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)
5/18/11 (Commentary for Wednesday) Gold, silver and oil gave us healthy bounces while the Dollar Index held its ground – if the Dollar Index did not make an important intermediate low on 4/28, it should do so by the PI-cycle turn on 6/13. The SPX also bounced in a move off the Full Moon low. A fierce short-covering rally in the Dollar Index may be underway even before the official end of QE2. The weekly and monthly charts of the Dollar Index argue for a move to .90 sometime this summer before the long-awaited meltdown. Bonds reversed down but still are in an uptrend – the Fed continues to prop the long end up. Commodities have been washed out hard and may have one more rally into mid-June – a super spike in oil above $120 on WTI is still a possibility but the 5/2 highs may be it for this cycle. Commodities are making a major top - peaking a 60 year cycle high. The Dollar Index appears to be rallying in the next wave higher but a retest of the lows going into mid-June is a possibility. The Euro is in danger of collapse – sell the Euro on bounces.
Big Picture on Stocks (Updated) – The SPX is topping the rally from March 2009. There are four signs of a major top in the making for the stock market: (1) the peaking of the OIH and XOI indices in early April, (2) the outperformance of healthcare and other defensive sectors in April, (3) the apparent bottom of the Dollar Index on April 28, and (4) the intermediate-term top in silver on 4/25 and gold on 5/2. A final leg is possible going into the next Pi Cycle date (6/13) at a time when the Fed plans to stop its QE2 campaign – raising cash levels is important here. We should see a big correction beginning no later than mid-June.
Big Picture on PMs (Updated) – Important intermediate tops were made in gold and silver – silver ($49.20) on 4/25 and gold ($1577) on 5/2. A retest of these tops should occur by 6/13 before a C-wave down into late July/early August – the 36-wk cycle low and the 12-wk cycle low. New buyers of gold and silver should wait until the next 12-wk cycle low around late July before making initial purchases – silver could retrace to the high $20s.
- Stocks – IBM bounced and hit its "max option pain" target – the SPX looks ready for a pop higher.
- Gold – The GDX is rallying in a 4th wave bounce – the 4th wave correction should last until next week.
- Silver – Silver should bounce to $39-40 before the C-wave down into cycle lows in late July/early August.
- Bonds – Bonds reversed down today but may not see any serious downside until the end of QE2.
- Crude oil – Crude oil got a bounce to over $100 – a B-Wave test into early June is underway.
- Dollar index – The Dollar Index appears to be making another leg higher – an intermediate-term low should either be in place on 4/28 or by 6/13. The Euro is in danger of collapsing over the next couple of months. Shorting the Euro on rallies. The next phase of the sovereign debt crisis may have arrived.
TURNING POINT DAY:
The Full Moon Timing Window on 5/17 could give the PMs and the SPX an important turn – at this point it looks like a potential low.
- Evolving Gold (EVG.TO, C$0.69 -.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, $2.79 -.03) – The Japanese nuclear plant cooling issues caused panic selling today in all things uranium – we are holding for higher prices. Uranium stocks are playing catch up to the rest of the commodity complex. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.62 -.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$0.62 -.02) - 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, $.150 +.015) - 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.
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