh of Egypt thousands of years ago, there are fat years and there are lean years during which as faithful stewards we should prepare ourselves for the hard times during the prosperous years by taking profits as targets are reached.

What do all these allusions mean to the subscribers of GST? Witness the panic and fear that now pervades the marketplace. The astute speculator watches and waits as the corrective process wends its way through the markets. It is the age old transfer of wealth from weak hands to strong hands.

Let’s look at the events of this latest correction. What we are now going through is not novel. As far back as the early civilizations until the present time, the financial markets have created winners and losers. Whether it be tulip madness or the Florida Land Boom fiasco, the markets have always found ways to separate the winners of the losers. Today’s bubble is not in mining stocks, but in U.S. treasuries.

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Healthy Correction In Precious Metals Brings Opportunity

In Market Analysis, Stock Movers on October 6, 2011 at 6:22 am

Over the past few weeks I have alerted  subscribers that gold was due a healthy pullback.  On September 5th, 2011 I wrote,

“It’s been a long run for the bullion since my firm’s late January 2011 buy signal. Make no mistake, it will rise though, refreshed to make another run to higher highs. A brief retreat for gold bullion to long-term trend support would be of no surprise. Indeed, it may represent a healthy and necessary correction in what my firm views as the ongoing highway of the long secular rise. These thoughts should not be regarded as bearish analysis at all. Instead they are being presented as a technical and healthy possibility to eliminate current media-hyped precious metals euphoria and avoid buying gold bullion at an interim top.”

Barron’s quoted our Gold Stock Trades Premium Daily Bulletin today indicating a potential reversal after this post Fed, short term, volatile “twist”.

The Market Vectors Gold Miners ETF (GDX) gained 4.6% on the day while its small-cap minded cousin the Junior Gold Miners (GDXJ) rose 5.2%. The Global X Silver Miners ETF (SIL) finished higher by 5%.

“Seasonality should play a factor here. Historically, bear markets end and bull markets begin in the fourth quarter. To those summer soldiers considering throwing in the towel, this may be a time for reconsideration,” noted Jeb Handwerger, editor of Gold Stock Trades.

To read the full article in Barron’s click here.

Check out my recent interview discussing the recent selloff and one gold miner making major progress in mining friendly Nevada.



Time To Reenter Gold?

In Market Analysis, Stock Movers on October 5, 2011 at 2:39 am

Stock markets are tumbling from Japan to Wall Street. Already shaky Spanish and Italian financial instruments are quaking in their fancy boots as Greece does not make the cuts needed to be able to receive financial assistance. Vladimir Putin, a prototypical example of a classic Russian Bear says that the American Bull has blunted horns and suffers from impotence. He states, “Americans are living beyond their means and shifting the weight of their problems to the world economy…They are living like parasites off the global economy and their monopoly of the dollar.” China joined Putin by calling the brouhaha in the West as “madcap brinksmanship.”

The scepter of fear is haunting the fiscal world from West To East. International turbulence is precipitating a search for safe havens. Treasuries (TLT) are hitting new highs, the U.S. dollar (UUP) has bounced versus other currencies, commodities (DBC) are being sold off and gold(GLD) and silver (SLV) bullion’s volatility has increased significantly.

These actions are signaling a notice of caution in an economy which is in desperate need of jobs. It is not only the debt crisis, it is the DEBT. The world is worried. No country including the United States can long remain a global factor when dollars are being squirreled away at close to 0% interest in cash and long term treasuries. This capital should be productively used to build factories, mines and mills.

Dormant dollars and treasuries are not exactly the B12 injection that the old bull needs. Do not be surprised as unemployment soars that the Fed at its upcoming meetings does a reprise of the show from the summer of 2010. It may not be a stretch to think that all of these developments may be programming us for Chapter 3 in an ongoing series of quantitative easing to try to stimulate job growth and to stave off a deflationary spiral as Operation Twist was a dud.

By now our readers should realize that it is specifically those sectors representing wealth in the earth resources such as the gold (GDX) and silver (SIL) miners that will prove to be areas of sizable payouts in times to come. Our sectors represent buys of a lifetime as the global economy is in convulsions.

It must be realized that not all wealth in the earth sectors move synchronously. Gold and silver are unique in that over the centuries they move from peaks to valleys and back again with breathtaking volatility. An examination of historic charts reveal that despite the ongoing roller coaster the precious metal arc rolls upward.

SLV:SPY iShares Silver Trust/S&P 500 SPDRs

Right now, gold(GLD) has achieved our long awaited pullback to the $1600+ area. Our firm recommended taking partial profits in a percentage of our holdings in gold before this pullback. It appears to be a prudent move as we witnessed a short term decline. Now may be a more propitious time to reenter at oversold conditions and after a healthy correction.

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The Rare Earth Sector: Questions Must Be Asked

In Market Analysis, Stock Movers on September 27, 2011 at 9:25 pm

This week, Molycorp Minerals (MCP:NYSE) went to bat before the House Foreign Affairs Committee, represented by CEO Mark Smith. What was needed was a confident batter presenting an urgent case for national survival. But instead of a strong slugger, all we got was a little leaguer. Opportunities were missed and runners were left stranded. The industry sent a very conflicted Mr. Smith to Washington.

First of all, Mr. Smith never questioned the categorization of the metal class, namely that heavy rare earths (HREEs) are lumped in with the more common, garden-variety light earths (LREEs). Not once were the members of the committee informed of the importance of the highly critical dysprosium and terbium minerals, or the serious consequences China’s supply monopoly poses for American industry. Meanwhile, Alaska-based miner Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) is sitting on a mountain of dysprosium and terbium in North America’s backyard.

Indeed, the Machiavellian hand of China’s mining industry was not merely overlooked, but praised. Mark Smith’s presentation before the Congressional Committee read like an apologia for the nation’s draconian quotas. Not once in his presentation did he make reference to American sources of these valuable minerals. Instead, Molycorp was hailed as king of the REE hill, as if there were no other viable rare earth entities. It became an obvious case of not-too-skilled investor relations.

In every missed opportunity there exists a valuable learning experience. What else was omitted that would have made for a stronger presentation?

  1. Where does Molycorp get its heavy rare earths? Smith claimed Molycorp possesses a complete suite of rare earths at their Mountain Pass property. Assays have shown that this mountain possesses predominately light rare earths with little or no heavies.
  2. Why does Molycorp venture to far-away Estonia to process U.S. ore when it can be done more efficiently and economically on American soil? A new industry could be created here offering jobs to build a new, native industry.
  3. What was the significance of the aborted deal between Hitachi and Molycorp? The Japanese claim that Molycorp did not possess sufficient heavy rare earths to satisfy Japanese industrial needs. Smith glossed over the strategic importance of heavy rare earths right here in the United States.
  4. Why was no mention made of the Critical Minerals Act that has been languishing on congressional desks for many months? Encouraging Federal Government to support this act might have served to fast-track vital legislation. What could be more pertinent than weaning the U.S. from its dependency on China?
  5. Chinese policy makers have stated that the nation needs strategic rare earths for its own markets and that there are simply not enough of these resources to go around. They’ve even said they would welcome American firms to develop the sector on Chinese soil. Why not explore this opportunity to assist our Chinese colleagues, thereby furthering a more harmonious relationship?

Let’s hope that a more voluble and reasoned representative will inspire Congress at the next opportunity. Sadly, only four committee members were present at the hearing. Perhaps such North American players as Ucore, Rare Element Resources Ltd. (RES:TSX; REE:NYSE.A) and Great Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX) can send a slugger up to bat to advance our indigenous rare earth industry.

It’s not just Congress who could use some enlightenment on this oft-misunderstood market; even major investment firms demonstrate limited understanding of the rare earth sector. J.P. Morgan recently downgraded Molycorp’s rating, slanting its sector thesis by forecasting declining prices. Nowhere did they differentiate between the heavies and the lights. Dysprosium and terbium prices have not gone much lower. Investors fear that Molycorp and Lynas Corp. (LYC:ASX) will flood the rare earth supply when they come online, but this is not the reality.

Right now, LREE-heavy Lynas and Molycorp are half a loaf. All these two giants have to do is look to our recommendation list to find suitable heavy rare earth additions to complete the catalogue, or else they open themselves up to evisceration by bankers who may be playing both sides of the field.

Finally, is it not passing strange that JP Morgan chose to issue this negative pronouncement on the eve of Bernanke’s two-day conclave in Washington? Keep in mind that J.P. Morgan is being sued by individual silver investors who allege the bank “amassed an unfairly large position in silver futures and then used its position to drive down prices of silver and increase its own profits.” (Wall Street Journal) This lawsuit may indeed throw into question good-old J.P.’s credibility as an impartial observer. Do not forget that our rare earth stocks have an incredibly large short-interest position. This is not the time to flee the battlefields in this vital sector.

Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst who is syndicated internationally and known throughout the financial industry for his accurate and timely analysis of the equities markets—particularly the precious metals sector. You can read his daily bulletin for timely updates on the rare earth sector by clicking here.

Compelling Values In Gold, Silver and Miners After Correction

In Market Analysis, Stock Movers on September 27, 2011 at 5:15 am

The boards have been awash in a sea of red for precious metal investors.  After Operation Twist many forget the underlying reasons why the U.S. dollar (UUP) is rallying.  A few weeks ago we highlighted that Japan(FXY) and Switzerland(FXF) fired a shot heard around the world in an attempt to remain competitive in the global marketplace.  The rapid rise of the yen, a traditional safe haven currency, threatens Japan’s economic survival in an increasingly competitive world arena.  This holds true for the Swiss as well.

The franc and the yen were seen as safe havens compared to the U.S. Dollar.  This interventional action into the foreign exchange markets is the third time this year that Japan has had to resort to drastic measures of buying U.S. dollars in order to devalue the yen.  The Swiss, Japanese and U.S. surprise has sent the dollar soaring.  There appears to be a coordinated effort to boost up the dollar.  This is good for the struggling European problems as the indebted PIIGS can pay off their soaring debts with cheap Euros (FXE).  Finally, a dollar counter-trend rally has occurred.

The world markets sensing international monetary fear, regards Japan and Switzerland’s move as a shot across the bow.  As the world reacts to the action by the Federal Reserve’s Operation Twist, there is danger of other nations creating a full blown global currency war.  Eventually the good old U.S.A. seeing the dollar rise will be forced to devalue its own currency as a rising dollar makes it difficult for the U.S. to pay back its soaring debts.

Will the Fed or European Central Bankers through a Euro TARP come riding to the rescue in time to avert further bloodshed?  Bernanke has the option of doing what he did heretofore, which is to print fiat money.  The hoped for result in the Fed action, reflects the ongoing thesis of Gold Stock Trades, that a resort to additional global quantitative easing in whatever guise will be a welcomed relief from the pain that investors are undergoing.

Operation Twist has gotten the market to ask, “May we have some more QE…please?” This is why we have heard talk of further QE’s  down the road.  Are we being programmed for further accommodative actions as investors flee to the supposed safe haven of the U.S. dollar and long term debt?

Obviously the world is reacting with a loud, “No!” to Bernanke and Obama’s inept ability to jumpstart a struggling economy sending the U.S. dollar and treasuries(TLT) skyrocketing and selling equities (SPY), gold (GLD), silver (SLV) and copper (JJC).  The U.S. Dollar and treasuries are in overbought territory indicating that the risk aversion panic may be reaching a peak, while commodities are reaching record oversold levels and has provided a discount sale for investors who have not yet entered the hard assets secular uptrend.

Now the Fed and the ECB will be forced to come riding to the rescue before the whole system deteriorates any further.  Nation after nation are entering the currency battles.  Is the U.S. biding its time until Europe contains its own debt crisis?

What does this all mean for GST subscribers as the global hemorrhaging continues unrelieved dragging down our mining equities and gold and silver bullion to fire-sale prices?   Do not be dismayed as we firmly believe that precious metals remain a central core holding and that the miners will catch up after the margin calls are met.  Investors are selling the good stocks with real assets, to cover the losses in their weak stocks.

It is realized that the mining equity battlefield is covered with stocks (GDX and SIL) that are technically damaged.  However, this is not the time to flee the battle when the smell of gunpowder is in the air!  This is the time to be patient, remember the underlying fundamentals and look for compelling values.

We are adamant in the signal that the marketplace is sending us.  There has been a disproportionate ratio of down stocks to up stocks.  Usually a ratio of 10 to 1 indicates an immediate turnaround.  At this point the disproportion may be setting a record.   Unless this action is forecasting dire catastrophic events, there are no places to hide.

At this point the marketplace will accept even palliative measures as long as the downward descent is halted.  We expect Bernanke and Trichet to  come up with more powerful measures.  It may not walk like QE3, or talk like QE3 but in the very least it will act like QE3 by whatever means necessary unlike the twist.

Make no mistake, what is happening today in the general market has resulted in an extremely oversold condition in mining stocks(GDX) and gold and silver bullion.  A strong rebound rally is anticipated in these areas.

One of my readers just wrote, “Jeb, is the world coming to an end?”  These words are music to my ears as they indicate the fear from which significant rallies occur in precious metals.  Stay tuned to the rally that inevitably arises from such pessimism in my daily bulletin.

Disclosure: Long GLD,SLV, GDX

Check out my recent interview discussing the selloff in gold and silver.

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Great Potential Upside In Gold and Silver Miners

In Market Analysis, Stock Movers on September 20, 2011 at 9:19 pm

There has been short term profit taking in gold over the past few weeks as investors return to an oversold equity market. Make no mistake such a development is temporary and healthy as GST believes gold prices will make it back to the $1900+ area.

It is important that our comments be clearly understood. As the SPDR Gold ETF (NYSE:GLD) hit our overbought targets we moved laterally into our mining selections, which were just on the cusp of upside breakouts after several months of consolidation.

We remain firmly aboard the long term ascent of the golden highway. However, we are now reaching a point where the gold trade is becoming overcrowded and we see greater potential upside in our undervalued miners such as the Gold Miners ETF (NYSE:GDX) and Silver Miners ETF(NYSE:SIL).

A correction here to $1650 would be within the parameters of a healthy consolidation. Recognize that GLD has made a considerable move since our last buy signal.

As contrarians it requires tremendous discipline to take profits when everything is coming up roses and to buy when there is blood in the streets. Yet this is precisely the discipline of the astute trader. There are always situations under the radar, ripe for the picking.

The gold bullion trade may have been getting somewhat crowded in early August as these central banks entered during the eye of the storm. My readers have been prepared for this current debt hurricane for many years. Now when gold reaches the front pages of the media in early August our readers were prepared for a bullish consolidation and focused on the undervalued miners just beginning to make major moves.

The undervalued miners (GDX and SIL) have yet to enjoy the run up that gold (NYSE:GLD) and silver (NYSE:SLV) bullion has experienced in 2011 and look to have recently broke out. Our chart below suggests that a rise is imminent in our selections in the precious metal miners(GDX and SIL) to catch up to the underlying bullion.

The markets will do whatever they can to confuse and misdirect us as prices may possibly retreat from these interim levels to long term support. It has been a breathtaking rise in the yellow metal as the Euro and the United States both attempt to work its way out of their respected debt crises. We have seen an accelerated move in gold and this recent pullback may furnish some holders with the opportunity to reenter. The miners appear to be outperforming the bullion and may have broken a key downtrend.

The uptrend in gold is still intact. Moreover, my firm believes that the rise in gold and silver is a sign that QE3 will occur in whatever guises necessary. The lawmakers in Washington are not ready to adopt draconian measures to reduce deficits by raising taxes and by cutting entitlements. Instead, they are choosing a much easier solution which is to monetize the debt. The Fed will continue to print cheap dollars (NYSE:UUP) in order to pay off obligations. This is one of the subsurface meanings to the solution of the debt crisis. Investors are concerned by the current brittle economic fears of fiscal troubles that may lie directly ahead. Prices already are repeating last year’s meteoric rise in gold. As the U.S. dollar grows weaker and inflation increases, the price of gold will move higher over the long term although there will be healthy, restorative pullbacks along the way. During those pullbacks the miners should outperform and shrink a very wide divergence. Stay tuned to my daily bulletin.

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Short Term Correction in Gold and Silver Provides Buying Opportunity

In Market Analysis, Stock Movers on September 15, 2011 at 6:49 pm

Deflationary Repeat of 2008?

There is fear in the land. Many are asking where to go if a deflationary repeat of 2008 is in the cards. The response to such an event may be an initial decline in all holdings across the board. The market roller coaster may take us down, but if we keep our eyes open, at exactly the same moment we could see a sudden rise directly ahead in certain sectors.

The drop might initially reflect a short term decline in commodity markets which are inherently volatile. Nevertheless, the eventual payoff may be worth the ride. Global debt crisis woes may be causing the recent breakouts in hard assets such as gold and silver as global speculators search for authentic safe havens.

Dollar Vs. Euro: Greater Leeway For QE3

The old game of wheeling and dealing is going on behind the scenes as the G-7 meets. The US needs to have a cheap dollar in order to pay off rising debts. The weakness in the euro has caused a bounce in the US dollar and is only cosmetic. The dollar long term downtrend is still apparent as it attempts to rise above the declining 200 day moving average. The rise in the greenback gives greater leeway for the Fed to institute accommodative measures. Conversely, the Chinese require a rise in the yuan to fight inflation and need access to the West’s natural resources, which they can purchase with their hordes of cash and US treasuries.

Further Government Interventions

Indeed, there may be further interventions and potential easing measures by government and politicians for a short term extension of the ongoing drama, as they dot the I’s and cross the T’s in the publication of some kind of interim bailout.

Our elected representatives will play the old game of kicking the can down the road to the 2012 election. This will serve a major purpose of deflecting blame away from the foxes who raided the hen house in the first place.

They then will be able to shift the blame to the people who are busily paying taxes and government salaries. They will walk away exclaiming that the people have spoken. Little wonder that the public’s belief in politicians is at an all time low.

Bullish On Commodities

My firm maintains our faith in the natural resource sectors and wealth in the ground assets is the place to be. Surely there might be other conventional safe haven plays in such venues as the dollar and treasuries. These countertrend moves are transitory in nature. The bubbles are in long term US debt and deteriorating Western paper currencies, not hard assets and natural resources. Any short term decline in our chosen sectors should rebound violently to the upside.

Investing wealth in the ground is exactly what our Chinese counterparts want to do with their paper assets in the dollar and long term debt.

Look for increased Chinese participation in acquiring mining assets. I believe this is only the beginning in the long range rise in mining resources.

Safe Havens

So where are the safe havens now? Is it in treasuries, which are a promissory note by a government whose fiscal integrity is being questioned? Or is it the US dollar, which is constantly being inflated? Look at your grocery bills and the rising costs throughout the economy. These sectors will surely be punished by Ben Bernanke, a student of the Great Depression.

My firm chooses to regard our natural resource mining sectors as increasingly important safe havens. They represent not only real money, but realistic, non-fiat money of which no more can be manufactured. Do not be diverted or distracted from the path of sound money by bandaids, bailouts, and cosmetic “touch-ups”.

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Major Miners Acquiring Undervalued Juniors In 2012

In Market Analysis, Stock Movers on September 12, 2011 at 7:54 am

Recently two mining giants – Goldcorp(GG) and Barrick Gold (ABX) — published their bullish earnings reports showing increasing margins due to a rising gold price. Here is a perfect example of a report that’s trying to tell us something. The hidden message in these glowing statements is of great significance to gold traders. What is the other side of the story?

The fly in the ointment may be that the majors need new blood. They are having difficulty making progress with their next generation mines; experiencing delays and shortfalls. There is a sense of urgency in their pronouncements of increasing the capital they are going to spend on exploration and development of two key emerging assets.

Goldcorp specifically identified the El Morro Project in Chile, where it’s partnered withNew Gold (NGD), and which has the largest potential increase in reserves. New Gold has had a major breakout at $12 and phenomenal month of August.

Read the writing on the wall. The future of the majors lies not so much in glowing statements but in their hidden meanings. These companies, as measured by the Market Vectors Gold Miners ETF (GDX), are getting more mature and are facing diminishing reserves and a rising gold price. This may be the reason why their share prices are underperforming – they are sitting on large cash positions and must either increase dividends or look for growth through mergers and acquisitions.

My firm’s area of specialization is in researching promising explorers, as measured by theMarket Vectors Junior Gold Miners ETF (GDXJ), which will grow increasingly attractive as acquisition targets for the older majors. For example, the acquisition by Newmont Mining(NEM) of Fronteer.

Also witness the recent move by Agnico Eagle Mines (AEM) in investing $70 million dollars in a young promising company Rubicon Minerals (RBY), which had recently sold off to the downside. Also look at Aurico Gold’s (AUQ) takeover of Northgate Minerals (NXG) at valuation levels not seen in more than seven years. I realize that miners have been trailing bullion for several months and am convinced that their day is yet to come. Rubicon had recently published a decrease in resources, sending shares plummeting. Agnico seized the opportunity to make a very advantageous investment. In the Summer of 2008, Agnico had taken interest in Gold Eagle Resources at bargain prices. It didn’t take long for Goldcorp to buy the entire company, giving Agnico a significant profit. This may be exactly the template that other hungry majors will be looking to emulate as they buy emerging properties at discounted prices. As the price in gold bullion advances many situations increase in value. GST is always on the hunt for assets in the earth which are the mother lodes of the eventual bullion.

When the day of the junior miners comes, the profits will far outstrip those of bullion. From a technical standpoint, often times mergers and acquisitions are not readily discernible in chart patterns. Indeed, Fronteer had quite a nasty correction before it was acquired by Newmont. Suffice it to say that momentum traders rarely benefit from mergers in the making.

I’ve noticed that equity prices will fall below a rising 200 day moving average only to eventually break through on the way up. Interested parties might find juniors at irresistible bargains right now in comparison to gold bullion.

Subscribe to my free daily intelligence reports by clicking here.

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Undervalued Miners Beginning To Play Catch Up To Gold Bullion

In Market Analysis, Stock Movers on September 5, 2011 at 5:21 pm

The action in the precious metals raises interest, especially in the maze created by a fear-driven market. Gold at this time is participating in a runaway move past resistance. Although gold has reached new record highs, it may begin stalling in its attempt to continue moving parabolically, while the undervalued miners play catch-up. What may this hesitation signal and shrinking of the divergence between miners and bullion mean to you?

Technically, it may be informing us that the bull move so many analysts are expecting is somewhat mature in gold bullion, but miners are just beginning to break out. Much like a sprinter who first moves backward in his running block in order to propel his thrust forward, gold may initially have to come down from its technical heights in order to amass the energy required for a more pronounced forward move. Bullion may have to take a time-out to rest, while miners such as Goldcorp (GG), Newmont (NEM) and Barrick (ABX) play catch-up; they look poised to break out of the running blocks.

It’s been a long run for the bullion since my firm’s late January 2011 buy signal. Make no mistake, it will rise though, refreshed to make another run to higher highs. A brief retreat for gold bullion to long-term trend support would be of no surprise. Indeed, it may represent a healthy and necessary correction in what my firm views as the ongoing highway of the long secular rise. These thoughts should not be regarded as bearish analysis at all. Instead they are being presented as a technical and healthy possibility to eliminate current media-hyped precious metals euphoria and avoid buying gold bullion at an interim top. Instead we suggest looking into the undervalued miners that are just beginning a potential major move.

We must include any and all eventualities. How pleasant it would be if the ultimate path to riches was one straight move higher. Investing doesn’t work like that, though. Markets are fickle and they do everything they can to confuse, misdirect and obfuscate the speculator. Precious metals investors must follow bullion and the mining equities as everything has its season. It appears to be the miners’ time in the sun.

US Treasuries have reached record highs reflecting the irrational fear of U.S. debt as a safe haven. Gold markets are ebullient as the media scares us with the bugaboos of horrific possibilities that may never come to pass. Your attention is also called to the falling U.S. dollar, which appears to be on the verge of breaking into record lows. It remains to be seen whether the panic in the greenback is just around the corner, as investors fear what impact QE3 will have on the currency. One might have expected the U.S. dollar to be an ironclad safe haven during the market decline in August, but it was not.

Such negative action may mirror inflationary decisions regardless of whatever compromises are reached. There is a sense that inflation is in the offing and that now only a Band-Aid will be applied to staunch the bleeding of an economy in trouble.

In the background is the ever-present figure of the Fed, which is taking whatever steps necessary to prime the pump to give us de facto quantitative easing in whatever guise necessary. For the present, a compromise may materialize, sufficient to take us to the next election in 2012, when the whole song and dance will be reprised in a repetitious third act.

Preparations are being made for further downgrades of the U.S. AAA credit rating, which may affect the security of treasuries as a safe haven. As speculators are entrapped by the fear of bad news, there may be a rush to the safe havens of gold and silver miners, and possibly uranium and rare earth miners as well. Such developments may be leaving these sectors as the only players left standing on the field.

Editor’s Note: Read more from Jeb Handwerger at Gold Stock Trades.

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Mergers And Acquisitions In Mining Stocks Heat Up

In Market Analysis, Stock Movers on August 31, 2011 at 9:18 pm

The brouhaha over the debt ceiling has generated upward moves, particularly in gold bullion. This is a primary example of a news driven market skewing orthodox technical measurements. Now it is entirely possible that the scare headlines are generating a caffeinated move to surpass resistance areas, especially in gold. The debt farce can end precipitously and so may the risk trade. What the market giveth exogenously is what the market taketh away with the resolution of the underlying media hype. The risk off trade may boost mergers and acquisition activity in the mining sector.

Six weeks ago, I became aware of a major divergence between the miners and the underlying metal. This juncture represented a buying opportunity. On July 13, 2011 Barron’s wrote that my firm was a solitary voice in indicating that miners would outperform gold bullion, saying “…One contrarian to that view is Jeb Handwerger, editor of Gold Stock Trades. He points to technicals that favor miners, although he remains bullish on prospects for both types of precious metals ETFs.”

Subsequently, miners did bottom in mid June. In fact, we have witnessed parabolic moves in the gold sector, completely overlooking some undervalued miners such as Goldcorp (GG),Barrick (ABX), and Newmont (NEM). These are some of the fastest growing stocks in the market with increasing profits and margins.

It is precisely gold’s linear bull trend as opposed to a geometric blowoff which indicates the longevity of this millennial move in gold. As the metal surpasses resistance we anticipate and welcome the customary healthy pullbacks on this rising arc. The risk off trade will transfer capital from the extended gold price to the undervalued mining equities.


Click to enlarge

Meanwhile, the debt debates serve to provide fuel for these sectors as the “Washington Square Dance” was resolved by a nip and tuck procedure when major surgery is really required.

My firm senses we are on the road to additional economic stimulants by whatever guises necessary, probably in the next few weeks. They may surface under different names but the basic principle should be the de facto desirability of accumulating wealth in the ground assets of precious metals, uranium, and rare earths.

The Market Vectors Gold Miners ETF (GDX) recently advanced above its 200 day moving average and is not nearly as overbought as its underlying metal. A bullish golden cross of the 50 dma above the 200 dma is occurring now. Up to now the crises over both European and American monetary problems have marked bullion as a safe haven. It appears that the metal has become overextended relative to the miners.It’s time for the miners to come to the ball.

We are seeing some major, cash loaded miners diversifying into copper and now into significantly discounted uranium miners. My firm has long been focusing on this trend. For example:

  • Newmont took a stake in uranium miner Paladin.
  • Barrick bought copper miner Equinox.
  • Stillwater (SWC), a palladium miner, expanded into copper with the acquisition of Peregrine.
  • Anglogold Ashanti (AU) acquired First Uranium Corporation (FIU.TO).
  • China’s Hanlong made a hostile bid for Bannerman Resources on the bargain counter at $.60 a share, representing what may be an increasingly obvious straw in the wind.
  • Now this week we hear of Cameco’s (CCJ) hostile bid for Hathor’s Roughrider Deposit. Could this be the catalyst the sector has been looking for?  Click Here to access my daily service.

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Is Gold and Silver Money?

In Market Analysis, Stock Movers on August 26, 2011 at 9:36 pm

Readers continue to express an abiding interest in silver, also known as the “poor man’s gold.” Prominent among the questions they raise: Quo vadis silver?

Recently the noble white metal experienced a rapid run-up to the halcyon heights of $50, only to retreat precipitously to the low $30s. This on-again, off-again action was due to a technical response to silver’s inherent volatility as both an industrial and a safe haven metal.

In order to quell such ebullient action, the Comex lowered the boom by a series of increasing margin requirements similar to what is occurring now in gold futures. I’ve written that such moves were in the cards with silver in late April, and gold more recently. Too much hot, speculative money was entering this market in late April (and early August in gold). Moreover, the big banks and hedge funds grew uncomfortable with their growing short interest positions. The actions of the Comex arrived just in time to save the day for the big fellows.

Furthermore, the $50 area represents formidable overhead resistance dating back to January 1980 when the Hunt Brothers drove prices from $11 to $50 an ounce. It did not come as a surprise when we saw the possibility that this overhead resistance would be subject to a Newtonian “equal and opposite reaction” to the mean that had been established in the low $30 area.

Where do we go from here?

Short and Medium Term: Recently silver has broken its 10-week base, and in the short term may have gotten ahead of itself on the breakout, as the 50-day moving average flattens and commences an upward slope.

Look for a rendezvous with the 20- or 50-day moving average or its short-term uptrend for a secondary buy point.

Long Term: My firm believes that silver will recapture its $50 heights sooner rather than later. The establishment of a base in the low $30 area has been a healthy and a necessary one for the technical resumption of the upward, long-term trend.

In confirmation, silver has made a triple top breakout on the point and figure chart. This formation is one of the strongest technical indicators that auger a pending upward rise.

Readers have asked whether silver is rising too fast in comparison to gold. My response is that we have only to look at the gold-silver equation. What had been historically a dominating ratio of gold to silver is readjusting to reduce the preponderance of gold in this formula. It might appear that silver is rising too fast, however it is playing catch-up to what has been a narrowing of the gold-to-silver proportion. My firm believes that, since the historic breakout in silver in 2010, the gold-to-silver metric would significantly decrease.

Silver operates from a dual base, acting as a safe haven for the rising middle class as well as its vital use in industry. Demand is soaring, while supply from existing mines is diminishing. This supports the bullish thesis. Whether the US dollar can maintain its safe haven status is questionable. Add to this the tenuous position of the Eurozone and the future of the euro. The supply of silver is extremely tight. There are few pure silver plays as it is mostly produced as a byproduct. For these reasons demand exceeds existing supply. Investors unable to do specific stock research should take a look at the Global X Silver Miners ETF (SIL).

Is silver the new gold? Is it going to be more of a safe haven as margin requirement increases hit gold? Interestingly, the biblical terms for money and silver are synonymous. My firm believes that the appellation “poor man’s gold” is not derogatory. Instead, it refers to universality and feasibility as a medium of easy exchange in the banking and public sectors.

When Dr. Paul asked Dr. Bernanke, “Is gold money?,” the answer might have been, “Yes, but silver is more so.” By federal law, silver is money, exchangeable more easily than gold for goods and services. Silver represents a rising area of importance in our everyday lives. It is ever present and growing in the age of the plagues of uncertainty, instability, turbulence, revolutions and fiat money. We expect silver to hit new highs, along with the miners, in 2011. Stay tuned to my daily bulletin for specific stock research and market timing.

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Gold Bullion Moves Parabolic: Look For Mining Stocks To Play Catch Up

In Market Analysis, Stock Movers on August 23, 2011 at 3:15 am

Uncertainty and fear are the mother’s milk of the metal’s market. Our pundits, politicians and professors have given us plenty of reasons to question whether these supposed savants are steering with a working compass. One day headlines proclaim, “Bernanke Ready To Do More If Needed”. Then we later read that the Professor is playing down the possibility of additional quantitative easing due to internal dissent. This cold water is being doused on the markets after evoking these hopes.

How can the bourses be anything but unsettled by such erratic behavior emanating from Washington’s mavens and Europe’s Pundits? An old blues song keeps playing in the subconscious:

“First You Say You Do and Then You Don’t,
Then You Say You Will and Then You Won’t.
You’re Undecided Now, So What Are You Going To Do?
Now you wanna play, and then it’s no,
And when you say you’ll stay, that’s when you go,
You’re undecided now So what are you gonna do?
If you’re kind, make up your mind
You’re undecided now…So what are you gonna do?”

Precious metals thrive on equivocation in high places. Ergo volatility and obfuscation. There are plenty of exogenous factors that are present in the market mix, such as the debt ceiling, downgrades from the S&P, the persistent Euro-Zone travails, and let’s not forget the constant rumblings from the Middle East cauldron. A sector of the world although presently unnoticed may soon resume its position on the global market stage. At my firm, we intend to write more about this particular area as we expect it to exert a profound impact on the financial markets going into the second half of 2011.

Gold Stock Trades has alerted its subscribers to the breakout in precious metals and critical pivot point of $52.50 on the Market Vectors Gold Miners ETF (GDX). This move may encounter ebbs and flows on its way to its destined heights. Constant vigilance for possible entry points on the way up are advised. Let’s look at the record. Our technical studies reveal an upward arc despite the diversions of day-to-day turbulence. Volume on the pullbacks are only merely above average. These volumes were significantly less than recorded during recent breakouts, indicating institutions may be adding miners as a safe haven.

For many weeks $52.50 was our line in the sand. That has held. I would like to review this chart as a precaution to those who panic out at exactly the wrong times. Notice on the chart the weekly inverted hammer which occurred at that critical area, the second week of June. Weekly inverted hammers are common around bottoms of corrections as it indicates a large number of speculators who began shorting as GDX tested and made a fake breakdown, momentarily penetrating 2011 lows.

At that time many were calling an end to the precious metals market and began shorting. However, we saw a trap — many were caught. Short covering rallies morphed into authentic breakouts as the long term trend followers returned, this after the 200-day was regained on excellent volume. Some of the major miners such as Goldcorp (GG), Newmont (NEM) andBarrick (ABX) exhibit the powerful technical and fundamental characteristics of potential precious metal leaders.

The weekly long term downtrend in the US dollar (UUP) is intact as it threatens reaching new lows. Through the first half of 2010, we were dealing with Euro debt concerns and the run-up last summer in the US dollar showed it still maintained a safe haven status. Conversely in 2011, we have had a confluence of black swans globally, especially with the Euro (FXE) and the U.S. dollar is not catching a bid and is still hovering around record lows.

We are seeing parabolic moves in gold (GLD) and silver (SLV) in 2011, as more investors realize the validity of precious metals as a safe haven. Soon investors will realize miners are sitting on assets increasing in value, which have not yet been reflected in their share price.

Stay tuned to my daily bulletins.

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Summer Doldrums In Gold Miners Concluding

In Market Analysis, Stock Movers on August 17, 2011 at 8:14 pm

One of our favorite mining equities has been the ongoing advance of New Gold (NGD). On several occasions we have made doubles in this ongoing saga since we first highlighted it in early 2009. Click here to see original recommendation. The chart is extremely powerful. This could well be the hallmark of an ongoing powerful advance. It refused to violate its 200 day moving average despite sector weakness.


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This relative strength may be telling us that New Gold may well be one of our leaders as we return to an equity that has shown consistent strength in volatile markets.

They have one of the best cash flows in the business. Additionally, they represent a strong presence in gold and silver as well as copper.

This abundance of riches increases with the little noticed but all important and fully funded New Afton Project in the friendly jurisdiction of British Columbia. The bride becomes increasingly more beautiful when one considers that New Afton is fully funded, permitted and ready to be carried across the threshold of productivity.

New Gold is strategically positioned to profit from this new upward leg in precious metals. They have a strong balance sheet in the hands of experienced management represented by Oliphant, Gallagher and Lassonde, who have a proven track record of building major mining companies.


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Gold Stock Trades has maintained a strong hand on signaling the completion of the basing process in mining stocks (GDX) in relation to gold (GLD) and silver (SLV) bullion prices. Right now it will suffice to alert readers that one of the most salient technical signals is occurring right now-The dreaded death crosses are being transmuted into euphoric crosses of gold.

For the past four months, an eagle eye has been kept on the number $52.50 on the gold mining equities (GDX). That was the line in the sand that we drew for our subscribers. It represented the technical juncture of key support levels, which can be referred to continuously in our published archives. That line held. The basing process is being completed at this very moment.


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Currently as of this writing it is rising above its 200 day moving average, the critical long term trend indicator. This reversal now above the all important 200 day moving average is among the most bullish of buy signals as the death cross of the 50 day which reversed below the 200 day in June now crosses above making a bullish golden cross.


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Many analysts had been concerned as to the effect of the expiration of QE2 on the global financial markets and left the commodity arena. Instead, gold stock trades maintained a steady hand on the wheel. Unflinchingly, we stated it was a short term, positive and characteristic correction, necessary to eventually propel us into new highs. As any runner might attest the sprint forward is preceded by a move backward out of the running block in order to gain momentum for the breakout ahead.

At the same time silver is also breaking its own 50 day moving average to the upside despite a series of increasing margin requirements designed to temper the upward move. This upward move is quite bullish as it may signify that the advance in silver is not to be thwarted. As gold is breaking new highs, silver is just beginning to play catch up.

Careful monitoring of the uptrend is required.

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Ongoing Developments In Nuclear And Rare Earth Stocks

In Market Analysis, Stock Movers on August 16, 2011 at 3:46 am

As our loyal subscribers are well aware, Gold Stock Trades has long been beating the drums for attention to be paid to the ongoing developments in nuclear (URA) and rare earth stocks (REMX). An important feature of our service is to focus our investment spotlight on what must be considered a vital factor in our modus operandi. Gold Stock Trades may be early in our sectors under review, but as we say in our masthead. . .we anticipate opportunities.

The search for possible long term winners may be a lonely road in the short term, but that is precisely the path we find attractive. Better to get on at ground level then buy at the fiftieth floor when much of the profits are already reflected. Gold Stock Trades mines for winners where gains are geometric as well as incremental.

Our venues are the roads less taken yet more profitable than the distracting detours of the daily players who are bogged down by the trees that obfuscate the verdant forest where the big winners reside. Four baggers are hard to come by, but they are there for the investors who can stay on the long term trend. One of our credos is patience and fortitude. Gold Stock Trades are for those visionaries joining us in our search for profit multiples.

Today’s markets offer us a prime example of the validity of our mission statement, “to boldly go where no one has gone before.” Seemingly obscure, but vital news items attract our eagle’s panoramic sweep.

Example: At one point Gold Stock Trades occupied the loneliest of perches. Hourly the media blasted barrages of negative gloom and doom stories regarding the demise of nuclear power and the shortcomings of rare earth development. We sensed that much of this news were contrived to sell advertising.

Thus today an important arm of China-The Hanlong Bank-announces that they are casting a covetous eye on a seemingly obscure nuclear miner-Bannerman Resources Ltd. (TSX:BAN; ASX:BMN), domiciled in Australia and owning two huge uranium deposits in Namibia.

Read between the lines, the main property is located next door to Rio Tinto’s (RIO) Rossing Mine, one of the largest uranium deposits in the world. Bannerman’s Management is resisting the Chinese offer of $.61 a share, claiming China is taking advantage of its low share price due to the negative publicity that befell the global uranium market post-Fukushima. (It is important at this point to highlight the very same Hanlong Bank just signed an enhanced agreement with one of our favorite and long followed equities-General Moly.)

Gold Stock Trades refused to buy the nuclear bashing and chose to wrap fish in yesterday’s newspaper. We remain more steadfast than ever as we muse over the rest of the story. Might it be that China is prescient?

As we write the following story is coming over the wires: “China Set On Nuclear Path.” The Chairman of China’s main energy agency states unequivocally, “Nuclear Power is a choice of must. . .we stay firm on our nuclear plans.” Exactly what is China’s (FXI) strategy? They are actively building 28 nuclear plants to reach 40 gigawatts by 2015.

The Chairman felt shutting nuclear facilities was ill advised and precipitous. He claimed that the few nations that are abandoning nuclear are succumbing to fear and irrationality. It is as if humanity should stop eating because someone choked on a bite of food. He emphasized that China has no choice but to continue proceeding full speed ahead on its nuclear highway.

Similarly, there has been a significant development in another sector that we have been following for some time: The Rare Earths. Avalon (AVL), one of our earliest selections, just announced agreements with three major unidentified Asian companies in a memorandum of understanding (MOU). These companies are agreeing to provide capital and technical know-how in exchange for future first call on production.

It is not a mere coincidence that this announcement surfaces at the same time that Avalon updates a very positive pre-feasibility study and begins the bankable feasiblity. It can only add additional spice to the wooing.

Today, there are an abundance of important developments pertinent to GST subscribers. Example: Major industrial producers concerned about having ready availability of critical rare earths are making alliances with miners.

Siemens, Europe’s largest engineering firm, has entered into an important deal with Lynas (LYSCF.PK). We are witnessing end users partnering with miners to secure future supplies in assuring availability for uninterrupted production. This burgeoning trend will continue with more and more strategic relationships between industrial giants and rare earth miners. Molycorp (MCP) just announced that they will partner with Hitachi (HIT) to produce permanent magnets.

Gold Stock Trades has been predicting these milestones for a long time. It is understandable that some of our readers might be champing at the bit. Our studies reveal the rare earths and nuclear stocks are in basing formations, ready to break out of the starting gate. We will continue to keep our subscribers au courant. Stay tuned.
Disclosure: Long LYSCF and AVL

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Investors Flee To Precious Metals and Miners

In Market Analysis, Stock Movers on August 12, 2011 at 6:27 pm

My firm is witnessing the resumption of the long term uptrend in gold and silver bullion, as well as precious metal mining stocks. Along the way there have been many negative voices suggesting a move into the US dollar and long term treasuries. We see no underlying fundamental reasons for this and find that the safe havens of yesteryear are falling by the wayside. I’ve written that investors are preparing for further accommodative moves by the Federal Reserve Board.

I have firmly rejected these Cassandras. Instead my firm has advised patience and fortitude in precious metals. Truth be told, any retreats are regarded as a healthy event in the long range upward trend.

Economic Doubts

There is a lack of confidence among many citizens regarding the policies of our economic savants, as is so often the case in the lives of individuals, and in the fortunes of nations. Psychology certainly has a role to play in the marketplace. The apprehensions of the general public is dour indeed. Pessimism and doubts are increasing. It is said that 30 million people are looking for full-time employment.

The average person may be sensing that our guiding elites are impotent in their attempts to invigorate a weak economy. The on again-off again comments by Bernanke to the effect that QE3 is once again on the table has swept the land with the increasingly uncomfortable feeling that our professors and our politicians may not really know what they are doing. These sentiments are reflected in a number of current polls.

Yesterday, the general markets responded to Bernanke’s announcement to turn the printing presses on by keeping interest rates low until 2013. He also indicated that QE3, in whatever guises necessary, will be employed on any equity market weakness. We notice that the general market faded after a strong start. Volume fell and the indexes finished in the lower part of their range. This may have indicated profit taking.

The US dollar is breaking down as Bernanke announces the possibility in some form of renewed quantitative easing. At the same time credit agencies are warning that it may reduce the credit rating of the United States even further. The Euro is breaking down as well, leaving precious metals firmly standing in the center of the ring.

The Safest Haven

The market should not be confounded by the precious metals, which triggered a buy signal as they resumed their upward trend. Gold is leading the way, as everyone and their brother tries to buy some. However, we must not forget the miners, which are extremely undervalued as gold tests $1800. Once again the miners should capture the heights of various industry groups once the panic selling and deleveraging ends.

Where oh where are the safe havens of yesteryear? To use a boxing metaphor, the old champions of the US dollar and the Euro are growing “weak in the pins”. There was a time when dollars and euros were viewed as safe havens. Now they are losing their luster. Precious metals dominate the investment arena as an increasingly safe haven — the currency of choice.

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Precious Metals As Lifeboats In A Sinking Ship

In Market Analysis, Stock Movers on August 5, 2011 at 8:26 pm

The musicians are fiddling as the world burns. Global markets are navigating slowly in an ocean of greed, stupidity and compromise. Hundreds of years ago, masses of people took to the streets of Europe dancing madly in a kind of national “moshpit”. The cause of this “St. Vitus” mania was never diagnosed.

Today, we are witnessing a similar type of irrational behavior which defies reason. Prominent politicians and economic elites are doing a macabre dance in the grand ballroom of the supposedly unsinkable ship of state. How else to explain that the debt reductions being considered save perhaps a couple of trillion dollars over the next ten years? They are being lauded as meaningful reforms. In reality, they are bandaids applied to an arterial hemorrhage resulting from massive debt and mounting  deficits.

It is just not computing.  These ten year stratagems to control debt are an inadequate tourniquet that will only worsen the bleeding. Huge debt increases or deficits will continue to grow. The measures necessary to revive the patient are nowhere being proposed. Our public sector is swollen beyond recognition.

What is required is a rational collective that at least keeps our financial ship afloat. We are slowly drowning in a system that costs $6.7 trillion dollars every year at all levels of government, Federal, State and Municipal.

A great scam is occurring as our leaders focus mainly on measures that are at best only stop-gaps. They are not taking the steps needed for the survival of our country. Spending and entitlements need to be cut surgically. Political pork must be excised effectively. Tax increases must be approached with extreme care, less we kill the patient.

Sadly, there are few contemporary leaders who have the moral ethicality, stature and bravery to make the necessary actions that our Founding Fathers might have taken had they been confronted by similar challenges.

George Washington’s Farewell Address published in 1796 had it right. With a vision, characteristic of a biblical prophet, he looked far ahead, two hundred and fifteen years, to our time. In no uncertain language, he cautioned against needless foreign entanglements and kicking the excessive debt can down the road to our children, that rightfully should be our responsibility to correct.

Instead, we are surrounded by leaders who profit from a system of cronyism, insider dealings and leveraged vote-buying. Politicians will face another beating at the ballot box in November of 2012 if their economic irresponsibility continues to run amok.

It makes no sense that the 2012 budget should be above the $2.2 trillion dollars in anticipated revenues. Simply put our spending is way more than our income. The truth is we are broke as a nation. We could not manage our households in such a reckless manner.

Shortly, a “compromise” will be reached. It will be exactly that, a face saving political maneuver for the time being. The real battle-lines will have to be faced eventually as we approach the 2012 elections and their aftermath.

For the time being, there will be minimal resolutions to a serious problem. Eventually, the musicians will have to be paid in legal tender.We allow ourselves to be swayed from our highest principles of national morality. Our survival will hang in the balance.

What does this mean for our subscribers?  Precious metals represent lifeboats in the midst of what Gold Stock Trades has labeled the “Titanic Syndrome” – the conceit that our financial ship is unsinkable. So have the bubbly ready for the pending announcement of compromise and subterfuge. We may run for awhile, but we will not be able to hide from the coming deluge of 2012.

Although the technical picture for mining stocks and precious metals is improving, there will be periods of volatility as the global markets shake. A consolidation in gold and silver bullion in August would be normal and healthy.

We are in this for the long term and maintain our confidence in the secular uptrend in precious metals which results in large profits. There has been some technical damage to the downside in our selected miners. This is characteristic of moves in the precious metals market which are designed to shakeout the summer soldiers and weak holders.

This current weakness in miners may be attributed to the declining equity markets and the need for liquidity. The U.S. dollar is benefitting from the risk of contagion of bad debts through the Euro-Zone and foreign exchange interventions by the Japanese. Italy appears to be the next Greece. The Euro’s recent uptrend is under pressure as Trichet begins Europe’s next round of quantitative easing and the Gold ETF (GLD) is reaching my late January targets. Stay tuned to my daily intelligence reports byclicking here.

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Rare Earths: Separating Fact From Fiction

In Market Analysis, Stock Movers on August 2, 2011 at 6:35 pm

Many years ago, farmers in Pennsylvania noticed a murky liquid seeping up through the soil. It didn’t take long for entrepreneurs to find a use for this oily stuff. It was advertised as a cure for baldness, impotence and sundry medical conditions. Little did the super-salesman of that time realize that they had come across a vital component of the industrial revolution. They called it Snake Oil.

Recently, a professor at the University of Tokyo, spinning a story, announced a latter-day version of the discovery of the lost continent of Atlantis. Brought up from the briny depths of King Neptune were stories of huge deposits of rare earth elements (REEs) located 20 fathoms beneath the sea. You might as well chalk this one up to tales about Rhinemaidens, leprechauns and sunken pirate treasures. Truth be told, the professor’s article may have value for readers of science fiction. You might find a pot of gold at the end of Finian’s Rainbow more quickly than you can bring up REEs from Davy Jones Locker. The search costs would be prohibitive. You would be well advised to file this story into the bin labeled Myths and Fairy Tales.

Now back to reality. Mitsubishi has joined the growing ranks of Lynas Corporation (ASX:LYC) investors. The company recently disclosed the purchase of a 10% stake accumulated between the dates of May 24 and June 7 at the cost of approximately AUD$325 million. In the face of the Malaysian brouhaha and the World Trade Organization (WTO) ruling against China, Mitsubishi’s buy and Siemen’s recent joint venture is a bold vote of confidence that Lynas is here to stay and that REE resources must be produced outside China.

The WTO may take a long time in the execution of its decision as the matter falls into the delaying hands of lawyers, appeals and politicians. However, experienced market players have been through news-driven developments on other occasions. Stocks can be drawn and quartered by media stories that can exacerbate day-to-day events and cause short-term fluctuations only to be forgotten the next day. With Lynas, we are witnessing a classic example of how panic can influence hasty and erroneous conclusions. It is important to play our cards close to the vest.

In assessing the barrage of stories flooding the news, we are deluged with often-conflicting items. One story purports that the Malaysian Prime Minister is requiring Lynas to institute several corrective procedures before moving forward there. Lynas responded that it would get the work done within the targeted end of 2011 timeframe.

Stories and opinions from anonymous sources hinting at further delays could be planted to confuse the lay retail investor. Possible short sellers are driving skeptical stories in order to turn a profit. Gold Stock Trades takes anonymous sources and fishy stories with a grain of salt.

Articles in the press, namely The Wall Street Journal, have highlighted the possibility that we may be witnessing a bubble in the rare earths. They cite a preponderance of short sellers hovering as vultures in the skies over the sector. Moreover, there may be the presence of a fine Chinese hand at work. After all, it is to Beijing’s benefit to throw as many monkey wrenches as possible into the grist for the Malaysian mill.

Where does this leave investors? At this moment (and I stress moment), we take a long-range view. Gold Stock Trades is convinced that the REE arena will reemerge as a source of profit once this particular black swan is overcome. We maintain a cool hand in what is a developing story.

Not all the cards are in the hands of the Malaysian bureaucracy and the Green Party. Many interests are looking forward to Lynas providing REEs, particularly Japan and its highly technologically dependent industries. Lynas may well have other moves that it can make. Is it too fantastically far-fetched to think it could dump Malaysia and move to another venue closer and more economical to its Australian base? Think Papua or Borneo. After all, Sumitomo Corporation of Japan has bankrolled Lynas thus far. This is only a matter of conjecture at this point and Lynas will make every attempt to satisfy whatever corrective measures are necessary to develop the Malaysian project. One way or another, these critical ores will be refined to satisfy the survival, not only of Japan but advanced industrial interests elsewhere.

At this point, what may be impediments on the Lynas road to production may actually accrue to the benefit of other REE recommendations on our select list. These companies are undervalued and just emerging. They have resisted falling below long-term trendlines and are now testing overhead resistance areas. The survival of Japan’s modern industrial base is at stake. It is full speed ahead for large, corporate investors who stand undeterred in their growing position of the stock.

The Lynas stock chart reveals the penetration of the 50- and 200-day moving average to the upside. This strength continues in the face of bad press, negative news and announced government hurdles. Technically, this reveals that the stock has passed from weak to strong hands. Additionally, a very significant development has occurred with another one of my recommendations. Tasman Metals Ltd.’s (TSX.V:TSM; OTCPK:TASXF; Fkft:T61) Norra Karr Project has been declared a National Interest by the Swedish Government. This classification is crucial because it guards Norra Karr from any land use issues that may occur in the future. The importance of this development is best expressed in the following words issued by the government: “REEs are of great importance in modern society and access to these elements is very limited within Europe. The Swedish Geological Survey is therefore of the opinion that assets such as these should be accessible to future generations. Norra Karr is a very important project from a material supply point of view, both for Sweden as well as for Europe. The mineral resource at Norra Kärr is the only NI 43-101 compliant REE resource in mainland Europe.”

Tasman’s Norra Karr project is located near the capital of Stockholm. The site has great infrastructure, which allows year-around access. This is no Wall Street house hyping a stock. It bears the official seal of the Swedish Government. Attention must be paid.

jeb handwerger

Tasman has found support at the 200-day moving average and maintains its long-term uptrend. The company did not violate March lows in its most recent selloff since May. Tasman has been stuck in a range between $3.50 and $6.00. In May, the commodity selloff brought Tasman down along with it extending the consolidation. Now it is forming a six-month base and did not break down technically in early June. Tasman is forming a W consolidation and I expect a breakout into new highs by Autumn of 2011.

Similarly, Ucore Rare Metals Inc. (TSX.V:UCU; OTCQX:UURAF) is in a kindred situation. The governor of Alaska is on record advocating fast-track development of this company. Ucore’s Bokan Deposit is the only heavy REE (HREE) mine on American soil. It has based and reversed in the $0.60-$0.65 area for many months, making a major move. I would not be surprised if Molycorp Inc. (NYSE:MCP), which is not exposed to HREEs, gets interested in Ucore’s assets before it is too late. For the past six months,Gold Stock Trades has been highlighting Ucore as a takeover target by such entities as Molycorp. Such majors stand to profit from the inclusion of HREE Ucore’s dominance. The possibility of Ucore being taken over by resource-hungry majors is gaining increasing attention from brokerage houses and institutional interests. The National Strategic and Critical Minerals Policy Act is now moving through both the Senate and House of Representatives. It enjoys bipartisan sponsorship at the highest levels because of the importance of fast-tracking domestic production of vital metals for national interest including Ucore’s Bokan Mountain HREE deposit. That is not Snake Oil; that is real opportunity.

Read Jeb’s daily bulletin for timely updates on the rare earth sector by clicking here.


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How Will Debt Ceiling Deal Impact Gold and Silver Prices?

In Market Analysis, Stock Movers on August 1, 2011 at 7:05 pm

Each day our fascination with the market kaleidoscope arises as it attempts to influence us and confuse us at the same time.  This is why Gold Stock Trades examines the unfolding developments with the panoramic eye of an eagle.  This great bird of prey is gifted with vision that can see both the immediate terrain and at the same time extending to the most distant horizon.  In like manner, our telescopic view surveys the daily events as they might possibly influence our long range position.

For the past few weeks we have been dealing with an ebullient metals and miners market.  We notice that the capital markets are undergoing travail soon after The West has instituted a bailout of Greece.  Add to this the Moody’s statement that the Yuan of all things may need to be downgraded based on higher than expected difficulties encountered by their local governments.    This talk of the possible need to lower Chinese credit ratings may be tonic to the very mining sectors that GST follows.  Do not forget the U.S. debt ceiling talks closely approaching the August 2nd deadline.

The concept of safe havens continue to reemerge as an underlying theme in our market weltanschauung.  This comprehensive conception of risk aversion is a valid specific standpoint for the preservation of our investment capital.

What do we see from our aerie that can help us to grow our selections?    There are plenty of concerns globally such as the Arab Spring, the Islamist Winter, Euro-Zone Debt Concerns, U.S. Debt Ceiling among other threats to international stability.    Gold is not a merely an inert clump of metal as it might be viewed by its critics.  It is a looking glass into which we can see the many global pitfalls that surround us.

Now China is being added to the banking contagion that is spreading as a virus to the fiscal world community.  There has always been a psychological component to investing.  It might not take long for the realization that this infection may proliferate in the minds of market players and spread fungus-like.  Remember that the Chinese may have foreseen such an eventuality and have been encouraging the purchase of gold and silver in their neighborhood banks.  We may soon witness the acceleration of gold and silver purchases by the nascent Chinese middle class.  Notice the emergence of the Hong Kong Mercantile Exchange which will allow 3 billion people in China access to silver as a safe haven hedge.  This may be a catalyst for silver prices to move into new record highs.  The Comex may think twice before any late Sunday Night margin rate hike blitzkrieg’s.

Focussing on the record divergences between bullion and mining equities is rapidly becoming an important consideration.  For the past few months, the hard metals have outperformed mining equities.  We are emerging from a seasonally weak period for miners, which we have identified as the “summer goldrums”.  We see the time to sow the seeds for the approaching Autumn harvest season which over the past few years has been very profitable for mining investors.  There is favorable seasonality during the months from August to December.

Presently, there are extremely attractive  valuations in mining equities vis a vis bullion.  Eventually, there is usually a reversion to the mean as mining equities play catch up to bullion, which has been commanding the field up to now.  Soon the Barrick’s, Newmont’s and Goldcorp’s of the world with increasing profit margins will be faced with a choice to either distribute sizable cash dividends or invest them in mergers and acquisitions.  Discovery and production rates in the industry are declining as the bullion prices continue to soar.  Takeover’s may be the way to go for them to replenish their shrinking reserves.  The see-saw may be swinging to the side of well managed and adequately financed junior miners as featured in our roster of selections.

Gold Miners (GDX) appear to have formed a potential bottom area and have shown great relative strength over the past few weeks.  The critical $52.50 level, which is a key Fibonacci retracement and 2011 low, has held.

The negative divergence between price and momentum indicated that the recent move below $52.50 was not a break of support or long term trend.  It was a classic case of gathering in the stops by strong hands in a typical exhaustion move.

This is why we keep our stop loss orders close to our vest in order to avoid the cognoscenti from using awareness of our stratagems against us.  I distinctly recall my market maker friends telling me that they follow charts in order to exploit outsiders.  That is why the markets are akin to a skillful chess game, in which we avoid being “faked out”.  One must be aware of the common traps.

Gold Stock Trades subscribers have been well aware of the extreme negative divergence between the prices of mining equities versus its underlying metal over the past two months.  A reversion to the mean may be in process as miners formed a pivot point ahead of gold and silver bullion and is showing increasing relative strength.

Stay tuned to this developing story on miners vs. bullion by clicking here.

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Gold and Silver Resume Secular Uptrends

In Market Analysis, Stock Movers on July 27, 2011 at 10:18 pm

The recent decision to inject 60 million barrels of oil into a market that was already in retreat smacks of outright attempts by U.S. Government to manipulate commodity prices.  These actions are reminiscent of the Sunday night blitzkrieg move by COMEX in early May to control silver prices by means of successive margin rate hikes even after silver began declining.  These stratagems of manipulating commodity prices lower has not succeeded as both gold and silver are breaking key resistance areas.

For the past several weeks, Gold Stock Trades subscribers have been alerted to the reemergence of quantitative easing by whatever guises necessary.  Our economic brain trust is actively committed to a Keynesian solution to the current economic crisis.  Commodity investors have just emerged after sailing full speed ahead into the turbulent seas of the oil surprise and margin rate hikes.

Commodity markets were in a state of agitation as the Obama Administration and the members of the International Energy Agency delivered a surprise body blow to commodity investors.  This kind of exogenous fundamental development tend to affect technical analysis  only for the short term.

Many were keeping an eagle’s eye on the pending announcement by Bernanke and the Federal Reserve concerning the expiration of QE2 on June 30th.  When he did speak, he admitted that he did not have “a precise read on why this slower pace of growth is persisting.”  This represented a rather sad admission by a highly paid commander of our economic ship of state, who is supposed to be guiding us through our latest economic crisis.  All The King’s Horses and All the King’s Men Can’t Put the Economy Together Again.   Instead we are reminded of the young boy who cried out, “Look, The Emperor has no clothes!”, while the assembled elders were applauding the magnificence of the invisible garments.

Dare it be asked, do these guys know what they are doing?  One fears that they are marching full force naked into a cold night. Investors are being caught off guard.  Financial markets are being stood on their collective heads.  Traders are now returning to gold, silver and the miners as it regains the lead as the dollar has lost its traditional safe haven bid.

The recent commodity manipulations and subsequent breakouts prove they are only short term, we would not be surprised if silver’s move to the upside to be quite powerful as many long term holders purchased below $35 from the speculative day traders.  It is the basic interim and long term health of the markets that concern us and in which we are focussed on.

For the present it is realized that stimulus programs never die, they simply reincarnate in new guises.  One can not help but sense a certain desperation to these recent manipulations.  Are our leaders playing a form of russian roulette as the world wonders whether a bouncing ball of economic policies will land on the red or the black?  We may be witnessing a roll of the economic dice, which we hope will not come up snake eyes.

In this event, The Austrian School may have a valid point, in that attempts to intervene in natural developmental forces, can only result in markets that return inevitably to the direction in which they had been headed.  The Keynesians may well be having their day.

The nagging question is, have the interventions really ever worked?  Could Von Mises and the Austrian School inevitably be right on the world economic stage?

Returning to the underlying direction of today’s essay, crude oil prices, miners and silver prices being driven downward to their lowest level in four months and thereby giving a rise in the U.S. dollar was only short term in nature.   The long term trends have held.

No matter how you cut it, the release of 30 million barrels of oil from the strategic petroleum reserve, is an attempt to stimulate the economy by the policymakers.  They are running scared in the face of recent signs of a worldwide slowdown.  On top of this we are seeing weaker manufacturing numbers in China, the Eurozone, and a worrisome uptick in U.S. unemployment.  Returning to our contention, that these measures are really an attempt by our economists to discover a stimulus that truly works.  Well…Professors it doesn’t look like its working as silver, gold and energy resumes their secular uptrends.

At Gold Stock Trades, we have specifically positioned ourselves in the natural resource sectors as being representative of the sound money arena.  The waves that have been hitting us this summer, while they may be rough are temporary.  We are now returning to a calm sea and a prosperous voyage.

Attempts to influence the natural direction of the marketplace is akin to suppressing a coiled spring that eventually needs to be released.  One is reminded of the boy who attempted to dam the North Sea by keeping his finger in the dike, eventually it broke and swept away everything before it.

Are we witnessing the same attempt to control market pressures that eventually explode in a cataclysmic Krakatoa?  This oil surprise is in essence a rear door stimulus.  Interestingly, this occurred on the eve of the expiration of QE2.  This may represent an under the table tax cut for consumers.  Sooner or later a disenfranchised middle class and their children will have to pay the piper.  Stay tuned to important developments by signing up for my daily intelligence service and technical studies by clicking here.

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Rare Earth Stocks Undervalued and Beginning To Reverse Higher

In Market Analysis, Stock Movers on July 26, 2011 at 11:21 pm

Goldman Sachs recently based its rare earth recommendations on a limited universe consisting of two stocks, Molycorp and Lynas

Those of us who delve into the markets are referred to politely as investors.  That is a Madison Avenue spin on what should in essence be a more accurate description.  We are speculators, which is a more precise appellation.  We assume business risks in hopes of gain.  We buy and sell in the expectation of profiting from market fluctuations.

We lean heavily on our technical indicators, which are effected by news driven and exogenous developments. They can often skew the calculations of the most adept of chart readers.

A gray swan is looking over our analytical shoulder.  Not quite black, far from white, the coloration as of this writing is gray.  The news recently of which my intelligent subscribers are well aware, is that the Lynas Corp. Ltd. (OTO: LYSCF, Stock Forum) Malaysian project has encountered a roadblock requiring ten corrective measures that have to be addressed on the bumpy road to production.

Today Lynas reiterated, “We believe the plant will be commissioned by the end of 2011 and we expect to deliver some product to customers in the first half of 2012.”  It is important to note that the independent review panel concluded that the project met all international radiation safety standards.  In reality, it is unknown how long the process to completion will take.  Management claims they are still on schedule.  Skeptics question the timeline.

We expect more of these “Merkel Moments” on the often rocky path to fruition.  In reality, the problem is two-fold as the German government discovered.  Not only do the “Greenies” have to be assuaged, but there are political considerations that are added to the brew.  Politicians inevitably must run for office as Merkel realized.

The Prime Minister of Malaysia is up for reelection.  As we deduce, politicians are a fickle breed turning concrete decisions into sand.  Similarly, the Prime Minister of Malaysia, a firm proponent of the Lynas project, is confronted by the vocal opposition.  They sense the opportunity to score political points in the upcoming vote.

Now all of the valid considerations for the importance of rare earths for our industrial survival recede for the time being.  Taking a backseat are the all important needs for rare earths in the technology, military, consumer and alternative energy sector.

Where does this leave subscribers to Gold Stock Trades?  The history of water shed developments are replete with difficulties.  Fulton’s steam engines blew up at the beginning.  The first space missions exploded.  The birthing process is described as labor.

The West, which had the lead in rare earth development, has to play catch up to China. It co-opted what was originally an American enterprise.  This is a rebirth of an industry.  One can sense the Chinese laughing at the plight of The West scurrying helter-skelter to gain independence from the Chinese hegemony over a vital industry.

We notice as we write that Lynas, which had fallen below the 200-day moving average with a low of 1.81 has penetrated above the 200 day and is breaking above the 50 day moving average.  This is a very bullish sign.

Goldman Sachs Group Inc. (NYSE: GS, Stock Forum) recently based its rare earth recommendations on a limited universe consisting of only two stocks,Molycorp Inc. (NYSE: MCP, Stock Forum) and Lynas.  Gold Stock Trades has a broader view.  We notice that other candidates may have been overlooked by the major analysts.  We have presented our subscribers with additional viable candidates that are undervalued, undiscovered and strategic.

Valuable lessons are being presented to us by the Lynas and Molycorp experiences.  We feel that these are not the only partners on the dance floor.

Feel free to consider additional rare earth miners (REMX) who are located in friendly areas of North America and Europe with critical heavy rare earth ores as well as light rare earths.

Many are undervalued and certainly not in the limited Goldman Sachs universe.  These rare earth miners are becoming very attractive and appear to be just beginning to reverse their recent consolidations.

Stay tuned to developing stories on the rare earth saga by clicking here.

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Miners Outperforming Bullion As Investors Fear Government Defaults

In Market Analysis, Stock Movers on July 25, 2011 at 6:41 pm

The market wires are ablaze recently with news that all is well in the relationship between Athens and the elites of the Eurozone. The Greek bailout is a fait accompli. The markets have responded with a relief rally that has taken the pressure off of stock and commodity markets internationally since the beginning of July.

All is quiet on the Western Front, one would think. The nagging question is: where is all this money to bail out debtor nations going to come from? Indeed, the Greek Canary is singing. Perhaps we should pay attention to its song as he is being accompanied by the melody of the steady beat of the printing presses.

It has been the contention of my firm that QE3 is being skillfully engineered by our economic mavens. It matters little what moves are being played in this masterful chess match. What is of import is the end game.

The moves en route to checkmate may be devious or disguised. The important consideration is the players’ basic strategy. The skillful chess master makes his moves by whatever deceptions are necessary to achieve his tactical goals. At the same time, his opposition is guided into a snare.

Readers should avoid becoming pawns in what is essentially a series of moves designed to entrap the unwary player.

Questions must be asked. Was the current move into cash, treasuries, and liquidity the way to go as QE2 expired? Is gold and silver bullion the proper play? Or is it time for the miners to play catch up?

As we ponder over the economic chessboard, we sense that the basic direction is toward the use of economic stimuli in whatever guises are necessary.

A few weeks ago, we saw the oil market surprise in order to bring down commodity prices as a fiscal stimulant. We also saw the successive margin rate hikes from the Comex in silver. Recently, the Fed was off the hook for a couple of months.

Heretofore, the Fed was criticized as facilitating the rise in commodities. Recently they posed as a stabilizer of prices while monetizing mounting debt burdens. In line with this, increasing the US debt ceiling becomes a done deal. Politicians can now go on their vacations and present themselves to their constituencies as the saviors of their cherished entitlements.

Gold pulled back to its multiyear trend support. Oversold levels were hit and we have witnessed a rally over $100 an ounce in two weeks. A healthy consolidation is expected and welcomed after such a move as it moves to our late January 2011 target of $160. (See this video from ©thestreet.com predicting $1600 gold, $40 silver.)

This healthy correction in precious metals and commodities, and the dead cat bounce in the US dollar have been normal and necessary. It was from these oversold conditions that a major up move formed in late June similar to what we saw in August-September 2010 and February-April 2011.

The gold miners are showing good relative strength versus the bullion. The critical $52.50 retracement level showed support as it tested 2011 lows.

The recent successful retest and reversal regaining its long term trend indicates that the summer “goldrums” (© Gold Stock Trades) for miners may be ending. Many of our mining recommendations showed that a bottom was forming ahead of bullion. Just like miners began reversing lower before bullion in April, they began turning higher before bullion in this recent move higher. We are witnessing the divergence between miners and bullion close as the undervalued equities have shown impressive relative strength. Do not be surprised if precious metals and miners consolidate after such an impressive reversal over the past few weeks.

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Uranium Stocks Basing, Potential Upside Breakout

In Market Analysis, Stock Movers on July 22, 2011 at 12:36 am

My firm has been observing with great interest the divergent paths in nuclear policy being taken right now by two major sovereign nations, France under Nicolas Sarkozy and Germany led by Angela Merkel.

These neighboring countries share little more than a common border. They are embarking upon two polar-opposite philosophies regarding nuclear development.

Sarkozy understands fully the concept that a modern industrial nation must utilize safe and economical nuclear power to satisfy its energy needs. The French have been doing this for years. They are rapidly becoming the energy wholesaler for the world, certainly for Germany.

On the other hand, Merkel concerned that she might lose the upcoming election, has buckled to the demands of an environmental, political party that has run amok. Politicizing the needs for national survival to satisfy a section of the electorate represents the road to chaos.

The French have a saying, “The more things change, the more they stay the same.” There are always two sides to the coin. The U.S. Civil War between the Union and the Confederacy is a prime example of differing philosophical approaches. We can draw the same analogies between Napoleon and Wellington at Waterloo or even if we go back to Sparta and Athens.

Recently, Sarkozy has clearly been determined to enlarge the French development of nuclear power. Berlin is scrapping the very same policy that the French are betting on.

Thus Germany, which heretofore had elected to march down the same nuclear road as France, is choosing to become a client nation. That is perfectly alright with Sarkozy. Paris knows something that Berlin has chosen to ignore in its quest for votes.

As an example of the inconsistent and indeed irrational Merkel policy, Germany’s nuclear exit actually hurts Merkel’s green-energy aspirations. Examine Merkel’s tangled policies. Last year she extended the lifespan of nuclear reactors to 2030. No sooner did she do that, then the result of some elections caused her to mothball Germany’s nuclear plants.

Merkel has already said that her policy reversal means that Germany will have to build more coal power plants at exorbitant costs. This will cause rising air pollution and damaging carbon emissions. Currently Merkel is petitioning Russian President Medvedev for additional natural gas. Recently Merkel was also caught selling tanks to Saudi Arabia in exchange for oil. This is the very environmental and geopolitical consequences that the “Greens” have wanted to avoid.

For Germany to get to its declared 2020 emission reduction targets, it has already scheduled a 10% decrease in national electricity consumption. This abandonment of a safe and sane nuclear policy means that they will have to build new housing that requires less heating and the additional expenses of doubling alternative energies coming from such areas as wind and solar.

Current headlines announce that 15 of 31 eurozone banks are in serious danger of collapsing. Unfortunately Germany is involved in financing these troubled entities. The question arises, how could Germany embark on additional financial ventures, involving billions of dollars, at a time when massive populations are taking to the streets of Athens and elsewhere? How is Germany, which is rapidly becoming a client state to France and Russia, expected to bail out the euro?

Meanwhile, Sarkozy has installed new management in Areva policy, as Paris takes the lead.

No other sector has been so brutalized by the media as the uranium miners (URA). On a daily basis stories have been slanted to construct a doomsday scenario, despite which uranium remains a viable, safe and economical presence on the world scene.

Merkel’s camp are in the minority. Notice July of 2010 marked the bottom in the fortunes of many uranium stocks such as Denison (DNN), Uranerz (URZ), and Cameco (CCJ). Could July of 2011 be similar?

In October of 2010, I alerted readers to a breakout in this sector. Now the uranium miners appear to have solidified their base over the past four months since Fukushima, despite ferocious media attacks. Investors looking to make new purchases should monitor potential upside breakouts from outlined consolidation pattern. Notice that even in a panic-driven equity market, many uranium stocks’ 2011 lows have remained inviolable. Stay tuned for developing news on nuclear.

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General Moly Receives Water Rights Approval For Mt. Hope Molybdenum Mine

In Market Analysis, Stock Movers on July 19, 2011 at 5:59 pm

I introduced General Moly  to my subscribers in May of 2009. At that time, the permitting process was not paramount, as financing was the critical consideration as we were still emerging from the depths of the mining sector crash during the 2008 credit crisis. At the same time, China was embarking on a search for potential mining acquisitions in the West. It was inevitable that a plum such as General Moly would catch Beijing’s eyes.

General Moly sits atop a massive mountain of molybdenum in Nevada called Mt. Hope, the largest and highest grade asset in North America. Nevada happens to be one of the world’s most friendly mining jurisdictions. The union between China and GMO was inevitable. In order to make steel out of iron ore, molybdenum needs to be introduced into the mix. Ore can not be catalyzed into steel without the addition of molybdenum.

Mt. Hope’s high grade ore could be mixed with China’s low grade moly to produce a desired mixture which is needed for China’s massive infrastructure plans. China cast covetous eyes on this American bonanza as steel demand has increased. China has major infrastructure plans, such as building 27 nuclear reactors and 10 million social housing units, requiring a lot of steel. China has also classified molybdenum as a national resource, curbing its own domestic production and forcing banks to look overseas.

Moly is still trading below $20/lb way off its pre-credit crisis highs of over $30/lb. Chinese demand is increasing as the percentage of its usage of alloyed steel products are way below that of its neighbors like South Korea and Japan. As China competes with its neighbors and invests in its own infrastructure, its use of molybdenum as an alloying agent will also expand.

Several weeks ago, China plunked millions of dollars into the waiting arms of GMO. It’s confident that water rights will be granted and that the requisite permits would follow. So confident is it in anticipating regulatory success that it fast-tracked the funding.

Today, GMO received the water rights which were expected back in March. This is a long-awaited milestone for those who have been patiently following this niche mining company.

Significantly, other institutions have purchased shares of GMO, namely Posco , the giant steel company from South Korea, and Sojitz, the major Japanese trading company. For years, China has been the main supplier of the forenamed entities. Now China is experiencing a supply-demand shortage of its own concerning molybdenum. General Moly is one of the only pure moly developers with significant partners.

In addition to Mt. Hope, GMO has the Liberty Project, also in Nevada, which the market is giving little value. GMO announced drill results recently from Liberty. The company is planning to release an updated resource estimate on this project in the third quarter and plans to update the 2008 pre-feasibility in 2012.

Recently, institutions are scrambling to pick up vital molybdenum assets. Mercator Minerals paid a 38% premium for Creston Moly, which is far less advanced than General Moly in the mining process. General Moly has revealed how an analogous buyout of its assets would be worth at least $7 a share. Additionally, the Mercator buyout of Creston is a continuation of the trend of consolidation; Hudbay Mineral is taking over Norsemont Mining for millions of dollars.

As GMO de-risks Mt. Hope as it trudges through the final stages before building the mine, it is quite important for investors in mining stocks to exercise patience and fortitude. There are sometimes bureaucratic and regulatory delays which might make GMO’s price tend to base over several months and then return to its upward trend. However, many major institutions such as Posco, Hanlong, Arcelor Mittal and Sojitz have done their due diligence in this asset and are confident. One other consideration: General Moly is the only pure molybdenum play on the major U.S. exchanges. Thompson Creek, the former pure play, has expanded into precious metals and has diversified away from molybdenum.

General Moly has been in a downtrend for most of 2011 as it has awaited the recent ruling.  Stay tuned to my newsletter for any turning points.

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Perfect Storm For Gold and Silver Prices

In Market Analysis, Stock Movers on July 18, 2011 at 8:50 pm

Originally published on marketwatch.com

“This year, investors have been engulfed by the perfect storm for gold, resulting from the Japanese earthquake and tsunami, Middle East and North African turmoil, credit downgrade warnings in the U.S. and the exacerbation of euro-zone debt fears, amongst others,” said Jeb Handwerger, editor of GoldStockTrades.com.

This chaos has had a positive effect on gold bullion and now investors are finally jumping on board,” he said. “This may be a significant move for several weeks.”

So why should anyone even suggest the possibility for any sizable declines in gold prices?

If the market develops a “parabolic rise” it may encounter “severe downturns,” said Handwerger, who’s also a natural-resource analyst. “Investors in any asset must grow cautious as a trade becomes crowded.”

Tides can turn

Finding out just how much caution to take is a challenge in a market where, apparently, a bullish stance is most common and supportive news for gold prices is plentiful.

But silver is a good example of just how quickly a tide can turn.

For the month of April, silver prices were up 28%, then posted a drop of 21% for the month of May following a series of margin requirement increases that squeezed some investors out of the market. Read the May 31 story on gold and silver.

“The recent spike in silver, followed by a waterfall decline due to the raising of margin requirements, reminds long-term precious metals investors that one must be prepared to accumulate products when there is a panic and sell them when there is euphoria,” said Handwerger.

Read the original article at marketwatch.com

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U.S. Dollar Downtrend Intact, As Precious Metals and Miners Breakout

In Market Analysis, Stock Movers on July 15, 2011 at 7:57 pm

Recently, investors have been concerned over the possible effect of the expiration of QE2. They have been looking for a clear mission statement in order to understand how government policy can impact their investment universe. This has sent gold and silver miners to key support levels and oversold conditions not seen in more than two years. Recently, Federal Reserve Chairman Ben Bernanke brought renewed hope for precious metals and mining stock investors. The U.S. central bank is prepared to provide additional stimulus if the current economic slow patch persists.

My firm has stated unequivocally that we have been programmed over the past two months to accept accommodative policies and QE3. The recent downturn in economic data such as home prices, increased unemployment and decreased manufacturing, indicates that we are being prepared to accept further bailouts and money printing measures. The Fed has already invested trillions of dollars in order to stabilize the capital markets. We are heading into the election year. Fed policies may be affected by political concerns in order to continue the accommodative measures of the Obama administration.

We have assiduously monitored the all important level of GDX $52.50 for several weeks. It was important that this support held for the long term uptrend. We saw a head fake, or bear trap through $52.50, the 2011 low. The new low was not confirmed by our indicators. This signaled a potential turning point and head fake.

The market will often do what it can to confuse us. Ergo, in an attempt to shake out weak holders, a head fake break below this support occurred. After these fakeouts occur at support, powerful moves tend to follow, which we are currently witnessing.

In plain language, the all important 200-day moving average, which has been regained, proves the long term trend in mining stocks moves on a labyrinthian path; however the path ascends upward over time.

Silver is showing signs of demand as it regains its 50-day moving average. Notice the 200-day moving average continues to catch up with the price during this consolidation. This recent pullback has been quite healthy for the silver market and has wiped out a lot of speculative hedge funds and day traders who bought at the wrong time when it was overbought and extended way above the 200-day moving average. Notice the decreasing volume, showing that the enthusiasm of profit taking and selling is waning.

An ascending triangle has been forming and I believe we may see a breakout to the upside where we can challenge April highs.

Gold is making a record breakout and is forming a bullish symmetrical triangle. This breakout may lead us to our $160 target, originally forecasted in late January. A high volume breakout to the upside has occurred. These continuation patterns favor a confirmed upside breakout.

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Barron’s: “Gold Stock Trades Signals Potential Bottom In Mining Stocks”

In Market Analysis, Stock Movers on July 13, 2011 at 7:50 pm

Written on 7-5-11

Mining stocks look attractively valued, Jeb Handwerger, editor of GoldStockTrades wrote in a note to clients.

Soon the Barrick’s and Newmont’s (NEM) of the world “with increasing profit margins will be faced with a choice to either distribute sizable cash dividends or invest them in mergers and acquisitions,” he observes.

Discovery and production rates in the industry are declining as the bullion prices continue to soar, Handwerger added.

He sees GDX forming a potential bottom as the ETF has held above the $52.50 a share level, a key technical indicator in light of less relative strength in bullion spot markets, Handwerger notes.

GDX closed Tuesday about 5% above that mark.

See the full article from Barron’s by clicking here.

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Time For QE3? Gold and Silver Miners Reversing Higher

In Market Analysis, Stock Movers on July 12, 2011 at 7:41 pm

At times such as these the economy reminds us of the inscription that Dante read at the gates to hell, “Abandon Hope, All Ye Who Enter Here.” My firm takes a different view of this grim admonition. At the risk of sounding pollyanish, we look for the silver lining instead of succumbing to panic.

Can the economy get any worse from here? Perhaps, yet the situation brings to mind an old aphorism, “The worse things were…the better they got.” The Gershwin Brothers put the same thought another way, “With gloom to lead the way, I’ve seen more skies of gray, then any Russian play can guarantee.” The time to buy stocks is when the lumpen are terrified, not euphoric.

This year investors have been engulfed by the perfect storm of the Japanese earthquake and tsunami, Middle East and North African turmoil, credit downgrade warnings in the US, the exacerbation of Eurozone debt fears, and more. What does this all mean? The global market has had all the slings and arrows of outrageous fortune thrown at it. This chaos has had a positive effect on precious metal stocks that has not been reflected in its current price.

Newcomers to the arena are being given a golden opportunity to participate in an underpriced and oversold mining sector. Gold is close to all time highs yet miners have recently been basing at 52 week lows.

This represents an unusual opportunity. Central banks are increasingly buying gold. Witness the recent acquisitions by Mexico, Russia, China, and India who adding to their repositories of precious metals as they choose to diversify away from the US dollar.

This dollar bounce and mining stock selloff is providing one of the best opportunities for long term mining investors to enter the market during this short term liquidity crisis.

There is currently a short term consolidation and pause in the US dollar decline. This is a phenomenon resulting from the extreme weakness of the Euro and the need for liquidity rising from the potential exit from QE2.

Looking forward to the rest of the summer and the 2012 election it may become evident that a QE3 – in whatever semantic guise – may have to be instituted to buoy the economy, improve employment, and postpone a financial crisis. Already President Obama has told the nation that he will propose a massive infrastructure stimulus after today’s horrendous jobs data.

This unemployment crisis may benefit the long term holders of precious metals and mining stocks as interest rate hikes will have to be kicked down the road to some future date. Quantitative easing and stimulus projects will also be instituted, putting us into further debts.

There are too many well publicized negative considerations when the see-saw of speculation tilts to one side. It is entirely possible that the equilibrium is somehow going to be restored. In time, there has got to be a morning after. Precious metals will inevitably occupy their rightful place in the investment universe. Miners have bounced off 2011 lows and are now positioned for a breakout, while gold is challenging record highs.

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Buy Mining Stocks In Friendly Jurisdictions

In Market Analysis, Stock Movers on July 8, 2011 at 8:30 pm

The elections in Peru of avowed radical socialist Humala is a development of great significance for precious metals and mining investors. It’s not an event that has gone unnoticed by experienced speculators. Mining investors worldwide are eyeing July 28th, when the new regime takes control. So far in 2011 investors have sold off mining assets in Peru and are buying the underlying metals.

What we are witnessing is no less than the ongoing sophistication of the third world. Peru is only the latest development in this continuum. “Nationalistas” – Chavez in Venezuela, Morales in Bolivia, and Lula’s successor and protégée, Dilma Rousseff in Brazil — are raising the ante around the negotiating tables. One cannot help but wonder who is next? Mining investors are increasingly aware of civil unrest and geopolitical uncertainty. Recently they have been in favor of holding the underlying metal, causing a major divergence. There may be a reversion to the mean where high quality projects in mining friendly jurisdictions receive a premium. We must not forget that Peru was recently regarded as a mining haven and a model for foreign investment with such mining giants as Southern Copper (SCCO) and Buenaventura (BVN). Unfortunately 2011 has not been kind to investors in Peruvian equities, as Humala is an unknown and his election victory has significantly weakened assets in the country.

Mining stocks are beginning to emerge from a severe selloff starting in April. No doubt technical damage was inflicted. The recent correction was the most severe downturn in the past two years and had all of the earmarks of a classic panic as it momentarily broke 2011 lows.

We are in the greatest gold bull market since the 1970’s. The metal is up almost 500% over the last ten years. We went through an uncomfortable and painful short term correction in what has always been a volatile arena, add to this the summer doldrums, global unrest, economic uncertainty from the withdrawal from QE2, and the possible advent of QE3.

All of these imponderables add up to confuse and discourage investors. The markets have always done this in an attempt to create the transfer of wealth from weak hands to strong. This is the very essence of market place dynamics.

Mining stocks in mining friendly jurisdictions are regaining their technical strength. There is a divergence between the price of mining stock equities and its underlying assets in all sectors that my firm follows: gold, silver, rare earths, and uranium. However, for every action there is an equal and opposite reaction. The bounce could well be as frenetic on the rise as it has been panic ridden on the decline.

Start getting excited for the second half of 2011.

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Gold and Silver: Short Term Pullback In Secular Uptrend

In Market Analysis, Stock Movers on July 6, 2011 at 8:04 pm

We have witnessed an important watershed in world history with the unwinding of QE2. Every citizen, no matter where, has a ready camera eye on the world, carried in his smart phone case. Even more so does the internet provide the anvil for major nations to forge economic strategies. “Swords are being hammered into cybershares.”

We think of wars being fought with soldiers on battlefields, now Cyberspace is the new field of combat. As we have seen with the uprisings in North Africa and the Middle East, the use of the internet is becoming a vital instrument in fighting the wars of the future. Cyber-spying to formulate the economic policies of nation states are an increasingly critical factor. So it has never been thus that even friendly nations may spy on one another in order to formulate their investment timing.

An interesting development that underlies the growing importance of the internet in our daily lives is occurring under our very noses. Recently, an unnamed, nation state cracked into the confidential, super secret network of the International Monetary Fund (IMF). The IMF is an integral component of the global financial system.

It is important to comprehend the significance of this developing story. Indebted nations are strategizing methods, in which they can pay off ever mounting debts with cheaper currency.

China, who is sitting on a hoard of devaluing dollars and bailing out a debt burdened Europe, must exchange them for real assets in the form of precious metals and natural resources in the ground. History presents us with watershed events which are difficult to perceive while we are in the midst of them. This has been no surprise to readers of Gold Stock Trades.

In a series of articles entitled the “Chinamese Twins”, I have identified the attempts on the part of China and America to achieve a kind of symbiosis. It is a pro-quid-pro where deals are being constantly negotiated between the two superpowers.

The recent arrangements consisted of the U.S. paying off rising debts with cheap dollars (UUP), while China increased the value of the Yuan (CYB) in order to combat inflation. At the same time, the higher Yuan might purchase real mineral assets. We are now seeing the outcome of a much weaker dollar, higher commodity prices, and less inflation in China.

This year the Chinese Investment Corporation, who has been given a duty to look for potential North American resource assets by the Government of China, opened its first international branch in Toronto, the North American epicenter of resource companies. It is within conjecture that China may step up its hunt for resources in the second half of 2011.

Egypt has upcoming elections where the Muslim Brotherhood looks to be taking a major role, Democracy-Islamist style. Then we have the imminent Iranian Nuclear developments probably in 3 weeks. Did we forget about the PIIGS and the U.S. debt problems?

There is a whole flotilla of Black Swans straight ahead that could lead investors to the safe havens of precious metals and strategic metals resources.

Overall, there have been “summer doldrums” for mining stocks (GDX), gold (GLD) and silver (SLV) unless some exogenous event swoops down upon us. Although things may taste flat to bitter at this time, the aforementioned additions to the soup can serve to bestir the pot. Important reversals are being monitored as QE2 expires.

The markets will do what they always do: confuse, misdirect and obfuscate. It’s important for investors to stay on target and not be swayed by skewed media reports and questionable economic data, which often serve to mislead us as we make our way through the investment jungle.

The long range arc of gold, silver and mining stocks moves on a maze-like path, however it should be noted that the path ascends upward over time. As precious metal investors, we must view temporary corrections with an eagle’s eye, making sure to survey the economic landscape. In doing this, I see a chaotic game-plan unfolding below the headlines.

At times like this, we as investors must avoid the turbulent winds that only serve to divert our course. Precious metals will remain the true compass to guide us on the path toward investment profits.

Our leaders, however, are charting a different course. President Obama’s reelection campaign is already on the road. The current administration seems to be increasingly concentrating on its own interests. This was highlighted by Obama’s move to release 30 million barrels of emergency reserve oil (OIL). This oil is supposed to be used for emergencies, not votes. Why did it come right as QE2 ended? Is this a stimulus in disguise?

We’re told by the politicians that unless the national debt ceiling is raised quickly and unconditionally, the nation will be adversely affected. Standard & Poor’s threatened that if the US government fails to raise its borrowing limits, they will give the lowest credit rating possible, forcing interest rates to soar and causing a deflationary nightmare. The US has until August 2 to increase its debt limit. Since 1960, it has been raised over 60 times. Spending, entitlements and deficits will increase, and the long-term upward trend in gold and silver should proceed.

My firm believes that this trend of raising debt limits will continue. It’s an election year, and politicians’ jobs are at stake. The last thing they want is default. A lower credit rating would cause borrowing costs to skyrocket, which would cripple the US in paying back its soaring debts. Don’t forget that the US is the world’s biggest spender. This is the third year that the deficit has exceeded a trillion dollars.

The opposition to such threats is supine and voiceless. The Republicans are accused of “brinksmanship” and plunging us into a fiscal abyss. Instead of viewing this as a major lever in obtaining important concessions from our leaders, only the “voice of the turtle” is heard through the land. Consequently, the US is heading toward a European-style centralized government, which the current administration hopes to effect if they are reelected.

As precious metal investors, we observe a different vista. We sense that the “Summer Goldrums” is creating a base right here in precious metals. It is a short-term pullback in a secular uptrend.

Mining stocks may be affording us with a pivotal turning point from which a profitable new rise may emerge. Miners have currently tested the key $52.50 level successfully, the 2011 low-on-low volume indicating a lack of buying rather than aggressive selling.

I am keeping an eye on what may be a good re-entry point for the commitment of new funds. My firm reiterates its conviction in the long-term upward trend of the mining stocks and precious metals. Gold maintains its strong uptrend, evident on long-term charts, and many who have been calling a finale will realize that this period is just an intermission.

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Gold, Silver and Mining Stocks Maintains Strong Uptrend

In Market Analysis, Stock Movers on July 5, 2011 at 8:48 pm

We have witnessed an important watershed in world history with the unwinding of QE2. Every citizen, no matter where, has a ready camera eye on the world, carried in his smart phone case. Even more so does the internet provide the anvil for major nations to forge economic strategies. “Swords are being hammered into cybershares.”

We think of wars being fought with soldiers on battlefields, now Cyberspace is the new field of combat. As we have seen with the uprisings in North Africa and the Middle East, the use of the internet is becoming a vital instrument in fighting the wars of the future. Cyber-spying to formulate the economic policies of nation states are an increasingly critical factor. So it has never been thus that even friendly nations may spy on one another in order to formulate their investment timing.

An interesting development that underlies the growing importance of the internet in our daily lives is occurring under our very noses. Recently, an unnamed, nation state cracked into the confidential, super secret network of the International Monetary Fund (IMF). The IMF is an integral component of the global financial system.

It is important to comprehend the significance of this developing story. Indebted nations are strategizing methods, in which they can pay off ever mounting debts with cheaper currency.

China, who is sitting on a hoard of devaluing dollars and bailing out a debt burdened Europe, must exchange them for real assets in the form of precious metals and natural resources in the ground. History presents us with watershed events which are difficult to perceive while we are in the midst of them. This has been no surprise to readers of Gold Stock Trades.

In a series of articles entitled the “Chinamese Twins”, I have identified the attempts on the part of China and America to achieve a kind of symbiosis. It is a pro-quid-pro where deals are being constantly negotiated between the two superpowers.

The recent arrangements consisted of the U.S. paying off rising debts with cheap dollars (UUP), while China increased the value of the Yuan (CYB) in order to combat inflation. At the same time, the higher Yuan might purchase real mineral assets. We are now seeing the outcome of a much weaker dollar, higher commodity prices, and less inflation in China.

This year the Chinese Investment Corporation, who has been given a duty to look for potential North American resource assets by the Government of China, opened its first international branch in Toronto, the North American epicenter of resource companies. It is within conjecture that China may step up its hunt for resources in the second half of 2011.

Egypt has upcoming elections where the Muslim Brotherhood looks to be taking a major role, Democracy-Islamist style. Then we have the imminent Iranian Nuclear developments probably in 3 weeks. Did we forget about the PIIGS and the U.S. debt problems?

There is a whole flotilla of Black Swans straight ahead that could lead investors to the safe havens of precious metals and strategic metals resources.

Overall, there have been “summer doldrums” for mining stocks (GDX), gold (GLD) and silver (SLV) unless some exogenous event swoops down upon us. Although things may taste flat to bitter at this time, the aforementioned additions to the soup can serve to bestir the pot. Important reversals are being monitored as QE2 expires.

The markets will do what they always do: confuse, misdirect and obfuscate. It’s important for investors to stay on target and not be swayed by skewed media reports and questionable economic data, which often serve to mislead us as we make our way through the investment jungle.

The long range arc of gold, silver and mining stocks moves on a maze-like path, however it should be noted that the path ascends upward over time. As precious metal investors, we must view temporary corrections with an eagle’s eye, making sure to survey the economic landscape. In doing this, I see a chaotic game-plan unfolding below the headlines.

At times like this, we as investors must avoid the turbulent winds that only serve to divert our course. Precious metals will remain the true compass to guide us on the path toward investment profits.

Our leaders, however, are charting a different course. President Obama’s reelection campaign is already on the road. The current administration seems to be increasingly concentrating on its own interests. This was highlighted by Obama’s move to release 30 million barrels of emergency reserve oil (OIL). This oil is supposed to be used for emergencies, not votes. Why did it come right as QE2 ended? Is this a stimulus in disguise?

We’re told by the politicians that unless the national debt ceiling is raised quickly and unconditionally, the nation will be adversely affected. Standard & Poor’s threatened that if the US government fails to raise its borrowing limits, they will give the lowest credit rating possible, forcing interest rates to soar and causing a deflationary nightmare. The US has until August 2 to increase its debt limit. Since 1960, it has been raised over 60 times. Spending, entitlements and deficits will increase, and the long-term upward trend in gold and silver should proceed.

My firm believes that this trend of raising debt limits will continue. It’s an election year, and politicians’ jobs are at stake. The last thing they want is default. A lower credit rating would cause borrowing costs to skyrocket, which would cripple the US in paying back its soaring debts. Don’t forget that the US is the world’s biggest spender. This is the third year that the deficit has exceeded a trillion dollars.

The opposition to such threats is supine and voiceless. The Republicans are accused of “brinksmanship” and plunging us into a fiscal abyss. Instead of viewing this as a major lever in obtaining important concessions from our leaders, only the “voice of the turtle” is heard through the land. Consequently, the US is heading toward a European-style centralized government, which the current administration hopes to effect if they are reelected.

As precious metal investors, we observe a different vista. We sense that the “Summer Goldrums” is creating a base right here in precious metals. It is a short-term pullback in a secular uptrend.

Mining stocks may be affording us with a pivotal turning point from which a profitable new rise may emerge. Miners have currently tested the key $52.50 level successfully, the 2011 low-on-low volume indicating a lack of buying rather than aggressive selling.

I am keeping an eye on what may be a good re-entry point for the commitment of new funds. My firm reiterates its conviction in the long-term upward trend of the mining stocks and precious metals. Gold maintains its strong uptrend, evident on long-term charts, and many who have been calling a finale will realize that this period is just an intermission.

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Nuclear Energy and Uranium Miners Present Unique Opportunity

In Market Analysis, Stock Movers on July 4, 2011 at 5:59 pm

Read the recent interview with Jeb Handwerger in marketwatch.com by clicking here.

“Jeb Handwerger, editor of GoldStockTrades.com who’s also a natural-resource analyst, pointed out that the world didn’t stop mining resources after the fatal explosion at a Massey Energy Co. mine or after the BP BP +0.75% Deepwater Horizon oil spill, both last year.

“There is no form of energy production that is without risk. Coal mines can collapse, oil rigs and pipelines can explode and dams can be breached,” he said.

“Nuclear reactors can lose backup power during a 9.0 earthquake and tsunami,” he said. But “nuclear’s safety record over 50 years stands head-and-shoulders [above] its competition.”

So in the uranium space, there’s “possibly a once-in-a-generation opportunity,” Handwerger said.”

Read the full article at marketwatch by clicking here…


Potential Turning Point In Gold Mining Stocks As QE2 Expires

In Market Analysis, Stock Movers on June 30, 2011 at 4:23 am

Jeb Handwerger, editor of GoldStockTrades, has been bullish on miners. He points out in a letter to clients today that GDX has held support above a technically significant $52.50 level.

Read the full article at Barron’s by clicking here.

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Will Rare Earth Stocks Be Hurt By Surprise Oil Release?

In Market Analysis, Stock Movers on June 29, 2011 at 4:48 pm

The recent release of 60 million barrels of oil will artificially lower the price. The high oil price has been the best catalyst for clean energy production and fuel efficient vehicles. Increasing the supply of oil may be pushing down the demand for rare earths, uranium, and lithium only in the short term. This decline in oil prices should not drastically hurt the development of rare earth assets outside of China.

Over the long term, oil prices will return to equilibrium as the new supply is absorbed by the market. Demand for fuel efficient vehicles will continue to soar. Rare earth and lithium stocks have pulled back and are significantly discounted. However, this may change shortly.

My site received a significant letter from Governor Sean Parnell of Alaska recently in which he wrote to Energy Secretary Steven Chu that, “The federal government simply cannot afford to sit on the sidelines as other countries move aggressively to develop new mines…” (Read the full letter by clicking here.) The Governor proposes an immediate initiative combining federal and state governments in the speedy development of Alaska’s vital rare earth resources.

Washington is beginning to take notice of the rare earth crisis affecting our most critical industries. It is apparent that the West will not be relying on trade sanctions alone to counter China’s export cuts of critical rare earths. Artificially lowering the price of oil is only a short term move and the US must move fast to find alternative energy sources. Rare earth assets in the US must progress rapidly or domestic high end users such as Apple(AAPL) and General Motors (GM) may face supply shortages.

The President has set aside funds for 2012 to create a rare earth research hub. It is being modeled after the famous “Manhattan Project” where top scientists will be brought together to develop a rare earth supply chain. This will consist of targeting the top domestic development projects and creating a separation facility to manufacture the ore into a final product. This could potentially be a tonic to many of the North American rare earth miners who are developing the assets but need the government’s assistance to subsidize refining and separating capabilities.

In the article Molycorp, Rare Earth Sector Sees Major Developments This Week, I mentioned that “Colorado Congressman Mike Coffman introduced the Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2011, which will give loans to the industry and speed up permitting.” These initiatives from Washington have been long overdue. The US needs to recapture this industry co-opted long ago by China. Fortunately important forces in the US are beginning to take action to regain the high ground.

The Bin Laden Mission was a prime example of unintentionally revealing to the world one of the many uses of rare earths in top secret technologies. For the first time, the public became aware of the existence of a stealth helicopter. Stealth technology depends on rare earth oxides. The rare earths absorb the opposition’s laser wavelengths to avoid detection. We are witnessing only one of many hitherto unknown applications. Imagine the plethora of rare earth developments that await mankind.

One can now begin to comprehend the significance of Congressman Mike Coffman’s urgency in stressing the importance of fast tracking the production of rare earths for our national security. There’s no better example of this than the indigenous mother-load of rich rare earth assets in our own country.

Major US domestic rare earth stocks such as Molycorp (MCP), Rare Earth Elements (REE), and Ucore must be closely monitored for consolidation in 2011.

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Nuclear Energy and Uranium Stocks Poised To Rebound

In Market Analysis, Stock Movers on June 24, 2011 at 9:31 pm

A significant base may be forming in uranium stocks — seen in the Global X Uranium ETF (URA) — as Japan’s troubled nuclear energy industry passed its first major vote since the Fukushima tragedy. Many of the stocks that make up this ETF are down more than 40% such as Uranium Resources (URRE) and Uranium Energy Corporation (UEC). But positive news is beginning to reemerge after three months of naysaying. Fukushima is proving nuclear is here to stay.

In the northern prefecture of Aomori in Japan, citizens gave a resounding vote of confidence to a conservative pro- nuclear governor. He won a third term, turning back a challenger who wanted to freeze all existing plans for the building of new nuclear facilities.

Aomori is not far from Fukushima, thus making it an ideal place to test the issue of which way Japan wanted to go with nuclear power. It is interesting to note that the opponents still seek the negative interpretation of a positive development. They still live in the forty year old past of outmoded plants and don’t acknowledge the new generation of safer, more compact reactors that are being built around the globe.

The Japanese Citizenry are well aware of why they voted to go ahead with development of nuclear power generation. Those who would take the “Merkel” approach, cutting off the nuclear nose to spite the German atomic face, are naive to the realities of industrial generation in our modern society. That thinking is limited to the thought that the people who voted in favor of nuclear power based their decisions on strictly economic motivations.

It is true that Aomori is one of the poorest areas with an unemployment rate among the highest in Japan. Nuclear energy provides almost 15% of tax revenue during the current fiscal year. Moreover, they receive generous subsidies from Tokyo.

The Japanese have a saying, “Fukatsu No Seishin — We will never give up.” One wonders when the nuclear critics will awaken to the new atomic realities.

A new day is dawning on the economical generation of electricity. The superiority of nuclear power [NLR] over other sources such as solar, wind, and coal are becoming increasingly apparent. The march towards safer new nuclear construction continues apace as the realization is that a new and improved nuclear is here to stay.

If any nation had justification for turning their backs on nuclear policies, it was Japan. This recent vote may serve to inspire a watching world. Remember that Aomori is the site of 4 of the 14 planned reactors to be built in Japan. In addition, the prefecture also has the nation’s only nuclear reprocessing plant. What does this mean to holders of uranium mining stocks? We know that there is a global shortage in the supply/demand equation of available uranium ore, especially in the United States as the Russian HEU agreement nears completion in 2013. This shortfall may increase in the immediate future, benefitting patient holders of uranium mining stocks that are near production in the United States.

Many small miners that are near term low cost and low capital producers have already bottomed and have reversed their downtrends. As the HEU agreement nears expiration in 2013, these junior uranium miners will be mining ore at the right time and in the right place.

Many uranium miners are not violating Fukushima lows. Two weeks ago we witnessed the first major accumulation of uranium stocks since March as the Department of Energy sold a large portion privately instead of dumping it on the open market. This is beneficial for the uranium spot price as the market was preparing for these auctions over the next few months. These auctions would cause the spot price to decrease significantly.

We have been witnessing a major negative divergence between price and momentum indicating a potential reversal from this five month downturn in this brutally beaten down sector. The uranium sector has usually bottomed in late June or early July. Last year, we saw a record run with these stocks as countries began to stockpile uranium ore. I would not be surprised to see something similar during the second half of 2011 when uranium once again resumes its major secular uptrend and truly reflects the long term supply shortfall.

Unlike Japan, Germany (EWG) is taking the wrong road. It’s a decision that is political and irrationally motivated in response to the Green Party. It makes me wonder what some politicians will do to get elected.

The leaders of German Industry have written an open letter stating that halting the country’s nuclear energy with such “unprecedented haste” gives them increasing worry.

Germany has been the crown industrial jewel of Europe, maintaining a profitable economy in the heartland of an otherwise deficit ridden Eurozone. The Chief Executive of Daimler Motors voiced fear about Germany’s abrupt about face in nuclear policy.

The huge power requirements of Germany’s heavy manufacturing companies, which are the flower of the European economy, will now be dependent on power sources from France and Russia. Could this be a potential black swan?

Germany’s electricity prices, which have more than doubled in the last ten years, now become a sensitive issue for German Industry. This nuclear transition is forcing an increased reliance not only on coal, but also on nuclear energy from France and natural gas from Russia.

This is no way to run a modern industrial nation. German Chancellor Angela Merkel is running scared and scuttling Europe’s most advanced modern industrial machine.

(It is important that readers be aware that the anti-nuclear movement in Germany was strong long before Fukushima. The Japanese tragedy provided the ammunition needed by the anti-industrial left. The nuclear plants were growing old in need of revamping.)

Chancellor Schroder, who preceded Merkel, was sympathetic to the Green Party and committed to a nuclear phase-out plan by 2022. Merkel’s response in late 2010 was to attempt to extend the nuclear exit by 12 additional years.

Many riots and demonstrations occurred in response to Merkel’s move. She was under pressure to give in to Socialist demands when Fukushima provided the immediate excuse to reverse policy and to close all of Germany’s Nuclear Plants. We see that Germany’s decision to forsake their nuclear reactors was a long time coming. This is despite Merkel’s statement — which was misleading — when she said, “After what was an unimaginable disaster at Fukushima, we had to reconsider the role of nuclear energy.” She announced the decision to close all the reactors by 2022 at a news conference in the presence of several of her cabinet ministers.

This is a sharp policy reversal that will make Germany the first major modern industrial nation to abandon nuclear power. Merkel’s move is in contrast with the US, China, India, Russia, and many others who are continuing full speed ahead with safe and up to date nuclear power plants.

There are currently 62 modern and efficient power plants being built all over the world including 27 in China, 5 in India, 11 in Russia, and even 2 in Japan. In fact, uranium is fast approaching a supply-demand deficit and a possible shortage in uranium ore.

There are 443 operating reactors, not including new plants coming online, which need over 180 million pounds of uranium annually. The world produces only 130 million pounds per year. Already there is a shortfall of 50 million pounds which is being filled until 2013 by the Russian Highly Enriched Uranium Agreement. The Russians have made it clear that they will not renew this agreement after 2013, as they will need the fuel for their own needs.

Meanwhile, the Nuclear Regulatory Commission which oversees nuclear power in the US has been conducting special investigations into nuclear reactors. The Chairman of the NRC has expressed confidence in the safety of the American Nuclear Reactors and US utilities are purchasing all available supplies of ore.

Additionally the French Prime Minister recently said, “We think nuclear energy is the solution for the future.”

We must be aware that the German decision is politically driven. The move to end nuclear power will increase energy prices and endanger German competitiveness.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.


QE or Not QE? That Is The Question

In Market Analysis, Stock Movers on June 22, 2011 at 4:25 pm

While the media is customarily thought to disseminate news, there is a far more intriguing purpose in the role of the relationship between the national mindset and the intended purposes of economic establishment.

It has ever been thus, going back to Shakespeare’s Salanio character in “Merchant of Venice.” Upon meeting colleagues, the characters would greet each other with the question: “Now, what news on the Rialto?”

The Rialto was a place where the powers that be would meet in the morning and exchange ways to use the day’s news to establish desired policy. The Roman baths were also venues in which senators and policymakers would formulate strategies. Of course, Joseph Goebbels and the Stalinists also realized the pivotal role played in the intermarriage of news and economic policy.

Similarly, today we observe the fine “Roman hand” in planting stories to influence a kind of Orwellian mindset in the furtherance of establishing desired fiscal objectives—the doublethink, paranoia, deception and delusion.

It is more than coincidental that, when the elites wish to formulate their desired goals in such matters as quantitative easing (QE), bailouts and Keynesian pump priming, negative economic data will be released. It’s the same old story.

The Obama team is dedicated to Federal Reserve Chairman Ben Bernanke’s philosophy of avoiding depression through the printing press to proliferate cheap money. We are being set up for the acceptance of quantitative stimulus by whatever means and guises necessary.

Until now, everything was coming up roses. National recovery was in the air. Then, all of sudden this week, data turned on a dime. Economists were compelled to rethink hitherto positive figures. Are we being programmed for more QE?

It would not be surprising if we were finessed into acceptance of inflationary policies. Bills could be paid with cheap dollars. Moribund local and state governments could pay off their strangling debts. Think of our swollen budget being paid with cheap dollars. A seemingly simple solution to a complex problem. However, there may be another side to the seesaw.

Our erstwhile allies, such as China and Russia, have been making noise about setting up an alternative currency. Witness Greece and the PIIGS nations (Portugal, Italy, Ireland, Greece and Spain). They are desperate for money to extricate themselves from their financial quicksands. More bailouts anyone?

Foreign governments are buying gold at levels not seen in 30 years due to risk of further declines in the U.S. dollar.

Goldman Sachs is under subpoena in Manhattan as possibly playing a major role in the housing market fiasco. The Manhattan District Attorney is investigating “activities in creating and selling mortgage-based securities designed to allow the bank to profit from the collapse of the housing market.”

One cannot but hope to consider that many of these dramatis personae are some of the very same folks that are steering our national financial ship of state. Prayer anyone?

All these roads lead clearly to the validity of Gold Stock Trades’ essential message. Precious metals, either mining stocks or physical bullion, may be the requisite ports in the upcoming storm.

One need not be a weather forecaster to see the gathering dark clouds and approaching black swans. Hard money is real money. Look only to the best-managed and -financed miners as safe harbors in the gathering tempest. The storm takes time to form. To paraphrase Louis XIV, “Après moi, le deluge” (after me, the deluge).

Sophisticated readers don’t have to be regaled by today’s headlines. They are well aware of the economic syndrome that afflicts our economy by such current headlines as Market Stumbles as Factories, Hiring Slows Down; Biggest Drop in Stocks in a Year; State and Local Governments Going Broke; Unemployment Rises, etc.

The voice of Cassandra is heard across the land. Where does all of this negation leave the intelligent investor who is seeking a life preserver with which to ride out the storm?

The U.S. economic system, which had been the jewel of the world, is in crisis. How long can even the healthiest of systems continue being raped by CEOs that walk away with millions from institutions that are crowned “too big to fail?” They have been bailed out by monies contributed by the great American middle class, which is rapidly being disenfranchised by having to pay for a violated economy.

There is talk of QE3 coming to rescue this sick patient—this may be a placebo that does not cure the ailment. After all, Bernanke instituted QE2 only after deciding that the system was too weak to stand on its own. The treatment has always been in front of our very eyes—sound money in a healthy economy. Instead, we relied on the economists for fiat cures.

Indeed, one of the few areas that has held up during this recent liquidity selloff has been gold and silver bullion. Both gold and silver bullion continue to move higher as equity markets decline, showing its relative strength. In fact, as of this writing, gold bullion is challenging record levels, while gold miners are hitting new 2011 lows.

The current market acts as if it was a skillful boxer—bobbing, weaving and full of head fakes designed to confuse us. We have entered into the summer doldrums (or should I say, “goldrums”) in mining stocks.

Do not be fooled. Precisely at such time is a beehive of footwork occurring beneath the surface. The miners are planting the seeds in what has always been a seminal season before the harvest. They are entering into the drilling and exploring period, which will hopefully lead to pay dirt in the autumn.

What does this imply for astute investors who are aware of the territory? It’s sowing time—not selling time. There is fear in the land that may be the antecedent to panic. Nightmarish scenarios of a repeat of the 2008 financial crisis lurks in our subconscious. Good paper may have to be sold to cover bad mistakes.

Gold is continuing toward our $1,600 June target, while the miners continue their 9-month consolidation. These extended formations, potentially lead to explosive breakouts. Don’t forget August 2010, when silver broke out from major resistance at $20 and we saw its historic move. Could August 2011 be similar for the undervalued miners?

Miners tend to lag the price of bullion, as many of the industry analysts use a trailing three-year bullion average price to value projects. The velocity of the ascent in the current price of gold this past year is not reflected in current valuations.

Once these higher metrics are updated in the Fall, many of the miners may see gains to reflect the more accurate values of their assets.

I will publish new gold and silver mining stock recommendations when I see a clear recovery and reversal in the miners.

Patience and fortitude are our constant marching orders. We are in the midst of a correction in mining stocks that may be short-lived, albeit breathtaking. Heretofore, gold bullion has pretty much kept in lockstep with the miners. In this summer season, we have seen a divergence between the two. Such an anomaly is seasonal and transient.

I believe we may see miners catch up in the second half of the year, which, historically, has been an annual occurrence. We have entered the summer “goldrums,” which has become an annual event. Many mining stocks are extremely undervalued and oversold.

Actually, we are at the most divergent level from the mean between miners and the metal in many years. There may be a reversion to the mean between miners and the gold price during the second half of 2011. This period could be setting up an updated base for miners.

The low volume selloff in miners to long-term support levels indicate that shrewd precious metal investors may not have not sold their mining equities. And many have reported that they’ve reallocated their holdings in bullion and repositioned into out-of-favor mining stocks while they are on a “fire sale.”

This year, I expect very exciting third and fourth quarters for mining equities, as investors realize the potential of gold and silver discoveries during this secular dollar bear market and global currency crisis.

Remember that the arc of precious metals moves to confuse us, but it continues to ascend upward. Presently, our service is in a holding period, waiting for a potential signal for a reversal to add or initiate a position in the best-managed and well-financed mining stocks.

Only the most adroit of traders can manage to exit, and then enter again. The U.S. Dollar, while seemingly a safe haven, is acting questionably at this time. Understandably, investors are nervous and using the old boxing analogy, decide to ‘throw in the towel’ prematurely. Careful monitoring of the markets is required. Volatility has significantly increased, as we come closer to the expiration of QE2 at the end of June.

Many imponderables await us that could constructively affect our precious metals portfolio, such as elections in North Africa, turbulence in Syria and Iran, instability in the PIIGS nations, U.S. credit downgrades, QE3 uncertainty, etc. The list is endless and abounds with reasons that validate adherence to our policy of precious metals, which includes well-managed and positively financed mining stocks in friendly jurisdictions.  Click here to monitor on a timely basis these developing stories.


Potential Pivot Point For Gold Miners?

In Market Analysis, Stock Movers on June 21, 2011 at 5:38 pm

Just quoted in Barron’s last week…

“At least one analyst sees a pivot point for gold forming, especially among mining stocks.  Jeb Handwerger, editor of GoldStockTrades, told clients in a note today that GDX is testing key support levels around $52.50 a share. It closed today at $53.06 a share. If the ETF holds, that could pose an attractive entry point for bullish traders, wrote Handwerger.”

Read the full article from Barron’s by clicking here.

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Liquidity Crisis Intensifies Mining Stock Sell-off

In Market Analysis, Stock Movers on June 14, 2011 at 1:48 am

Any thoughts of a bubble in precious metals is not pertinent at this time.  As long as mining stocks are not in favor then any thoughts of a bubble are not applicable in the current situation.  Mining stocks should be soaring in tandem with their brothers in bullion.  Such is not the case.  Miners are trading far below general market valuation. In past history during a bubble, mining stocks soared to hundreds of dollars a share at the same time as bullion.

Wealth in the ground represents an open ended warrant on mining potential.  Mines can grow, new ore bodies can be found, while bullion has no such potential open ended expansibility.

Gold mining stocks(GDX) are incredibly cheap at $1500 gold(GLD).  Before the credit crisis in March of 2008 as gold hit $1000 an ounce, miners (GDX) hit its all time high of $55.  Now three years later gold is 50% higher, yet the miners have barely been able to breakout of the $55 range.  Yamana (AUY) and Kinross (KGC) Gold are two majors that have been significantly underperforming gold over the past three years and are not near their pre credit price levels in 2008.  These stocks have not provided any leverage to the price of gold to their shareholders.  Investors are sticking to the bullion etf’s and are disinterested in the miners.  This lack of interest in this sector signals we still have some way to go in this precious metals bull market.

The gold miners should be trading higher if they kept pace with the rise in the bullion.  The standard deviation between miners and gold bullion has never been so great.  It is at times such as these that investors can benefit from this apparent discrepancy.

Currently mining stocks have corrected because of apprehension regarding the possible exit from QE2 and growing difficulties for miners worldwide.   Investors who were burned during the 2008 credit crisis are concerned about a repetition of such an occurrence and its effect on a potential counter trend rally in the U.S. dollar (UUP) and long term treasuries (TLT).  Small mining companies (GDXJ) depend on a readily available line of credit.  Investors fear if the flow of capital were to be shut off as had been their experience in the past, their ability to operate might be impaired.

This may represent a buying opportunity for investors in small miners(GDXJ).  Miners represent assets in the ground whereas etf’s such as GLD and SLV may have a built in weakness in the actual physical gold and silver they are holding.  If called upon to produce the actual bullion, they might not be able to do so.  This would favor mining stocks which represent actual wealth in the ground.

There may be an implicit weakness in the very nature of a strictly bullion etf.  Simply put a large quantity of bullion may not be able to be produced on demand.  Do not be surprised if the bullion etf’s find themselves unable to meet the demands of the marketplace.

In such cases, the miners would once again come into favor as the investment vehicle of choice.  At present there is a deviation between bullion and assets in the ground.  Investors may be reluctant to hold paper in such a climate of fear and uncertainty.  There are presently astute wealthy investors who have sold some of their bullion to purchase mining stocks.

Again note that many miners are presently languishing while bullion etf’s struts across the financial stage.  This anomaly may not last much longer.  Presently mining stocks are going through a major firesale, while bullion commands center stage.

In the markets, it is prudent to expect the unexpected.  That is why we should seize the opportunity to buy straw hats in winter.  Such an opportunity may be upon us now as bullion etf’s may stumble in the future.

The gold mining etf (GDX) may be making a critical turn in the low 50’s as it has broken through trend support.  The technical conditions are even more oversold than the reversal lows in January 2011, July 2010 and February of 2010.  A move above the trendline and moving averages may turn out to be a very powerful buy signal and signal the current correction is over.  Careful monitoring of the uptrend is required.

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Gold Soaring In Comparison To Stocks

In Market Analysis, Stock Movers on June 10, 2011 at 8:29 pm

A seminal speech was delivered a few weeks ago by President Obama at the State Department, in it he outlined a radical switch of policy in the Middle East.  Such an error in judgement was made once before when Jimmy Carter suggested that we democratize Iran.  What occurred was  destruction of an ally in the Shah and replacing him with a purported force for democratization in the persons of the Ayatollah and the Mullahs.

Just look at what we got stuck with.  Our present course in the Middle East may be a repetition of this error.   There is no guarantee that what may be thought to be democratic for Westerners, may be counterproductive in a completely different arena.

Far from there being an Arab Renaissance, we may be witnessing the formation of a Islamist Spring, followed by an Arab Winter.  Hope may rise eternal that American style democracy can emerge from a fundamentalist, theocratic mindset.  This may be a thin blanket for a cold night.  Anti American and Israeli sentiments may not be far from the surface of what is though of as a movement toward Jeffersonian Style Democracy.   Suffice it to say, The U.S. may be imposing Western beliefs on Middle Eastern customs and traditions established for over a thousand years.

Such developments may well constitute exactly the opposite of what our strategists are planning.  Black swan anyone?  Turbulence, instability and uncertainty have usually been a prescription for precious metals and natural resources as a safe haven.

From where is all the money coming to pay for all these planned excursions?  Can an already troubled financial system handle additional burdens that threaten to break the camel’s back?

We read about debt limit, budgetary woes, foreclosures, unemployment, Eurozone debt crisis, the possible loss of a AAA credit rating and a myriad of domestic travails.  Shouldn’t we first repair our own home first?  Sound money and a sound fiscal body is vital for our national health.

Interestingly, the precious metals and mining indices are moving higher, while the equity markets are declining showing relative strength breakouts.  The Dow-Gold Ratio has shown a major breakdown through the 8 to 1 ratio.  We are seeing an eerily similar setup to the Great Depression and the 1970’s where paper money such as equities are seen as less valuable than hard assets.  Investors are seeking protection in precious metals due to this dollar devaluation and disappointing economic recovery.  Despite bailouts, record low interest rates and quantitative easing the Dow-Gold ratio shows that the economic recovery has been ineffective and inflationary.

Gold and Silver are showing signs of fortitude during these equity sell offs maintaing its status as an authentic safe haven .  A significant continuation in trend may be beginning where precious metals may move higher while equities continue to correct as investor look to hold real money over paper.  This breakdown in the Dow Gold Ratio signifies major inflation and economic weakness ahead.

The S&P is showing negative divergences between price and momentum an indication of further price decline.  The absence of relief rallies over five weeks in equities and the outperformance of gold indicates investors are interested to hold hard assets going into the conclusion of QE2.  All eyes are on the financial markets as QE2 expires.  Investors are exiting the dollar as well as equities and moving into hard assets.  The market may be signaling future accommodative measures especially if the equity market continues declining.

I invite you to follow my favorite sectors (precious metals, uranium and rare earths) with me on a daily basis with my technical intelligence reports and intra day chart videos by clicking here.

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Rebound In Rare Earth Stocks?

In Market Analysis, Stock Movers on June 7, 2011 at 6:33 pm

For several months, I have alerted readers to the potential supply crisis of critical rare earths (REMX), which are used in our most vital defense technologies (ITA) and high tech industries (QQQQ). The recent volatility in the equity markets have caused many investors to flee rare earth mining stocks in search of safe havens in gold (GLD) and long term treasuries (TLT). This trend should be transitory in nature. We may see a strong rebound in many of these rare earth stocks once the uncertainty regarding the ending of QE2 winds down.

The latest Chinese data indicates that rare earth exports are continuing to drop by more than half compared to last year’s output. In April, China exported only 1,819 tons of rare earths, a shortfall of 53% from the previous year.

High tech manufacturers outside of China must look elsewhere to satisfy their rare earth needs. Rare earth prices are soaring, but the rare earth mining stocks are not reflecting the elevated prices yet. This phenomenon will not last long as institutions will begin catching on to the divergence between rare oxide prices and undervalued rare earth miners. Prices are soaring, rising almost ten times in the past year, forcing manufacturers in Japan (EWJ), South Korea (EWY), United States(DIA) and Europe to search for future supply for their survival. This should be a bonanza for rare earth developers down the road, once manufacturers dip their toe into the water and acquire some of these vital assets. Once one does, we may see a domino effect of consolidation. It’s within the realm of possibility that cash-rich manufacturers will be compelled to enter off take agreements and alliances with global sources of supply and potential miners.

It’s time for the affected industrialized nations to do their own heavy lifting in providing these vital elements so necessary for the very survival of their manufacturing base. We are talking here of an emergency process, which will take time to develop from mining to manufacturing. Advanced nations must think of urgent measures such as developmental fast tracking, financing and legislative expediting to bring these projects to fruition.

Noises are being made about taking China (FXI) to court, namely through the World Trade Organization. It is questioned whether such a resort to complicated and lengthy legal procedures can be successful.

Time is truly of the essence. Whether the proposed case has merit or not, modern industrialized nations must seize the high ground and move rare earth mining forward.

I have highlighted some eligible heavy rare earth projects suitable for immediate development in North America and Europe. Lynas (LYSCF.PK) and Molycorp (MCP) are not capable of filling the supply deficit for rare earths alone. Additional projects must be developed and brought into production.

Development of the rare earth initiative is long past due. The Department of Defense requires it and the high tech industry demands it. The West has the expertise and the capability of recapturing the base that was once ours and was co-opted by the Chinese.

Lynas appears to be reaching support at its 9-month trendline. This is an area in which we have seen major moves higher into new high territory. Lynas has the best odds of being the first miner to the market outside China. Over the past nine months, Lynas has bounced off of support and made breakout moves. Lynas is experiencing higher highs and higher lows characteristic of a healthy trend. Lynas could make a move into new record high territory.

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Disclosure: Long Lynas

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What Are The Best Safe Havens?

In Market Analysis, Stock Movers on June 2, 2011 at 8:11 pm

Global debt issues combined with weakening US economic data has reignited the quest to protect capital. Investors are seeking the ultimate safe havens in the US dollar (UUP), long term treasuries (TLT), gold (GLD), and silver (AGQ) in order to protect their wealth from the onslaught of currency instability and US economic weakness.

This month we have witnessed the US dollar gapping higher in response to euro (FXE) weakness. This may have been a head-feint, wherein the U.S. dollar has mainly shown strength in response to a comparatively weaker Euro. These gap movements are apt to be short-lived and filled quickly.

Some speculators may have misinterpreted this volatility in the greenback as signaling the end to the bull market in precious metals and commodities (DBC). A consideration of the long-term trends of the precious metals versus the U.S. dollar might reveal otherwise. Remember that the trend is your friend even though it may take time for it to become apparent.

Credit ratings are being lowered in Belgium and Italy as Greece appeals for additional aid. The debt crisis will be continuing for some time, which means that more euros and dollars will need to be printed. The US is in danger of defaulting and its debt ceiling of $14.3 trillion has been reached. Indeed, it may be dangerous holding the greenback (UUP) and long term US treasuries (TLT) at this time. This bounce in the US dollar should be used for repositioning into gold (GLD) and silver (SLV).

The US Dollar ETF has been in a long-term downtrend. The decline was staunched by the introduction of QE2 in the summer of 2010, in response to the fear of the European Debt Crisis metastasizing into a global contagion. This may be a case of deja vu. What we are seeing now may be a reprise of past actions where “Band-aid” dollars will be applied to stop the hemorrhaging. Think of all the fiscal activities our leaders are contemplating.

Additional monies will have to be printed to service our contemplated projects all over the world. Not even considered have been our own domestic needs. States and municipalities are claiming that they are in de facto default. Monies will have to be printed and accommodative policies may have to be accelerated,

From the standpoint of classical technical analysis, the US dollar broke three-year support at the end of January 2011. This area should now act as resistance during this countertrend rally.

Precious metals have bounced off key support and gold is challenging its all-time high at $1575.10. During the May margin hike, induced sell-off wealth may have gone from weak, speculative hands to strongly held positions for what may be a more sustainable up move.


Gold and Silver Set To Rebound

In Market Analysis, Stock Movers on May 31, 2011 at 5:21 pm

Silver (SLV) since its August 2010 breakout at $18 has made a historic move as investors have exchanged their fiat currencies into silver at a record pace. At that time I predicted a powerful move up to $27. The August breakout signaled that demand in this niche market is far outpacing supply. Whenever these unprecedented long range swings occur professional traders look for a technical reaction as traders tend to take profits and shake out late comers. Prices tend to snap back and support may be found at its 50% retracement level. Silver has hit that mark at $32.50 and also touched its 9 month trendline yesterday. Many indicators augur that a reversal has formed below $35.

This precipitous decline in silver has reminded us of the importance of managing volatility. One may well understand the fundamentals but can fall a snare if the element of time is neglected.

Taking timely profits upon reaching overbought readings and overhead resistance are vital. One must also be careful about selling when support is being reached and abruptly exiting during a selling capitulation. Sometimes the price tends to overshoot support levels to cause additional selling. Technically this is referred to as an exhaustion move. However, after these extreme waterfall declines one must always be alert to the possibility of a powerful reversal upward.

In late April of 2011, I had alerted my readers about a needed and healthy overdue correction, which has now occurred in the silver market.  In addition, I signaled the possibility of a dead cat bounce in the U.S. dollar. Selling has come and gone across the commodity and mining sector like a tornado. This may have been an excessive reaction to such storms.

The specter of default and loss of its AAA credit rating are beginning to form storm clouds on the horizon. I believe this May 2011, U.S. dollar dead cat bounce in concert with the precious metals decline has been constructive and a blessing for long term gold and silver holders to reenter. When too many passengers tilt to one side of the ship, stability is threatened. As speculators piled aboard, this trade became crowded. This violent downturn has served as a cathartic to eliminate many abuses to the system.

Astute buyers are able to pick up gold and silver at a discount.  These fire-sales do not occur very often. When they do…carpe diem!

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Goldman Sachs’ Rare Earth Rhetoric

In Market Analysis, Stock Movers on May 27, 2011 at 8:59 pm

The front page headline in The Wall Street Journal a couple of weeks ago read, “Goldman Sachs warns of surplus with rare earths (REMX), rare earths seen growing less rare.” If there was ever a case of clumsy misinformation, this had to be it.

In my opinion the headline should have read, “Rare Earths Seen Growing Rarer — Possible Mass Buying Explosion Straight Ahead.”

It is well known that Goldman Sachs hires only the most adept analysts, so when Goldman speaks, Wall Street listens. The article states that Goldman’s opinion “matches the outlook of many other market participants who believe the current boom is overdone… we envisage some price softness in the 2013-2015 period.” Goldman’s analyst Malcolm Southwood adds, “The rare earth price boom is nearing its peak. The supply deficit will peak this year before the market slips into surplus … rising into 2015.”

I beg to differ. Goldman bases its analysis mainly on one company – Lynas Corporation (LYSCF.PK).. Statistically this skews the rare earth universe.Southwood also omits many important considerations such as differentiating between heavy and light rare earths. No mention whatsoever is given to the difficulty of extracting rare earths from ore. The analyst fails to see that Lynas is facing opposition from environmentalists as the company attempts to build a separation plant in Malaysia.

Currently, there is no other major separation facility of heavy rare earths outside of China. This consideration alone may put a premium on the end products which we know are used for many high tech purposes and which have been labeled as critical by the US Government. Please review the exhaustive study done by the Department of Energy which contradicts Goldman’s analysis by clicking here.

In fact China, which commands the rare earth space, may be a net importer and the supplies for their own needs are growing scarcer. Investors forget quickly; not long ago, China strove to take control of Lynas’s assets, but was countered by the Australian Government. Do not be surprised to see China intensifying its search for rare earth deposits globally.

Goldman’s analyst tried to buttress his argument by including several words about major deposits such as Greenland Minerals, which he claims is more than twice the size of Lynas’s Mt. Weld and Molycorp’s (MCP) Mountain Pass put together. Alas, it is located on “an isolated mountainside just south of The Arctic Circle,” far from suitable infrastructure such as highways that might bring ore to markets at reasonable cost.

Moreover, the rare earth mining stocks have risen much less than the price of the rare earth oxides themselves. This consideration may foreshadow the eventual breakout from a long sideways technical base. The upside breakouts of our rare earth selections are apt to be impressive.

The WSJ article errs in citing Lynas and Molycorp as the main actors on this stage. Indeed in a few years global requirements will rise that will need many companies the size of Lynas and Molycorp.

US legislators are thinking about taking the case before the World Trade Organization to free the West from Chinese domination of rare earths. The Pentagon has observed that the shortage of materials has led to a slowdown in the manufacturing of strategic weapon systems crucial to US military operations.

The Goldman report showed a surplus in light rare earths, not in the critical heavy rare earths used in the permanent magnets placed into hybrid engines and wind turbines such as dysprosium, terbium, and europium. Not all rare earth deposits are created equal and the majors nearest to production do not have these critical elements.

In conclusion, the rare earth marathon may be ready to take off. As Al Jolsen said, “Folks, you ain’t seen nothing yet.”

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What Will Happen As QE2 Ends?

In Market Analysis, Stock Movers on May 24, 2011 at 4:46 am

The euro (FXE) slid compared to the US dollar (UUP) after meeting and reversing at its long-term downtrend resistance line two weeks ago. About four weeks prior to that, I alerted readers that the euro could reverse lower supporting precious metal prices. In a March 28 article I wrote, “Watch for a move out of the euro to support precious metals prices as the euro reaches its descending upper resistance level. For the past two years the euro and the dollar have done this inverted dance wherein one goes up and the other goes down. But one thing I am not fooled about is the fact that they are both in secular long-term downtrends.”

The euro continued to press higher on the hopes of a recovery from July of 2010 until May of 2011. The decline in the euro is due to expectations of further bailouts in Europe and the European Central Bank taking a very dovish position by not raising interest rates. Greece is on the brink of default and Portugal may receive additional assistance. We are witnessing pressure put on the euro and capital flowing into the US dollar which has forced some UD dollar (UDN) bears to cover their aggressive short positions. This short covering rally in the US dollar has caused a commodity (DBC) de-leveraging forcing hedge funds to raise cash reducing their exposure to commodity-related equities.

Don’t forget that the US is dealing with its own domestic economic issues combined with a renewed commitment to democratize the Middle East, which will require additional borrowing. Investors and traders are asking: Where will this money come from? The US has already hit its debt limit and has been warned of a credit downgrade.

Many are concerned by the reported end of quantitative easing II (QE2). However, noises are being made about the possibility of the imposition of QE3, which could possibly be tonic for gold and silver prices.

At present gold may be basically pricing in the possibility of sovereign default risk. Witness the pleas of Greece for immediate aid. Other members of PIIGS nations may not be far behind. The biggest threat to our thinking is a continuing dip in risk appetite initiated by the end of QE2 or as stated a heightening in the eurozone debt crisis. This may be causing this US dollar spike as capital flows to safe havens and investors close their short-dollar wagers.

AT my firm, we feel that such a move would possibly be transitory in nature. Should QE3 not be instituted, Ben Bernanke has a whole bunch of other arrows in his quiver. Monetary printing by any other name may be just as effective as it is surreptitiously instituted. There is a strong possibility that the Fed will remain faithfully wedded to aggressive monetary policy in order to lower unemployment and extricate the nation from its economic mess. A black swan may be steaming toward us. As remote as it may seem, the possibility of a US financial default may be in the cards. But then, isn’t that what black swans are always about?


Rare Earth Stocks Reaching Key Support Levels

In Market Analysis, Stock Movers on May 18, 2011 at 6:17 pm

The prices of rare earth oxides are blasting through the stratosphere. Manufacturers are driving prices in their haste to involve the materials in production of hybrid vehicles, wind turbines, and the most high tech applications of which many sophisticated investors are unaware. These producers need the rare earth ore and are willing to pay for it on the world markets.

China (FXI) has the right stuff, but are claiming – perhaps rightfully – that they need the materials for themselves. In fact they are in the forefront of venturing abroad to take over promising heavy rare earth mines all over the world. Do not forget China’s bid to control Lynas in 2009. America once commandeered this mining area, but over the years, China co-opted it and became the world leaders, supplying over 97% of the world’s rare earth supply. North America and Europe need to move fast to develop their own supplies.

One of the great demands for rare earths is coming from manufacturers of hybrid cars. Toyota (TM) and Honda (HMC), in order to produce these fuel efficient vehicles, require a large amount of rare earths in each automobile. Toyota has raised the price of the Prius, which is no surprise as each one uses at least 1kg of neodymium which has recently soared in value. These new hybrid models are driving sales and one can be sure that the major manufacturers will gain supplies for several years to come.

Never has there been such a divergence between the price of the rare earth ores and the developing rare earth miners as there is now. The current commodity correction has caused the high flying rare earth sector (REMX) to plunge. I believe we are currently seeing a transition of ownership from weak holders on margin to strong holders with cash who are buying these world class heavy rare assets for pennies on the dollar. Many of the rare earth stocks such as Avalon (AVL), Rare Earth Elements (REE), and Molycorp (MCP) are down more than 30% from their highs. This is quite normal for highly speculative mining investments.

We may begin to see a race to control these heavy rare earth assets in mining friendly jurisdictions while this divergence exists between the price of ore and the mining shares. These manufacturers – through the support of their governments – will find available supply by strategic acquisitions and agreements. Personally, I am looking for the critical heavy rare earths outlined by the US Department Of Energy – such as dysprosium, terbium, and europium – which are seeing critical supply constraints.

The West is struggling to gain supply for the next few years and some of the undiscovered gems with the crucial heavy rare earths will not last long at these price levels. Molycorp had better move fast to gain assets before people realize that their Mountain Pass deposit does not contain the critical heavy rare earths, just the light rare earths which Goldman Sachs recently revealed there may be a surplus of. Not all mines are created equal.

It is important for investors to realize that companies in the rare earth sector are advancing rapidly in developing projects all over the world. Prominent among them is Lynas Corporation — an Australian entity in which Japanese interests have taken large positions. They announced the establishment of a proposed production plant in Malaysia and insist they are still on target for commencing production by September 2011. Malaysian environmentalists are protesting this as they remember being badly burned by Mitsubishi, which left Malaysia holding a radioactive bag after producing rare earths. Lynas management is assembling a panel of experts from all over the world to calm Malaysian fears and at the same time prevent any unfortunate reoccurrence. Lynas welcomes the one month review to ensure the project is safe and presents no danger to the workers. Lynas also hopes to have its Australia Mt. Weld project up and running. Japan (EWJ) is so desperate to obtain product for their high tech industries on which their economic survival is based, it has bankrolled the building of this project. Lynas is hoping to transport the ore from Australia to Malaysia for processing. This contract was signed by both sides in September 2008.

Little noticed is the acquisition by Lynas of a large rare earth deposit in Malawi, Africa. They have the approval of the Malawi government to commence development of this major project. Interestingly, the deposit has extremely low natural radiation levels, unusual for a rare earth deposit.

Lynas appears to be reaching extremely oversold levels and long term support. This is an area in which we have seen major reversals higher. I am confident about the progress of the facility in Malaysia and believe Lynas will truly be the first miner to the market outside of China. It is on sale and should hit our short term targets shortly.

The rare earth supply constraint continues to elevate prices sharply both inside and outside of China. Investors will not be asking much longer why rare earth mining stocks aren’t moving in tandem. I believe we will see major gains in the second half of 2011 in these stocks and a large amount of strategic acquisitions by end users.

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How Do We Trade The Gold-Silver Correction and Dollar Dead Cat Bounce?

In Market Analysis, Stock Movers on May 12, 2011 at 7:12 pm

The US dollar has been reacting very bullish to the death of Osama bin Laden, the figurehead of Al Qaeda. Short-term investors have shown a renewed interest in the US dollar (UUP) as near-term resistance and the 50-day moving average have broken to the upside. Word has  spread that this has been a critical blow to the Al Qaeda network, but countries are preparing for retaliatory attacks.

Bin Laden’s demise came at a crucial time as investors were rushing to flee the dollar for protection in silver (SLV) and gold (GLD). His death has certainly affected the foreign exchange markets and given a renewed interest in the US dollar, especially versus the euro (FXE) where debt concerns are resurfacing and where this past week investors left interest rates unchanged. Obviously, the view that geopolitical tensions in the Middle East will ease has caused a renewed interest in the resilience and the image of the US internationally.

We may see continued “short term” weakness in gold and silver and strength in the US dollar as both markets were extremely divergent from the historic mean before this event reaching record levels. The US dollar is beginning to reach key resistance after a bounce.

Before bin Laden’s demise the US dollar was reaching extremely oversold levels. This dead-cat bounce is only temporary. Investors should use this opportunity to position themselves against long term US dollar weakness. There will be great rallies and crashes in this volatile downtrending market. One should use these counter trend moves as an opportunity to enter into gold  and silver. Commodities tend to rebound aggressively from these dips. It has always been prudent to buy the countertrend moves or dips rather than chasing the herd when the sector is overheated. Hopefully, silver and oil (OIL) have taught this lesson to investors getting overly aggressive at overbought conditions.

Precious metals and commodities are going through a healthy technical correction. The recent parabolic move in silver has been followed by a waterfall decline as trailing stop losses have been hit. It was important to take partial short-term profits as technical targets are reached and back when the market was still moving higher before the panic began. Now the situation is reversed. Panic is seizing the silver and gold trading pits, an ideal time to buy for a long-term investor in hard assets.

Although we are seeing a countertrend rally in the US dollar and many are calling a top in gold and silver, sadly, nothing has really changed. We are possessed by the nudging fear that although bin Laden is gone, the malady of radical Islam and potential retaliation lingers on. The specters of our mounting problems such as a runaway budget, sickening unemployment, the victimization of the middle class, enormous entitlement programs are yet unsolved. Interestingly before bin Laden’s demise, Ben Bernanke attempted to assuage our enormous wounds by trotting out the same old, tired tropes. Glibly, he tried to assure us that everything was going to be alright. Many of us were unconvinced. Between Ben and Bin, we are between the rock of retaliatory terrorism and the hard place of fiscal woes.

The US dollar will soon meet major resistance and overbought conditions. Over the past 11 months these dollar rallies have fizzled out very quickly over four weeks. There is no concrete evidence at this juncture to predict a major turning point in commodities or the US dollar.

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Why The U.S. and China Secretly Want A Devalued U.S. Dollar

In Market Analysis, Stock Movers on May 9, 2011 at 3:38 pm

“Expect China to aggressively pursue strategic metal mining companies as part of a little publicized arrangement between the US and the Asian giant.”

In early January of 2011, a top secret candlelight dinner was held at the White House. There was no fanfare. Present were the industrial, military and governmental heads of both China and the United States. Our government had just digested the failures of Lehman Brothers, AIG and other corporate icons by creating massive bailouts and running up trillion dollar budgetary deficits. China was also concerned about inflation and soaring prices due to the intentional debasement of the US currency (UUP) by the Federal Reserve. Both sides reached a modus vivendi, so they could mutually profit from these agreements. Please see my January 2011 article on the “Chinamese Twins” to understand these past few weeks.

Since my January article was published, the yuan has steadily risen versus the greenback. China had long wanted to enter the American financial markets. It had abundant US dollars to make acquisitions and at the same time needed to diversify out of its enormous US debt (TLT) position. The solution was simple: the US would deliberately weaken the US dollar in order to hope to fortify the proposed elevation of the yuan. Consider the cleverness of these stratagems. A bolstered yuan could allow the growing Chinese middle class to improve their lifestyle. In addition, China would now be able to go on a buying spree for foreign companies, particularly in the area of commodities and natural resources.

With the improved yuan (CYB) they would now be able to acquire foreign companies at more attractive prices then heretofore. An elevated yuan would allow them entree into American institutions and banks. It would also allow US citizens to transfer their cheap US dollars into the yuan at bank windows right here in the United States.

Remember that noises have been made establishing the yuan as the World’s Reserve Currency. The agreement was to facilitate Chinese acquisitions and financial entry into the US markets and thus establish a pro quid pro with the United States. Conversely America would also benefit by being able to sell products at advantageous prices and pay off our colossal trillion dollar debt with cheap dollars. Basically, this was the scheme achieved by China and the United States at that candlelight dinner.

The game-plan was conceived in Washington in early January of 2011and delivered by Bernanke in Washington at the end of April with his grand debut in front of the media. The head of the Fed could regale his audience with phrases like interest rates, transitory inflation and other tropes.

One question remained that no one would dare to ask: If there is no concern over rising silver prices and the falling dollar, why are precious metals especially silver (SLV) soaring into new highs? Obviously the plan to devalue the dollar had seen silver — poor man’s gold and a highly speculative market made up of mostly retail investors — reach record heights. The weapon to combat this “bad inflation” would come not in the form of interest rate hikes to slow down the acceleration of the dollar decline, but through a series of margin rate increases which would cause a temporary shakeout of speculators. Raising the costs of owning silver began a quick de-leveraging by risky traders taking on too much risk at frothy levels. This has sent fear throughout the commodity sector. This correction should be short lived as strong hands will come in and silver will regain its footing and find support after the washout has concluded.

I have researched natural resource assets that might prove to be attractive to the Chinese. On our list are companies some of which already have Chinese participation. Just this year alone Minmetals was outbid byBarrick (ABX) to takeover copper miner Equinox. Jinchuan is making a bid for base metal producer Lundin (LUN.TO) Mining. General Moly (GMO) has received major assistance to build North America’s largest molybdenum mine in Nevada. General Moly is currently writing its feasibility study in Chinese to secure the necessary financing.

The Chinese are very willing to partake in these world class assets and are not hiding that fact. This aggressive search for strategic metals may transfer into the rare earth sector (REMX) as well. Prices are continuing to soar and hybrid car manufacturers are looking for supply over the next 3-5 years as demand is rapidly advancing for the crucial heavy rare earths used in the fuel efficient engines. Manufacturers are trying to get all the ore they can. After our supply runs out, I expect some off take deals to occur in late 2011 with some of these key rare earth assets in North America and Europe. Let us not forget that China made an unsuccessful bid for Lynas (LYSCF) not too long ago.

We expect China to now aggressively pursue these strategic metal mining companies (REMX) as part of this little publicized arrangement between these two powerful nations which I have called the “Chinamese Twins” — now conjoined intimately.

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Take Advantage Of Dips In Precious Metals and Miners

In Market Analysis, Stock Movers on May 6, 2011 at 4:54 pm

Federal Reserve Chairman Ben Bernanke will continue devaluing the dollar (UUP) by keeping interest rates at all-time lows and continue quantitative easing as we have not seen a major improvement in unemployment and housing. We are also entering an election year in which central banks do not want to rile the equity markets. Just because the S&P (SPY) has been soaring does not mean the economy is improving. Easy money policies will continue for an extended period of time to fight against current economic weakness. This is an environment in which gold (UGL) and silver (AGQ) will benefit. We are currently seeing a massive inflationary environment globally that has caused political unrest in North Africa and the Middle East, and rising costs in key emerging economies such as China and South Korea.

We must be prepared for these current short-term corrections in precious metals because it will provide additional buying opportunities in gold (GLD), silver (SLV) bullion and mining stocks (GDX). The market will try to make you be complacent when you should be fearful, and make you scared when you should be enthusiastic.

I have mentioned that silver was 70% above the 200-day moving average, surpassing overhead resistance, reaching record levels on the oscillators and surpassing my late January technical targets. Silver has moved much faster and higher than I originally projected. I initially thought the move would last through May, but the speculative buying and short covering has caused silver to reach my target a few weeks ahead of schedule. Whenever these conditions occur, caution is merited as the odds of a shakeout have significantly increased. A healthy correction is necessary to maintain the long-term steady uptrend and provide secondary buypoints.

Major institutions raises cash and began selling into a rising market as the speculative fever reached a climax the last two weeks of April. When the consensus gets greedy, I get fearful. Since late January when my indicators turned bullish on precious metals and mining stocks, we have seen record investment demand in silver and gold bullion combined with short covering. Tremendous record volume in the silver market indicated a short-term buying hysteria. These frenzies in the precious metals markets are often followed by quick and violent corrections which we are currently witnessing to shakeout the Johnny Come Lately traders who get overaggressive in these rising markets. Investors were building up very aggressive and speculative positions. The conditions in silver have been setting up for a painful pullback.

A healthy correction is currently necessary to sustain the long-term steady uptrend in hard assets. Most investors do not realize that precious metals are in a long-term secular uptrend but there will be volatility with ebbs and flows. Silver is an extremely turbulent market which exceeds technical targets and momentum oscillators regularly. Silver blows very hot and very cold exceeding to the upside and the downside.

This is a chart I sent my readers April 22, 2011.

I needed to be careful about this move in silver in late April surpassing my late January target of $40 and the US dollar bearish sentiment which was reaching an extreme in late April. Silver exceeded upper trend channels and saw record volume, showing signs of a shakeout. I was very concerned that silver was overheating as the herd tried to force its way into this trade.

Whenever I have seen these parabolic moves, they have not ended well as the profit-taking begins and the investors who have overleveraged themselves get margin calls. I am not surprised at all about this painful shakeout.

Precious metals investors may be repositioning from bullion into mining stocks. This consolidation may be the catalyst to help the miners catch up with the performance of gold and silver bullion. Mining stocks have not yet seen the speculative levels that bullion has seen. The general public is now realizing that inflation and precious metal prices will be high for some time to come as Bernanke has no plans of exiting, but are reluctant to enter bullion at these pricey levels. Miners, especially junior explorers (GDXJ) are providing a discount to bullion. Inflation will continue for years to come yet this correction in the junior miners (GDXJ) indicates the public is still unaware of the basic fundamental and growth potential of this sector over then next decade especially when gold and silver find support.

This has been no surprise to my readers. I have said that there is no exit plan from the Fed. There is a concerted effort to devalue the US currency to pay back soaring debts. The US is broke and it can’t afford raising interest rates. Savers are getting swindled by leaders in Washington, which has used public taxpayer money to bail out corporations and banks. Americans are getting squeezed by soaring prices of basic goods, while their hard-earned savings are depreciating.

I have urged caution around initiating positions in gold or silver bullion as the trade was very crowded and at the end stages of its short-term move from late January through May. Remember, gold has a historic cycle to provide a sale every six months.

As gold and silver sell off, don’t forget the long-term uptrend will stay intact. Will you be ready for the next turning point in precious metals as the herd sells out during the panic?

I believe junior mining stocks (GDXJ) will catch up. Some people are concerned that some of the mining stocks that haven’t moved yet should be sold while they’re reaching long-term support and basing. I don’t believe so as they all provide leverage to falling currencies and rising demand from emerging economies. As these mining stocks sell off, I begin to look at the long-term fundamentals which have not changed. Perceptions from the herd change but the fundamentals in gold miners (GDX) do not. One must take advantage of sell-offs in gold and silver miners; they are opportunities to get on board the secular bull market in precious metals. I believe it is the best way to protect one’s assets during these times of growing record deficits and currency devaluations.

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Buying Precious Metals At The