Buy, Buy, Buy
I don't know why I need to keep repeating the same thing but I will until it sinks in. We are in a gold bull market. None of the signs of a top are or have been present. We are in a gold bull market and every setback is nothing less or more than one more opportunity to buy gold and gold shares on the cheap.
I predicted a couple of months ago that the start of the war would bring a setback to gold and it would be temporary. It's here, it's temporary and it is a wonderful opportunity to buy gold stocks cheap. The correction took place only after a near record degree of bullishness and is perfectly normal. When everyone wants to buy gold, sell it to them. When no one wants gold, buy it from them. It's not a conspiracy though for the first time, I did see signs of deliberate manipulation last week in the dollar, stocks and gold.
Last week the United States entered a new era. Freedom and security as we knew it is probably gone for a very long time. As Americans, we have traded the illusion of freedom for the illusion of security and made a very bad deal. After months of dithering, the President of the United States attacked a sovereign nation who posed no threat to its neighbors much less to America. Lost in the smoke and fog of war was the announcement of the February 2003 budget deficit of $96 billion. Work that out on your Bowmar Brain, folks, that's $1152 billion per year annualized. And that doesn't include a dime for the cost of the war.
By now it should be obvious that the cakewalk we had been promised isn't going to take place. We have shot down a British aircraft, our own troops have started fragging their officers and basically we have dug both fists into the mother of all Tar Babies. What we have is Waco on an international scale. The actions of the president and those Neocons surrounding him have probably destroyed both the UN and NATO.
Lest I be deluged by dozens of rants from the 103rd Combat Virgin Battalion talking on subjects about which they know nothing, I do know combat, having served in Vietnam for 20 months. I was a warrior, not a supply clerk. I do know combat and I do know war. We started something which will end poorly. We can't win this war and our rulers will be very lucky to avoid trial for War Crimes. If you are one of the sheeple and still support those clowns in power, don't bother writing, I don't want to hear the bleating of sheep.
On a lighter note, I returned from the PDAC convention in Toronto and judging from the attitude of those at the show and the volume of people, gold has indeed turned a corner. Two years ago, about this time, I attended a show in Miami. There may have been half a dozen companies represented and if 50 actual investors took the time to come to the show, I'd be surprised.
The PDAC show, in contrast, was packed wall to wall with both investors and companies. I don't know how many companies actually came but the place was sold out.
I discovered a few wildly underpriced companies which you would have had to have been at the show to discover because in a few cases, even their web sites are way out of date with what is going on.
4FigureAU does a weekly study for us in which he compares the price of about 174 junior mining companies to their yearly intraday highs.
At the peak of gold in January when everyone loved the POG, only about 17 companies hit new yearly highs. That can't possible be a major or even minor high, that might be the beginning of a correction but no more. Last week only three companies hit new yearly highs.
One was IMA Exploration (IMR-V on the TSX) They had a booth at the show with some interesting rock samples. It seems they looked over some satellite photos and liked what they saw in one area. They were looking for gold. They sent out a geologist to do some sampling. As luck would have it, they didn't find a speck of gold. But they found silver and copper so common that the locals were using 15% copper boulders to support fence posts. You will have to contact them directly to get the full details but the find was incredible.
One of the specimens they brought to the show tested 3% silver. That's 3%, not grams per ton, not kilograms per ton, not pounds per ton. 3% is actually 66 pounds per ton which is about the highest concentration of silver I've seen. Their web site barely mentions the find, they have been staking property around the initial 3200 meter find as fast as they could. But the find is rich and it's a mine. It's a mine right now, you could take a blow torch and begin to mine, the ore is so rich. The stock climbed to $1.02 Canadian when the find was announced a few weeks back but stepped back to about $.80. I bought a lot of it in the $.80-$.85 range. It closed on Friday at $1.04. Don't expect to be able to buy it cheap again.
Due your own due diligence but IMA has a remarkable find in Argentina and with a market cap of $18 million US, the stock is a gimmie.
Two other juniors showed samples at the show which were interesting, Gallery Resources, (GYR-V) showed a mineralized core at the show which was part of a 2.2 meter drilling at their Katie property in the Botwood Basin. The core showed strong mineralization and assay results will be back soon. Gallery is continuing a winter drill program in Newfoundland and the bush telegraph has it that they have found even more results showing strong mineralization on the property with results to be announced. With a market cap of $8 million US, they provide an interesting risk/reward ratio.
Candente Resources (DNT-V) announced an investment by famed Rob McEwen of GoldCorp recently. Also involved in the Botwood Basin area play, Joey Freeze showed me drill core with one hole showing a 250 foot section of strong mineralization. You would have to be at the show and have listened to the Candente Dog and Pony show to actually see the core but the results will be interesting to say the least. A lot of drilling has been done in the Botwood Basin with mixed results and between Gallery Resources and Candente, I expect some far more positive results than from past drilling. Candente still has a market cap of about $10 million and in my view, really excellent management.
My favorite copper play is still Northern Orion (NNO-T) , my favorite silver play is still Cardero (CDU-V) and Ascot (AOT-V) . But IMA has a really wonderful discovery and should it prove to be extensive, they will give Cardero a run for their money.
Endeavour Mining Capital (EDV-V) is still one of the most undervalued merchant banks with superior management. It sells for about a 40% discount from NAV. I talked to their management at the show and requested that they post the NAV daily on their site. Look for them to become both a bigger player in financing and more visible in the future.
Queenstake Mining (QRL-T) announced a major coup about
a month ago. They are in the process of purchasing the Jerritt
Canyon mine in Nevada for about $50 millon US including bonds
and reclamation. The mine will pole vault them into the 300,000
ounce per year category. Overall the marketplace still views
the project as a giant risk but if you believe as I do and the
management of Queenstakes does, in the future of gold, the purchase
will add tremendous value to their cap. At present their cap
is about $17 million US which seems very low in comparison to
such similar stocks as Wheaton River with a cap of $140 million
US. I have been and will be a strong buyer of Queenstake.
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