The Slow Lane

To da moon

2010-09-22T23:36:00.000-04:00

John Roque discusses with Jim Cramer how gold is going to $3,000 an ounce and beyond: click here if you dare

East Asia Minerals (EAS.V)

2010-09-22T23:22:00.002-04:00

Update on the metals market

2010-09-18T06:18:00.002-04:00

From Ben Davies:

"We are at an inflection point for world markets as the issuance of sovereign debt and the consequential proliferation of currency has left gold as the only viable store of value."

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/15_Ben_Davies_-_Gold_Will_Outperform_Many_Fold.html

Weekly metals wrap with Bill Haynes and Dan Norcini:
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/18_KWN_Weekly_Metals_Wrap.html

Silver update...very close now

2010-09-17T02:32:00.002-04:00

"It's just a little coin."

2010-09-17T02:23:00.004-04:00

Joe Kernan looked like he had bitten in to a lemon when he was talking about Jim Rickards coming on CNBC yesterday morning. Joe mentioned that last time Rickards was on, he talked about $5,000 gold. Kernan said "At the time I was wondering what he was smoking, but now...". Becky Q asked if he was having second thoughts about that and Kernan offered up this searingly insightful analysis:

"I don't know...it's just a little coin."

You got that right, Joe. Gold...is...money.

Here is a link to the segment where Rickards does the math for Joe: Jim Rickards on CNBC

Yukon Gold Rush II

2010-09-15T23:30:00.003-04:00

It seems probable to me that the awesome influx of capital catapulting the market cap of the Yukon gold juniors higher represents the first in what is likely to be several waves over the coming years. Serious money is being put into exploration programs that are starting to yield discoveries. Modern exploration methods are being brought to bear on a gold-rich area that is largely underexplored. It's only a matter of time before others follow in Underworld's success.

Silver monthly chart

2010-09-15T23:27:00.001-04:00

ATAC...consolidating...

2010-09-15T23:22:00.000-04:00

Northern Tiger...roaring...

2010-09-15T23:08:00.002-04:00

What kind of bug are you?

2010-09-15T22:59:00.001-04:00

Also tasty...

2010-03-17T21:07:00.003-04:00

Tasty...

2010-03-17T21:03:00.001-04:00

More from Stewart...

2009-11-07T07:27:00.002-05:00

"This is the gold rapture. No prisoners will be taken. If you are a long term investor, the strategy now is to sit there in the corner and wait. Wait for much higher prices before selling anything. You need to decide who you are, where you sit on the investor-trader scale. Investors want to become traders on severe price weakness, and traders want to become investors into great strength like we have now."

Stewart Thomson
"Gold Starship: Family Reunion On Pluto?"

Full article here.

Le "trou du cul" du jour

2009-10-29T16:39:00.006-04:00

Galleon Paid Bankers Millions For Extra, Non-Public Info (MS, GS)
(article)

Exhibit E

2009-10-20T23:31:00.001-04:00

"However, taking the specifics of this market into account and the facts that gold has now decisively broken into $1,000 thus causing many new investors to enter the market and that the best part of the bull market (for juniors) is still ahead of us, makes me consider PM juniors as one of the best places to invest it."

P. Radomski
"Is the Junior Stock Sector Dead or Are These Companies Set to Outperform Once Again?"

Exhibit D

2009-10-20T23:28:00.000-04:00

"Certain junior mining/royalty companies will hit the mother-lode and experience dramatically greater increases in their stock prices than the average and the leverage-on-leverage benefit of warrants should cause some of the right warrants of the right mining/royalty companies to experience 5,000% or more. So "Does the Adens' $5,800 Gold Projection Suggests +5,000% Gains in Junior Equities?" In some cases it appears so!"

Lorimer Wilson
Does the Adens' $5,800 Gold Projection Suggests +5,000% Gains in Junior Equities?

Exhibit C

2009-10-20T23:25:00.001-04:00

"The leverage is always on the bottom side of the category scale, so I anticipate that the bottom half of Junior Producers and the viable companies in Gold Exploration entities to outperform the top half of Junior Producers and Major Producers as the price of gold continues higher in late 2009 and 2010.

History tells us this is how it has always happened, and I believe it will again."

Jim Sinclair

"The Shift Between Gold Share Categories"

Exhibit B

2009-10-20T23:22:00.002-04:00

"My thinking is that with gold now established in a clear bullish trend, this may be the time to buy the mining stocks."

Richard Russell, 321gold
October 15, 2009

Exhibit A

2009-10-20T23:18:00.002-04:00

Gold Juniors Geyser Time!
by Stewart Thomson

"...I think we're at that point right now. I seriously believe there is more leverage in junior gold stocks to gold bullion, right now, than there is with futures contracts. That's the power, that's the tool that is sitting right in front of you in your gold toolbox."

http://www.321gold.com/editorials/thomson_s/thomson_s_101409.html

Juniors on fyah...

2009-10-17T23:23:00.000-04:00

It's started...

Message from the universe...

2009-08-03T19:57:00.004-04:00

A friend of mine showed me some nuggets he had found in a stream recently, a stream that is known to host alluvial gold. Then two days later I found a hawk feather. The message from the universe is that gold is about to fly.

Hedgie Gets A Wedgie

2008-06-22T09:55:00.006-04:00

Ralph Cioffi, former investment bank Bear Stearns hedge fund manager, is escorted by law enforcement officials to a waiting car after being arrested in New York June 19, 2008


"Clang clang, go the jail guitar doors
Bang bang, go the boots on the floor
Cry cry, for your lonely mother's son
Clang clang, go the jail guitar doors"

From "Jail Guitar Doors" by The Clash

Level the playing field...

2008-06-18T13:21:00.000-04:00

Ready to go again...

2008-01-03T08:08:00.000-05:00

The 11/30 call was early, but still looks right to me...

Miner Contemplation

2007-11-04T10:50:00.000-05:00

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."

JER.v is breaking out on volume...

2007-11-01T15:04:00.001-04:00

PEZ.V - The Gift That Keeps On Giving

2007-10-19T13:16:00.000-04:00

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.

Impact Silver

2007-08-26T23:12:00.001-04:00

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.

PEZ again...

2007-07-25T15:28:00.000-04:00

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

2007-07-25T08:03:00.000-04:00

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.

Forum Uranium...

2007-07-08T20:40:00.001-04:00

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.

PEZ dispenser

2007-06-28T08:42:00.001-04:00

On the threshold...

2007-06-28T08:38:00.000-04:00

Stock of du jour

2007-06-22T17:36:00.001-04:00

JER Envirotech

2007-05-28T14:30:00.001-04:00

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.

Michael Kiley 1958 - 2007

2007-04-25T15:01:00.000-04:00

May you rest in peace, bro.

Energy Fuels

2007-04-12T23:01:00.000-04:00

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.

Copper

2007-04-09T23:18:00.001-04:00

Uranium tops $100/pound...

2007-04-07T23:42:00.000-04:00

Yikes.

A very tight market just got even tighter

2007-03-09T22:47:00.000-05:00

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

2007-03-09T07:50:00.000-05:00

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]

Follow the yellow cake road...

2007-02-25T14:58:00.000-05:00

Follow-up on Candente

2007-02-22T11:31:00.000-05:00

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.

Candente

2007-02-21T12:55:00.001-05:00

Breakout - Kirkland Lake Gold

2007-02-19T15:16:00.000-05:00

Silver bandages

2007-02-17T21:10:00.000-05:00

Uraniumania!

2007-02-12T19:18:00.000-05:00

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.

Strathmore follow-up...

2007-01-31T11:32:00.000-05:00

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

Key Reversal Identified

2007-01-28T22:23:00.000-05:00

"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"

"Breakout!" Revisited (AGC.V)...

2007-01-27T18:17:00.000-05:00

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:

"Ready to Run?" Revisited

2007-01-27T14:02:00.000-05:00

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!

Lose some, win some...

2007-01-27T13:23:00.000-05:00

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.

Even more on Stathmore...

2007-01-20T14:19:00.000-05:00

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, New Mexico. What is the timetable on the permitting process and what would construction time look like

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 New Mexico. It was permitted and even had a shaft sunk on a nearby property in the late 70s, early 80s. It was Kerr McGee’s next mine they were developing to feed the largest mill in the world in Ambrosia Lake, which BHP Billiton tore down 3 years ago. In the Gas Hills of Wyoming, we own 3 projects that are probably capable of being fully permitted in 24 months, but these would be smaller open-pit mining operations, and it would be the $Sweetwater Mill that we would need a toll milling agreement with. We are also permitting several ISR projects in Wyoming and we are starting a number of other initiatives on some of our other advanced resources in Wyoming.

-theinvestar: When you look at Strathmore, what part of the company would you say sets you apart from other uranium companies?

David Miller: The acquisition of the Kerr McGee properties in New Mexico along with the Kerr McGee data base is the biggest thing. They made an early decision to abandon the sector because of its collapsed due to the cancellation of so many nuclear power plants in the 1980s. We recognized from day one that the sector had been abandoned and there were no big companies out there waiting around to pick up uranium projects that companies can be successful with. We recognized this early on and were the first company to open a permit office in New Mexico, the first to start the permitting process on a mill in New Mexico, and we realized that we have to help reinvent the industry. We staffed up early and have over 200 years of uranium experience in our management team. Few companies have that expertise available.

The Investar blog

More on Strathmore...

2007-01-18T21:15:00.000-05:00

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.

TJ: Tell everybody the symbol, refresh our memory, what does that trade under Strathmore?

KB: It’s S…T…M, as in Mary.

TJ: Is that on the Venture or in Toronto:

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.

TJ: Wow.

KB: We think they have some very high quality pounds and some great opportunities to do joint ventures and move things forward, we think this is going to be their year, after being in a relative holding pattern for a couple of years. The stock hasn’t really moved much and the other ones have and I think that this is going to be a big year for Strathmore.

Market Matters Radio

Strathmore Minerals

2007-01-17T23:41:00.001-05:00

The Bull Resumes...

2007-01-15T23:39:00.000-05:00

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.

Time for Reflection...

2006-12-31T09:06:00.000-05:00

The world turns and we pass into a new year. It is often said that this is a time for reflection, so I've included a nice picture of one. Hope everyone has a healthy, happy and prosperous 2007!

How we live...

2006-12-18T22:29:00.001-05:00

Uranium Spot Price Hits $72/pound

2006-12-16T10:04:00.000-05:00

Largest Weekly Spot Uranium Price Jump in History

December 16, 2006
By Julie Ickes, Editor of StockInterview.com

‘Feeding Frenzy’ Sends Weekly Spot Uranium Price to Record $72/Pound

The TradeTech Weekly Spot Uranium Price Indicator has soared
by more than 97 percent during 2006.

As StockInterview.com predicted a week ago, uranium sellers got what they were expecting - a price bump. For the week ending December 15, the weekly spot uranium price indicator jumped by $7/pound, or more than 10 percent, to $72/pound per pound U3O8. According to Treva Klingbiel, editor of Nuclear Market Review, this was “the single largest increase reported since NUEXCO began publishing prices in 1968.” TradeTech posts the weekly spot uranium price change on the company’s website – http://www.uranium.info

The price increase resulted from a number of bids for an offering by a U.S. uranium producer of 260 thousand pounds of U3O8. According to Klingbiel, “The producer received multiple bids with the winning bid at, or very near, today’s Uranium Spot Price indicator of $72/pound.”

At least nine buyers remain active in the market seeking about 5 million pounds of U3O8, according to TradeTech, which releases the weekly spot uranium price indicator through widely followed industry magazine, Nuclear Market Review. Klingbiel reported this week’s auction of uranium created a ‘feeding frenzy’ among buyers, writing, “Meeting this expectation, competition was indeed fierce, as buyers exhibited a willingness to pay a strong premium in order to purchase material at a fixed price.”

Looking ahead, one U.S. utility hopes to secure 3.5 million pounds for delivery in 2012. A non-U.S. utility seeks to secure 10 million pounds for delivery starting in 2009. Another two non-U.S. utilities are attempting to purchase more than five million pounds in the long-term market, starting as early as 2009. Fifteen more utilities are evaluating long-term purchases for more than 35 million pounds for delivery between 2007 and 2020. Only one U.S.-based seller is currently evaluating bids for 1.2 million pounds of uranium for delivery as early as 2008.

Clearly, the spectacular price rally of 2006 will continue into early 2007 as the impact of the flooding at, and subsequent delays of uranium production from, Cameco Corp’s Cigar Lake project in northern Saskatchewan. Because of the past two week’s news reports, there was concern about the Department of Energy future auctioning from uranium inventories. These auctions may not begin to take place until mid 2007.

Opportunity in BioteQ

2006-12-14T08:22:00.000-05:00

This is not a biotechnology company, or perhaps I should see, I see it as a mining company and a sustainable technologies company. BioteQ (BQE.V, BTQNF) has developed a method to treat acid mine drainage water, producing clean water and salable metals in the process. The amount of metals extracted from the water more than covers the costs of building and operating the plant. The technology has been adopted or is being piloted by Phelps Dodge, Breakwater Resources, Inco, Placer Dome, Columbia Metals, Jiangxi Copper and Codelco. The US EPA approved the use of BioteQ's solution at a superfund site in Colorado.

This week, the company announced a definitive agreement with Jiangxi Copper, the largest copper producer in China. They will run a 50:50 JV venture to build and operate a plant currently under construction, with licensing terms negotiated for an additional five plants. The initial plant was designed to produce 1.5MM - 4.5MM pounds of copper/year. Operating costs are expected to be less than $0.60/pound.

The stock is now at an all-time high and looks like it is ready to make a move to a new level:

Gold

2006-12-12T23:22:00.001-05:00

Still in the channel...

Commander gets a whiff of U308...

2006-12-12T19:32:00.001-05:00

Keith Barron: A Geologist's View of the Gold Market

2006-12-10T10:20:00.000-05:00

Ask the Experts with Keith M. Barron, Ph.D.

April 1, 2006

Topic: A Look at the Gold Market From the Perspective of a Geologist

Note: With the benefit of hindsight, we can appreciate this interview more. We know now what Keith Barron must have known as he gave it, that Aurelian was on the verge of announcing one of the most significant exploration discoveries in many years. In this interview, Jim Puplava solicits Dr. Barron’s thoughts on everything from geology and exploration to market psychology and what to expect in the course of the gold bull market.

Jim Puplava: Well, we’re definitely in a bull market. Over the past five years we’ve seen the price of gold go from a low of $255 in April of 2001 to today’s record on Thursday of 588.10. We’ve seen silver prices go from $4.06 to $11.70. And the gold index, the AMEX gold index has gone from a low of 41 to 340. But this bull market is going to be different from previous bull markets in the past. And that’s mainly having to do with supply. To talk about that issue, joining me on the program today is Dr. Keith Barron, a Director of Aurelian Resources.

And Keith, I want to go back to a study that was done a couple of years ago that was done by a geologist by the name of Ralph Bullis, and he took a look…in many ways he reminds me of Matt Simmons, looking at all the world’s producing oil wells, he looked at all the world’s gold deposits. Either they were in production, pre-feasibility or discovery stage. And I wonder if I might start our discussion there, because it was a very telling study.

Keith Barron: Yeah, it certainly was. Actually there’s been a couple of other studies done. There was one by the BHP group too. Basically examining the number of deposits, the number of new discoveries that have been made, well, not new discoveries, but discoveries made over the last fifteen years, what their sizes are and really the consumption levels, the draw down of various deposits as we see in production scenarios today. Production of the major companies is pretty healthy and if you want to replace those deposits, a lot of people out there in the investing community don’t realize that a mine is what we call a “wasting asset”. Meaning that, when you start mining it from day one, eventually it’s going to run out. And these things always do run out. Some of them carry on for a hundred years like Homestake, but the typical life for a gold mine is about eight years. And that’s pretty much the industry norm.

And there really haven’t been a lot of big, monster deposits found in the last five, six years. And, you know, some of the huge ones that we had back in the early 90s, like the Pierina deposit which ended up being 12 million ounces, Yanacocha, which is huge, that’s like, I think that’s well over 10, maybe getting up to 15 million ounces, maybe even larger than that, they simply haven’t been found in the last five, six years. I think we’ve had three discoveries that have been in the 5 million ounce realm. And that’s it. A lot of that’s got to do with the fact that there was very, very little exploration activity out there when the gold price was down in the dumps, in the $250-260 range, and it really had to spike up above $350, $375, $400 to start to jump-start that cycle again.

JP: I want to come to that because we’ve spent a lot of money in exploration over the last five years but despite the amount of money that’s been spent on exploration, we haven’t had these major discoveries. In other words we haven’t found a North Sea or a North Slope or a Ghawar. Keith, is that because we don’t have access to certain areas of the world. For example, that’s an argument I hear about the oil industry, that we don’t have access to all the Middle East as we did say in the 40s and 50s. We don’t have access to Russia. Is it one of just having access do you think?

KB: Well that’s certainly one component. And part of that access is a profusion of new national parks and new wildlife sanctuaries and also jurisdictions in the world where the chances are if you make a discovery you’re going to simply come up against a lawsuit by a number of environmental groups. But all that being said, I think when this cycle restarted, and it really did start to take off around 2003, we saw a lot of junior companies simply going out there and picking up old discoveries, some really rather tired things that have been kicked around for a long time because they could quickly and easily do it and make some coin in the marketplace.

It does take a number of years of sustained exploration activity to work these things up and to find new deposits. And I think we’re starting to see things bear fruit now. But all that being said, I do think that as far as the industry goes, the low-hanging fruit is long gone. I think that a lot of the easy parts of the world have been walked over, they’ve been looked at numerous times it’s getting more and more expensive to find these deposits. Companies have to go deeper. They have to use sophisticated techniques like geophysics and geochemistry to find these things. And it’s simply not a case of walking over the ground and stumbling over a quartz vein full of gold and yelling “Eureka!” [laughs]. Those times are largely past us by now.

So I think that as we go forward and we look towards the future in the gold mining and silver mining industries, I think the companies are going to have to start to get a little more realistic about what their expectations are. And in the latter couple of years we’ve seen a lot of the major companies, a lot of the senior producers up their, I guess, qualifications for a deposit that they want to get interested in. And when I started in this business back in the early 80s, companies were looking at one million ounces. Soon thereafter it became two and then it went to three. And for a lot of them now, the threshold’s at five. Five million ounces or they’re not going to play. Well, five million ounces…those types of deposits are scarce as hen’s teeth [laughs]. And certainly the record of discovery over the last five, six years is bearing that out.

So I really do think that the companies are going to have to set their sights lower and start being a little more realistic and even start looking at deposits that are one million ounces or perhaps even smaller. You know, quite often the companies are fixated on the number of ounces in the ground, but you have to think about quality ounces, too. And there are a lot of deposits out there that are quite lucrative that are only a million ounces. They’re high grade things, they may not have a long duration mine life, but nevertheless you can make a nice tidy sum of money at them. And I think really that’s where the future of the industry’s headed.

JP: You know, you’ve been in this industry for twenty-five years. You’ve worked at the majors such as Goldfields. And you just made a comment that when you were in the industry, a one million ounce deposit or one million ounces of production, I mean, if you take a look at Newmont’s production going back to 1988, it was under a million ounces a year.

KB: Um huh. Yeah, indeed. Well, you know, the way that it works in the market place these days, if you’re…the larger you are, the more money you attract from the funds and that’s one reason why these companies have very much been engaged in mergers and acquisitions and gobbling each other up. Because size in the resource sector really, really does matter. So, the kingpins, the Newmonts and the Barricks of the world are the ones who are going to attract the attention from the investment bankers. And not so much the smaller players. So that’s one reason why…you know, to significantly grow your ounces on a percentage basis, you have to go out and acquire these large reserves.

So, really what we’ve seen over the last couple of years now has been a shift away from actual exploration, to acquisition. And companies have gone out and they’ve started to gobble each other. And we’ve seen that, we saw Homestake go. Just very recently we saw Placer now go. And I think this is a trend that’s going to continue, if these senior producers continue to be fixated on having to grow their resource base by huge increments.

JP: I want to contrast today’s gold market with what went on in let’s say the late 60s and the 70s, because during that period of time there was no shortage of supply, the US even had stockpiles of silver. This time around, I wonder if you might speak for example, what’s going on in South Africa. One of the largest producers of gold in the world and what’s happening on the supply side. I wonder if you’d address that for a moment.

KB: Well, it’s really quite interesting. There’s a lot of difference now in the market place from what we saw back in those days. And a lot of it has got to do with the fact that the price of gold is quoted in US dollars. So if you’re a producer in South Africa, for instance, you have to pay your costs, your labor costs, in Rand and the Rand is appreciating against the US dollar, meaning it’s going up in US dollar terms, and the gold price is not going up in US dollar terms as fast, then you’re going to end up being a loser. And some of the companies working in foreign jurisdictions like South Africa haven’t been able to capitalize on the gains in the gold price because the local domestic currency has been climbing very fast against the US buck. That’s a very major consideration. So this is why some companies are starting to, not simply abandon, but start to look for other greener pastures, away from jurisdictions like South Africa. Even Canada is pretty expensive for some of the companies and they go and look for other places to go and mine.

I think that there’s some very interesting stuff going on now, though. And I think a real big trigger as to what’s happening in the market place has been this latest…this recent acquisition of Virginia Gold by Goldcorp. And I don’t know if you’re familiar with this Jim, I’m sure that some of your listeners are, but this is a real significant, maybe even a bellwether event, because Virginia Gold had a deposit in Quebec, in Canada called the Eleonore Project and Goldcorp took the company out even before there was a resource estimate on the thing.

[Note: On September 12, 2006, Aurelian Resources appointed Andre Gaumond, President and CEO of Virginia Gold to their Board of Directors.]

Now there was a lot of rumor on the street, a lot of very good drill holes, a lot of very good results that came out and people were thinking it looked like maybe four million ounces or so. And it got snapped up before there was actually a number put to it. And I think this is very significant. This is telling us that some people in the industry realize the problem here, realize that these things, these big deposits are scarce as hen’s teeth and if they get wind that a little company is on to one of them, they’re going to get snapped up early. I think this is really, really interesting.

JP: And that’s the surprising thing. I get reports, I take a look at gold production, Keith, I take a look at all the majors, what’s happening to their production. I’m taking a look at all the rising costs, declining production, declining profit margins and then I’m also looking at, just as I am in the oil industry, you look at replacement of reserves and how many of these large majors are replacing their reserves every year? They’re not.

KB: They’re not at all, in fact they’re reserve base, their profile is declining for most of them. There’s not just currency considerations, there are huge costs, especially due to fuel and we saw the gold price spike up today but we also saw the oil price spiking up today. So, you know for a producer, it’s expensive to produce. Diesel, gasoline, lubricants, rubber tires which are made out of petrochemicals. All of this stuff is getting very, very expensive and it adds to the cost of production.

JP: You know another aspect to this that I see is the human element. And that is, a shortage of qualified people: geologists, I mean, who wanted to go in the gold-mining industry or the mining industry in the 90s? If you were studying, you wanted to become a programmer, get in to technology or go on Wall Street. How many people wanted to go dig for oil or for that matter, copper or gold?

KB: Well, I did, but I was one of the few [laughs]. But, I taught in the university for a little while, and I remember back in the late 80’s there were very few students around. There were lots of students being openly courted by…to go in to environmental science and things like that. Geology just wasn’t sexy enough. And there’s been a lot of comment in the last year in the industry that you know, 2010, 2015 we’re going to have real problems in the industry because we’re just simply not going to have the personnel there.

JP: If you were advising somebody on a career, would you tell them to go in this industry, today? Because the very same things you’re saying about the mining industry people in the oil industry are echoing the same sentiments.

KB: Well, yes, that’s true. And both industries, as you know, are very cyclical. And it’s not for everyone’s palate, but they also can be very lucrative and very exciting. I just love it. I think it’s great!

JP: Keith I want to move on to another element about this bull market, because everybody’s talking about central banks are tightening, but I looked at the money supply globally, we’re a world run on fiat currencies. European money supply growth is over 8% and at the least the last time they reported M-3 growth here in the United States, we’re no longer reporting it, the M-3 money supply was growing at 8%, money supply is growing in China, it’s growing in Japan. Yes, they’re raising interest rates, but I have a chart we’re going to publish with this week’s program, it shows interest rates throughout the 70s and they were rising throughout the 70s but at the same time the money supply almost went up five, six-fold. So if we look at, globally, do you think one of the reasons gold is rising, is people realize that we live in a world today where all we’re seeing is depreciation of fiat currencies?

KB: Well, I think that’s certainly the case and gold and silver for thousands of years have been regarded as a safe haven. And we’ve seen many cases in history where countries have inflated their money supply right away to nothing and the ones who had gold and silver hard assets were the ones who ended up surviving the crisis very, very well. In fact, some of them did extremely well. You know during the Great Depression in the US, Homestake, for instance. was doing exceptionally well. Homestake Mining, very famous gold mining company.

I think, you know the sentiment in the US…there’s a lot of propaganda that’s spread, in fact, I’ve read some of it in the newspaper this morning, saying well, people aren’t taking inflationary concerns very seriously. And a couple of guys…they always find a couple of pundits somewhere who say, ah, you know, it doesn’t really matter, it doesn’t matter that the Fed’s raising rates or anything like this. But really it does matter. And certainly people outside of the US understand this.

You know, the US is in a heck of a pickle with the debt situation and the trade imbalance. Most of the debt’s owned by the Chinese and other Asian countries and I think that’s a very, very precarious situation. And it’s only by the good graces of them that this money is loaned back to the US and can keep the whole system going. But I think in the longer term, I don’t see President Bush slowing down his expenditure on the war efforts, I don’t see him saying to everyone, well we have to bring austerity measures in folks, and people are going to have to live within their means and we’re going to encourage people to start saving more money, because we don’t know if you’re going to have a pension when you get to be sixty-five. That’s not going to happen. I think that Mr. Bernanke is really quite poised to do the famous helicopter drop of money. And it’s been throughout history, if you have to take a serious dose of medicine, and pass that on to the voters to correct a fiscal imbalance, the much easier and more palatable solution is to spend it away. And I think that’s what’s going to happen.

JP: I think that explains why we’re seeing gold break out against most major currencies. Keith, I want to come back to gold exploration, because you’re a geologist and that’s your expertise. Are there places in the world today that maybe we don’t have access to that we know there’s gold or silver, but we just don’t have access to because of political reasons or environmental reasons. In other words are there spots out there?

KB: Oh, I’d say there’s lots of spots. I’d say that there’s lots of places, say in the Middle East that are very interesting to go and look at. But you’d have a very hard time convincing a Board of Directors to go and spend money there.

JP: [laughing] I wonder why.

KB: I wonder why, yeah, ha ha. Places with extreme political risk. You know, as time goes by, more and more of these frontier areas are going…they’re being investigated, it’s getting harder and harder to find places that haven’t been touched before.

JP: Another aspect to that is I’ve been told today that realistically, where, let’s say if you were to go back two decades ago, it might have taken five years or maybe even less from the time of discovery to the time of production. I am told by people in the industry today that you’re even looking at closer to ten years today. So, even if we were to go out and discover a North Slope or a North Sea or a Ghawar today, it would be ten years or it could be up to ten years or more before we could bring it on stream.

KB: Yeah, I think that’s certainly the case. You know, this is not the 1960s, there’s a high level of environmental consciousness out there, not just from the environmental groups, I’m talking about from the actual companies and the people who perform the work, such as myself. We’re all aware of having to protect the environment and do things in a responsible manner and this kind of stuff takes time.

Also, in the late 90s, we did live through a very large fraud that was perpetrated in Indonesia and now there have been all kinds of safeguards put in place on various countries, Australia, Britain, Canada, the US, their mining industries are all much more heavily regulated. And in terms of going through the various stages of exploration and reporting and raising money and doing that kind of stuff, companies have to be a lot more careful, they have to be a lot more professional in their work, they have to record things a lot better, and keep better records and all that stuff takes time, too.

Like for instance, talking in terms of how long it takes to get a big gold mine up and running, Barrick has a fabulous deposit called Pascua Lama which is right on the border between Argentina and Chile. And to get at it, they’re going to have to move a glacier. Now this has been a point of contention with several different groups, I understand that in the engineering sense it’s not a huge thing that has to be overcome. But obviously this kind of thing has to be done with some sensitivity and it needs comment and discussion from the various parties who are stakeholders in this kind of stuff. And all this does take time. So I think it’s going to take a number of years before we see that one getting up and into production, even though it’s been known for quite some time now.

JP: You know, another aspect about this market, we’ve talked about the majors not being able to replace their reserves, we’ve talked about that there just aren’t that many five million ounce plus gold deposits out there. Yet, you have people like for example, you have the head of Goldfields talking about we’re revising our acquisition targets and we’re looking at five-million ounce properties plus. Does he see something or know something that none of us are aware of?

KB: I doubt it. He might be taking a little bit of flack from the operations in South Africa that aren’t making a lot of money. To go back to what I said before, it really depends on what jurisdiction you’re in. If you have your gold mine, you make a fabulous new discovery in the Carlin Trend in Nevada, and your costs are in US dollars and you get paid in US dollars for your gold, you’re in fat city, that’s great! If you’re working in a country where the currency is pegged to the US dollar and gold keeps rising against the US dollar, again, you’re doing pretty well. But if you’re in another jurisdiction where the currency is very quickly appreciating against the US dollar, faster than the gold price is rising in US dollars, then you can actually be a net loser.

JP: Let’s take a look at the exploration side. Let’s say I’m running a gold fund, a gold account and I want to send you out on a project to look at it before I finance it or before I invest in it. Why don’t you take us through, from your perspective, what do you look for, as a geologist, if you’re doing due diligence on a property?

KB: Well, I would say, one of the most important things that I always look at first, are the people who are involved. And I’m not just talking about the management who are in the head office, I’m talking about people on the ground. I like companies that have their own personnel, rather than employing contractors or contracting firms. Because, quite often people who are on the site, if they work for the company, they’re probably getting rewarded with some stock options, they have a vested interest in making it work and they all work a little bit harder, I think, than maybe disinterested contractors would. So I think that’s important. It’s very important to look into their backgrounds and at their experience and see where they’ve been and how many years they’ve spent in the business.

And then, looking at the project itself, there’s always…location is an extremely important thing, the jurisdiction where it is, political jurisdiction, infrastructure, how close is it to sources of power, roads, air strips, things like that. What’s the availability of skilled personnel in the country? Can you find a source of workers for the mine nearby or do you have to bring them in from another country? That’s very important. I know there are some companies working in Mali in West Africa that had to bring everything in by container. Everything. Like right down to the nuts and bolts, just because they couldn’t source it locally. And that kind of stuff’s expensive to do.

So that’s a real important consideration. A lot of people e-mail me and they ask me about political risk and they say “You know, we’d be a lot happier if you had a project that was in the US or Canada because of perceived political risk in places like Latin America. And I think, you know, that is a concern. But I also think that projects in North America tend to take a lot longer to get permitted and they usually run into a bunch of nuisance lawsuits. And that’s a consideration as well. So you have to really take these things on balance. There are lots of deposits that are amenable to open-pit extraction, or underground extraction, it really depends on the nature of the mineralization, the grade, the depth, to where it’s being encountered. Is there past mining activity on the property, are there potential liabilities from old workings, environmental liabilities or something that might be unsafe in some manner? There’s a lot of considerations. Each one you have to take on its own merits.

JP: Keith, what are you going to see if you were going out to view a project, you just talked about the company having its own personnel, environmental restrictions, things of that nature, but let’s that I’m an analyst or a newsletter writer, I’m not a geologist, I’m going out to a project. What are thing you’re going to pick up on that perhaps, I wouldn’t see?

KB: Well, most of the analysts that I run into actually do have a geological background. They might have put a couple of years in to the business before going in to the banking side or the investment side. So a lot of these guys certainly know the buzzwords and the right questions to ask. I guess there are a number of things. I know certainly I can go through a press release, there are often things that are not implicitly said there are sometimes errors of omission [laughs] in press releases.

JP: What we don’t tell you that you don’t need to know, huh?

KB: That’s right. And that’s a…well, here’s a for instance and this is something that I ran into back in the late 90s. It was a company that had a copper deposit in Kazakhstan in Central Asia. And they were talking the thing up, talking about it like it was going to be a huge open pit mine. Now they never ever said it was amenable to open-pit, but they certainly gave that impression. And when you actually went to the information that they released in their filings, they would always give a percentage of copper and then an interval…not the interval, but a width. So they would say “We have 256 metres of say, 1.4% copper.” Now they didn’t say that was starting at around 420, 450 metres below the surface.

Now that’s very, very important and very significant for some of us in the business because we know that’s about the limit that you can go on an open-pit mine. And there’s not going to be any company in the world that’s going to move 450 metres of waste rock which has no value, to get at the goodie zone. So really, that property was quite valueless. And there were a bunch of guys who were bagging the market on it. So, you know, we call these things sins of omission, and they’re out there. Certainly the lay person, if you read enough stuff and you make yourself familiar with the business, you can pick these things up. You do not have to be a university trained professional to pick up on this. Really a lot of companies have cleaned up their acts since the mid 90s, early 90s, there’s not much of that kind of stuff that goes on, but every now and then I do see things like that.

JP: You know, one aspect that has struck me, Keith, is I believe in this bull market that there the juniors are going to be the place to be. I mean, that’s where you’re going to see the growth. Whether it’s a junior producer that can go from, I don’t know, 25, 50,000 ounces of production to maybe a hundred, two hundred. Or maybe a 200,000 ounce producer that goes to 500. What are the key things that you would be looking at if you were investing your own money in a junior.

KB: Well, I think one very important thing is blue sky. There are a number of projects out there that have been shopped around numerous times, have had lots and lots of exploration done on them and really they’re at a stage where there’s not much blue sky potential in them. Meaning there’s not a lot of expectation that they’re going to come up with something that’s going to be huge and big and new and not seen before.

Let me just back track a little bit, let me back track here. A company, XYZ Company goes in to Nevada and they pick up a property. They’ll go and do some preliminary work on it and they’ll do a financing and they’ll raise a bunch of money and they’ll go through one season of exploration and exploration in northern Nevada certainly is quite seasonal. Let’s say those results are…they’re not good, they’re not bad, but they haven’t come up with a real discovery yet. So they go ahead and they go into a second year of exploration. By the end of that second year they might need to have to go out and raise some more money again. So they’ll have to dilute the share price, raise the money and have another kick at this thing. And when companies have had about three or four seasons of exploration on the property and they’re not finding anything new or they’re not having success, then really it’s time to dump them. Unless, unless they’ve been smart enough to go out there and get themselves another project or a stable of projects and they can continue the thing going.

Exploration’s very much…I like the, what we call the Shotgun Approach in exploration. And the Shotgun Approach is two different things or it can be done in two different ways. You can have a whole stable of projects in different places in the world or different countries, different regions of a country and do it that way. Or you can have a very big land position in a very prospective area. And then send your geologists out to all our corners of it and explore it that way. And that’s how you maximize your chances of discovery. It’s putting people on the ground, doing the work, getting the exploration done, especially in new promising areas and coming up with new stuff.

JP: What about development plays, where you take a company that perhaps is drilling out and developing a piece of a property, they have a sizable ore deposit. They also have a large enough land package so they’ve got other discoveries that they’ve made on the horizon. In your mind, what make a company attractive for a takeover?

KB: Well the scenario you just discussed was exactly what Virginia Gold was when it got taken out. It was a company that had been very successful finding gold and base metals in various places. And they had one exceptional project that looked like it was going to be a multi-million ounce producer and that’s why it got scooped up. So, a great scenario, great package of land, lots and lots of blue sky and it’s an area that Goldcorp can be looking at for years. Or, you know, Goldcorp could choose to, you know, get something to a certain stage and vend it off or vend an interest to somebody else and develop it with partners. It gives companies a lot of freedom of choice and a lot of ways to move.

JP: Keith what about scenarios where you have a deposit that is a long-life deposit or that is a sizable one, but it’s also in a more politically stable area of the world? For example, I would be somewhat reluctant to go into Mongolia right now or, let’s say, Russia.

KB: Well, certainly those are extremely prospective areas. Parts of Russia have got massive deposits in them. Mongolia, also, an extremely promising place, but we had the Parliament dissolved in Mongolia, I think it was last month, in February. Before that there were discussions on clawing back 30% of deposits, the government basically re-writing the land…or the mining tenure law. And these places have considerable risk, they just haven’t matured enough.

But there are other jurisdictions in the world, right now I’m involved in Guyana, I’m also involved in Ecuador. I think both of them are great places to be. Guyana has a major bauxite producer there now. They’ve had a gold mine working there for fifteen years. A Quebec company, Cambior, has been active there. Ecuador has a number of major oil, North American oil companies working there and they’ve been there since 1969. So, there’s proven track record of developing resources and being able to repatriate your money, get your profits out and do business. And those are the sorts of regimes that I prefer to go and tackle.

JP: Keith, you’ve been in this business, what, twenty-five, thirty years now?

KB: Um-huh, twenty-five.

JP: What would you say is the most important thing that you’ve learned from a geologist’s point of view?

KB: Oh, boy! [laughs] There’s so many different things…

JP: Top of the list…

KB: Always keep your mind open to new things. We’ve seen various things…since I started in this business, there’s been a lot of discoveries of different commodities made in parts of the world that we thought didn’t have any potential. Like for instance, the diamond deposits found in the Northwest Territories in Canada. And I remember when I was in university for my Bachelor’s degree, we were told, really, you should just write that place off, it doesn’t have any potential for that kind of stuff. And now Canada produces 4% of the world’s diamonds. So there’s always things that are coming up, there’s always new ways of looking at things and also new technologies of extraction to get the goodies out of the ground.

So, like for instance, right now there are a lot of people interested in uranium deposits. There has been no exploration done, really, on uranium from really the early 80s. And there’s a lot of new concepts and new techniques, there’s something called in situ leach that was never used, back in the 80’s, that’s revolutionizing the uranium extraction industry. And we could very much see similar sorts of things shaping up at some point for the gold and silver industries. Who knows what’s on the horizon?

JP: Alright, that’s from a geological point of view. What about from an investment point of view?

KB: Well I think that this is a time that we won’t see for many generations to come. I think that the stars have aligned themselves to such an extent…I really do think that the huge gains that were made in the gold and silver markets back in ’73 and then again in ’79, ’80…all of that is going to be surpassed. I think there are a lot of people out there, a lot of investors now who are much more comfortable with investing money in the stock market, there are more players in the stock market than ever before, a higher proportion of the population. And because really due to globalization and the Internet and technology, you’re able to…for instance, I can invest in South African gold companies, I can invest in companies in Australia, just by the click of a mouse. It really has revolutionized things.

I think what we could see here, and I’ve talked about this on my own web site a couple of times, I think that what we could see, if this market really starts to break out, you could see something that resembles the Dot.Com boom in the gold and silver market. Right now there’s a very, very small percentage of the investing public that have caught on to the massive rises and gains in the gold and silver market and you know, it’s not being broadcast by BubbleVision on the TV, but it is getting around by word of mouth and certainly by your program, Jim. And the word’s getting around and it’s going to spread like wildfire. And when this thing really starts to take off, I think you’re going to see some massive gains in the market place.

JP: You know I couldn’t agree more. What really surprises me, Keith, if you take the AMEX gold index, which bottomed in the first part of 2001 at 41, on the day you and I are talking on Thursday, the AMEX gold index hit 340.81. That’s an increase of 731%. In the last five years. Now imagine what they would be doing on CNBC if tech stocks were up 731…I mean, Cramer would be doing headstands.

KB: He certainly would! He’d be shouting even louder than usual. It amazes me that this stuff doesn’t happen. But, unfortunately it’s going to have to keep moving through cocktail chatter and people you meet on the bus and listening to great programs like yours and things like that and that’s how the word’s going to have to get out, because the mainstream media doesn’t seem to want to carry this stuff. In time they will. In time it’s going to be so big and so hot that it’s going to be impossible to ignore. And then they’re all going to start getting on the bandwagon. In fact, they’re going to start fighting for position [laughs] to report these various things. I really do think that’s going to happen. I was around in ’79 and ’80 when gold went up to eight hundred bucks and silver took out fifty bucks. I just think to myself “Good Lord, what would happen if you had the Internet around, back in those days?” And I think that kind of stuff is headed our way. I think you’re going to see some of the valuations of these companies just take off.

JP: You know, the thing that strikes me about that, one of the turning points in my career, was watching what happened to the stock market from 1982 to 1995, you made good money if you were investing in the stock market. But the final one third, when the public came in, 95% of the money that came in to mutual funds came in from ’95 to 2000. And what I can’t help but think about, Keith, is look how small…I mean, we could take and roll up all the world’s gold mining companies and they would be less than the value of General Electric or Microsoft. So imagine what happens when we get to Stage Three in this bull market?

KB: Yeah. And a lot of people have talked about that, that’s what they call in markets the manic stage. And it’s going to get there. And that’s the stage when you’re going to be having a sandwich during your lunch hour and you’re going to be overhearing people talking about the gold price. You’ll hear it talked about on the subway, you’ll hear about it in the elevator, going up to your office. And this is what’s going to happen. And I think it’s coming. There’s just so many signs out there. Just in the last couple of weeks we’ve seen what’s happened with the restating of results that’s coming from GM and you know, I look at that situation and I think, boy, you know those poor people who are employed by GM, what’s going to happen to them? Somebody’s going to have to come in and rescue their pensions or something and it’s going to be done with public money. Mr. Bernanke is going to open the pockets and spread his largesse and the M-3 money supply, even though it’s not quoted anymore, is just going to burgeon. And certainly everyone knows that that’s going to happen. I think that the US housing market’s going to roll over at some point. I don’t know what’s going to happen when a lot of the fixed-rates kick in on mortgages. Who knows what’s going to happen? I think all the signs are out there for trouble in broad market investments, trouble in industry, trouble in all kinds of different levels. And people will be running to gold and silver as safe havens. And that’s what is going to fire this thing. It’s already happened, it’s already started, it’s just going to keep picking up steam.

JP: Yeah, one would have thought, doubling of gold prices, more than doubling of silver, gold stocks up 730% would capture people’s attention, but I don’t think, maybe we’re too early yet, but Keith, as we close, why don’t you tell people about your website. You write pieces, some of it published on our web site and tell people about the companies you work with.

KB: Well, okay, I have my own web site, it’s called Straight Talk on Mining.com. I’ve got a number of different pieces on there that people can download for free and I just write it when I get the chance. It’s a completely free site and I write about general things that interest me, mining, there’s a little bit of geology on there, I try not to make it too tough for the lay person to understand. So I do that just as a hobby. I’m a Director of Aurelian Resources which is a gold and copper exploration company working in Ecuador. We’re in to a new drilling program right now and we’ve been drilling for a few weeks here and we think we’re going to have some press out shortly and we’re listed on the TSX-V. Mostly a gold-focused company but we do have some copper assets too.

And I’ve also been working on a uranium play, in a different company, in Guyana. That company’s called U208 Corp. It’s not public yet but we’re hoping to get it public sometime later on this year. U308Corp.com is the web site for that company and that web site’s under construction so we’re getting that up and running too. So I’m having a lot of fun. I mean, this is a great time to be in the resource business.

JP: Well I couldn’t agree more. Well, Keith, I want to thank you for joining us on the Financial Sense Newshour and sharing your knowledge with our listeners. I want to wish you all the best and I hope you’ll come back and talk to us.

KB: Well it’s certainly been my pleasure Jim and I’d be more than happy to come back any time.

Interview Audio: http://www.financialsense.com/Experts/2006/Barron.html

Dr. Keith Barron’s FSO Guest Editorials: http://www.financialsense.com/editorials/barron/main.htm

JER Envirotech - breaking out...

2006-12-08T17:15:00.000-05:00

Overview

Sometimes technicals and fundamentals come together in a powerful way. Those are the set-ups that I like the best. I believe that JER.V is currently presenting such an opportunity.

Background

I have been following JER Envirotech since early 2004. The company was brought to my attention by one of the VC's that is involved with Carmanah Technologies. Clearly, sustainable technologies is an area where they focus. I found it attractive as an investment for several reasons. They had already completed a few years of R&D and were ready to move towards production. The intellectual property was developed in conjunction with the Canadian government, which would be important for a small company. The markets were easily identifiable, ripe and massive.

Corporate Thumbnail

JER manufactures wood-thermoplastic composites, also known as WPC.
JER's composites come in two forms: pelletized for injection molding applications and extruded 4’ x 8’ panel board

The composite combines polypropylene and organic fibers: sawdust, rice husk, palm fiber, coconut fiber, etc.

Patents were developed in conjunction with Canadian Natural Resources Council. Canadian government owns the IP, licensed exclusively to JER for ten years.

First production plant established in 2005 in Delta, BC.

Joint ventures created to build plants in Malaysia, Philippines, India (China and Indonesia in the works).

So What?

So, if the story is so good, why does the chart look so bad? In September 2005, the stock broke out and doubled in three months. After hitting a high of 1.45 in November, it has not since regained that high. The stock looked like it was recovering in August but by September, it had risen up to the downtrend line and was turned back there. On the next leg down, though, it made a higher low and has been consolidating since then, coiling tighter and tighter.

Over the past several months, progress at JER has stalled. The equipment that is built for JER’s production facilities is highly-specialized. The lines that they obtained to produce the panel board were delivered with a die that cut 4’ widths exactly. The problem is, JER needed boards slightly wider than 4’, so that the edges could be trimmed for perfect size and consistency. Re-ordering the dies has meant months of delays in starting panel board production at the plant in Canada and in Malaysia. JER has not been able to secure large orders without the production capability in place and fully operational.

The dies were scheduled to be delivered at the end of November. I suspect that the dies were delivered and that is the reason that the volume spiked today. Once the panel board lines are up and running then we should know shortly thereafter what the order flow is going to be. There’s a lot more to the story, but I thought I should keep this as brief.

Stealth Minerals exits cloaking mode...

2006-12-08T11:36:00.000-05:00

Silver - daily chart

2006-12-07T08:07:00.000-05:00

Silver is trading in sync with gold. Pulling back from the top of the channel. Silver tested under the channel this morning ($13.41) but has recovered back within the channel. Still trading well above the 50 EMA ($12.25).

Gold - daily chart

2006-12-07T08:04:00.000-05:00

Gold is pulling back from the top of the channel, moving averages are still intact and the 50 EMA is now above the 100. Still looks healthy, though a test of the 100 is not out of the question.

Pediment Exploration

2006-12-07T00:02:00.000-05:00

Weekly copper...

2006-12-06T23:56:00.000-05:00

Teck Cominco - Cup & Handle

2006-12-06T23:46:00.000-05:00

The Big Picture for Investors

2006-12-03T10:58:00.000-05:00

One of the people that has had a major influence on my thinking about the economy, the market and portfolio strategy over the past few years is Don Coxe. Don is Chairman of Harris Investment Management and is responsible for Global Portfolio Strategy at BMO Capital Markets. I began following Don's work shortly after I discovered the world of base metals towards the end of 2002. Since that time, I have enjoyed listening to his weekly conference calls and reading his monthly publications of Basic Points.

I did not intend to become the unofficial transcriber of the conference calls, but backed into it first by trying to take detailed notes which then morphed into a full-blown transcription. I now have a colleague that shares the effort, but it is still a time-consuming undertaking. I have pasted the most recent call below. He's not brief in his comments, but I find it is usually worth the effort. What I find particularly valuable about Don's work is that he always applies his broad and deep insights to actionable recommendations. Enjoy...

Nesbitt Burns Institutional Client Conference Call for December 1, 2006

Don Coxe
Chicago

December 1st, 2006

“Endangered Species”

Thank you all for tuning into the call which comes to you not from India but from Chicago. And, yes, I had a spectacular experience in the intervening month since we’ve communicated with each other. That will be all unfolding in the December issue of Basic Points, but what we want to talk about today, focus on the big acquisition that has been made while we were away, which was the agreement for Phelps Dodge to be acquired by Freeport. And the chart that we faxed out was Phelps Dodge and our tag line was “Endangered Species”.

So, what we want to do is reiterate, I think, the importance of the thesis we’ve had for the last few years, which is, that what the mining industry in this cycle will not be doing is anything like what it did in previous cycles and therefore that the fundamental valuation of these stocks continue to be out of whack and that the people who best understand that are other mining companies. And so what we have though is a situation where there just are not going to be many of them left.

Assuming this acquisition goes through, and there’s been rumors that either BHP or Rio Tinto or even Anglo American might come in and top the bid, but if we assume that’s not the case, then what we’ll have is there’ll be only one metal mining stock left in the S&P, which will be Freeport McMoran. And meanwhile, of course, in Canada, the two biggest metal mining stocks have been taken off the market, Inco and Falconbridge. And so that what we have is a situation in which if you have the kind of bullish attitude toward the base metal industry that we have been espousing for all this time, the range of options to you keep shrinking.

So on the one hand of course, we are pleased when the company who is left standing, which has the most conspicuously dubious management is being acquired, that Phelps Dodge, who managed to blow about a billion dollars of the stockholders money in betting against the price of copper going up and then proceeded to shock the market by joining in in a bid to acquire both Inco and Falconbridge based on the assumption that metals prices are going to stay high for years.

So, that, plus the fact that the company is committing to spending what they say is a billion dollars in developing a gigantic copper ore body in the Congo. And Freeport has said that their experience in operating mines in Indonesia, fits them for managing a mine in the Congo. What I think the truth of the matter is, is that the value of unhedged reserves in the ground in Arizona and in Chile that Phelps Dodge has, plus the fact that they’re buying it at about six times earnings, means that they can ignore this Congo operation entirely and still be buying it very very cheap.

But for those of you who have been listening to these calls faithfully over the years, then I assume that on the lines is a significant percentage of all the public stockholders in Phelps Dodge. And the question arises then, what do you do with the proceeds?

So now we look at the broader stock market and the US stock market which was on a tear is now suddenly starting to show signs of doubt about the US economy. Now we had these signs of doubt coming up from time to time in the last six months, but while I was away the stock market proceeded to put those aside. It also ignored the election outcome. Now this is the first election that I can recall in a long time where the Republicans getting clobbered by Democrats produced a rising stock market.

You can argue that that was the right outcome and certainly if there ever was a Congressional delegation that deserved to get a kick in the behind for its behavior it was the Congressional Republicans. But we’ve got a lot of stock market history that at least on a near-term basis that the investor class and that’s a group who gets polled in all the elections and that’s a group who owns ten thousand dollars or more of common stocks, the investor class has been second only to one subset of the population and that is those who go to church at least once a week, as being loyal Republicans.

And so, I haven’t seen how those who go to church once a week voted in the election because we were away for all of that, but it’s quite apparent that the investor class has become disenchanted and has assumed that the Democrats are going to be a cleansing force. And certainly on the evidence there’s nothing that you can argue hard with that proposition. But still, it was an interesting outcome that the stock market would be so strong after this.

Charles Rangel is going to be head of the Ways and Means Committee, and he is…you know he’s one of the old bulls of the Democratic Party. He’s always been one of my favorite Democrats because he’s such a colorful character. When they had the Democratic National Convention in Chicago ten years ago and he was being interviewed and he said “When I die, I want to be buried in Chicago so I can remain active in politics.” And that reflects the reality that the most conspicuously Democratic constituency in so many elections in Chicago, most notably the one in 1960, is a graveyard vote. But it’s good to have somebody who’s that candid about it. And he is a very attractive figure and you don’t stay in Washington as long as he has without learning how things are done.

So, I think in that sense, that the voters, the investors are probably doing the right thing in saying “Well, there will be lots of talk and so forth, but there’s not going to be anything radical done.” And so we look at the economy itself then. And we have been adopting, as you know, an attitude that the best way to play this is to be underweight US equities compared to global equities, particularly emerging markets and within equities to be way overweight the commodity stocks. But given that they are cyclicals, that what you do is you hedge, in a balanced portfolio, by owning long zero coupon bonds.

So that was the strategy that we’ve been annunciating over and over and over. And in looking at what happened while we were away, what seemed to happen was that you really didn’t need the hedge, but both sides of the hedge did very well, thank you. We’ve got a strong bond market and yet we also have a strong commodities market. And although the commodity stocks have fluctuated quite a bit, when I look at their prices, they’re pretty much where they were and they;’ve done reasonably well against the overall stock market.

So ordinarily with a hedge, you only expect to win on one side of it. So I don’t think that’s going to last. But what the currency markets are saying is that the US economy is going to be slow relative to other major industrial areas. If you take the latest figures out of the Euro zone, we have that rare experience where on a six month basis now, if you take their numbers and one assumes that they’ll get revised and massaged so one is cautious about taking them, the Euro zone has been growing faster than the US economy in that time. And since it has been more or less an article of faith that the Euro zone is a zone of stasis and the US is a dynamic and progressive area, that’s at least a blow to the American ego, but it’s also been reflected in the value of the American Dollar.

And the DX index, which is the one that’s measured against all of the major currencies is hovering near its long term support and if it breaks through that we’ve got a fairly high risk situation out there.

Now, what’s happened is the strength, though, has not been the Canadian Dollar. Because Canada is seen to have two arguments against it. One is that it’s a commodity currency and the other is that a third or so of Canadian GDP is exports to the US. So if you’re bet is that you want to get out of the weakening US economy at a time the Euro zone is as strong as its been relative to the US in many a year, you buy the Euro and then you can also buy the Yen. And the strength of the Yen is, I think, one reason why the US bond market has been so good. Because what that means is, at least at the margin, that The Great Symbiosis is intact.

Which is, that Japan and China will be buying Dollars. And although you never get the figures on these cash flows until well after the event, the fact that the Yen has moved up at the same time as the Ten Year Note has moved up, is the kind of related performance that we’ve seen a good part of the last few years. I’;ve been reading some of the markets commentary since I’ve been back and one of the thihngs they’re expressing is amazement that the US long bond market has done so well. The TLTs as I follow them are at a new high. And they’re saying “But gold is way up, so how can this be? If gold is up and the Dollar is down and the US economy is underperforming then why if the US Dollar is down, why would anybody be buying long US bonds?

So I think that the answer to that is first of all asset allocators within pure US Dollar portfolios, like the kind that Harris Investment Management manages and then more importantly though on a global basis what you have is that it still remains in Japan’s and China’s interest to cushion the fall of the Dollar. And although they keep talking about diversifying their currency exposure, insofar as their currencies are being managed strategically as opposed to maximizing profits in them, then they’ll be buying Dollars rather than Euros. And the Euro’s getting all the support it needs from genuine investors as opposed to those who have other skin in the game.

Well, anytime you’ve got a situation where oil is no longer looking like it’s going to touch fifty dollars and copper holding well above three dollars and zinc and other metals…nickel trading at all-time records, what you have is confirmation that the global economy, that is the economy outside the US, may well be stronger than people had thought and in which case what happens is that those people who had dumped the commodity stocks are going to be getting back in to them.

And now we come back to our theme. There are only a few names that large-cap investors can buy. There’s only been two base metal companies in the S&P ever since they took Inco out of it, when they created purely national S&Ps, when they became involved with Canada and Europe and so forth. So they kicked Inco out of the S&P, so that left Freeport and Phelps Dodge and we’re going to be down to Freeport.

Within the Canadian market, so few, and even when you start looking abroad, there’s been so much consolidation that for large-cap investors there are few options. And Freeport McMoran has the problem that, at least up until now, that their reserves were entirely in an area of the world that has political risk associated with it, namely Indonesia. Now they happen to be in a good island in Indonesia, from a political risk standpoint, but the central government is an unknown quantity and there’s allegations that they’ve been paying the cost of Indonesian troops to protect the mines and those things, I don’t know if those stories are true but you don’t operate what is the second biggest income generator for the Indonesian government, second only to Mobil’s natural gas operation, you don’t operate that in Indonesia without having a, shall we say, complex relationship with the people in Jakarta.

So, what Freeport is accomplishing here, and I think it’s a great acquisition for them, is that their total reserve picture now, will be balanced between areas of political risk. So if we assume that the United States and Chile are about as good as it gets in mining, so we assign those a Triple A status and then we put Indonesia in at a Double B Minus status and if we take the Congo in as Zed Plus status, then what we have overall is, you’ve got a company that’s going to have the largest copper reserves in the world outside the Chilean government’s Codelco and maybe as big as Codelco, with production on three continents, debt-free, that can be put on after the acquisition but that can be paid off in a hurry. So it’s going to be a core investment for global investors in looking at their bet on copper.

Now BHP is going to have Olympic Dam operating flat out which will mean that they will be a major factor, but since BHP has so many operations and with over a third of their revenues coming from oil and gas, it’s not a pure play.

Meanwhile, for Canadian investors, and for a lot of Canadians I’ve talked to, Phelps was their biggest foreign mine. Their attitude was, I don’t need to invest outside Canada to get exposure to the mining industry. Well, when Inco and Falconbridge get taken away, what that leaves you with is Teck Cominco, a wonderful company, but it’s very diversified and they didn’t get involved in the nickel mining operation despite their attempts. So they have a copper mine in BC, but it’s a short duration ore body. And beyond that, what they are is basically zinc and coal and they’re getting in to the oil sands, with gold it’s a fine portfolio, but it’s one…that’s the big-cap stock left in Canada. Beyond that then, you get in to middle and small-cap stocks and I’m no expert, but we’ve got lots of people who are. But it’s going to be difficult for major investors to put significant amounts of capital into the Lionore’s and FNX’s and Inmet Mining’s that are sort of left in the Canadian market.

Well it doesn't take much exposure to the third world to understand that the demands for commodities are going to continue to increase. So when you look at the market cap that's out there of the companies that are left standing in relation to the demand there is going to be over the next ten years for their products, we have what I still believe, and even more so believe, is the greatest mismatch between the value of the companies who have to find, develop and produce the metals that are needed and the demand out there from economies who absolutely have to have these metals.

So, my view then on endangered species, is that if you could have been in the St. Louis zoo in about 1908 if I remember, and suddenly realized that you had the last twelve passenger pigeons left alive, you'd have done everything you could to get them to breed. Instead they didn't think about that and they all died. So, here we have an industry that is absolutely necessary, that is crucial to the expansions that are going on in the dynamic economies of the world. Still crucial by the way - yes, admittedly because of the US housing situation, copper demand in this country is falling - but what we've got is a trivial market capitalization. And it can only get more intensified as a result of this merger.

So I counsel you that you should probably be thinking about it, those of you who have the Phelps or those of you who got out of the group entirely when Inco and Falconbridge were taken away, that you probably shouldn't be waiting too long to get that money redeployed within the group.

As far as the golds are concerned - and what we have always said was that you buy the golds for a matter of insurance - but there again what we're looking at is a factor of political risk. Glamis got taken out on the basis that they've got a big, big new mine in what has been deemed to be a political risk free country, Mexico. However, it's sad to report that all of a sudden Mexico is going from the absolutely safe area, to one where one has to ask a few questions.

And meanwhile in Latin America, we've got Hugo Chavez coming up for another ratification vote and one way or another he's going to be reconfirmed and he's going to be more of a problem than ever. And that leads us to the final group that we've talked about a lot and where there's been some news which was adverse - namely the oil sands stocks - because of the change in Canadian tax laws the second biggest market cap company of that group, the Canadian Oil Sands stock was hit and we'll be dealing more with that later I'm not in a position to comment on it now, but what this also illustrates is the endangered species concept. There are only a few oil sands stocks. And the news out of Russia, it gets even worse in terms of security.

So, as we come into this festive season where people are feeling positive about things, I think that it's a good time to take out the idea of the Sierra Club and the conservationists which say protect endangered species, but in this case you protect them in your own interest. That's it. Any questions?

Q&A

Question 1 (Douglas Elmore): Good morning, Don and welcome back. We have, we’re told by Craig Miller, a lot of Southwestern Resources which is a gold, silver and base metals company with properties in Yunan province in China in our retail system. And I'm worried about China and Peru, as I think I should be, and I just wonder if you can comment on that 'cause he's warned us that China wants to limit the number of juniors operating in China and rather have large-cap companies, which could make this a takeover target possibly. The geology seems to be there. So that's the China story. And then as far as Peru goes, I keep massaging my concerns by thinking that the Bank of Nova Scotia’s big in South America and in Peru by its banks, but should I feel comfortable. I just wondered what your thoughts might be about mining in China

DC: Okay, well, we'll talk about Peru first. There was a big sigh of relief in the mining industry when the supposed good guy, Garcia, won the election. And his C.V. included being associated with something like 5,000% inflation when he had previously been in power, but he was supposedly somebody who had learned from his experience. What was interesting that within a couple of weeks the mining industry expressed its gratitude for being saved from a foam-flecked Chavista, by announcing a voluntary grant of 3/4 of a billion dollars for education and health in the provinces where they operate. This is an epiphany, indeed.

The people in the mining industry that I know are fine people but that they all of a sudden discovered their enthusiasm for making gifts of these proportions and that they're not doing it. They're not building the hospitals and they're not building the schools but it's going to the government which shall we say reduces somewhat the amount of sense of charity that you might have in this whole but it suggests that maybe there was some coercion subtle or otherwise. Now, if you assume that there was some sort of coercion and this becomes a form of danegeld and what we know about it is you never stop. Once you've paid the danegeld, you never get rid of the Dane. So Peru I think, has at least a big question mark over it.

China, I am not in a position to comment there. I am in a position to comment on the treatment of mining companies in India but that's not what you asked. I'm of the view that the Chinese like to either deal with situations where it's Chinese companies who control the assets or deal with very big companies that go into joint ventures and do all the work and put up the capital and Chinese companies get a free ride. And none of this suggests to me that a small-cap company can assume that it’s going to be able to maintain things all the way through to production and they're going to get all the required licenses. Let's just say that there is a risk factor there which is truly unquantifiable and that this is not, therefore, a complete alternative as an investment.

You know, when you invest in gold mines, the risks you have are that the US dollar will be strong, that we will have neither inflation nor deflation, that the global economy will be strong and that people won't feel they need insurance and that therefore that there will not be an enthusiasm for gold. So those are enough risks it seemed to me without getting involved in it, because of what you are talking about political risks. The people that I know that have been goldbugs forever, are people who have a hatred of politics and politicians which is truly visceral. And that's because they assume that the central bankers of the G7 are collectively set out along with the politicians to debase and debauch the major currencies.

Well, if you have that kind of attitude towards governments that are democratically elected and where there is a lot of ways of analyzing how things are done seems to me that it is sort of perverse to go out and be putting your money into an area where you are dependent on Chinese politicians and Chinese bureaucrats' good faith. So those are the concerns I would have. Thanks for the question.

Next question?

Question (Noel Loehmer): Don, hi. I've been wanting to ask you this question. My overall question is, what will the effect of a falling US dollar have on growth in emerging markets and demand for resources in emerging markets. The question revolves around, starting with Stephanie Pomboy's comment that the deteriorating US credit environment that she expects from a housing bust will send liquidity in retreat. And if the US economy slows and rates fall, the US dollar will fall and the question also revolves around the idea that many emerging markets have currencies linked to the US dollar. So if their currencies are not inflation…if the economies are not inflated by the value of the US dollar but in fact are deflated by a falling US dollar then will that slow down their economies and will that slow down world demand for resources

DC: Well. there's a lot of subtext to your question. Let me just take sort of an overall view that as a general rule that we've known back over the decades, a falling US dollar providing it doesn't set off a huge rise in inflation, is good for emerging markets because emerging markets have a disproportionate percentage of their foreign debt in dollars And so therefore what it does is it reduces their carrying costs or indeed it improves their balance sheets. And that a strong US dollar is fundamentally negative for emerging markets.

And if you look at what happened in the debt crises of the last 30 years, that's been a very good rule. That what causes when you have this rule of that an emerging market is one that you cannot emerge from in an emergency, all of those occurred at a time of a strengthening US dollar. So if we have a gentle slide in the US dollar that doesn't send the global inflation rate up, then that's actually, for emerging markets as overall asset class, is good news.

Now you may say "Well, wait a minute they are exporting one way or another to the US," well it depends then we've got to start talking about the specifics of each economy as to what kinds of products they send to the US, that sort of thing. It's very complex. But what we can say without any question is that a very strong US dollar fundamentally reduces the amount of global liquidity. Because the way you measure global liquidity is in dollar terms.

So therefore, you look at an emerging economy and you take the money supply growth measured in their own currency as to what percentage growth there's been. Well if their currency has strengthened against the dollar then dollar-adjusted liquidity has grown. And that's actually a good way to look at it because again I'm just frankly looking at India, what happens in this kind of environment is it makes it easier for them to acquire assets abroad. It makes it easier for their people to travel abroad. All sorts of good things happen.

So I would not be concerned, given the fact that overall global inflation, I mean you look at Brazil which is 3 to 3 1/2% I mean the idea of Brazilian inflation being at that level is almost supernatural. The overall picture in the world of inflation is reassuring leaving the obvious disaster areas like Zimbabwe out of the calculation. So, of the things to worry about with a falling US dollar, I think low on your list should be emerging markets. I think that in general you can say based on four decades of history, that that will be likely at least modestly stimulative to the economies and a net benefit. Thank you. Any other questions?

Question (Robert Rosetti): Hi, Don, how are you doing and welcome back. You just covered what I wanted to talk about so, thanks again.

DC: Very good. Any other questions?

Question (Stephen Ottridge): Just wanted to get back to you with your view on the Congo. I think that when you're rating it with a "Z" whatever, that's rather the old page one news of the past and I think that you've got to look at the page 16 news of them having had quite a successful election. I saw the BBC news coverage on it talking about it's an absolute miracle and then there was another piece in the province of Ituri some more rebels have given up there. I don't think you should have it rated that far down the scale.

DC: Well, thank you, Stephen. My attitude towards the Congo is based on having followed things in that country since 1961 and that there have been all sorts of times where people have said "This time they're going to get it right." And I hope that's the case but it's not the kind of thing where I would want to bet a serious amount of personal money on the fact that this time it will be stable. And if it is a miracle, then it is truly a miracle. But I'm not sure what price/earnings ratio one should have on the assumption that the miracles will continue and I hope it works out that way. And I wasn't trying to be deliberately scornful but it's been an ongoing tragedy ever since Patrice Lumumba took over from the Belgians. And so, all bad stories eventually come to an end. And maybe this is a good story and if so this will be the second best news to come out of Africa in the last 15 years. The first of course being what's happened in South Africa. Let's hope that's what it is, but my "Z" rating is based on four decades where all hopes ended up getting dashed.

SO: But isn't that rather like the Phelps Dodge management? Copper has always been down low so it will always be low into the future?

DC: Well, you've got a good argument and I hope you're right, okay? I guess that my basic bias is to…I think that my enthusiasm for these commodity stocks means by definition, that I'm saying that you should be willing to take on what the markets think is a significant amount of commodity price risk and invest in them. And that I think I can get some kind of handle on. The political risk is something where I try to stay away from it if I can.

Maybe we’re going to get forced in to it. If all these companies get bought up and there's nothing but the Congo’s and Zimbabwe’s to invest in, then we're going to have to get good at that. But at the moment at least what I'm saying is if we can stick to the rule of investing in unhedged reserves in the ground in politically secure areas of the world, if you can find the ways of doing that, then that's what you should do. And particularly if you only have to pay price/earnings ratios like 5 to 9 times earnings for it. If we can get to the stage where you're paying 30 times earnings for copper in Arizona and 3 times earnings for copper in the Congo, maybe that's the time to make your move. Thanks, Stephen. Any other questions?

Operator: There are no further questions, Mr Coxe.

DC: Thank you all for tuning in. We'll talk to you at the regular time next week.

Don Coxe profile from the BMO websites:

Donald G.M. Coxe is Chairman and Chief Strategist of Harris Investment Management, and Chairman of Jones Heward Investments. Mr. Coxe has 27 years experience in institutional investing, including a decade as CEO of a Canadian investment counseling firm and six years on Wall Street as a 'sell-side' portfolio strategist advising institutional investors. In addition, Mr. Coxe has experience with pension fund planning, including liability analysis, and tactical asset allocation. His educational background includes an undergraduate degree from the University of Toronto and a law degree from Osgoode Hall Law School. Don joined Harris in September, 1993.

Vocabulary Builder

Danegeld: The Danegeld was an English tribute raised to pay off Viking raiders (usually led by the Danish kings) to save the land from being ravaged by the raiders. The term has come to be used as a warning and a criticism of paying any coercive payment whether in money or kind.

Reflections on New Orleans

2006-12-01T08:22:00.000-05:00

It's been a couple of weeks since I returned from New Orleans and I've had a chance to digest (or forget) much of what I heard there. One of the speakers noted that studies have shown that most people will forget 95% of what they heard within a few days. Fortunately, I found a write-up on the conference that provides a good overview of what was presented there.

Here are some of my own thoughts/impressions:

- The New Orleans Investment Conference was one of the best investment conferences that I have attended. Part of the reason for this may be because it costs a fair amount of money to get in, so I found that the other attendees I spoke with were pretty serious about what they were doing. The quality of the speakers at the conference was notable. In addition to the usual suspects who work the gold show circuit (Peter Grandich, Rick Rule, Doug Casey, etc.), there were some speakers who you rarely see at these shows, including Marc Faber, Jim Rogers and Dennis Gartman.

- There were fewer exhibitors at this show than most of the conferences I attend: PDAC and Cambridge House in Toronto, IIC in New York. I welcomed this as it gave the show a more intimate feel and it was not so overwhelming, especially lately as the size of the shows has been increasing. Over the course of 4-5 days, you had the opportunity to speak with almost every company present, if you wanted to do so. There were good opportunities to mingle with the exhibitors as well, since pretty much everybody was staying at the Marriott. The hotel bar was a good place to meet up with people at the end of the day in a more relaxed setting.

- I had the opportunity to spend some time with the GATA folks and went out to dinner with the entire GATA board as well as a couple of folks from Candente Resource Corp., a company that I have owned for a few years now. At dinner I sat across from Candente's CEO, Joey Freeze and her new VP of Operations. While Candente has been something of a laggard compared to some of the other juniors I own, I have never doubted that this team would work unflaggingly to create substantial shareholder value. Candente did a good job of getting their story out at the conference and I was not surprised to see the stock get a 21% bump on Friday, the day before the conference ended.

- One of the people I have gotten to know over the past couple of years, first on Internet message boards and then in person at conferences drove down from Toronto for the show. He has been focusing almost exclusively on Mexican gold and silver juniors for the past few years and has made several trips to mine sites to do some first-hand due diligence. He also authors articles for Resource World under the name "Mexico Mike". In his spare time, he hosts an investment discussion forum. Mike introduced me to the guys who run Baja Mining, who have a copper project in Baja that they are bringing to production. Haven't bought it yet, but it is on my watch list. Mike also is getting me in to a private placement for Bandera Gold. One of the advantages of getting to spend full-time in this area is getting to know people who have access to deals. Who you know can be just as significant for portfolio appreciation as what you know, I believe.

- New Orleans seemed to me like a city on the ropes. On the trip between the airport and the hotel, there was not much that you could see in the way of residual damage from Katrina. In the French Quarter, which did not get flooded, there are still quite a few shops that are boarded up. I presume that these were operated by people who left and have not returned. The city was noticably subdued compared to my previous visit there in 2000, not surprising considering they have lost a huge chunk of their populace. The folks that remain are trying to keep their "game face" on, but trying so hard that it smacks of desparation. The anger and resentment for their situation was almost palpable and just below the surface. Very sad. Hopefully the city will be spared from getting smacked again as they slowly recover. I look forward to returning next year.

Salt Spring Silver

2006-11-19T23:04:00.000-05:00

Off to Nawlin's

2006-11-13T15:29:00.000-05:00

I'm heading out for the New Orleans Conference first thing tomorrow. I will be there through Sunday, will try to post some notes while I am there.

Breakout!

2006-11-10T20:40:00.000-05:00

This is it. The day I've been awaiting for...three years. I can take some comfort in Peter Lynch's observation that some of his biggest winners didn't do anything for 2-3 years before they did their thing. Perhaps Amarillo will fit that mold. After taking an initial position in early 2004, I averaged down a few times, lowering my cost basis. And then I waited...

Amarillo Gold is a junior exploration company with properties in Brazil. They are part of the Ironbark group of companies, which includes Aquiline Resources and a few others. Their main property has a historical resources of 700K ounces of gold, but further work has demonstrated that there is more than that. Recently the company staked additional ground adjacent to Mara Rosa based on their current work. They are also in the process of acquiring another property, Lavras del Sul, from Rio Tinto. Rio was looking for a 5-10MM ounce deposit. When they determined that was not likely to pan out at Lavras, they decided to let it go. They left a string attached though, that will allow them a substantial back-in option if in fact, it turns out to be a multi-million ounce deposit. Initial work on the property indicates a potential for 3MM ounces.

As far as I know, there aren't any imminent major announcements, but something lit the fuse today and buyers piled on, driving the stock up 20% on over 1/2 million shares (which is a lot, for Amarillo). This took the stock up through the .50 level which was roughly the last point of resistance and the rim level of a cup and handle formation that is traced out over the preceding three years. Could be good for a move to .80, short term. Depending on whatever is behind the action today, could be even more juice. We will have to see...

ASPO-USA presentations

2006-11-08T23:39:00.000-05:00

Lots of good stuff here...

http://www.aspo-usa.com/fall2006/presentations/pdf/

Uranium: from discovery to production

2006-11-05T17:07:00.000-05:00

Click here to see the timeline to produce uranium, from discovery.

Coming soon, to a browser near you...

2006-11-02T08:55:00.001-05:00

This is one of the private companies I am backing. They are getting ready to launch their site...

Aurelian's visible gold

2006-11-01T19:04:00.000-05:00

Article on Universal Uranium

2006-11-01T14:33:00.000-05:00

This article was sent to me by investor relations at Universal Uranium. It was posted at Stockhouse, but they did not attribute it.

Uranium in Labrador...

Extreme opportunity

As most uranium investors know, Labrador is becoming a hotspot for uranium exploration and has already treated to a couple successes in Aurora Energy and Crosshair minerals. Both companies are working aggressively on their properties to prove up uranium lbs and have met to a 350% and 320%share price increase respectively. Now not all companies exploring in the Central Mineral Belt SP's have done quite as well. Their SP's increased significantly back in early winter of last year, but have fallen off considerably due to a combination of significant success' of Aurora and Crosshair and lack of activity by these other juniors which has seen speculative money flowing into those 2 companies from the other area plays.

This is actually quite significant to me that the there is only a fixed amount of speculative money in this area and that the spotlight and big institutional speculative dough has yet to participate in this area of exploraration. Most speculative bucks are still finding their way to regions like Athabasca because of its history. There is quite a disparity between the haves and have nots of the region as displayed with comparative market caps of the companies below...

Symbol	Company	Land Position (acres)	Share Price	Market Cap	% gain or loss
AXU	Aurora	200,000	12.50	725MM	up 350% from lows
CXX	Crosshair	168,583	2.23	130MM	up 320% from lows
BAY	Bayswater	979,227	1.24	73MM	up 60% from recent lows
SAN	Santoy	115,148	.385	30MM	down 56% from highs
MNS	Monster Copper/Santoy(jv)	70,225	.33	7MM	down 27% from highs
UUL	Universal Uranium 60%	305,423	.39	11MM	down 58% from highs
SSE	Silver Spruce 40%	305,423	.38	9MM	down 55% from highs

Here are some factors that make uranium exploration looks very rosy for Canadian companies...

Cameco's taking a hit on their flooded Cigar lake mine... there are thoughts now that they may not be able to put it into production... 20MM lbs of uranium supply from 2008 - 2010 that now needs to be made up.

Governments are less willing now than ever to sell enriched uranium from weapons for energy, meaning we are losing a supply of uranium which had helped fill the production vs demand gap.

World demand for uranium and nuclear energy is ever increasing...

China is building 30 reactors

USA is now looking into biulding close to the same amount as well

Other countries are aspiring to be nuclear proficient

Global Warming - not only is it considered a green fuel that combats global warming. Global warming contributes to easier accessibilty to areas previously thought to harsh to mine and extends the seasons in areas such as the Yukon.

So lets look at Labrador a little more closely...

The area is obviously coming a hot play with success' of Crosshair and Aurora. The rest of the area plays after rising in speculation have tailed off to an acceptable re-entry point with most coming back between 50% and 60%. Indicators to me point that the big speculative money has yet to flood this area yet.

Newletter writers are starting to focus on the area as well as everyone knows how Grandich loves his Crosshair minerals. Now the other chiuauas in the area are making headlines as well as companies are mobilizing thier exploration programs.

Fishing for the undervalued potential winners...

UUL and SSE are at the beginning of their 1 year $2 million work program and have finished trenching with results pending; drilling is imminent if assays come back good. They have the second largest land position in CMB besides Bayswater Ventures and seem to be undervalued on land position alone. Their properties border Aurora's as well as Crosshair's and have one of the premiere land positions in the region. At a combined 20MM market cap between the 2 companies it is a fraction of Crosshair and a spec of dust compared to Aurora. With such a large land position contiguous with the proven winners in the area and Silver Spruce just getting its work program into full gear, I would expect great things from this uranium play in the future as they continue to work and develop their promising properties in Labrador. As the work program heats up at Silver Spruce, the share price should appreciate as investors see the company has moving forward with its projects and see a good chance at another Aurora or Crosshair. If 2 companies in the area have already been successful, it increases the odds that the others will be as well.

Heres to positive assays and an aggressive drill program...

This is what I've been talking about...

2006-10-31T21:16:00.001-05:00

Crisis at Cigar Lake: Time to Back Up the Truck on Uranium Stocks?

By Dave Forest
31 Oct 2006 at 10:48 AM EST

STOWE, Vermont (Casey Research Advertorial) -- The uranium industry is reeling. On October 23, Cameco, the world’s largest yellowcake producer, announced that its Cigar Lake mine had sprung a leak. Early attempts to seal the affected area failed, and the underground workings are now completely flooded.

This is a pivotal development. Cigar Lake is the world’s largest undeveloped uranium deposit, holding 232 million pounds U3O8 at a grade of 19%. Production from the mine was supposed to begin in early 2008; at peak, it was thought that the mine would have provided 17% of world uranium supply.

In short, this is one of the few projects that could make a significant difference for the uranium market… or, it was.

Cigar Lake’s future is now in doubt. Although Cameco’s management put on a brave face - saying they are “committed to develop plans to remediate the project” - we spoke with several uranium professionals in Saskatchewan who told us they now believe the mine may well be lost completely. At the very least, the flood will push back start-up for a minimum of one year, assuring that supply will be even tighter than anticipated over the next several years.

Considering that the market had little breathing room even with Cigar Lake’s supply, the situation verges on crisis. Especially in that a good deal of Cigar Lake’s output was already sold forward. Those buyers - who thought they had locked in supply - may well be forced to go to the spot market to buy. A further significant jump in the spot price over the coming weeks is a distinct possibility.

At the risk of hyperbole, the loss of Cigar could kick off a spectacular run for uranium stocks. Although share prices for uranium exploration companies have had stellar gains over the last three years (greater than 1,000% in a number of cases) a $5 or $10 jump in the uranium spot price over the coming months could touch off buying of even greater proportions. A frenzy reminiscent of tech stocks in the late 1990s is brewing.

Investors that haven’t already done so should be taking this chance to position themselves in quality uranium issues. While a uranium furor will lift all boats (at least at first), the truly spectacular gains will come from those companies that have the management expertise and prospective projects needed to produce a discovery during the bull run.

Take UEX Corp, for example. In June 2005, when uranium stocks in general were enjoying excellent gains, the company reported a staggering drill intercept of 58.3% U3O8 from its Shea Creek property. The stock jumped 80% in a single day. Less than three months later it was up 180%.

And that was when uranium was selling for $30 per pound. With the price now over $60 - and millions of new investors clambering to get a piece of the action - any company that comes up with a discovery stands to make huge returns for investors, nearly overnight. And if recent events at Cigar Lake kick the market into overdrive, gains could be of the once-in-a-lifetime variety.

Which companies have the right stuff to cash in? JNR Resources, one of the companies we’ve been following on behalf of subscribers to our Casey Energy Speculator newsletter, recently reported tantalizing surface samples of up to 48% U3O8 from its Way Lake project in Saskatchewan’s Athabasca Basin. Drilling is planned shortly. Although our subscribers have already made a tidy 85% return on JNR since our initial recommendation, we’re holding on. As the stars continue to align for a uranium mania, an 85% gain will look miniscule.

Of course, we’re not betting the farm on that one company. Another of our followed stocks is a micro-cap explorer sandwiched between uranium majors Cameco and Cogema in the uranium-rich southeast Athabasca Basin. Yet another is pioneering a new uranium district in Quebec. A major producer recently staked land surrounding this company’s projects - meaning that the world’s best uranium finders believe the geology is ripe for a discovery. We made 100% on this stock in 6 weeks, and we’re looking for more.

There is much that needs to be said about the universe of junior uranium explorers, the vast majority of which are little more than promotional exercises, but for now we’ll just say that taking the time to understand the difference between a paper shuffle and a well-run company with scale and grade in the right geological setting is time well spent. As the importance of the crisis at Cigar Lake becomes apparent, these stocks are going to the moon.

Copyright © Casey Research 2006

Dave Forest is Editor of the Casey Energy Speculator. To learn more about the Casey Energy Speculator, including how to sign up for a no-risk trial subscription, visit www.caseyresearch.com.

Junior U's

2006-10-31T16:42:00.000-05:00

A couple of months ago, I posted about uranium juniors in general and Strathmore in particular as an example. Well, the setups that I saw then have had follow-through with a vengeance that even I find startling. What was already a strong fundamental situation got taken to a whole new level with the accident at Cigar Lake. Dr. Michael Berry likened it to the Aurelian discovery and that comparison has merit in that there is an immediate fundamental revaluation occuring. It was specific to Aurelian but applies across the sector in the uraniums, granted that the upward revaluations will be more warranted in some situations than others.

Golden thoughts...

2006-10-29T10:18:00.000-05:00

From an article by David Vaughn at Kitco:

"[Rick Rule] now believes that gold and silver stocks are about to go "silly" on the upside... maybe the silliest he has seen in his long career.” “Coupled with strength in the metals, he fully concurs with Doug Casey’s views that we are on the verge of the bull market of a lifetime."

I found this noteworthy as Rick Rule tends to be fairly skeptical about valuations, so if he thinks that there is a huge rally coming, it tends to give one pause. The article also has some worthwhile observations on the increasing institutional participation in the resources sector.

Reflections on Aurelian

2006-10-29T07:55:00.000-05:00

Here is a post from Bob Brummell at StockHouse contemplating Aurelian:

I just spent the evening reading through ARU's property notes and Dr. Sillitoes report. A few thoughts come to mind after studying it.

1. The Aurelian people have done a tremendous job reporting their exploration activities on various prospects. It's incredibly well written and has a genuine flavour to it. There is no puffery. It's straightforward. No hype and no bullchit. A joy to read.

2. I hope shareholders have patience. It's obvious a tremendous amount of high potential, high value exploration remains to be done. Aurelian needs time. Realistically, it could take several years. It's not something that should be rushed. Fact is that impatience and rushing could result in tremendous lost rewards.

3. There's no need to worry about dilution or burn rate. If management elects to explore further, they could easily raise another $25 - $30 million by issuing just 1 million shares. So why rush with potential so high.

4. My hat's off to Aurelian's geological team. They've done excellent grass roots work. Although not stated, I'd guess conditions at times were rugged.

On another note, I have a hunch the new boys on the block must be an irritation. Perhaps ARU is challenging some of the nonsense. Perhaps that's why GML issued a retraction and clarification about how close their border is to FDN. It's much more than the 300 metres they were claiming.

Lastly, El Condor may produce more than a mine. It's quite possible we are looking at a new mining camp hosting several mines. They likely won't match FDN's stature but who knows at this point. They could be very substantial.

Bob

Posted here originally.

Ready to run?

2006-10-28T22:19:00.000-04:00

Coxe weighs in on uranium...

2006-10-27T22:23:00.000-04:00

Don Coxe was early on the base metals, early on the oil sands and now is early (relatively) on uranium. His clients are institutional, pension funds and hedge funds and the market cap of the uranium sector is tiny. This could result in outsized gains.

BMO’s Don Coxe favors uranium, gold, platinum stocks

RENO, NV (Mineweb.com) --In analysis published this week, BMO Capital Markets Global Portfolio Strategist Donald G.M. Coxe advocates investment clients seriously research the future of nuclear power and consider investing in uranium.

http://www.mineweb.net/mining_finance/337750.htm

ASPO-USA 2006: Mr. Udall on a hopeful note...

2006-10-27T22:05:00.000-04:00

ASPO-USA 2006: Commuting

2006-10-27T22:03:00.000-04:00

ASPO-USA 2006: Richard Lawrence and Debbie Cook

2006-10-27T21:21:00.000-04:00

Richard Heinberg at ASPO-USA 2006

2006-10-27T21:18:00.000-04:00

Follow-up on Cigar Lake

2006-10-24T08:37:00.000-04:00

Yesterday, I posted the news about Cigar Lake and my initial response. After having had a chance to read a bit more and digest the news, it is even bigger than I had first thought. The mine opening may take much longer than a year and this will impact 30% of the supply on which the market was depending. This article from StockInterview is worth reading very carefully:

Cameco’s Cigar Lake Mine Drowning:
Where Will U.S. Utilities Get Uranium Now?

Sprott Market Strategist:
Some May Sign $100 Long-Term Contracts

Dr. Murenbeeld at the Denver Gold Forum

2006-10-23T22:19:00.000-04:00

Dr. Copper

2006-10-23T20:53:00.001-04:00

Production delay at Cigar Lake...

2006-10-23T09:23:00.000-04:00

To most people, this would not be a notable news item. If you have been studying the uranium market, though, it is one that merits close attention. Cigar Lake is in the area of the Athabasca Basin where the richest uranium mines in the world are located. Given that the market is already very tight (if price is a valid indicator), then this delay will have significant ramifications. Perhaps it is already priced in, to some extent, but it will be worth keeping tabs on the uranium price over the next few weeks, at least...

Cameco Announces Construction Setback at Cigar Lake Project
Monday October 23, 4:11 am ET

SASKATOON, SASKATCHEWAN--(MARKET WIRE)--Oct 23, 2006 -- Cameco Corporation (TSX:CCO.TO - News)(NYSE:CCJ - News) reported today that Cigar Lake mine construction is expected to be delayed by at least a year after the mine experienced a significant water inflow following a rock fall and a portion of the underground development was allowed to fill with water. Production startup was previously planned for early 2008. The remainder of the underground area remains dry. Cameco is operator and majority owner of the Cigar Lake uranium project located in northern Saskatchewan.

The incident began at 1:10 p.m. on Sunday, October 22, 2006, in the future production area that previously had been dry. As a precautionary measure, non-essential personnel were temporarily evacuated. There were no injuries and there was no impact on the environment.

At 8:45 p.m., in accordance with existing contingency plans, the company decided to close two bulkhead doors to contain the water inflow within the future mining area. The mine shaft (shaft #1), future processing area, pumps, refuge station and heat exchanger for freezing the ore are being protected from the inflow and will be monitored as the pressure builds up behind the bulkhead doors.

Cameco will be developing plans to restore access to this area which will provide a better estimate of construction scheduling and likely startup date of production. At this point, the construction delay is estimated to be at least a year. This incident is not expected to impact reserves at Cigar Lake.

Given the expected delay in construction, the capital cost is expected to be significantly higher. We will provide an estimate of these costs once the remediation plans have been developed. We will also update our production forecast for Cigar Lake at that time.

Cameco has supply interruption protection in its contracts providing the right to reduce, defer or cancel volumes on a pro-rata basis if we experience a meaningful shortfall in planned production. This language protects about three-quarters of current contracted volumes. This percentage will rise as old contracts expire. All contracts also contain standard force majeure protection.

The baseload contracts put in place to support the development of Cigar Lake also contain supply interruption language, which allows Cameco to reduce, defer or terminate Cigar Lake product deliveries in the event of any delay or shortfall in Cigar Lake production.

Given the foregoing contractual protections, Cameco is adequately positioned to meet its contractual obligations.

The Cigar Lake project is located 660 kilometres north of Saskatoon with a workforce of about 650 during the construction phase. The Cigar Lake mine is owned by Cameco Corporation (50%), AREVA Resources Canada Inc. (37%), Idemitsu Uranium Exploration Canada Ltd. (8%), TEPCO Resources Inc. (5%).

Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest uranium producer. The company's uranium products are used to generate electricity in nuclear energy plants around the world, providing one of the cleanest sources of energy available today. Cameco's shares trade on the Toronto and New York stock exchanges.

CONFERENCE CALL INFORMATION

We invite you to join us in a conference call at 11:30 a.m. Eastern time (9:30 a.m. Saskatoon time) today, October 23, 2006 to discuss this news release. The call will be open to all members of the investment community. Members of the media will be invited to ask questions at the end of the call. In order to join the conference call today, please dial (416) 644-3414 or (800) 814-4862 (Canada and US). An operator will put your call through. Please pass this invitation to colleagues in your organization who have an interest in Cameco.

A recorded version of the proceedings will be available: on our web site, cameco.com, shortly after the call, and on post view until midnight, Eastern time, Monday, November 13 by calling (416) 640-1917 or (877) 289-8525; (Passcode: 21207525).

CAUTION REGARDING FORWARD-LOOKING INFORMATION

Statements contained in this news release which are not historical facts are forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause such differences, without limiting the generality of the following, include: volatility and sensitivity to market prices for uranium, electricity in Ontario and gold; the impact of the sales volume of uranium, conversion services, electricity generated and gold; competition; the impact of change in foreign currency exchange rates and interest rates; imprecision in reserve estimates; environmental and safety risks including increased regulatory burdens; unexpected geological or hydrological conditions; political risks arising from operating in certain developing countries; a possible deterioration in political support for nuclear energy; changes in government regulations and policies, including trade laws and policies; demand for nuclear power; replacement of production and failure to obtain necessary permits and approvals from government authorities; legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the electric utility industry in Ontario; Ontario electricity rate regulations; weather and other natural phenomena; ability to maintain and further improve positive labour relations; operating performance of the facilities; success of planned development projects; and other development and operating risks.

Although Cameco believes that the assumptions inherit in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this report. Cameco disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact:
Contacts:
Cameco Corporation
Investor & media inquiries
Alice Wong
(306) 956-6337

Investor inquiries
Bob Lillie
(306) 956-6639

Media inquiries
Lyle Krahn
(306) 956-6316
Website: http://www.cameco.com

Under the scope...

2006-10-18T15:01:00.000-04:00

This morning I went to visit one of the private companies I am backing. They just received their electron microscope a couple of weeks ago, so I went to check it out. That's about all I can say about them right now, everything is under tight wraps. Within a couple of months, there should be more latitude to talk about what they are doing. Could be a blockbuster...

Breakout or fakeout?

2006-10-13T17:30:00.000-04:00

Today was a significant day in the natural resources sector. After a major headfake in September that gave a false signal that the traditional fall rally was underway, natural resources stocks have been retrenching ever since. Whether today marked a turn or just another headfake can only be concluded after the fact. What can be said though, is that price and volume action was strong across the board. Price and volume action was encouraging in oil stocks, uranium stocks, base metal stocks and precious metal stocks. The action cut across market caps, too, lifting the seniors, mid-tiers and juniors.

Valutrader on Silicon Investor put today's action in historical perspective:

Nothing is for certain, but FWIW an historical pattern worth noting is that after a strong breakout Friday like today and a short pullback after the gold market closes

1. they run the stocks up into the close
2. there is a burst up Monday morning which is sold
3. Monday and Tuesday drift lower
4. Wednesday firms
5. Thursday and Friday push higher

As always, we'll see.

On breakout days like today, the juniors tend to rocket off the bottom. Even though these stocks are doing little more than recovering recently lost ground, looking at the percentage gains discourages those who have traded out from buying back in, as it feels like chasing. Here are a handful of my best performers today:

DNT.TO 15.38%
PEZ.V 23.26%
SCM.V 12.58%
UC.V 10.20%
UPC.V 16.67%

Without a doubt there are now some gaps on these charts that may have to get filled, but that would also be consistent with the scenario laid out by Valutrader. If this move is for real, then these gains show where these stocks are headed. Also, even though the summer is over, the drilling programs are not. If significant results can be produced during a time when market conditions are favorable, then the impact on share price appreciation can be magnified. Let's see what happens next week...

Bears on parade...

2006-10-12T22:57:00.000-04:00

Sentiment can be a useful indicator, as psychology is a critical element in the market. According to a recent article, stubbornly bullish gold advisor have been relenting to the sell-off:

"The Hulbert Gold Newsletter Sentiment Index, which represents the average gold market exposure among a subset of short-term gold-timing newsletters, stood at a reading of minus 25% on Wednesday night (10/11/06). That's not far off the all-time low, and it's a dramatic change from the stubborn bullishness that gold-timers displayed when the current downleg began, in September."

http://www.siliconinvestor.com/readmsg.aspx?msgid=22903506

Uranium juniors...

2006-10-03T22:23:00.000-04:00

I've been spending time over the last week looking at uranium juniors. Yesterday I added to my position in Forum Uranium. I am typically not too keen on averaging down, but I believe it is the right thing to do in this case. Forum is a well-run company that has some highly-prospective properties (don't they all?) in the Athabasca Basin and the Thelon Basin. They are just starting a drill program on their Key Lake Road project in the Athabasca and I have heard that they like what they see. Unlike PM's uranium explorers are able to run a scintillometer over the core as soon as it comes out of the ground. This is no substitute for an assay, but if there is significant radiation, it will show up on the meter.

Last week I attended the Toronto Resource Investors Conference. One of the companies that I thought was worth a closer look is Universal Uranium. Like Forum, Universal has a solid team in place. They have a fair amount of cash and properties in Utah, Labrador, Arizona and Colorado. They are about to kick off an 18-hole drill program on their property in Lisbon Valley, Utah. This area is host to a number of historical uranium mines. One of the more well-known mines is Mi Vida, discovered by Charlie Steen. Mark Steen, Charlie's son, works with Universal and got them involved in the Utah properties. They have a crew up in Labrador as well that is turning up some good initial results with their field work. If they can get the property adequately prepped before winter, they will be able to drill it. Otherwise, it will have to wait until spring. Utah and Arizona can be worked year-round. The stock has been steamrolled over the past several months and despite the fact that the downtrend has not yet been broken, I started a position thinking that the worst is probably over.

Today...

2006-10-03T17:58:00.000-04:00

This is the side of Wall Street that natural resource investors were shown.

Step in to The Financial Matrix...

2006-09-12T17:12:00.000-04:00

I came across an excellent blog the other day that has some worthwhile charts and commentary on the sector. Please see what Mike is up to over at the Financial Matrix.