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)
6/17/11 (Commentary for Sunday) The SPX bounced into Triple Witching Friday but the next leg down should start Monday – the 55-Day Fibonacci step out from the 5/2 high argues for a capitulation low around 6/26. Gold looked resilient going into Friday – a test of the May highs is possible before 6/26. A Greek debt default could impact domestic money market funds as French and German bank paper is held by US money market funds. Bonds rallied hard on a flight to quality but sovereign debt concerns should curtail this rally late June. The Euro bounced into Friday but the move looked corrective – more downside is expected into 6/26. As suspected, the Martin Armstrong Pi-Cycle date on 6/13 appears to be correlating into a flight from the Euro and the USD. The period between 6/1 (New Moon/partial solar eclipse) and the 6/15 lunar eclipse (including the 6/13 PI-cycle turn date) marked important turns in several markets – the grains, oil, Dollar Index and stock indices all reversed hard in this time window. The Dollar Index may be on its way to a summer target of .90.
Big Picture on Stocks (Updated) – The SPX has topped the rally from March 2009. We saw 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 out performance of health care and other defensive sectors in April, (3) the bottom of the Dollar Index on April 28, and (4) the intermediate-term top in silver on 4/25 and gold on 5/2. The 6/13 PI-cycle turn date appears to be relevant to the EUR/USD trend which HAS TURNED DOWN on the back of the Greek fiscal crisis. We're looking for a capitulation low by 6/26 which should give us a bounce into July.
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. We got a retest of those tops into the New Moon on 6/1 - a C-wave down into late July/early August is now ahead– 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. Gold stocks may give us an important low by 6/26 – the XAU has completed a large-scale EW a-b-c correction from early December. A test of HUI=475 this week could be a trigger for a rally into July.
- Stocks – Looking for a Wave 3 of C capitulation on the hourly chart – before 6/26. The FOMC meeting announcement on Wednesday has bullish seasonality.
- Gold – Gold held above the key $1520 level last week – another test of the $1577 high is possible before late June lows.
- Silver – Silver looked resilient last week – 6/19 is a turn date.
- Bonds – We expect bonds to hold up into 6/26 – a major top is forming.
- Crude oil – Crude oil still looks weak – we're expecting an important cycle low by 6/26. The XLE formed a massive Head & Shoulders top on the daily chart – a break of support points to 65.
- Dollar index – The Euro bounced correctively into Friday – looking for 1.35 by late June.
TURNING POINT DAY:
The 55-Day Fibonacci step out from the 5/2 high for gold and the SPX falls on 6/26 – we expect an important low around this time.
- Evolving Gold (EVG.TO, C$0.60 -.00) - 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, $3.05 +.09) – The Japanese nuclear plant cooling issues caused panic selling today in all things uranium – we are holding for higher prices. Uranium stocks are playing catch up to the rest of the commodity complex. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.52 -.03) – 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 -.00) - 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, $.1650 +.0150) - 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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