Mining for Winners in Any Market

Posts Tagged ‘gold mining stocks’

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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

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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.

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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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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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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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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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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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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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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.


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.

Try my premium and time sensitive daily bulletin from which this analysis is based on by clicking here.

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Don’t Be Blinded by Current Equity Market Euphoria

In Market Analysis, Stock Movers on January 10, 2011 at 4:46 pm

Bill Gross, the PIMCO money manager, to whom it is often worth listening, cautioned this week that our nation’s leaders really don’t know where they’re going. They’re mired in the fiscal quicksands of perpetual trillion dollar deficits. I believe, as he does, that there will be more agony ahead after the present euphoria in the equity markets. Thus I say, “Caveat Emptor — Let the Buyer Beware!” Our leaders are paying scant attention to the “Buck” that is being passed on to our children who are going to be stuck with the bills. Today I don’t see anybody around to weep for our infants. As the reporter covering the burning of the Hindenburg shouted in horror, “O the humanity!”

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. This is giving an opportunity to precious metal investors to buy gold and silver on sale. As the mining stocks correct and gold and silver make a healthy pullback, precious metal traders who took profits in October and November, when it was overbought and reaching resistance, will now be in a strong position to enter as the price finds support over the next few weeks and reaches oversold levels.

This reckless US deficit spending may reap the whirlwind of higher inflation, a weaker dollar, and the loss of our AAA credit rating. An unintended consequence may be the abandonment of the US dollar as the world’s reserve currency. Already the Russians and Chinese are in a pact to trade in their own money to protect themselves from imminent dollar depreciation.

Time and space do not permit me to discuss the deleterious effects of such items as earmarks, obscene bonuses, municipal government insolvency, and a list of the men and companies that got away with mere slaps on the wrist.

Perhaps well-chosen and carefully followed mining stocks and well-timed gold and silver purchases may offer a shelter from the approaching storm.

I invite you to partake in my free 30 day trial at http://goldstocktrades.com/premium-service-trial where many signals are being confirmed and sent out to readers.

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Fronteer Gold (FRG) Continues To Expand Long Canyon

In Market Analysis, Stock Movers on December 23, 2010 at 4:35 pm

There is a growing scarcity of available precious metal mines in the world. The old majors such as Barrick (ABX), Goldcorp (GG), and Newmont Mining (NEM) are facing diminishing reserves in their existing mines. They are mature miners and their pockets are bulging with cheap dollars. Moreover, these majors are competing with the Chinese, Russians, Japanese, and Koreans who have all shown an interest in expanding their precious metals assets and diverting assets away from paper currencies into real assets. All of them know it is cheaper to buy growth rather than to find it; they’re like the Red Queen in Alice in Wonderland who must take two steps forward just to stay in the same place.

Sitting on cash and not converting it into resource growth can be deadly for a large company in this ebullient precious metals market. Many ponder why precious metal prices are rising, yet many majors are sitting on their laurels afraid to make the plunge to acquire projects. This has led many institutional investors and mutual funds to flock to the smaller explorers who are delivering the consistent results to the market that characterize growth. Many of the developers have underperformed, and this certainly has been an explorer’s market. I don’t have to work hard to prove this point.

The small miners have been significantly outperforming the large-cap mining companies. Investors are looking for resource expansion and growth. Many top companies are leaner and stronger with far superior assets than they were in 2007. Companies are able to expand developing discoveries at lower costs due to the weak economy and cheaper oil. Remember back in 2007, oil was up to $140 a gallon? Now costs are more inexpensive and precious metal prices are significantly higher. The operating margins have significantly improved. Some of these potential projects that were once marginal are gaining more interest as the high price of precious metals is improving the project economics of marginal projects. Now the question is who will be acquired. The best way to figure that out is to screen for the best mining companies using both a fundamental and technical approach.

I believe companies will acquire and invest in juniors due to fears of further bailouts in Europe and currency devaluations in the United States during 2010. Several US states are on the verge of bankruptcy. France is in danger of losing its triple-A credit rating and many European sovereigns have already been downgraded. The reaction to debt issues have been radical moves from central banks and governments to print and inflate asset prices at any cost. Deficits are soaring and investors are flocking to junior mining stocks. Many high-quality juniors have just recently made moves and are just beginning to return to pre-credit-crisis highs. If the majors do not act soon, many of these high-quality, high-grade projects will be swallowed up from the international demand for hard and real money. There are very few high-quality projects with production potential that suit the needs of majors. The majors are growing increasingly compelled to scour the planet for eligible deposits. The gold price has advanced over 25% this year, silver is up over 50%, and investors are curious as to which major will make the next deal. Discovery rates are dropping and there are a lack of viable low-risk deposits for a major. Faced with the prospect of declining profit margins and depleting mines, the majors must speed up the pace of seeking M&A activity. Such a search is not without risks. Venturing into foreign lands, dealing with unstable governments, operating in the midst of drug cartels and well-armed bandits, they pay top dollars for blue-sky potential in safe jurisdictions and close to infrastructure. Yet there are high-quality mines in the United States, especially in Nevada, that have been overlooked.

In 2010, majors began making moves that gave hefty premiums for blue-sky potential and high-grade assets. Recently the acquisition of Andean Resources by Goldcorp demonstrated how confident the Goldcorp team feels in the potential upside of the Cerro Negro project. Investors looking to make money in the mining sector should study similar projects that have all the criteria that majors are paying top dollar for. The Cerro Negro project has high-grade exploration upside, low cash costs, and blue-sky potential in a mining-friendly jurisdiction.

In their urge to merge, these majors are overlooking suitable prospects in their own backyards. Here, in the safer, stabler turf of the United States, there are hosts of friendly candidates waiting to be acquired. One candidate which I have informed my readers about for several months is Fronteer Gold (FRG).

Fronteer has a huge land position in Nevada, second only to Newmont, and is consistently announcing high-grade results from its 100%-owned Long Canyon Mine. It has been impressing the markets by expanding the mineralization to the northeast, and in its last press release it showed high-grade mineralization to the west. This is demonstrating to the mining community what an incredible deposit this is becoming and how it is open in multiple directions.

The recent results also validate Fronteer’s move to acquire Auex Ventures in order to take 100% control of this asset. Fronteer has not just discovered a mine, it’s discovered a whole new trend in a mining-friendly jurisdiction near infrastructure. This mine has the potential to get huge. Drilling results are continuing to expand high-grade intersections of around 10 grams per ton. Now,with the recent transaction this past week of its Michelin Uranium Deposit, Fronteer is in a strong cash position and is the largest shareholder of Paladin Energy, a world-class uranium miner. This provides Fronteer with liquidity. At any time it can raise money through selling shares and not diluting shareholders to build its gold discoveries.

Paladin is the eighth-largest producer of uranium with a pipeline of uranium projects and is in a strong financial position. This is an investment for shareholders who believe we’re in the beginning of a uranium bull market. I believe in a couple of years the price of uranium will move much higher, placing Fronteer in a financial position to build world-class gold mines without needing financing or diluting shareholders. It also gives a concrete value to any potential suitor in case it should want to purchase Fronteer. Fronteer’s books have about $120 million of cash and around $250 million of Paladin Energy, an impressive balance sheet for an emerging-mine developer.

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British Columbia Looking For Positive Decision On Taseko’s Prosperity Project

In Market Analysis on October 11, 2010 at 8:23 pm

I wrote an article on July 5th, 2010 as Taseko was collapsing after a Federal Review Panel concluded that Prosperity would have significant adverse affects on the environment. As the stock was plummeting from the news I wrote to readers that Taseko was reaching a major buy point and an area of support.  Since that article Taseko has rallied more than 75%.

An important point that sellers did not understand in July was that Federal Review Panel did not weigh the economic affects at all.  Their duty was only to make environmental recommendations in case the project was approved.  The British Columbia Approval was based on the fact that Prosperity is crucial to the future economic growth of the Province and that those positive outcomes far outweigh the environmental impacts.

In the article I noted that the mining industry brings in over 8 billion dollars to British Columbia a year and Prosperity is a crucial  decision which the entire mining is carefully observing.  Prosperity is an essential project for the Province as it will bring in more than 400 million dollars a year in revenue.  It will create a lot of jobs and boost not only jobs for miners but in all the mining related industries.  A new mine has a domino effect for the economy as it is the foundation for local industry in British Columbia.

Last Friday Premier Gordon Campbell made an important plea to the Prime Minister in highly publicized speach to approve the mine.  This gave a huge signal to the mining investment community that this decision from the Prime Minister will have powerful ramifications.

The ramifications of the Federal Government overturning a Provincial decision would spur a lot of tension in an area which has been hit hard from a weak economy due to the downturn in forestry.

Investors are now seeing the broad based support especially local political support that Taseko is receiving and the importance of this mine to be constructed from very powerful people in the Province.

This has sent Taseko’s shares soaring to new highs as investors price in a go ahead from the Prime Minister.

Now Taseko is approaching a major breakout point which could significantly send shares higher on approval from the Prime Minister.  The decision should be released soon and I expect the Prime Minister will support the Province’s decision.  Since my original recommendation on Taseko from May of 2009 Taseko shares have soared more than 333%. If you are interested in new recommendations and how to trade mining stocks using technicals and fundamentals please sign up for my newsletter at http://goldstocktrades.com.

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Dollar and Gold Miner ETF Analysis

In Market Analysis on June 12, 2009 at 11:22 am

UUP

As we can clearly see that the dollar is having a bear rally.  The moving averages and the trendline is acting as resistance.  The dollar opened up today and is testing the 20 day moving average which is the short term “magnet” for the stock.

The GDX has come back right where I thought it would come back to which was the previous resistance that is now its support.  Please see my archived analysis of GDX.  This teaches us not to chase after any positions as there will be second chances which is now.

Looking at the individual commodity stocks, it seems as though they are ready for another move.  Last night I sent out a free bulletin of two recommendations that have the possibility to make huge gains.

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Oil Versus Gold Chart Analysis

In Market Analysis on June 11, 2009 at 7:46 pm

GLDvsUSO

The spread of the price of gold to oil is extreme and there seems to be some interesting opportunities in the energy exploration and energy services area.  Recently a lot of money has been flowing into both of these areas and the trends are changing.  Projects that would not work at $40 a barrel would certainly proceed at $80.  I would want to find companies that offer leverage to the price of oil.  In one area there have recently been major mergers.  Some of the smaller players have the opportunity to be taken over at huge premiums.

One area that is still quite undervalued and out of the headlines is uranium.  Uranium powers 16% of the world’s energy supply and there are many nuclear power plants being built across the world and many more filing applications.  Power plant projects are costly.  There is bipartisan support in the US for nuclear plants due to reduction of carbon emissions.

I have great opportunities in both areas.  Stay tuned to my free newsletter to hear of these two opportunities.

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One of the Best Gold and Silver Mining Exploration Stock U.S. Gold

In Stock Movers on June 11, 2009 at 2:13 pm

Today U.S. Gold (UXG) came out with exceptional drilling results.  As I announced last week before there meeting in New York, that I believed that important news will come out.  Their El Gallo project is quite impressive as they are observing increasing mineralization and they are continuing to explore the property they acquired from Nevada Pacific.  They don’t even know how big that project can become.

They are also bringing out another drill in Nevada where they started actively drilling at the end of May.  They are exploring the outer edges of the Tonkin project to see if there are similar mineralizations as the huge Barrick project.

Rob Mcewen is on a mission to build a huge company, which he has done before.

As the chart shows we are breaking out here and I do believe this trade has an opportunity to make huge gains.

UXG