Depression Beater Portfolio: - see below for new updates on Junior Miner Favorites - (This portfolio is just a sample of my own portfolio - no recommendation to others is implied or intended)
5/1/11 (Commentary for Sunday) Gold and silver are declining big in Sunday overnight trading – Silver's 12-wk cycle low may not be seen until Monday. An EW 5-wave decline on the 5 min chart from Friday may be the C-Wave of an EW a-b-c correction but just a corrective bounce Monday could signify a top of some significance. A Large Divergent Decline in the Option Premium Ratio and back-to-back small changes in the McClellan Oscillator argue for a short-term DJIA top as we approach the New Moon on May 3 but the death of Osama Bin Laden Sunday night could give the US markets a boost on Monday. The energy sector (OIH and XOI) has peaked for this cycle and warns that we are in the late stages of the oil rally but an al-Qaida attack on the Saudi oil pipeline could drive this market over $150 in a heartbeat. The Dollar Index is bouncing on the news on Osama Bin Laden's death at the hands of US Navy Seals but we are still expecting a move down to the lower .70s by June – this should help propel gold, silver and oil to their target highs by early June. The Euro is in danger of collapse after early June.
Big Picture on Stocks – From our perspective, we are the later stages of the stock market run from March 2009. The SPX got the scary decline into 3/14 needed to propel the last up into May/June. Our bias is for an "inflationary blow off" into the next Martin Armstrong Day in June 2011 at a time when the Fed plans to stop its QE2 campaign – some indices like the SPX could actually test their all-time highs. We should see a big correction begin in June.
Big Picture on PMs – The 12-wk and 48-wk lows bottomed around 1/28 amidst 52-wk lows in bullish sentiment and the latest low in PMs occurred on Monday – WE ARE NOW ENTERING THE ACCELERATION PHASE HIGHER in the PM sector – Wednesday's action confirmed that the recent 12-wk cycle lows have bottomed. A strong rally into May/June to around $1650 gold and ~$53 silver is possible. The PMs should suffer a large correction starting in early June. New buyers of gold and silver should wait until the next 12-wk cycle low around late July before making initial purchases – silver could be back down to the $35 level by then.
- Stocks – Another Large Divergent Decline in the Option Premium Ratio and back-to-back small changes in the McClellan Oscillator argue for a short-term top by the New Moon on 5/3 but the death of Osama bin Laden may give a big boost to US markets Monday. A final leg up into late May/early June is expected.
- Gold – Gold tested $1570 on Friday and is correcting in overnight Sunday trading – the 12-wk cycle low appears to be in but we're getting close to the $1650 target and more cash should be raised.
- Silver – Silver appears to have made a B-Wave test of the Monday high on Friday – we are in the process of making a C-wave down that should complete the 12-wk cycle low. We have a $52.50 target that should be met by early June,
- Bonds – Bonds may have ended its counter-trend rally and reversed down. A major bear trend is close at hand.
- Crude oil – Oil went broke out to yearly highs. A super spike to $120-150 is possible but the OIH and XOI have both confirmed a top and are indicating that the rally in oil is in its last legs barring an actual physical supply disruption in Saudi Arabia. The current up leg in crude will be propelled by a mini-crash of the dollar into June.
- Dollar index – The Dollar Index is bouncing on the news of Osama Bin Laden's death at the hands of US Navy Seals. Still we are looking for the Dollar Index to test the low .70s before June and this should translate into gold around $1650 and oil higher than $125. The Dollar Index is close to a major low – the Euro is in danger of collapsing in early June.
TURNING POINT DAY:
The decline in Sunday overnight trading argues that silver's 12-wk cycle low will arrive Monday. The New Moon on 5/3 should give us a short-term peak in the SPX.
- Evolving Gold (EVG.TO, C$0.80 -.01) - Lackluster management and marketing have kept this gem back during a period of speculative enthusiasm for PM junior miners. But a world-class deposit in Wyoming (Rattlesnake) and a potentially huge find on the Carlin Trend in NV argue that this stock will be a big winner. Goldcorp took a 15% interest and that says it all. It is remarkable that this company with two rather obvious world-class deposits is failing to get any traction – IT HAS BEEN DEAD MONEY AND SHOULD BE CONSIDERED AS A SOURCE OF FUNDS FOR other PM juniors with a better looking chart.
- Uranium Energy (UEC, $3.50 -.07) – The Japanese nuclear plant cooling issues caused panic selling today in all things uranium – we are holding for higher prices. Uranium stocks are playing catch up to the rest of the commodity complex. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.64 +.02) – Very undervalued uranium stock with huge reserves (+100 M lbs of relatively high grade), lots of cash and production prospects by 2013.
- Prophecy Resource (PCY.V, C$0.84 -.01) - Normal profit taking going on here after a large run up last year. John Lee is determined to drive this emerging coal producer in Mongolia into an international mining powerhouse. Started production last fall with a favorable off-take agreement. Very aggressive business plan in place to make it a billion dollar company. Following the path that Robert Friedland took with South Gobi. This stock has obvious 10-20 bagger potential.
- Gryphon Gold (GYPH, $.1470 +.023) - Got plan from management to begin phased production by early 2011 - financing details have yet to be announced. Has >1M oz AU proven, mining permits and a highly prospective land package. Needs a cash infusion and maybe a partner. Good leverage to gold.
JUNIOR MINING FAVORITES:
(These companies are speculative - best to keep them to 10% of a portfolio with 50% stops based on purchase price. Buy a basket to diversify risk)
RULES FOR JUNIOR MINING INVESTING:
1) Keep to 10% of a portfolio.
2) Due your own Due Diligence.
3) Maintain a price stop of 30% of purchase price or whatever your Technical Analysis suggests is prudent.
4) Sell half of position on a double.
5) In this speculative environment with many junior miners coming to life, put a TIME stop on your junior investment. If your position is DEAD MONEY, consider rotating it to a stock that has more favorable technicals - juniors should have a PERFECT STORM behind their back between now and April 2011 - it's a time to MAKE HAY.
Comments