Wayne Campbell writes on Silicon Investor:
"There was a blow off top from late 99 to March/April 2000 in the Nasdaq. Pigs were flying. Money could be made and kept by buying tiny momentum plays and then selling a bit into each absurd upday through Feb Mar and April.
Sikaman Gold turned Internet stock....300 million shares out had a 3D shopping "portal" where you could move your curser around a little boxes that represented stores. Click on the box and you went to the stores website. That was it. Stock went to a buck and stayed there for weeks. Advertised on the Superbowl that year (Those wierd blimp or scoreboard overlays). I had stock worth half a cent earlier and bailed at 7 cents in 1999, just ecstatic to get out with anything.
We could be ready for a mirror in the mining sector. Big, but risky money (buy high sell much higher....buy crap, sell insanely overpriced crap) may be able to be made again right here.
Nov and Dec are the set up months buy anything that sniffs of momentum.....sell into rallys starting Feb March....be all out by April fools day.
Mine the SI threads for potential momo plays. Watch for junior miners at the superbowl and the Air Canada Centre being renamed the Aurelian Canada Centre. Place your asks by thinking the stock will never hit that price, then double the price."
Sunday, November 04, 2007
Thursday, November 01, 2007
Friday, October 19, 2007
PEZ.V - The Gift That Keeps On Giving
I posted about Pediment Exploration a couple of times earlier this year (6/28, 7/25) as I saw some intriguing patterns developing on the chart. I thought that this was a good time to review what has happened since then. The stock is being recommended by a handful of newsletter writers, based primarily on the exploration success that they have had at their San Antonio project in Baja, Mexico.
There are several good sources of fundamental analysis of this company, so I will limit my comments. Suffice it to say that the chart below is a visual explanation of why I invest in the junior mining sector. It is a hit or miss game, but when a company hits big, the rewards can be staggering. I don't think Pediment is done yet. They are continuing to define the resource at San Antonio and are preparing to drill two more of their properties.
There are several good sources of fundamental analysis of this company, so I will limit my comments. Suffice it to say that the chart below is a visual explanation of why I invest in the junior mining sector. It is a hit or miss game, but when a company hits big, the rewards can be staggering. I don't think Pediment is done yet. They are continuing to define the resource at San Antonio and are preparing to drill two more of their properties.
Sunday, August 26, 2007
Impact Silver
The weekly chart of Impact Silver is notable for a couple of things. The recent sell off shows how easily relatively small volume can chop a considerable amount of market cap off a stock. Now the stock is right at the uptrend line and also at the 100 week EMA. This area was support for the stock during the first wave down of this consolidation in the fall of 2006.
Looking back further, the stock consolidated for several months in 2005 after moving up steadily from mid-2004 to peak well above the long-term moving averages. The consolidation we are in now is a similar shape but much larger magnitude. The increase in volume over time corresponds to higher price levels and greater price swings on run-ups and corrections.
I don't worry too much about Impact Silver. They are a real company that is producing silver today and steadily increasing production. The market's perception of the company may vary wildly from one day to the next but the professionals running the company continue moving it forward regardless.
Wednesday, July 25, 2007
PEZ again...
I posted a chart of PEZ.V back in June, when it looked like it was ready to finish consolidating. I am continuing to keep an eye on it as it is still showing encouraging signs:
Candente revisited
I posted on Candente this past February as the chart was showing a strong set-up. The stock got a huge boost after listing on the Lima Stock Exchange in Peru and has been consolidating since. Recently the stock has begun another leg up and is now making new all-time highs.
I have followed this company for several years now and have had the opportunity to watch them build the company over that time. When Candente announced their intentions to proceed with developing Canariaco themselves, they were met with some skepticism that explorers could become mine-builders. As the project advances, the market appears to be starting to recognize their evolving status. Environmental and feasibility studies are underway and it is clear that this project will have relatively low start-up costs and very fast payback (less than two years at current copper prices).
Candente is also currently drilling their El Oro gold project in Mexico. The company has a 30% interest in the project and is working with Canaco to develop it. The area where Candente is drilling is the site of historical mining operations. This was the site of one of Mexico's most prolific gold mining areas and there are reasons to believe that a significant amount of ore still remains there.
A wild card that was recently added to the hand is the Tres Marias property in Peru. This property, like El Oro, hosted mining operations historically. Operations were conducted down to the 75-meter level, but all indications are that the mineralization continues below that level. The main vein runs north/south, has been mapped on surface for 1/2 a kilometer, traced for another 300 meters and is open in both directions.
Here are a couple of excerpts from the press release announcing the property:
"Silver values from surface sampling and historic mine dump piles have grades of up to 68.08 ounces per ton (oz/T) (2,334 grams per tonne (g/t))."
and
"The high sulphidation alteration zone extends along a ridge for one (1) km and includes lithologically and structurally controlled vuggy silica and hydrothermal breccias in various surface exposures. Anomalous gold values of up to 4.0 g/t were obtained from grab samples of the vuggy silica material."
Although the stock has had a great run so far this year, there is a lot of news in the pipeline that could continue to attract attention to this company. The stock is arguably undervalued just based on Canariaco alone, but significant results at El Oro will begin to provide Candente's precious metal assets with greater visibility.
I have followed this company for several years now and have had the opportunity to watch them build the company over that time. When Candente announced their intentions to proceed with developing Canariaco themselves, they were met with some skepticism that explorers could become mine-builders. As the project advances, the market appears to be starting to recognize their evolving status. Environmental and feasibility studies are underway and it is clear that this project will have relatively low start-up costs and very fast payback (less than two years at current copper prices).
Candente is also currently drilling their El Oro gold project in Mexico. The company has a 30% interest in the project and is working with Canaco to develop it. The area where Candente is drilling is the site of historical mining operations. This was the site of one of Mexico's most prolific gold mining areas and there are reasons to believe that a significant amount of ore still remains there.
A wild card that was recently added to the hand is the Tres Marias property in Peru. This property, like El Oro, hosted mining operations historically. Operations were conducted down to the 75-meter level, but all indications are that the mineralization continues below that level. The main vein runs north/south, has been mapped on surface for 1/2 a kilometer, traced for another 300 meters and is open in both directions.
Here are a couple of excerpts from the press release announcing the property:
"Silver values from surface sampling and historic mine dump piles have grades of up to 68.08 ounces per ton (oz/T) (2,334 grams per tonne (g/t))."
and
"The high sulphidation alteration zone extends along a ridge for one (1) km and includes lithologically and structurally controlled vuggy silica and hydrothermal breccias in various surface exposures. Anomalous gold values of up to 4.0 g/t were obtained from grab samples of the vuggy silica material."
Although the stock has had a great run so far this year, there is a lot of news in the pipeline that could continue to attract attention to this company. The stock is arguably undervalued just based on Canariaco alone, but significant results at El Oro will begin to provide Candente's precious metal assets with greater visibility.
Sunday, July 08, 2007
Forum Uranium...
Forum is representative of much of the junior uranium sector. The stock has gotten a 50% haircut in the April to July timeframe. Just a little off the top. Whoops. This is a speculative situation, but they have the right ingredients that are key to exploration success for any uranium junior: highly prospective portfolio of properties, top-notch geological talent, cash in the bank. Like many charts I have been looking at recently, this one appears poised to break out. We will see what happens next.
Thursday, June 28, 2007
Friday, June 22, 2007
Monday, May 28, 2007
JER Envirotech
Sometimes I refer to certain small-cap stocks as "lottery tickets"...speculative, but with huge potential. I started following JER Envirotech (JER.V) three years ago. The missteps and management faux pas that have occured over that time period weave a tale of woe that has resulted in the stock selling at about the same price now as it was back then. That's the bad news.
The good news is that the company still has extremely viable products and they have completely overturned the management team and brought in industry professionals who are businessmen (as opposed to inventors and entrepreneurs). Despite the 3-years walk across a bed of nails/coals (take your pick), I think that the wheels are finally on the rails and things are coming together in the way that is required for the company to get traction, which is why I mention it now.
Thumbnail of the company:
- Wood-plastic composite products, using polypropylene and organic fibers such as sawdust, rice husk, palm fiber, etc.
- Technology was developed in conjunction with the Natural Resources Council of Canada. Canadian gov't owns the patents, company has an exclusive license to use them. This should discourage infringement by larger players.
- One product line consists of pellets that can be used as input to injection-molding applications (coat hangers, car parts, and on and on and on).
- The other product line is 4' x 8' sheets. This is the only company that can extrude WPC panels of that size. Also can produce variable thicknesses, depending on the application. Plywood is no good in tropical (think Asian) markets, due to insect infestation and rot. This stuff does not rot, but has performance characteristics that meet or exceed plywood. Due to deforestation in Asia, there ain't a lot of plywood there anyway. Cement panelboard is used in many applications where JER would compete. WPC panel board is cost-competitive to cement panels and has superior performance characteristics.
- The company has recently replaced the entire management team, but if you read through the bios of who they have brought in, it is clear that they are now building the RIGHT team to take this company to the next level. Earlier team were nice guys...but not businessmen. They just closed a non-brokered private placement to raise $2.6MM and are doing a brokered PP to raise another $5MM. This will give them the runway they need to execute their plan.
The stock is not likely to do anything for some time, certainly at least until they get the larger PP done. But NOW is the time to start doing DD on it if this is the kind of story that interests you. I bought into the company through a PP, before the company was public. The PPs they are doing now are at the same price level where I bought...three years ago. That stinks, but at least they are now headed in the right direction.
So...what is the potential? They are running trials with several companies that are testing the pellets and the panels for various applications (clothes hangars, car parts, building material, deck underlayment for yachts, for example). We need to see these trials turn into customer adoptions and then the revenue will start to ramp steeply. The company has production facilities that are operational in Delta, BC and Malaysia, with plants under construction in the Philippines and in planning in India.
During a conference call with the (new) CEO a couple of months ago, he said that he thinks that they can go from $3MM in revenue in 2007 (projected) to $30MM in 2008. If they can achieve a 10-fold increase in revenues within the next year and a half, then I think the stock will reflect it. Longer term, they are thinking much bigger numbers than that.
I bought the company because it was the most boring thing I could find. I was tired of companys with "exciting" products that were actually solutions in search of a problem. To me, this seemed like a no-brainer and it still does. Contrary to some popular opinion though, products do not sell themselves. It takes a village...ooops, no it takes the right management team to make it happen. I think the right team is now in place, but the market needs to see proof that they can execute their beautiful vision. This creates a window of opportunity for those who are seeking diamonds in the rough.
It's not without risk, but given the developments over the last few months, I feel that a large amount of risk has been mitigated and the markets for their products have not disappeared. All they need to do now is execute, execute, execute.
Wednesday, April 25, 2007
Thursday, April 12, 2007
Energy Fuels
I got this chart from a friend. He called me up tonight all in a lather about what the chart was telling him. He did not know that:
- Resource Investor published an article this week that laid out the case for a 10X price target
- The CEO is ringing the bell at the TSX on Friday
- The web site has been completely overhauled
- The stock has been shorted in anticipation of a large number of shares coming off restriction
Let's see what happens tomorrow.
Monday, April 09, 2007
Saturday, April 07, 2007
Friday, March 09, 2007
A very tight market just got even tighter
There's been a flood at another uranium mine. This one is in Australia and the damage appears to be extensive.
PDAC 2007 - Exchange Forum Speakers
Prospectors and Developers Association of Canada (PDAC) 2007
Notes from the Exchange Forum
Background: PDAC is the largest mining conference in the world, held annually in early March at Toronto’s convention center. The conference has two tracks, one with an admission price, for paid members of the PDAC and the other is free and open to the public. The former is oriented towards industry professionals and the latter is for investors. It is estimated that there were a record 17,000+ registered attendees in 2007, the 75th conference of the PDAC.
Context: The week prior to the conference, the general market had gone through a swift correction with gold getting knocked back sixty bucks. Many of the comments from the speakers were in regard to this event, interpreting its significance.
The first day of the investor track features a full day of speakers. Below are notes for these presenters:
Ian McAvity
John Kaiser
David Coffin
Lawrence Roulston
Paul van Eeden
Greg McCoach
Bob Bishop
Ian McAvity
Ian McAvity is a chartist and his presentation consisted of a series of charts which he presented with commentary. My impression from seeing him speak several times is that he is almost always pessimistic, so brace yourselves…
Last week we saw gold and silver down 5-12%
What if the S&P goes down 20-25%? What happens to gold? IM is very nervous right now.
There is too much money in speculative small-cap investments.
The metals market is vulnerable to a break in the stock market.
The $ is not going to break 80, it is not in Russia/China’s interest for the USD to collapse.
There is lots of money in small caps, the Russell 2000, they will not have liquidity. People buying base metal stocks don’t even know what the metals are used for.
The chart parttern last week (of the Dow?) shows an Outside Reversal. The market made a new all-time high on Monday morning but closed the week down 5%. IM thinks the Dow will go down 20-25%.
The bulk of the move for this cycle is probably over.
Consider HXD.TO, a fund that shorts the S&P TSX 60
Bad buying causes most losses in the juniors sector. Let the stocks come to you.
John Kaiser
JK thinks the third leg of this bull market started in October.
The action last week cooled down the juniors sector, which is a good thing.
We haven’t had anything resembling manic moves in the stocks yet.
The retail [investor] sector is not present in this market to any significant degree, but that will change. It will require massive participation to take the market to the mania phase, because of all of the paper that has been created along the way by sector companies.
Base metals – zinc warehouse levels have bottomed out, copper is building back up slowly.
Mainstream thinking continues along the lines that “the world is the tail wagged by the American dog”. The cyclical bears believe that China has no independent staying power if the US goes into a recession.
Base metal prices themselves have reflected market pessimism all the way up in this bull market as shown by backwardation of metals prices. Nobody thinks they can go much higher. [I got the sense Kaiser disagrees with that last bit.]
Yen carry trade – interruption of the Yen carry trade last May crushed the metals rally. When the Yen rises, hedge funds get hurt.
Wall of Worry includes housing. Housing will not collapse, even with the problems in the sub-prime market. They are not liquid like stocks (i.e. everyone can’t “go to cash”…you have to live somewhere).
Goldbugs Etymology
There are four types of goldbugs:
1. Apocalyptic – nobody wins, Ian Gordon is an example of this category.
2. Anti-USD – only gold ownership wins in this scenario, e.g. Paul van Eeden.
3. Conspiracy – Bill Murphy
4. Prosperity – John Kaiser. This is the scenario that recommends holding juniors and gold.
US dominance is declining with Asia’s rise. The USD will lose its role as the de facto global currency. Rising wealth in Asia will drive gold demand. More and more people want to own gold, to put some of their wealth into non-paper assets.
JK is scared by oil. If oil goes to the moon, base metal prices will come down but gold may not go up.
Uranium – a true bubble, but an almost invincible bubble. With decommissioning coming to an end, the supply demand situation looks like it is locked in. What could go wrong? Another Chernobyl. An atomic exchange between India and Pakistan. An al Qaeda dirty bomb. This the last one is the one that most concerns JK. This bubble will end by competition for other assets, for example, gold really taking off. JK commented that none of these juniors will be going into production any time soon.
David Coffin
The trigger for last week’s sell-off was Shanghai, but it was not the reason. We’ve had 4-5 years of strong markets, some things are now ending, like the Yen carry trade.
The strengthening of the Yen is the the signal for the second leg of this resource market. The Yuan is slowly strengthening vs. the USD, that will also continue. China wanted to see the Yen appreciate before letting the Yuan rise.
The debt in the US is going to continue to be a drag. The US slowing is a good thing.
Think about your timeframe and focus what you do along those lines. The next couple of weeks or months may be tough on your portfolios.
China will continue to boom, because of their high savings rate. As longs as China saves and re-invests, the boom will continue.
Last week we saw profit-taking, not panic selling. It is the unwinding of the Yen carry trade. There will be some more of that.
The Coffins are lining up buys. The buys are definitely out there.
Balance – stocks with big gains will come off some, but profits will be rotated into the undervalued stocks.
Copper – China is restocking, which started in mid-January. DC is now using $2 copper as a base price for long-term forecasting, up from $1.50. DC is looking for copper juniors that are near-term producers with projects that make sense.
Nickel – kind of cautious on this
Zinc – most unloved through the whole cycle, largely ignored. Hedge guys have not been in the zinc market like the copper market or the nickel market. Coffins are focusing fairly heavily on zinc, smaller ones, mid-tier takeover candidates.
Gold/Silver – gold should trade in the $700-$800 range to sustain current demand in the sector.
Uranium – Very real supply shortage. There is no spot price for uranium, really. Price is starting to have an impact on operating costs. Nobody knows where it will go. $200? Maybe. Some consolidation is coming.
Look for undervalued companies with strong bottom lines.
Buy carefully and watch the general market conditions.
The second leg of this bull market will run well into the next decade.
[…allow me to repeat that…]
The second leg of this bull market will run well into the next decade.
Oil is not going much higher.
Lawrence Roulston
Gold – the most important thing is the trend since 2001. There is no reason that should not continue. [Actually, he said “there is no reason that should continue”, but given everything else he said, I’m pretty sure the “not” was supposed to be in there].
Gold companies have sold for $230/oz for Proven and Probable reserves, but $20/ounce for inferred. So there is potentially huge upside between the two stages.
Focus on companies that have made the discovery and are adding ounces.
Silver – Lots of little companies are re-opening shut down silver mines and getting into production quickly and with relatively low capital outlays.
Platinum - $1200/ounce, strong supply/demand fundamentals.
Uranium - $85/lb, up from $7. Urge some caution with some of the juniors. There are now over 300 companies exploring for uranium. There are still some good values, but be selective.
Base Metals – the most misunderstood part of the resources sector. Is it a speculative bubble or a super-cycle that is just beginning? LR believes it is the latter.
Last week showed us that there is risk in all investment sectors. LR believes that there is strong fundamental support for the general market (earnings). There is lots of liquidity and the worst seems to be over.
In regard to the drop in the Chinese market, that market had been up 100% in the prior twelve months. The sell off was triggered by expectations that the government would act to rein in growth. They are still growing at 10% a year. They may pull back from that by one or two points, but remember that this is compounding.
The second wave of growth in China is underway and is about consumers. The first wave was in infrastructure. Now the growing Chinese middle class has just started to accumulate “toys”. There is no way that growth will drop off any time soon.
India is next door. Infrastructure development has lagged China but is getting better.
Between them, there are 3 billion people.
Nickel is the most dramatic lately. New all time high last week, closed over $20. Copper corrected last year, pulled back to a fundamental support level.
Commodities are strong fundamentally. If there was a speculative element in them, it would have been washed out by this nervousness.
Supply side response – Majors are increasing production, but there are fewer companies. In other words, growth is coming almost exclusively through acquisitions and not organic growth. Last year, the industry averaged less than 1% annual production growth. Not a lot of good deposits out there. The low hanging fruit is gone. There are some new mines but supply is basically flat and this will continue for several more years. New mines will not even offset current depletion rates.
Mixed Messages – Economists look at the long-term price trends and then project them forwards. Take the 1970’s and 1980’s prices and project them forward, but the measuring stick has changed in the meantime. You have to compensate for the decline in the US Dollar. The deposits that are getting developed are lower grade, deeper, more remote and more expensive to develop.
Six billion dollars have been spent in the last year and a half on acquisitions and one billion dollars more were made in minority investments and joint ventures.
The future – We are in the very early stages of a long-term cycle. There are many years to go. Prices are now very attractive.
List of companies to consider
Gold
Dynasty
Staccato
Mansfield
Exeter
Silver
Aurcana
Exmin
Fortuna
Platinum
Pacific Northwest
Base Metals
Acadian
Baja
Copper Fox
Geovic
Galway
Pacifica
Uranium
Hathor
Crosshair
Strathmore Minerals
Paul van Eeden
PvE commented that in his opinion, attendance seems down from last year. He thought there would be more people here.
It’s a waste of time worrying about what the market will do over the short-to-medium term.
China was cracking down on fraudulent activities in their markets. Tuesday was a total emotional reaction to that.
What are stocks? Fractional ownership in a real business. Why would you sell your shares based on what happened in China?
There are two things that are far more important than what is happening in China.
1. The US housing market – The US economy is 40% of the world’s economy. The US consumer’s spending is 30% of all economic activity in the entire world.
In the last couple of months, the US residential housing market has fallen into really bad shape. Home starts, home sales, sub-prime lender bankruptcies…there is a big shakeout going on. US consumers last source of financing is going away. If we get a 3% decline in worldwide economic activity, what will happen to base metal prices?
It’s game over for consumer spending.
The USD is declining due to a rising Yen.
2. Unwinding of the Yen carry trade – The Yen carry trade was underpinned by three Japanese policies: zero percent interest rate, stable exchange rate, quantitative easing. All three were eliminated over the last year and a half. Pillars of the Yen carry trade are gone. This is very, very significant and will cause downward pressure on the USD.
Last week gold and the USD fell together, because it was part of an emotional response.
PvE is buying gold here.
Greg McCoach
What happened last week? Greg is very concerned with the mortgage meltdown and thinks it will really hit home in the May-June timeframe. Several of the top 20 sub-prime mortgage lenders (20?) have gone under in the past few weeks. There is $2 trillion of mortgage debt that will reset in the next ten months. The average adjustable rate mortgage will go up between $300-$400 when they reset. This could get quite scary.
Last year the US government knew this was coming and that is why the Chapter 7 bankruptcy protections were removed (as of 10/17/05). Debt WILL get removed from the system. Real estate prices could drop by 50% or more.
On 3/15/06, the US Government stopped reporting M-3 figures. This is a red flag of desperation and one of which most investors are not aware.
There are major structural changes coming to America. Geopolitical risk has greatly increased over the last six months.
We need to have confidence in what we are investing in.
Precious metals are going much higher in the near future. There are 35 million new residences that have just been built in China, but 80% of the population is still rural. This equates to massive infrastructure demand. That said, Greg is still more bullish on PMs than BMs right now.
Bob Bishop
Note: Bob clarified the rumor that he is retiring by saying that he is leaving the newsletter business, but has no intention of retiring.
Last week was an opportunity. Gut check. Wake-up call.
Yen carry trade involves extreme leverage, take advantage of de-leveraging events.
If you can’t bring yourself to buy during a correction, then you need to review your exposure level (i.e. you are probably need to reduce your exposure).
What is going on now is the biggest growth story the world has ever seen. India is right behind China.
As an indication of where we are in this market, Bob presented the attendance numbers for some recent shows:
17,000+ PDAC
8,000+ Cambridge House Conference in Vancouver
6,000 Cordilleran Round-Up in Vancouver
Most Americans don’t even have a clue that there is a commodity bull market going on. We are still early in this market, gold for sure and probably other commodities too.
Bob recommended that people look at Martin Murenbeeld’s recent work. Mr. M. puts out gold price scenarios every year, best, worst and most likely. Best case for 2007 is an average price of $755. [Ed. – If memory serves, gold has exceeded even the best case scenario in recent years].
Investors should always spend some money when these things (big corrections) happen. Make it a habit to buy when there is panic in the markets.
Bob looks for price anomalies.
Uraniums are over-priced. Watch the market caps and look for valuation anomalies.
Bob gave a few investment ideas:
Kilgore Minerals (KAU.V) – Will be taken out this month in all likelihood.
Bitterroot (BTT.V) – Working on a Michigan uranium project with Cameco. Odds greatly favor success. Good value at 0.60.
Strongbow Exploration – Nickel play
[Jay Taylor spoke last, but I was unfortunately not able to stay to hear him]
Notes from the Exchange Forum
Background: PDAC is the largest mining conference in the world, held annually in early March at Toronto’s convention center. The conference has two tracks, one with an admission price, for paid members of the PDAC and the other is free and open to the public. The former is oriented towards industry professionals and the latter is for investors. It is estimated that there were a record 17,000+ registered attendees in 2007, the 75th conference of the PDAC.
Context: The week prior to the conference, the general market had gone through a swift correction with gold getting knocked back sixty bucks. Many of the comments from the speakers were in regard to this event, interpreting its significance.
The first day of the investor track features a full day of speakers. Below are notes for these presenters:
Ian McAvity
John Kaiser
David Coffin
Lawrence Roulston
Paul van Eeden
Greg McCoach
Bob Bishop
Ian McAvity
Ian McAvity is a chartist and his presentation consisted of a series of charts which he presented with commentary. My impression from seeing him speak several times is that he is almost always pessimistic, so brace yourselves…
Last week we saw gold and silver down 5-12%
What if the S&P goes down 20-25%? What happens to gold? IM is very nervous right now.
There is too much money in speculative small-cap investments.
The metals market is vulnerable to a break in the stock market.
The $ is not going to break 80, it is not in Russia/China’s interest for the USD to collapse.
There is lots of money in small caps, the Russell 2000, they will not have liquidity. People buying base metal stocks don’t even know what the metals are used for.
The chart parttern last week (of the Dow?) shows an Outside Reversal. The market made a new all-time high on Monday morning but closed the week down 5%. IM thinks the Dow will go down 20-25%.
The bulk of the move for this cycle is probably over.
Consider HXD.TO, a fund that shorts the S&P TSX 60
Bad buying causes most losses in the juniors sector. Let the stocks come to you.
John Kaiser
JK thinks the third leg of this bull market started in October.
The action last week cooled down the juniors sector, which is a good thing.
We haven’t had anything resembling manic moves in the stocks yet.
The retail [investor] sector is not present in this market to any significant degree, but that will change. It will require massive participation to take the market to the mania phase, because of all of the paper that has been created along the way by sector companies.
Base metals – zinc warehouse levels have bottomed out, copper is building back up slowly.
Mainstream thinking continues along the lines that “the world is the tail wagged by the American dog”. The cyclical bears believe that China has no independent staying power if the US goes into a recession.
Base metal prices themselves have reflected market pessimism all the way up in this bull market as shown by backwardation of metals prices. Nobody thinks they can go much higher. [I got the sense Kaiser disagrees with that last bit.]
Yen carry trade – interruption of the Yen carry trade last May crushed the metals rally. When the Yen rises, hedge funds get hurt.
Wall of Worry includes housing. Housing will not collapse, even with the problems in the sub-prime market. They are not liquid like stocks (i.e. everyone can’t “go to cash”…you have to live somewhere).
Goldbugs Etymology
There are four types of goldbugs:
1. Apocalyptic – nobody wins, Ian Gordon is an example of this category.
2. Anti-USD – only gold ownership wins in this scenario, e.g. Paul van Eeden.
3. Conspiracy – Bill Murphy
4. Prosperity – John Kaiser. This is the scenario that recommends holding juniors and gold.
US dominance is declining with Asia’s rise. The USD will lose its role as the de facto global currency. Rising wealth in Asia will drive gold demand. More and more people want to own gold, to put some of their wealth into non-paper assets.
JK is scared by oil. If oil goes to the moon, base metal prices will come down but gold may not go up.
Uranium – a true bubble, but an almost invincible bubble. With decommissioning coming to an end, the supply demand situation looks like it is locked in. What could go wrong? Another Chernobyl. An atomic exchange between India and Pakistan. An al Qaeda dirty bomb. This the last one is the one that most concerns JK. This bubble will end by competition for other assets, for example, gold really taking off. JK commented that none of these juniors will be going into production any time soon.
David Coffin
The trigger for last week’s sell-off was Shanghai, but it was not the reason. We’ve had 4-5 years of strong markets, some things are now ending, like the Yen carry trade.
The strengthening of the Yen is the the signal for the second leg of this resource market. The Yuan is slowly strengthening vs. the USD, that will also continue. China wanted to see the Yen appreciate before letting the Yuan rise.
The debt in the US is going to continue to be a drag. The US slowing is a good thing.
Think about your timeframe and focus what you do along those lines. The next couple of weeks or months may be tough on your portfolios.
China will continue to boom, because of their high savings rate. As longs as China saves and re-invests, the boom will continue.
Last week we saw profit-taking, not panic selling. It is the unwinding of the Yen carry trade. There will be some more of that.
The Coffins are lining up buys. The buys are definitely out there.
Balance – stocks with big gains will come off some, but profits will be rotated into the undervalued stocks.
Copper – China is restocking, which started in mid-January. DC is now using $2 copper as a base price for long-term forecasting, up from $1.50. DC is looking for copper juniors that are near-term producers with projects that make sense.
Nickel – kind of cautious on this
Zinc – most unloved through the whole cycle, largely ignored. Hedge guys have not been in the zinc market like the copper market or the nickel market. Coffins are focusing fairly heavily on zinc, smaller ones, mid-tier takeover candidates.
Gold/Silver – gold should trade in the $700-$800 range to sustain current demand in the sector.
Uranium – Very real supply shortage. There is no spot price for uranium, really. Price is starting to have an impact on operating costs. Nobody knows where it will go. $200? Maybe. Some consolidation is coming.
Look for undervalued companies with strong bottom lines.
Buy carefully and watch the general market conditions.
The second leg of this bull market will run well into the next decade.
[…allow me to repeat that…]
The second leg of this bull market will run well into the next decade.
Oil is not going much higher.
Lawrence Roulston
Gold – the most important thing is the trend since 2001. There is no reason that should not continue. [Actually, he said “there is no reason that should continue”, but given everything else he said, I’m pretty sure the “not” was supposed to be in there].
Gold companies have sold for $230/oz for Proven and Probable reserves, but $20/ounce for inferred. So there is potentially huge upside between the two stages.
Focus on companies that have made the discovery and are adding ounces.
Silver – Lots of little companies are re-opening shut down silver mines and getting into production quickly and with relatively low capital outlays.
Platinum - $1200/ounce, strong supply/demand fundamentals.
Uranium - $85/lb, up from $7. Urge some caution with some of the juniors. There are now over 300 companies exploring for uranium. There are still some good values, but be selective.
Base Metals – the most misunderstood part of the resources sector. Is it a speculative bubble or a super-cycle that is just beginning? LR believes it is the latter.
Last week showed us that there is risk in all investment sectors. LR believes that there is strong fundamental support for the general market (earnings). There is lots of liquidity and the worst seems to be over.
In regard to the drop in the Chinese market, that market had been up 100% in the prior twelve months. The sell off was triggered by expectations that the government would act to rein in growth. They are still growing at 10% a year. They may pull back from that by one or two points, but remember that this is compounding.
The second wave of growth in China is underway and is about consumers. The first wave was in infrastructure. Now the growing Chinese middle class has just started to accumulate “toys”. There is no way that growth will drop off any time soon.
India is next door. Infrastructure development has lagged China but is getting better.
Between them, there are 3 billion people.
Nickel is the most dramatic lately. New all time high last week, closed over $20. Copper corrected last year, pulled back to a fundamental support level.
Commodities are strong fundamentally. If there was a speculative element in them, it would have been washed out by this nervousness.
Supply side response – Majors are increasing production, but there are fewer companies. In other words, growth is coming almost exclusively through acquisitions and not organic growth. Last year, the industry averaged less than 1% annual production growth. Not a lot of good deposits out there. The low hanging fruit is gone. There are some new mines but supply is basically flat and this will continue for several more years. New mines will not even offset current depletion rates.
Mixed Messages – Economists look at the long-term price trends and then project them forwards. Take the 1970’s and 1980’s prices and project them forward, but the measuring stick has changed in the meantime. You have to compensate for the decline in the US Dollar. The deposits that are getting developed are lower grade, deeper, more remote and more expensive to develop.
Six billion dollars have been spent in the last year and a half on acquisitions and one billion dollars more were made in minority investments and joint ventures.
The future – We are in the very early stages of a long-term cycle. There are many years to go. Prices are now very attractive.
List of companies to consider
Gold
Dynasty
Staccato
Mansfield
Exeter
Silver
Aurcana
Exmin
Fortuna
Platinum
Pacific Northwest
Base Metals
Acadian
Baja
Copper Fox
Geovic
Galway
Pacifica
Uranium
Hathor
Crosshair
Strathmore Minerals
Paul van Eeden
PvE commented that in his opinion, attendance seems down from last year. He thought there would be more people here.
It’s a waste of time worrying about what the market will do over the short-to-medium term.
China was cracking down on fraudulent activities in their markets. Tuesday was a total emotional reaction to that.
What are stocks? Fractional ownership in a real business. Why would you sell your shares based on what happened in China?
There are two things that are far more important than what is happening in China.
1. The US housing market – The US economy is 40% of the world’s economy. The US consumer’s spending is 30% of all economic activity in the entire world.
In the last couple of months, the US residential housing market has fallen into really bad shape. Home starts, home sales, sub-prime lender bankruptcies…there is a big shakeout going on. US consumers last source of financing is going away. If we get a 3% decline in worldwide economic activity, what will happen to base metal prices?
It’s game over for consumer spending.
The USD is declining due to a rising Yen.
2. Unwinding of the Yen carry trade – The Yen carry trade was underpinned by three Japanese policies: zero percent interest rate, stable exchange rate, quantitative easing. All three were eliminated over the last year and a half. Pillars of the Yen carry trade are gone. This is very, very significant and will cause downward pressure on the USD.
Last week gold and the USD fell together, because it was part of an emotional response.
PvE is buying gold here.
Greg McCoach
What happened last week? Greg is very concerned with the mortgage meltdown and thinks it will really hit home in the May-June timeframe. Several of the top 20 sub-prime mortgage lenders (20?) have gone under in the past few weeks. There is $2 trillion of mortgage debt that will reset in the next ten months. The average adjustable rate mortgage will go up between $300-$400 when they reset. This could get quite scary.
Last year the US government knew this was coming and that is why the Chapter 7 bankruptcy protections were removed (as of 10/17/05). Debt WILL get removed from the system. Real estate prices could drop by 50% or more.
On 3/15/06, the US Government stopped reporting M-3 figures. This is a red flag of desperation and one of which most investors are not aware.
There are major structural changes coming to America. Geopolitical risk has greatly increased over the last six months.
We need to have confidence in what we are investing in.
Precious metals are going much higher in the near future. There are 35 million new residences that have just been built in China, but 80% of the population is still rural. This equates to massive infrastructure demand. That said, Greg is still more bullish on PMs than BMs right now.
Bob Bishop
Note: Bob clarified the rumor that he is retiring by saying that he is leaving the newsletter business, but has no intention of retiring.
Last week was an opportunity. Gut check. Wake-up call.
Yen carry trade involves extreme leverage, take advantage of de-leveraging events.
If you can’t bring yourself to buy during a correction, then you need to review your exposure level (i.e. you are probably need to reduce your exposure).
What is going on now is the biggest growth story the world has ever seen. India is right behind China.
As an indication of where we are in this market, Bob presented the attendance numbers for some recent shows:
17,000+ PDAC
8,000+ Cambridge House Conference in Vancouver
6,000 Cordilleran Round-Up in Vancouver
Most Americans don’t even have a clue that there is a commodity bull market going on. We are still early in this market, gold for sure and probably other commodities too.
Bob recommended that people look at Martin Murenbeeld’s recent work. Mr. M. puts out gold price scenarios every year, best, worst and most likely. Best case for 2007 is an average price of $755. [Ed. – If memory serves, gold has exceeded even the best case scenario in recent years].
Investors should always spend some money when these things (big corrections) happen. Make it a habit to buy when there is panic in the markets.
Bob looks for price anomalies.
Uraniums are over-priced. Watch the market caps and look for valuation anomalies.
Bob gave a few investment ideas:
Kilgore Minerals (KAU.V) – Will be taken out this month in all likelihood.
Bitterroot (BTT.V) – Working on a Michigan uranium project with Cameco. Odds greatly favor success. Good value at 0.60.
Strongbow Exploration – Nickel play
[Jay Taylor spoke last, but I was unfortunately not able to stay to hear him]
Sunday, February 25, 2007
Thursday, February 22, 2007
Follow-up on Candente
The trading action in Candente Resource Corp. (DNT.TO) over the past couple of days has been remarkable, with a 33% gain yesterday and another ~10% more today . While the charts were supportive of the notion that the potential for a breakout was there, they did not indicate the magnitude of the rally that is now underway.
The only news released by the company yesterday is that shares have begun trading on the Peruvian Stock Exchange. Daily volume of over 4MM shares yesterday was an all-time record for the stock. So it seems reasonable to speculate that at least part of what occured yesterday was a wholesale transfer of ownership in the company from North American to Peruvian investors.
Wednesday, February 21, 2007
Monday, February 19, 2007
Saturday, February 17, 2007
Monday, February 12, 2007
Uraniumania!
Well, we're not quite there yet, but I believe we are on our way. Some items worth mentioning...
- sxr Uranium One (SXR.TO) announced today that it is making an all-stock offer for UrAsia (UUU.V). UrAsia has properties in Kazakhstan, the combined entity will be called Uranium One, Inc.
- The folks at StockInterview.com are having a hard time keeping up with demand for their book coming from Amazon.com. They recently made six separate shipments to Amazon within a month's time and each shipment was sold out before it even arrived at Amazon. The book sales have become a new metric for measuring this bull market and provide fascinating insights into the demographics of the participants in this market.
- There are a number of blogs that have sprouted up that are dedicated to the uranium market. It's probably worthy of a dedicated post on the subject, but one of the ones that I came across this weekend is worth a look.
Wednesday, January 31, 2007
Strathmore follow-up...
Great news, Strathmore announced today that they are proposing to spin out their Canadian assets and some cash into a separate company. I think there are a lot of positives that will enable the creation of more shareholder value at a faster pace:
Strathmore Plans to Spin Off Its Canadian Assets
10:48 EST Wednesday, January 31, 2007
KELOWNA, BRITISH COLUMBIA--(CCNMatthews - Jan. 31, 2007) - Strathmore Minerals Corp. (TSX VENTURE:STM) ("Strathmore") is pleased to announce that it is proposing to reorganize its mineral property assets with a view to maximizing shareholder value. In particular, Strathmore proposes to transfer all of its Canadian mineral properties and a portion of its cash into a new exploration company pursuant to a plan of arrangement. Strathmore would continue to hold the U.S. and Peruvian assets. Immediately following such arrangement, Strathmore's shareholders, other than any dissenting shareholders, would be issued shares in the new exploration company so that collectively, they would own all of the new company's shares which would be listed on the TSX Venture Exchange.
The reorganization is designed to improve the identification and valuation of specific Strathmore properties, to enhance Strathmore's ability to divest specific properties through simpler corporate ownership, to enter into strategic joint venture agreements, and to enable Strathmore to separately finance and develop its various assets, selectively reducing stock dilution.
The proposed reorganization is subject to shareholder approval by resolution approved by not less than 66 2/3 % of the votes cast and Strathmore expects to present the matter to shareholders at a special meeting. The reorganization is also subject to approval by the British Columbia Supreme Court, negotiation of definitive agreements, acceptance by the TSX Venture Exchange and other regulatory approvals. Further particulars will be announced in due course.
Strathmore is a Canadian based resource company specializing in the strategic acquisition, exploration and development of uranium properties. Strathmore's common shares are listed on the TSX Venture Exchange under the symbol "STM".
STRATHMORE MINERALS CORP. is a Canadian based resource company specializing in the strategic acquisition, exploration and development of uranium properties. Headquartered in Kelowna, British Columbia, the Company also has U.S. based Development Offices in Riverton, Wyoming and Santa Fe, New Mexico. STRATHMORE MINERALS CORP Common Shares are listed on the TSX Venture Exchange under the symbol "STM".
This news release contains forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. For instance, the proposed plan of arrangement to reorganize Strathmore may be unsuccessful for unforeseen reasons such as an inability to obtain the necessary shareholder, regulatory or other approvals. In addition, any reorganization may be on terms that are different from those currently envisioned by the company.
This press release shall not constitute an offer of securities for sale in the United States or Canada or the solicitation of an offer to buy securities in the United States or Canada, nor shall there be any sale of the securities in any jurisdiction or state in which such offer, solicitation or sale would be unlawful.
ON BEHALF OF THE BOARD
Dev Randhawa, Chairman & CEO
FOR FURTHER INFORMATION PLEASE CONTACT:
Strathmore Minerals Corp.
Bob Hemmerling
1-800-647-3303
Strathmore Plans to Spin Off Its Canadian Assets
10:48 EST Wednesday, January 31, 2007
KELOWNA, BRITISH COLUMBIA--(CCNMatthews - Jan. 31, 2007) - Strathmore Minerals Corp. (TSX VENTURE:STM) ("Strathmore") is pleased to announce that it is proposing to reorganize its mineral property assets with a view to maximizing shareholder value. In particular, Strathmore proposes to transfer all of its Canadian mineral properties and a portion of its cash into a new exploration company pursuant to a plan of arrangement. Strathmore would continue to hold the U.S. and Peruvian assets. Immediately following such arrangement, Strathmore's shareholders, other than any dissenting shareholders, would be issued shares in the new exploration company so that collectively, they would own all of the new company's shares which would be listed on the TSX Venture Exchange.
The reorganization is designed to improve the identification and valuation of specific Strathmore properties, to enhance Strathmore's ability to divest specific properties through simpler corporate ownership, to enter into strategic joint venture agreements, and to enable Strathmore to separately finance and develop its various assets, selectively reducing stock dilution.
The proposed reorganization is subject to shareholder approval by resolution approved by not less than 66 2/3 % of the votes cast and Strathmore expects to present the matter to shareholders at a special meeting. The reorganization is also subject to approval by the British Columbia Supreme Court, negotiation of definitive agreements, acceptance by the TSX Venture Exchange and other regulatory approvals. Further particulars will be announced in due course.
Strathmore is a Canadian based resource company specializing in the strategic acquisition, exploration and development of uranium properties. Strathmore's common shares are listed on the TSX Venture Exchange under the symbol "STM".
STRATHMORE MINERALS CORP. is a Canadian based resource company specializing in the strategic acquisition, exploration and development of uranium properties. Headquartered in Kelowna, British Columbia, the Company also has U.S. based Development Offices in Riverton, Wyoming and Santa Fe, New Mexico. STRATHMORE MINERALS CORP Common Shares are listed on the TSX Venture Exchange under the symbol "STM".
This news release contains forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. For instance, the proposed plan of arrangement to reorganize Strathmore may be unsuccessful for unforeseen reasons such as an inability to obtain the necessary shareholder, regulatory or other approvals. In addition, any reorganization may be on terms that are different from those currently envisioned by the company.
This press release shall not constitute an offer of securities for sale in the United States or Canada or the solicitation of an offer to buy securities in the United States or Canada, nor shall there be any sale of the securities in any jurisdiction or state in which such offer, solicitation or sale would be unlawful.
ON BEHALF OF THE BOARD
Dev Randhawa, Chairman & CEO
FOR FURTHER INFORMATION PLEASE CONTACT:
Strathmore Minerals Corp.
Bob Hemmerling
1-800-647-3303
Sunday, January 28, 2007
Key Reversal Identified
"Gold looks awful, having broken down from a Head-and-Shoulders top on Friday. It should now drop down into the support zone in the $570 - $580 area shown on the chart. However, with the dollar now short-term overbought following its sparkling performance last week, and prone to react/consolidate, we should not be surprised to see gold rally back to the underside of the H&S top, i.e. to the $612 - $615 area, probably early in the coming week, which would be viewed as an opportunity to short it, with a close stop above the neckline."
Clive Maund, 01/08/07, 321Gold, "Bottom Pickers Beware"
"Gold is looking technically stronger than it has done for the past 16 months. It would have escaped the notice of many that it broke out last week from a little-known technical pattern known as 3-arc Fan Correction. This pattern was not detected earlier because it is rather rare, and instead attempts were made to define the action in gold since last May as some kind of triangle, which could, of course, be bearish. However, a 3-arc Fan was clearly identified in the Streettracks chart last week on www.clivemaund.com, prompting a re-examination of the gold chart, whereupon it became evident that a similar pattern exists in gold. This is very important, because it largely sweeps away lingering doubts about where gold is headed. This is because these patterns are very bullish, and seldom break down."
Clive Maund, 01/28/07, SafeHaven, "Sectorwide buy alert"
Clive Maund, 01/08/07, 321Gold, "Bottom Pickers Beware"
"Gold is looking technically stronger than it has done for the past 16 months. It would have escaped the notice of many that it broke out last week from a little-known technical pattern known as 3-arc Fan Correction. This pattern was not detected earlier because it is rather rare, and instead attempts were made to define the action in gold since last May as some kind of triangle, which could, of course, be bearish. However, a 3-arc Fan was clearly identified in the Streettracks chart last week on www.clivemaund.com, prompting a re-examination of the gold chart, whereupon it became evident that a similar pattern exists in gold. This is very important, because it largely sweeps away lingering doubts about where gold is headed. This is because these patterns are very bullish, and seldom break down."
Clive Maund, 01/28/07, SafeHaven, "Sectorwide buy alert"
Saturday, January 27, 2007
"Breakout!" Revisited (AGC.V)...
In November, I posted a long-term chart of Amarillo Gold (AGC.V), that depicted a cup and handle formation that stretched out for almost three years. The observation at the time was that Amarillo appeared ready to break out of this formation and confirm it. It subsequently did that and achieved the anticipated price target (TA does not always work, but sometimes it does). In that post, I also referred to some of the fundamentals that could help drive Amarillo, going forwards.
I began buying Amarillo Gold in January of 2004 when it was first recommended by Claude Cormier and added to my position on Friday. I believe that the consolidation occuring since the stock has moved to the new price level is close to completion. While the charts do not yet indicate that a turn is in progress, my sense is that there has been enough time to digest the previous move and the stock is ready for the fundamental news which is now anticipated (drill results from Lavras do Sul).
So, I think it's worthwhile to contemplate what might be in store for Amarillo. Their main deposit at Mara Rosa puts a fundamental floor under the stock. They have 700K+ ounces of gold with a high probability that the deposit will be expanded. Recent exploration of the Mara Rosa area lead to the staking of adjacent property and the identification of additional resources on the existing property.
The Lavras do Sul property was drilled previously by Rio Tinto and yielded mineralized cores of over 100M in length at 1 gram/tonne. Current drilling by Amarillo intends to confirm the historical drill results and start moving the property into 43-101 standards. Based on what I have heard from industry professionals, there is a high probability that Amarillo's current drilling will confirm previous results. Rio Tinto was seeking 5-10MM ounces of gold. It appears that Lavras do Sul may contain up to 3MM ounces. So, less than what Rio was seeking, but still respectable. When the drill program was announced, it was stated that initial results were expected in January.
The company has also made some personnel changes recently. Robert Landis was appointed as Chairman of the Board of Directors. Mr. Landis is a Boston-based investor that has served as a Director for several gold companies and is a consultant to GATA. His essays are available at The Golden Sextant.
I also noticed that the web page now identifies Sarah Vaughn-Jackson as the companys Communications Manager. If you Google around, you will find that Ms. Vaughn-Jackson provides similar services for Aquiline Resources and Laramide Resources. What Amarillo, Aquiline and Laramide all have in common is that they are creatures of the Iron Bark group. This group includes guys like Marc Henderson and Martin Walter who have spun out a number of companies in the mining exploration sector. The two I have mentioned are particularly successful examples. So this is another reason why I think Amarillo has a good chance of being a multi-bagger. There are people backing the company who have a track record of doing just that.
Here are some family photos:
I began buying Amarillo Gold in January of 2004 when it was first recommended by Claude Cormier and added to my position on Friday. I believe that the consolidation occuring since the stock has moved to the new price level is close to completion. While the charts do not yet indicate that a turn is in progress, my sense is that there has been enough time to digest the previous move and the stock is ready for the fundamental news which is now anticipated (drill results from Lavras do Sul).
So, I think it's worthwhile to contemplate what might be in store for Amarillo. Their main deposit at Mara Rosa puts a fundamental floor under the stock. They have 700K+ ounces of gold with a high probability that the deposit will be expanded. Recent exploration of the Mara Rosa area lead to the staking of adjacent property and the identification of additional resources on the existing property.
The Lavras do Sul property was drilled previously by Rio Tinto and yielded mineralized cores of over 100M in length at 1 gram/tonne. Current drilling by Amarillo intends to confirm the historical drill results and start moving the property into 43-101 standards. Based on what I have heard from industry professionals, there is a high probability that Amarillo's current drilling will confirm previous results. Rio Tinto was seeking 5-10MM ounces of gold. It appears that Lavras do Sul may contain up to 3MM ounces. So, less than what Rio was seeking, but still respectable. When the drill program was announced, it was stated that initial results were expected in January.
The company has also made some personnel changes recently. Robert Landis was appointed as Chairman of the Board of Directors. Mr. Landis is a Boston-based investor that has served as a Director for several gold companies and is a consultant to GATA. His essays are available at The Golden Sextant.
I also noticed that the web page now identifies Sarah Vaughn-Jackson as the companys Communications Manager. If you Google around, you will find that Ms. Vaughn-Jackson provides similar services for Aquiline Resources and Laramide Resources. What Amarillo, Aquiline and Laramide all have in common is that they are creatures of the Iron Bark group. This group includes guys like Marc Henderson and Martin Walter who have spun out a number of companies in the mining exploration sector. The two I have mentioned are particularly successful examples. So this is another reason why I think Amarillo has a good chance of being a multi-bagger. There are people backing the company who have a track record of doing just that.
Here are some family photos:
"Ready to Run?" Revisited
Back on October 28th, I posted a chart of Chesapeake Gold and posed the question: Ready to Run? Since that time, Chesapeake broke back down into the triangle. This week ended with Chesapeake blasting out of the triangle and on up to the $6 level. The acquisition of American Gold by Chesapeake has been accepted by shareholders and the BC Supreme Court. Approval from the TSX is the final step towards completing the transaction.
The new Chesapeake Gold will have about $40MM in cash, a huge portfolio of properties, two active joint venture projects (Christopher James Gold/La Cucaracha and Pinnacle Mines/La Calavera), the largest undeveloped gold project in Mexico (Metates, at 10MM+ ounces) and a project close to Reno that is attracting interest (Talapoosa).
Notice the resemblance to the XAU daily chart. Bizarre!
The new Chesapeake Gold will have about $40MM in cash, a huge portfolio of properties, two active joint venture projects (Christopher James Gold/La Cucaracha and Pinnacle Mines/La Calavera), the largest undeveloped gold project in Mexico (Metates, at 10MM+ ounces) and a project close to Reno that is attracting interest (Talapoosa).
Notice the resemblance to the XAU daily chart. Bizarre!
Lose some, win some...
This past week has been a mixed bag for my uranium juniors and I was reminded of the risks endemic to that species and the merits of having companies with defined assets at the core of the portfolio. Exploration is a difficult business and it is statistically true that failure is the norm. Most exploration programs do not result in a discovery. Even if they do, most discoveries do not become mines, for one reason or another.
First up was Nova Uranium. They announced disappointing results from their Mont Laurier property in Quebec. This is the second time that the company has come up short of expectations and the market responded accordingly. I took the opportunity to incur a loss and reduce my exposure to exploration spec plays by one position.
Next up was Universal Uranium. These guys finally announced long-awaited results from their drilling program in Lisbon Valley, Utah. Apparently, the assays were not worth detailing as they were not included with the release. They simply referred to 50PPM of uranium at the bottom of the holes. Universal has a respectable property position and an active work program in the Central Mineral Belt in Labrador, property in Colorado that has been JV'ed and a property in Arizona, so I will continue to hold this position.
Luckily, Strathmore has been more than compensating for these two. Because of position-sizing with the more "conservative" (i.e. companies with defined resources) plays given heavier-weighting, the advance in Strathmore has overshadowed the drawdowns from the others. The price and volume action were very encouraging towards the end of the week, with Strathmore hitting price levels it has not seen since 1998. The stock is moving towards overbought on the daily chart but still has room to run on the weekly and monthly charts. I have targets in mind for taking profits on my trading shares.
First up was Nova Uranium. They announced disappointing results from their Mont Laurier property in Quebec. This is the second time that the company has come up short of expectations and the market responded accordingly. I took the opportunity to incur a loss and reduce my exposure to exploration spec plays by one position.
Next up was Universal Uranium. These guys finally announced long-awaited results from their drilling program in Lisbon Valley, Utah. Apparently, the assays were not worth detailing as they were not included with the release. They simply referred to 50PPM of uranium at the bottom of the holes. Universal has a respectable property position and an active work program in the Central Mineral Belt in Labrador, property in Colorado that has been JV'ed and a property in Arizona, so I will continue to hold this position.
Luckily, Strathmore has been more than compensating for these two. Because of position-sizing with the more "conservative" (i.e. companies with defined resources) plays given heavier-weighting, the advance in Strathmore has overshadowed the drawdowns from the others. The price and volume action were very encouraging towards the end of the week, with Strathmore hitting price levels it has not seen since 1998. The stock is moving towards overbought on the daily chart but still has room to run on the weekly and monthly charts. I have targets in mind for taking profits on my trading shares.
Saturday, January 20, 2007
Even more on Stathmore...
A post on StockHouse pointed out an interview with David Miller of Strathmore Minerals. I have included an excerpt below. Note the lead time involved to build a new uranium mill. Six years, just to get all the permits. I also recommend taking a look at Ralph Kettell's article from June 2004 that got me started on the sector and Strathmore in particular. It is interesting to compare his insights on what would happen over the next few years and how they have actually played out. So far, Ralph's call has been extremely good.
-theinvestar: Currently Strathmore is planning to build a mill near Grants,
David Miller: The real issue is getting the permit. We believe it will take 6 years to obtain an NRC and all related permits. With that, last fall we purchased a section of land in the center of the Grants Mineral Belt. Its on a paved highway, infrastructure is in place, and it even has a heavy gauge railroad nearby that comes out of one of the coal mines in the same region, so we’ve positioned it to take advantage of infrastructure and the location in the center of the Grants Mineral Belt. Right now utilities have their uranium supplies for the next 2 or 3 years. It’s that period from 2012 and beyond when new power plants around the world are going to need their initial feeds and then are going to start consuming more and more uranium. 2012 and beyond is when the consumption of uranium is going to start growing dramatically. The mill should receive a license and can be constructed when the big shortages are going to occur.
-theinvestar: What projects are your most advanced, and when are you expecting to open your first mine?
David Miller: Our most advanced is probably Roca Honda in
-theinvestar: When you look at Strathmore, what part of the company would you say sets you apart from other uranium companies?
Thursday, January 18, 2007
More on Strathmore...
There are a few reasons I posted the monthly chart on Strathmore. First, I think it's an interesting chart and while events don't always develop as charts would lead you to suspect, it does at least inform you of a potential near-term outcome. Secondly, since it is a monthly chart, we should be seeing a picture with relatively little short-term noise that enables the dominant trend to clearly emerge. Third, this uranium stock is the first one that I bought in the sector, beginning in June of 2004 and continues to form the core of my uranium portfolio.
I started researching the sector after I read a couple of articles on 321Gold and other sites that really opened my eyes. Ralph Kettell wrote a piece on uranium and looked at Strathmore specifically. I realized that if all these articles were correct, then the timing to get into Strathmore after it had finished a major pullback was optimal and I got positioned accordingly.
Here is an excerpt from a recent interview, by Tom Jeffries of Market Matters Radio with Kevin Bambrough of Sprott Asset Management. Sprott is one of the top natural resources oriented funds in Canada.
KB: Well I think, for a few of the key uranium stocks that are out there that you know, people will be able to read that we’ve recommended many times over the last few years, I think they’re going to have another run. I think that the uranium price is poised to start moving higher again. It hasn’t really paused much, but just over the Christmas break, I’m just seeing that more and more people seem to be committed to the fact that uranium is definitely going to go to a hundred dollars this year. And once people see it start ticking up again I think there’ll be a rush back into these stocks because they’ll be viewed to be quite cheap. And probably the best of the bunch for this year is, I think, is going to be Strathmore Minerals.
I started researching the sector after I read a couple of articles on 321Gold and other sites that really opened my eyes. Ralph Kettell wrote a piece on uranium and looked at Strathmore specifically. I realized that if all these articles were correct, then the timing to get into Strathmore after it had finished a major pullback was optimal and I got positioned accordingly.
Here is an excerpt from a recent interview, by Tom Jeffries of Market Matters Radio with Kevin Bambrough of Sprott Asset Management. Sprott is one of the top natural resources oriented funds in Canada.
KB: Well I think, for a few of the key uranium stocks that are out there that you know, people will be able to read that we’ve recommended many times over the last few years, I think they’re going to have another run. I think that the uranium price is poised to start moving higher again. It hasn’t really paused much, but just over the Christmas break, I’m just seeing that more and more people seem to be committed to the fact that uranium is definitely going to go to a hundred dollars this year. And once people see it start ticking up again I think there’ll be a rush back into these stocks because they’ll be viewed to be quite cheap. And probably the best of the bunch for this year is, I think, is going to be Strathmore Minerals.
KB: It’s S…T…M, as in Mary.
KB: That’s Venture.
TJ: Okay, Strathmore, what’s it trading at now and what kind of growth are you at Sprott thinking this could do for us in the next couple of quarters?
KB: Well, I’m just putting it down as sort of my top uranium pick. It’s really hard to say where things are going to go but there’s many stocks out there that are trading at, you know, five, ten and producers trading at twenty dollars a pound in resources and most of the analysts out there seem to be showing Strathmore around a buck a pound.
Wednesday, January 17, 2007
Monday, January 15, 2007
The Bull Resumes...
Aurelian was an exceptional performer in 2006, actually doing what most explorers only dream about, namely, finding the mother lode. But even Aurelian wasn't immune to a sector correction and the chart shows a 30% pullback in the fall of 2006. The 25 week EMA has been tested a few times and continues to hold. The metals are possibly turning here, if that move continues, then another leg up for Aurelian seems probable. This should be supported by fundamentals with a total of five rigs now drilling continuously.
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