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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)
11/14/10 (Commentary for Sunday) China's threat to raise interest rates struck the commodities hard but we figure that it is not a knock out punch - not yet. We're looking for an important low to be made this week and more rally to come in the SPX. Gold may have completed an EW a-b-c correction on the hourly chart Friday - looking for a reversal up on Monday that should last at least into the Full Moon on 11/22. Bonds gave us a key reversal day Friday and confirm our bearish stance on the US long bond - though 5 more days of POMO activity leave us leary of shorting long bonds here until we see more price action. Crude oil finally reversed on Friday but should bounce into the Full Moon. The Dollar Index is getting a bounce into mid-November and the Euro is facing heat from the Irish debt crisis but the Fed is winning the race on currency devaluation. However, there is a chance of some agreement at the G-20 meeting this week that could sanction some dollar decline.
Big Picture on Stocks – The market is taking a breather here and we should see more rally into spring despite some sentiment indicators looking extreme. Important lows could be seen this week.
Big Picture on PMs – We may be close to the 12-wk and 36-wk cycle lows for the PMs. We may have seen the end of an EW a-b-c decline on Friday. Looking for further blow off into at least the February seasonal highs.
- Stocks - Looking for an important low this week by Wednesday in stocks - 1-Day Reversal Timing for gold on Monday argues for a reversal up in stocks as well.
- Gold - 1-Day Reversal Timing for gold and silver is due Monday - taking out the Friday low in gold and silver and reversing up would be bullish for at least a bounce into the Full Moon on 11/22.
- Crude Oil – Ideally crude oil would peak here on the New Moon should sell off into 11/18-11/22. Natural gas may have confirmed a low.
- Bonds - BONDS HAVE PEAKED - made an important double top on 8/23. Sell rallies - Friday gave us a key reversal day to the downside but we're holding off on selling short until we see the impact of the 5 days of POMO activity this week.
- Dollar index - The Dollar Index should give us a corrective bounce into mid-November but it could fall dramatically lower into 2011 - some agreement sanctioning a dollar decline may come out of the G-20 meeting this week.
TURNING POINT DAY:
1-Day Reversal Timing for the PMs on Monday suggest at least a strong PM bounce into the Full Moon Timing Window on 11/22.
- Evolving Gold (EVG.V, C$.89 -.00) - Lackluster management and marketing have kept this gem back during a period of speculative enthusiasm for PM junior miner. 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. Adding on weakness.
- Uranium Energy (UEC, $5.15 -.35) - 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.V, C$1.08 -.05) – Very undervalued uranium stock with huge reserves (+100 M lbs of relatively high grade), lots of cash and production prospects by 2013.
- Prophecy Resource (PCY.V, C$.93 -.02) - John Lee is determined to drive this emerging coal producer in Mongolia into an international mining powerhouse. Started production this week but needs final permitting. 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. Buy on weakness - short-term news releases could drive stock much higher.
- Gryphon Gold (GYPH, $.2250 -.0265) - 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 50% of purchase price or whatever your Technical Analysis suggests is prudent.
4) Sell half of position on a double.
5) In this speculative environemnt 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.