Presently we notice the European Central Bank is pumping money into the sovereign institutions following the precedent of the U.S. Federal Reserve. Indeed, this move is an admission that debt is being monetized before our very eyes. Once again the lemmings have jumped off a cliff into what they mistakenly thought was a safe haven. Isn’t that the name of the game, which is to get you to swing at the wrong pitch at the wrong time? As we write, the Federal Reserve has announced the expansion of the future horizon of record low interest rates from mid 2013 until late 2014. This rally from October 4th, 2011 is continuing surprising many who have been waiting for a pullback to reenter.
We have just returned from the Vancouver Resource Investment Conference this morning and had some time catching up with some of our GST select companies who appear to be rapidly progressing. We plan on publishing some interesting reports over the next couple of weeks on some exciting companies. Make sure to subscribe to my free 30 day trial of my premium service by clicking here… Don’t miss out!
Listen to my recent interview below from the Vancouver Investment Conference this past weekend highlighting a major rally in the uranium and rare earth stocks. I am also very bullish on junior gold explorers who are trading at fractions of what they are really worth.
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.
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.
Base metals soared today as car sales in China are increasing at a rapid pace. Taseko, New Gold and General Moly are companies with huge deposits that have not been developed. TGB and NGD are producing now so they will have cash flow.
Inflation is kicking in and the long term prospects of these companies are excellent. I would buy GMO on any further weakness. Molybdenum is used in making steel stronger and withstand greater heat and pressure.
UXG about to breakout of symmetrical triangle near 52 week high. Notice how the volume is confirming price. Again its giving us another opportunity to get into this position with an incredible land position in Nevada and great opportunity in Mexico. This company has the top management in the business where the owner puts his money where his mouth is. Rob Mcewen owns a good percentage of this company.
Thompson Creek came out with a news item today which states that it will increase production of molybdenum due to the improved market conditions. This is what we saw here a few months ago in the charts of Thompson Creek and General Moly. We believe that this is an opportune time to get into commodities as prices have not fully reflected market conditions. We will be issuing recommendations shortly on a few more trades. Stay tuned.
Notice the thick blue line and how FXI (25 largest and most liquid China Stocks) crosses that trendline on the point and figure chart. This shows us the strength of the most leading emerging market and how this market had impacted this rally for the past three months since the March bottom.
It is clear that China is buying up natural resources and stimulating their economy. The real estate market and construction industries in China are heating up. They are building power plants, mines and roads.
There are a few signs that there might be a slight short term pullback the next few weeks from the non confirmation in relative strength and low volume. However, this is the time to get into companies that the Chinese need which have huge amounts of natural resources.
The secret is out China is on the search for precious metals and natural resources. These next couple of days will give second chances to get into companies that have those assets.
We know what the Chinese need and are able tom make huge gains in finding the companies that have the greatest leverage to these necessities.
A few days ago (please see my archived post from 5/31/09) we mentioned be careful of chasing the gold sector as it is quite overbought. We also mentioned to wait for a retracement to the 20 or 50 day moving average. This is what is happening a retracement to shake out weak holders. Our students and long term followers have been following Taseko for a few months. Today thestreet.com had a video on it. So the mainstream is now picking it up which concerns me as that means we will probably have a pullback.
Last week we wrote on the blog about New Gold and the opportunity the chart was presenting to us. We put a buy point at $2.50. On Friday it closed at $3.10 which was a 24% gain for our followers. This was a breakaway gap as it broke out of a base on more than three times normal volume. Breakaway gaps usually do not fill. As the mining sector is overbought there might be opportunities to buy NGD at a cheaper price if there is some overall weakness. Otherwise this is a classic breakaway gap which usually preceded major moves to the upside. So to all our students who got in when we posted are in a great postion.
The S&P 500 remains above the 20 and 50 day moving average. The S&P has moved sideways making a base after breaking out to the downside of a rising wedge pattern. This rally has been on low volume. So this rise has been on the back of other factors such as a seriously declining dollar, a bear market in treasuries and a major rally in the emerging markets.
If you remember when the stock market crashed last year everyone was running into treasuries and the dollar. Now the opposite is the case people are running out of treasuries and cash. The stock markets have rallied and companies with real commodity assets are soaring. It seems as though the opinion that a deflation will precede inflation has been confirmed.
The dollar was hit hard on Friday leading to a huge rally in gold mining stocks and basic materials. As you can see the rally is impressive, however it is extended. Investors need to be cautious in chasing after this sector.
Last week I showed the chart of TBT which is the short etf fund and I mentioned not to get to excited and wait for a pullback. That pullback has come and from the high volume sell off it seems as though the pull back could take longer as it is extremely overbought. I would wait until it approaches the 50 day moving average before taking new positions.
The rally in China is strong and hope has come back that the worst is over which has caused a major upturn in commodity industrial stocks. As you can see the I Shares Hong Kong is much more impressive than the US indices. Other emerging markets such as Brazil and India are also outperforming.
This is a great point to buy New Gold. They have just combined with Western Goldfields. They will produce enough gold to be able to fund their development project in British Columbia called New Afton. This project has close to a billion pounds of copper. When buying a gold company making sure you have the management to grow and finance a company is crucial. They have the top minds in the field behind this company. Buying here at 2.50 is a great point to get in.
The volume is good on Taseko above average today to qualify as a breakout. Let’s hope it closes at the high of the day as more investors pile in and recognize the breakout.
It is crucial to look for a follow through on yesterday’s huge volume rise. Today will give many investors another chance to get in before the next leg up.
Yesterday I gave a signal that Taseko would breakout of the symmetrical triangle formation. Today it did on huge volume. I believe this will be a quite profitable trade at this point.
Investors are nervous of the government sales of treasuries which is causing the late afternoon selloff. The oversupply of treasuries and Fed’s balance sheet is a concern we should all have. How long can the government be bailing out and spending like there is no tomorrow?
I want you to take a look at this chart of the dollar and the long term treasuries. They are both very bearish charts. The dollar has a head and shoulder reversal pattern. In December there was heavy institutional selling followed by a retest of the high on low volume. Each time it has tried to retest its 50 day moving average it fails. 200 day in danger of turning negative meaning that inflation is on its way. Both treasuries and dollar appear to be very bearish on the GDX which tracks mining stocks is giving a very bullish picture as we just had a breakout. I would wait for GDX to pull back to its 20 day moving average or the 38.50 are before buying.
Taseko is on the verge of a major breakout. Great project…there is a little opposition to the Prosperity mine but that is minimal to the economic benefits to the region. This is a great managed company. Notice it closed on higher volume then the previous day even though it was below average volume. Look for volume through 1.60.
The Dow was up and regained to stay above the 20 day moving average even though volume remains quite light. It does look that the market is rounding and price volume action is poor. Be careful. Look at GLD. Gold closed near the high of the day after opening up lower. Price volume action is good as it approaches all time highs. Look for GLD to pull back to 20 day before breaking out into new high territory.
New Gold is an intermediate gold producer with great projects. They just aquired Western Goldfields. They have the cash flow to grow and develop new projects such as the New Afton project in British Columbia. Their management is the best in the business. Some of the directors ran Newmont and Goldcorp. They know how to finance gold companies and have a history of success for their shareholders.
The copper chart above shows a potential breakout which could lead copper significantly higher. The dollar’s chart as well as the long term treasury chart is extremely bearish this is due to two major reasons the excessive debt the USA is getting itself into and the fear that it will not pay back its debts. Also the copper chart is showing that the global economy is improving which is also bearish for cash as institutions want to invest that cash. There is a huge amount of cash on the sidelines about to be put into key stocks that will protect against inflation. Taseko (TGB) already has a great copper mine that will only be more profitable as copper rises and they are at the ground floor of the major Prosperity project in British Columbia which is one of Canada’s leading undeveloped gold-copper mines. This is a great way to be leveraged to the price of gold and copper.
Symmetrical Triangle Formation…Look out for breakout on volume! MACD about to cross. Great Story with prosperity permitting coming out soon.
Cheaper oil and labor costs coupled with the massive money supply will give a chance to make huge gains on certain mining stocks. The secret is out China is buying gold and are nervous with the US paying back its debt. Select mining stocks will give investors the opportunity to make huge gains and protect themselves of the folly that is going on in Washington.
Notice the thick blue line and how FXI (25 largest and most liquid China Stocks) crosses that trendline on the point and figure chart. This shows us the strength of the most leading emerging market and how this market had impacted this rally for the past three months since the March bottom.
The S&P 500 remains above the 20 and 50 day moving average. The S&P has moved sideways making a base after breaking out to the downside of a rising wedge pattern. This rally has been on low volume. So this rise has been on the back of other factors such as a seriously declining dollar, a bear market in treasuries and a major rally in the emerging markets.
As you can see the rally is impressive, however it is extended. Investors need to be cautious in chasing after this sector.
Yesterday I gave a signal that Taseko would breakout of the symmetrical triangle formation. Today it did on huge volume. I believe this will be a quite profitable trade at this point.
I want you to take a look at this chart of the dollar and the long term treasuries. They are both very bearish charts. The dollar has a head and shoulder reversal pattern. In December there was heavy institutional selling followed by a retest of the high on low volume. Each time it has tried to retest its 50 day moving average it fails. 200 day in danger of turning negative meaning that inflation is on its way. Both treasuries and dollar appear to be very bearish on the GDX which tracks mining stocks is giving a very bullish picture as we just had a breakout. I would wait for GDX to pull back to its 20 day moving average or the 38.50 are before buying.
Taseko is on the verge of a major breakout. Great project…there is a little opposition to the Prosperity mine but that is minimal to the economic benefits to the region. This is a great managed company. Notice it closed on higher volume then the previous day even though it was below average volume. Look for volume through 1.60.
The Dow was up and regained to stay above the 20 day moving average even though volume remains quite light. It does look that the market is rounding and price volume action is poor. Be careful. 
Look at GLD. Gold closed near the high of the day after opening up lower. Price volume action is good as it approaches all time highs. Look for GLD to pull back to 20 day before breaking out into new high territory.
Symmetrical Triangle