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.

Stock prices move in trends.  In a bull market, it is quite often easy to identify the ascending bottoms.  Being familiar with trendlines allows the investor to enter long term bull markets when they are oversold and at key support.  An investor must always be aware of a stock’s underlying long term trend. This can be counter-intuitive and awkward, as most times when it comes down to support you have to think against the market herd and buy when others are selling.  It’s like buying a winter coat in the heat of summer. Gold is on sale, and presenting a low risk, high reward trade, but it requires non conformity with the crowd which is not an easy task for anyone.  Many of us like to be in what’s hot now situations, rather than seeing the bigger picture and entering into a trade when it is uncomfortable.

Gold is now at my buy point of the rising long term trend support line.  GLD touched that line 6 times, which signifies that this trendline is a reliable point of support.  The significance of this line is that it is not steep, which also brings a higher probability that GLD will find support here.   It is also oversold.  Continued weakness here and a break below this long term trend would be troubling and highly unlikely.  If there is a break most likely it would be exhaustive, meaning that it will shake out a lot of shares before the next move higher.  I do not see $1200 as a top in gold as there are no technical signs of a major top.

On the other hand, financial stocks may be finding key resistance here following a low volume rally.  As investors are digesting earnings reports that claim credit is improving and lending is increasing, consumer confidence is weakening and the unemployment rate is still very high.  A jobless recovery is what many are considering we are experiencing.  It seems that this recovery has been good for wall street while main street has not seen an improvement. The financials have found resistance at the 200 day moving average and have now failed four times, significantly breaking through this point of resistance.  Historically speaking, after a few failed rallies a major drop could occur.

At the writing of this article, housing has also had a significant reversal after recent data showing an increase in pricing in some metropolitan areas.  Investors are selling home building stocks on positive news, which  indicates that there is some caution over what the real estate market will resemble after the home buyer tax credit expires.  The chart shows a clear reversal and I expect that the rally in equities will be coming to an end and that gold’s poor summer performance will be different this fall as many weak hands were shaken out.  An explosive fall rally into new highs is expected as I still have a target of $1400 by year end.

Disclosure: I own shares in gold and silver mining stocks.