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)
5/30/11 (Commentary for Monday) The New Moon Timing Window on 6/1 should pull the SPX and gold into a short-term peak. Gold exceeded the .618 retracement of the May decline and looks poised to test the highs. The Dollar Index price action on Tuesday needs to be followed closely. Taking out Friday's lows will imply a steeper retrace of the May rally and open the possibility of slightly undercutting the April lows. We feel that the period between 6/1 (New Moon/partial solar eclipse) and the 6/15 lunar eclipse (including the 6/13 PI-cycle turn date) should mark important turns in several markets. The HUI appears to need a 5th wave down on the daily to finish a corrective pattern from December – gold stocks are close to making an important intermediate bottom and the 34-Day Fibonacci step out from 5/2 points to 6/6 as the timing for an important turn – whether it is a low or not remains to be seen. We may be now getting a final commodity-inspired bounce into early June but the 60 year cycle is peaking commodities and the deflationary forces (stronger Dollar Index and bonds) are gathering steam. The weekly and monthly charts of the Dollar Index argue for a move to .90 sometime this summer before the long-awaited meltdown but an onset of a QE3 from the Fed could truncate this rally. The Dollar Index trading should tell us a lot on Tuesday – its price action is key. The Euro is in danger of collapse – sell the Euro on bounces into summer.
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 – maybe, maybe not, and (4) the intermediate-term top in silver on 4/25 and gold on 5/2. A final leg up 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 – The SPX appears to be rallying into the New Moon Timing Window on 6/1 – but this is a high-risk market that could see heavy selling after the critical 6/1 – 6/15/11 time period.
- Gold – Gold rallied above .618 retracement level ($1534) on Friday and appears ready to make at least a retest of the 5/2 high on the New Moon. The HUI is rallying into the previous 4th wave resistance on the daily. The HUI should move down in a 5th wave after the New Moon and 6/6 could mark the timing of the low.
- Silver – Silver should bounce into $39-40 by the June 1 New Moon Timing Window before the C-wave down kicks in.
- Bonds – Bonds may have concluded an EW a-b-c decline last week. This would argue for a final rally in stocks.
- Crude oil – Crude oil appears to be bouncing into the New Moon. Gasoline may have one final rally.
- Dollar index – The tape on the Dollar Index for Tuesday will be key – breaking Friday's lows will imply a retest of the lows and a final rally in commodities into mid-June. The Euro is in danger of collapsing over the next couple of months. Short the Euro on rallies. The next phase of the sovereign debt crisis has arrived.
TURNING POINT DAY:
The New Moon Timing Window/partial solar eclipse should give us short-term peaks in gold and the SPX – the 6/1 – 6/15 time band should bring key turns in many markets.
- Evolving Gold (EVG.TO, C$0.74 -.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, $3.30 +.09) – The Japanese nuclear plant cooling issues caused panic selling today in all things uranium – we are holding for higher prices. Uranium stocks are playing catch up to the rest of the commodity complex. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.70 -.01) – 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$0.64 -.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, $.18 +.00) - 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