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

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

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.

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

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.

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.


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

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.

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

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