Mining for Winners in Any Market

Posts Tagged ‘gold stock analysis’

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Taseko's Prosperity Project, Future of Mining in British Columbia in Jeopardy

In Stock Movers on July 5, 2010 at 3:26 pm

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Late Friday,  the Federal Review Panel came out with a recommendation that will be forwarded to the Prime Minister and his cabinet assessing the environmental impact of the mine.  The Federal Review Panel did not weigh in the economic affects of this project.  They made environmental recommendations for Taseko to take if the mine is approved.

I believe the Prime Minister, along with the Cabinet will support the British Columbia Provincial Approval based on the opinion that the economic benefits far outweigh the environmental impact.

The mining industry is crucial to British Columbia’s Gross Domestic Product and brings in over 8 billion dollars to British Columbia a year. A major concern is that the construction of new mines has been declining.  Many mines are closing and there has been a rapid decline of economic reserves.  This has seriously affected poverty levels and unemployment rates.

Prosperity is British Columbia’s flagship project that will bring in 400 million dollars of revenue a year and get many back to work.  Now the cabinet has recommendations from the panel on what Taseko should improve if the project is approved.  The project is very popular in British Columbia and I do not believe that the Prime Minister and Cabinet will go against British Columbia’s approval.  Their approval was based on the belief that the massive economic benefits would far outweigh the environmental loss to the local community.  If the Prime Minister rules against the Province, it will have devastating effects not only on British Columbia, but on Canada and its status as a friendly mining jurisdiction.  This status brings in huge amounts of investment capital which is crucial for economic development.

The news related sell-off creates another opportunity for investors to buy Taseko at bargain prices.  In January I recommended readers to take profit as it was time to sell on good news and when readers were up 250%. Now is the opposite time.  I believe this is the time to buy when everyone else is fearful especially if you are still holding shares.  Now is definitely not the time to sell into a panic.  Prosperity is far from over.

The news related break of the moving averages might appear negative but this decline has not shown to be high volume correction.  I expect there to be a move higher as many sold off with the news coming off the wire and do not understand the macroeconomic effects of this project.  Subscribers are still up over 100% even though many should have taken profits when I recommended and kept the 15% trailing stop loss which I also made sure for subscribers to have.  If you did not take profits with the 15% trailing stop loss and are still holding, I would recommend waiting until September until the Cabinet and the Prime Minister make their decision which takes into consideration other variables than the environment alone and not feed into the panic selling.

Disclosure: Currently do not own Taseko.

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U.S. Economy Breaking Down, Attempts To Prevent Deflation Failing

In Market Analysis on June 22, 2010 at 8:44 pm

The United States is facing a crisis of a rising dollar and a recession where basic  industries over the past several months have experienced a nasty decline.  This condition is a concern for policy makers as the federal stimulus appears to be wearing off.  The economy seems to be slowing and cash, treasuries, silver and gold appear to be the area of strength.

One bellweather blue chip Alcoa is down over 25% the past 6 months.

In January after breaking into new 52 week highs Alcoa experienced a nasty reversal and has been in a 6 month downtrend.  Meanwhile, the U.S. dollar is rallying as well as gold and silver.  This is a major deflationary sign.

Yesterday’s move to disconnect the yuan to the dollar was a mutual decision for both governments to stem the global deflationary crisis by devaluing the dollar.  The U.S. government has done everything they can to prevent a deflation by keeping interest rates at all time lows, buying back treasuries to keep mortgage rates low and a massive federal stimulus.  Now this latest move is another attempt to use China to decouple its currency, devaluing the dollar.

Although yesterday’s attempt appeared to be bullish as every media outlet believed that this would help global economic growth and the U.S. Economy, the market showed that government intervention can not subdue nature’s law of supply and demand.

The reality is years of bad debt and easy money need to work its way through the system.  Eventually the markets and forces of supply and demand will reach equilibrium.  Now investors are protecting their wealth by moving into gold and silver and I have done the same.

Economically sensitive equities and basic materials need to be avoided.  It is an important time to preserve wealth by being in gold and silver during this next downturn.

Gold appears to be making a very bullish crossover pattern on its relative strength chart compared to the S&P 500 index.  Each time it has made this pattern over the past 3 years with both moving averages pointing upwards has been very lucrative to gold investors.

The transportation averages had a nasty reversal today to further prove that movement of goods is under pressure.  Transportation is the clue to see if economic recovery is continuing.  Today’s reversal is evidence of weakness and further proof that businesses and individuals are holding onto their cash.

Today showed strong resistance and failure at the 50 day.  This is an extremely bearish pattern.  We must be defensive.

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U.S. Gold Making Major Gains, 90% Gain From Original Recommendation

In Stock Movers on June 17, 2010 at 9:10 pm

U.S. Gold (UXG) continues to be one of the best stocks in the overall market completely bucking the previous correction.  Please read my previous post from last week where I highlight the 4 major reasons this stock is moving and why I believe it will continue higher.  Click here for previous post.

We will have pullbacks but the next target for UXG is pre crash highs of $7.  UXG is leading the precious metals market as it is at the top of the list in performance over the past 6 months.

Best Performing Stocks
Symbol Company Name Percent Change Chart
RVS Riverstone Resources Inc. 114.81%
GMO General Moly, Inc. 84.34%
APLL Apolo Gold and Energy Inc 81.82%
UXG US Gold Corporation 79.27%
FRG Fronteer Gold Inc. 70.54%
BCLE Bio Clean International In… 50.00%
ANV Allied Nevada Gold Corp. 47.70%
RIC Richmont Mines Inc. 36.37%
DPM Dundee Precious Metals Inc… 34.37%
SA Seabridge Gold Inc. 34.19%

Notice two of our recommendations are up there General Moly and U.S. Gold.  New Gold would be up there as well with a 90 % gain but for some reason bigcharts doesn’t classify it as a gold stock.  Taseko is up close to 200% gain for the past year.

Since 2001 I have used technical analysis and specifically relative strength to focus on tomorrow’s leaders in the mining sector.  Having a discipline and following strength in a sector that is filled with shameless promotion is key to making gains.  Fundamentals analysis alone will not achieve the same investment return.

Here is a chart from our recommendation point of 6/2/09.

Subscribers have close to a 90% gain and I appreciate all the subscribers who waited patiently through the correction where we gave back a 45% gain.  I believe in holding on to winners.  Stocks that I recommend have potential to make huge gains, but one has to patient as stocks correct and create another base before blasting into new high territory as in the case of UXG.