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)
12/14/11 (Commentary for Wednesday) The markets appear to be setting up for a waterfall decline that could bottom the week after X-mas. The market declined into the 12/14-12/15 turn window so a bounce into 12/19 or so is possible before the ES resumes its decline – rally attempts should be shorted. Looking for a decline below the 10/4 low by year end as liquidity concerns from Europe ravage global markets and major cycle lows are set to bottom around year end. The DX breakout above the 10/4 high elevates the bear case here and argues for another leg down in the market into year end. Europe, China and probably the US are in a recession and this reality should be obvious by the end of Q1 2012.
Big Picture on Stocks (Updated) – We bottomed the first phase of a global bear market on 10/4 and we are in a large corrective rally that should run late into the year. We bottomed on the 11/25 New moon/solar eclipse and started a strong C-wave advance that should last into mid-December before the start of the next Bear Market Phase.
Big Picture on PMs (Updated) – We broke many lines of support on gold implying at a test of $1415 by year end as major cycles look set to bottom. The 12-wk cycle low is due by 12/26 or so.
- Stocks – The ES may get a bounce into 12/15 but the market is setting up for a waterfall decline. Taking out ES=1213 should allow for more of a corrective bounce that could run into the Monday after expiration.
- Gold – Gold broke down Monday – a price target of $1415 is now in play as liquidity concerns intensify – the 12-wk cycle low is due to bottom around 12/26.
- Sllver – Silver is declining in 5-waves on the 5-min chart – may get a bounce into 12/15 – taking out $26 by the end of the year is possible. Major cycle lows are due in late December or early January
- Bonds – Like the DX, the bonds should take out their 10/4 high as capital is driven into the risk off trade.
- Crude oil – Oil sold off hard on liquidity concerns as most commodities took a hit. Iranian tensions and a rolling supply shock from the 2008-2009 washout should give us another price spike above $100 going into the first half of 2012.
- Dollar index – The DX breakout above the 10/4 high reflects the liquidity crisis gripping Europe and argues for a global stock washout going into year end. The DX has rallied in 5-waves and is declining in 3-waves on the 5 min chart – looking for more rally tomorrow. Our target of .90 appears to be farther off in time – perhaps in early 2012 as the next stage of the European debt crisis rears its head.
TURNING POINT DAY:
The turn window on 12/14-12/15 should dominate trading this week – looking for a trading low by 12/15.
Depression Beater Portfolio: (This portfolio this week is just a sample of my own portfolio - no recommendation to others is implied or intended) DELAY NEW PURCHASES UNTIL LATE-DECEMBER – TIME TARGET FOR MAJOR CYCLE LOWS
- Evolving Gold (EVG.TO, C$0.295 -.035) – The stock price fell back to the level of the recent private placement – drill results coming out soon could confirm a world-class find in the Carlin trend – this stock is a buy here. 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.
- Uranium Energy (UEC, $2.96 -.04) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.37 -.01)– Very undervalued uranium stock with huge reserves (+100 M lbs of relatively high grade), lots of cash and production prospects by 2013.
- Prophecy Coal (PRPCF, $0.3935 -.0250) The spinoff of the Prophecy Platinum Company (PNIKF) has galvanized this stock – look to buy at key chart support as the broad market corrects into September/October. 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, $.256 -.019) - 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.