Another critical juncture

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Chart courtesy of http://www.chartoftheday.com

That´s a fine chart. It presents the S&P 500 (blue line), the most important world index, and the same S&P500 priced in Gold (gray line), which shows the cost of the S&P 500 in ounces of Gold and is called the S&P 500/Gold ratio. It has been overlaid onto the chart for ease of comparison.

Will the S&P 500 go on climbing and manage to stay above all time highs? Though is obviously hard to answer, if that should be true we might well see gold catching up strongly. Today it takes 2.3 ounces of gold to “buy the S&P 500”, which is less than half of what we had to “pay” well back in 2000.

A curious conclusion is that the S&P may be headed to a sort of parabolic move somewhere in the future and that Gold seems solid anyway we look to the picture.

Wait and see

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Gold fights but goes nowhere. But, sure, the bias still is bullish on the long run. Meanwhile, Copper is in all evidence catching up. It seems that is trying to reach the right price (see chart).

The USD may continue to go down but it will be a very tough process.

Meanwhile, the Dow and other even more important indexes like NASDAQ and SP500? Are they only correcting? We are indeed on a crucial juncture...

An excellent confirmation

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Chart courtesy of http://stockcharts.com

Cumberland Resources (CLG), a top junior gold miner, shines nicely making a strong point about its value and way up on a most sustained trend.

Maybe now a small correction is in the cards, after such a gap up. Or is it indeed? Cumberland is to be acquired by Agnico-Eagle Mines, so the general move is to the north!

Time for the Yen

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Yen is too low. Japan´s economy is growing and it is possible that BoJ raises rates again this year. Maybe we have seen a bottom at 81.91. Gap at 84.24 is a possible upside target.

An ugly setup

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Usually when we see a stock well under its EMA200 it is better not to try to catch a bottom.

But with Motorola (MOT) I think that its estimated revenues and profits for the last quarter of 2006 don´t match with such dumping stock prices. It is my belief it won´t take a very long time to close the gap down that is damaging the chart.

In other words: it is possible that, for now, we have actually found that bottom…

Blog Changes

There are always great opportunities on several markets and on specific securities. So, there is no point in restricting our action and remain only in precious metal stocks.

From now on, and every time I see convincing chances of a promising investment, whatever the market maybe, I will present one particular stock, index, commodity or currency and tell you my opinion about it.

Stocks of the Year

During 2006, the best performances in precious metal stocks - among a selected but large group I am following - are:

1. Blue chips

Agnico-Eagle Mines (AEM), with an astonishing jump from less than 20 to 41.24. Key explanation: strong earnings from LaRonde Mine in Quebec, Canada´s largest gold deposit in terms of reserves.

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Chart courtesy of http://stockcharts.com

2. Junior miners

Tara Gold (TRGD), with a thrilling walk from 0.05 all the way to 1.32! Key explanation: New discoveries and project development.

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Chart courtesy of http://stockcharts.com

Happy New Year!

Will Copper hold?

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Chart courtesy of http://stockcharts.com

Copper is very important. After a couple of huge mountains drawn by RSI indicator, we may observe a unique setup of the significant weekly EMA65.

Take also a look to the disproportion of levels between the two moving averages shown in the chart.

Osisko once again

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What a shoot up since August 2004 when the price was just C$0.24!

It is the result of late discoveries in the Canadian Malartic gold deposit, a very promising property 100% owned by the company. Inferred resource is estimated to be around 6.5 million ounces of gold.

Presently, Osisko has only 65,6 million fully diluted shares.

Examine these interesting two years and six months charts.

USD by itself

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Chart courtesy of http://stockcharts.com

Awful US Dollar chart and the fundamentals are also extremely troublesome. I think it is only a matter of (not much) time for us to see the green buck reaching 80. That will be a dramatic set up as this level is a long term support and below it is nobody´s land.

Let´s see what will happen and what kind of reaction we may observe on Gold.

More Charts

Trying to make this blog more useful, I have displayed more graphics of metal prices and related indicators updated every minute. Now you may follow from here the intraday prices of Gold, Silver, Platinum, Palladium, HUI, USD Index, Copper, Zinc, Nickel and Aluminum.

My goal is to show everything that matters. Thank you for coming here!

Tara Gold Resources

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Tara Gold (TRGD) is a growth-oriented precious metals exploration and development company by re-initiating and increasing production levels at La Currita, Lluvia de Oro and Picacho, and developing the San Miguel, La Millionaria, Pilar De Mocoribo and Las Minitas projects in Mexico.

Last week the company bought Don Ramon and Lourdes mineral concessions near Pilar De Mocoribo. Preliminary evaluation indicates that the property lies within a larger area that hosts numerous and very-high grade Pb-Zn-Ag Carbonate (Limestone) hosted deposits.

Tara Gold has initiated La Millonaria Production Plant, which contain an estimated 30,000 tonnes grading of 9.702 g/t gold and 23 g/t silver.

This junior miner is well in action and has very good potential not only on precious metals but also on base metals.

Let´s go!

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Chart courtesy of http://stockcharts.com

Trailing the performance of stocks is imperative. On a day like today it is important to notice two gold stocks that closed the week on strength. It is the case of Northern Dynasty (NAK) and Eldorado (EGO).

But they were not alone as Agnico (AEM), Harmony (HMY), Silver Wheaton (SLW), Abcourt (ABI.V), Ivanhoe (IVN), Gold Reserve (GRZ), Miramar (MNG), Eurozinc (EZM), Yamana (AUY), Aurelian (ARU.V), among others, had rallied for the last four weeks.

Kinross merges with Bema

(www.mineweb.com)

If Toronto’s Kinross Gold (NYSE:KGC) succeeds in its all-share $3.1 billion merger with fellow Canadian Bema Gold, Kinross will move up in the senior ranks of gold producers.

Each Bema common share would be exchanged for 0.441 of a Kinross common share, representing a 34% premium. After the transaction is completed, 61% of new Kinross would be held by Kinross shareholders and 39% by Bema shareholders. If the transaction fails, Bema (NYSE:BGO) would pay Kinross a $Cdn$79 million break fee.

Analysts were not enthusiastic about the prospect of Kinross taking on Bema’s ownership of the Cerro Casale project in Chile. While Cerro Casale is estimated to contain proven and probable resources of 23 million ounces of gold and 6 billion pounds of copper, analyst Mark Smith of Dundee Securities declared “the project’s awfully expensive,” requiring an initial capex of $2 billion. Both Placer Dome and Barrick have decided against developing the project.

Northern Dynasty Minerals

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Northern Dynasty (NAK) is advancing the Pebble Project, located in southwestern Alaska, USA, that hosts a world class gold-copper- molybdenum deposit, comprising 22,582 hectares.

The estimated mineral resources in the Pebble East and West deposits are of 54.8 million ounces of gold, 44.7 billion pounds of copper and 2.7 billion pounds of molybdenum.

There is excellent potential to establish significant additional resources with further drilling. Northern Dynasty is now establishing programs in order to integrate this exceptional discovery into an overall mine plan that is optimal for the project.

This an extraordinary project, located on American soil and the company is assessing the merits of building a consortium to permit, finance, construct and operate a modern and long life mine with very substantial annual metal output.

This is the biggest gold discovery ever in North America and majors are already on the race to take over. The first step was already taken last June when Rio Tinto affiliate Kennecott Canada Exploration acquired 9.9% interest in the company.

Base metals supercycle remains intact

(http://ft.com/markets/)

The recent strength of base metal prices has confounded the sceptics. Lead, zinc and nickel have all hit all record levels while tin has surged to its highest level since 1989. Such gains have defied the forecasts of many investors who believed that the peak in the cycle for metal prices had passed.

US oil prices have declined by a quarter since early August but base metals have largely resisted crude’s gravitational influence, displaying unexpected price resilience in the face of a US economic slowdown and concerns about its impact on global demand growth.

NovaGold says no to Barrick

(www.mineweb.com)

Barrick Gold raised its all-cash bid for Vancouver junior NovaGold by 10.3% to $16 per share Tuesday. The offer values NovaGold at $1.7 billion on a fully diluted basis.

NovaGold has three major assets, including the Donlin Creek project in Alaska in which Barrick is the joint venture partner, with gold resources estimated at 14.8 million ounces, and 100% interest in the Galore Creek project in British Columbia, estimated to have measured and indicated resources of 6 million ounces of gold, 75 million ounces of silver, and 6.8 billion pounds of copper.

However, NovaGold urged its shareholders to take no action at this time. In a news release issued Tuesday, the company said it has achieved “a series of major development milestones on its projects".

Our stocks

Dear Gold Portfolio

As I couldn´t get these stocks last week at the opening, I am trying again and now on AMEX.

Buy 500 Northern Dynasty Minerals (NAK) at 6.75

I intend to post a summary of this company soon.

Gold

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The most important thing about Gold and its very long term bull run is sustainability. That is exactly what we are founding here with the detail of being EMA50 that is giving a perfect support. Don´t get it wrong, this is a weekly chart and prices are consolidating to go higher.

Natural Gas

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It´s the usual time to climb. Probably we´ll find a top until the year´s end.

Silver

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Chart courtesy of http://stockcharts.com

That´s a solid a picture that make us believe we may start a rally anytime soon.

Copper

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Chart courtesy of http://stockcharts.com

A fine (and symmetrical) consolidation. If it follows 2004/05 we have to wait sometime for a new rally…

Yields

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Time for consolidation. Bond investors believed that a significant slowdown was on the cards but now they are not so sure.

S&P 500

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Chart courtesy of http://stockcharts.com

Are we heading to a top? Not yet…

Crude Oil

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Since August, Crude Oil has been falling sharply. It seems we have to wait a little more to see a bottom.

Dow/Gold

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Chart courtesy of http://www.chartoftheday.com/

Yesterday, the Dow edged above the 12,000 milestone for the first time. Considering the magnitude of the past bear market, it is a great achievement indeed. For some further perspective into the current rally, today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / Gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 20.1 ounces of gold to “buy the Dow”. This is considerably less that the 44.8 ounces back in the year 1999. When priced in gold, the current stock market rally hasn't amounted to much. In fact, the longer-term trend is actually down!

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." - Alan Greenspan

AURELIAN RESOURCES

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Aurelian Resources (ARU.V) is called a junior miner because it is only on an early developing stage of its gold project and not yet near production.

But ARU has a super first class mining property registering reserves of 8 million ounces of gold with 80% of targets yet to be explored!

It is surely a highly profitable investment even at these levels. I will write a more detailed post about this company in the near future.

IVANHOE MINES

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Extraordinary junior miner companies never disappoint. IVANHOE got a partnership deal with Rio Tinto and is up more than 30%.

Early on this blog I have expressed my opinion that the price of this stock could rally, with the possibility of going even higher than today´s level.

Nevertheless, I advise you to be cautious and trade a portion at your will, having a stop and following the action.

Gold and Oil again

Gold is loosing the battle with its EMA 50, which should be expected to happen this month and is looking the horizon from below. There is in place an unpleasant succession of lower highs and lower lows. A descending trend line, for now far enough from 540.

Is it possible that Gold will be trading downwards or sideways till the end of the year? Not likely.

On the other hand, with a few exceptions, every year over the last 15, Crude Oil has found its second half bottom in November or December. There is surely something here to think about.

Is it possible that Oil has already reached a bottom last week? I don´t think so.

After United States elections, we must assess these issues once more.

Our stocks

Dear Gold Portfolio

The trend is your friend...

Buy 300 Minefinders Corp (MFN) at 9.35
Buy 500 Northern Dynasty Minerals (NDM.V) at 7.50
Buy 1.000 Western Goldfields (WGDF) at 1.70
Buy 1.000 Stratagold Corp (SGV.TO) at 1.22

Minefinders Corp

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Chart courtesy of http://stockcharts.com

Minefinders Inc (AMEX: MFN) has precious metal properties in Mexico and the United States, having valuable and expanding resources at its main project, Dolores, at the Sate of Chihuahua, Mexico.

An independent feasibility study made a positive recommendation of its Dolores property, which is in a developing stage as an open pit. Global capital expenditure is estimated to be approximately USD 132 million. Total cash cost of gold and gold-equivalent silver are estimated to average $238 through the 15.5 year mine life.

The study estimates total production of 1.45 million ounces of gold and 53.2 million ounces of silver (or a total of 2.3 million ozs of gold-equivalent). The project economics indicate a pay back of capital in 3.3 years, a net present value of $277 million and an internal rate of return of 24.3% using $475 and $7.50 as the price per ounce of gold and silver.

It has to be noted that new drilling results (not included in the feasibility study) have increased total project reserves to 2.45 million ozs of gold and 128 million ozs of silver (total of 4.48 million ozs gold-equivalent) and subsequent resource expansion drilling program is underway below the proposed pit.

Infrastructure development at the project has been underway since Q3 2005, construction has already started and production is expected to begin in 2007.

In addition to the resources already drilled, Minefinders Corp controls a strong portfolio of properties in Nevada, Arizona, and Mexico which have the potential to host new multi-million ounce discoveries over the next few years.

With 51.4 million shares fully diluted, Minefinders Corp has a potential stock price well above current prices on a medium/long term basis.

ECU Silver Mining

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ECU Silver's operations are located on the Velardeña mining property in the state of Durango, Mexico. As a sort of financial back up and having also a role as a developing pilot plant, the company bought a milling facility in 2005 that is currently operating at 320tpd for normal production on a sector of Santa Juana mine.

Despite major discoveries that ECU has been made so far the geological conditions imply the possibility of bigger ones to appear!

Yet in an early stage, drilling program in Santa Juana and San Mateo mines has showed great discoveries with large extensions of average grade of silver above 150 g/t and of gold above 4g/t.

On a very conservative approach, resources were reported (for 2005) at 17.4 million ounces of silver equivalent and inferred resources were 81 million ounces of silver equivalent. In reality and including the discoveries that already took place in 2006, total resources so far should be estimated around 250 million ounces of silver equivalent. And we must remember that ECU has only completed less than 30% of its exploration program.

Without any doubt we have here a top junior mine company which is most probably going to deliver huge returns on the long term.

Our stocks

Dear Gold Portfolio

Buy 1.000 ECU Silver Mining (ECU.V) at 3.15
Buy 1.000 Mundoro Mining (MUN.TO) at 2.00
Buy 200 Aurelian Resources (ARU.V) at 25.5

Mundoro Mining

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Mundoro Mining Inc. is a Canadian company listed on the TSX (ticker symbol MUN.TO). It is the largest gold project in China to be explored by a Sino-Canadian joint venture and is believed to be one of the largest undeveloped gold deposits in China.

The company has a 79% interest in the Maoling gold deposit, which is located in the Liaoning Province in north-east China, in the old area of Manchuria, not far from Beijing.

As Maoling has measured and indicated resources of 161 million tonnes grading 0.92 grams gold per tonne, it contains 4.8 million gold ounces. Even with such a low grade we arrive at an extraordinary amount of payable gold.

The development team is experienced in working in China and a bankable feasibility study is due in mid-2007 with production projected in the first half of 2009.

The capital cost is estimated at US$235 million and cash costs of US$167/ounce. The company has forecast that at $400-gold, the internal rate of return would be 18% with net present value of 134 million.

With a market capitalisation of approximately US$74 million, Mundoro Mining is probably a very interesting long term investment.

Our stocks

Dear Gold Portfolio

Time to buy junior miners...

Buy 500 Cumberland Resources (CLG) at 4.85
Buy 3.000 Tara Gold (TRGD) at 0.55
Buy 2.000 Bullion River Gold (BLRV) at 0.90

Wait just a bit more!

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Chart courtesy of http://stockcharts.com

I have been away working hard. While stocks are up but bonds are also up (and yields down) signaling a slowdown in US, commodities are struggling for now.

Gold and Silver are fighting and I think they are doing very well. Strong, very strong hands, couldn´t manage to dump them and they remain above last major bottoms.

November will be a good time to see precious metals rally. We only have to wait for the elections.

Junior gold and silver companies are waiting to be bought. Tomorrow I may resume trading.

In my opinion this chart is bullish (see MACD´s histogram).

A tale of two commodities

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Chart courtesy of http://stockcharts.com

Gold is not really a commodity, it has other merits – it is a precious metal and is increasingly seen again as real money, a reserve asset suitable for institutions and individuals.

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Chart courtesy of http://stockcharts.com

Therefore, if we want to see what is moving the commodity index (as measured by CRB) we easily find that Oil is the heavy weighted commodity that leads the market. In fact, when we observe the charts the conclusion appears clear as water.

Only one significant doubt remains: Where do we find a short term bottom for Oil?

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Breaking 590 is hard work!

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Have we seen the bottom for now as Gold spot is under 590? I wouldn´t bet on that yet. Nevertheless, we can see some good signs – strong demand, price strength when other commodities are weakening (CRB chart). But only when Gold breaks 590 and then 600 we will be more enthusiastic.

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Our stocks

Dear Gold Portfolio

It is an excellent time to buy junior miners.

Cumberland Resources (CLG) is firmly above 4.80 support all the way during gold sell off. The company is on the final stage of the development of a major gold mine (Meadowbank), Canada’s Largest Pure Gold Open Pit.

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Chart courtesy of http://stockcharts.com

ECU Silver Mining (ECU.V) is continuing exploration program of the Santa Juana mine in Mexico with encouraging results so far.

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Chart courtesy of http://stockcharts.com

Buy 500 Cumberland Resources (CLG) at 5.70
Buy 500 ECU Silver Mining (ECU.V) at 3.10

Sellers beware

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Chart courtesy of http://stockcharts.com

Following September 5th false breakout we had a devastating sell off that is likely not done yet. Nevertheless, we are already in a very extending stance for Gold. While not trying to guess bottoms, we must watch carefully any future buy signal.

As Gold continues to show weakness the setup on the daily chart may point to a near bottom. I think downside risk stays around 570/572 level. Though RSI(12) is already under 30 we may see some consolidation followed by a test to the 542 level. If this is to happen and Gold bounce back up then I believe a rally will follow.

Silver has a similar story and though it has a more substantial downside risk, at this juncture it is likely to go along with Gold.

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