April 18, 2008
Today concludes the recent uptrend that we had forecast for the markets. As we approach a full moon on Sunday, expect a small downtrend by Tuesday (April 22) at the latest.
The commodities markets and commodities stocks saw tremendous gains over the past few weeks. The funny thing is that commodities, namely gold, encountered a hoard of negative news during this past 2-week period. Just take a look at the following items:
- The IMF announced its planned gold sales
- The Fed announced uncertainty about more large interest rate cuts (http://www.washingtonpost.com/wp-dyn/content/article/2008/04/08/AR2008040802911.html)
- Gold and Silver futures contract prices rose to $10,000 (from $1,500 just 5 years ago), making futures trading less desirable
- G7 meeting voices concern over sliding dollar (http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aymt1m00u8OQ)
-Gold’s volatility and high prices may hurt demand (http://www.ibtimes.com/articles/20070215/gold-demand.htm)
In spite of the bad news, mining stocks and commodities prices surged ahead proving the power of all market forces combined. Although some profit taking is likely over the next few days, the future looks great.
If you took our suggestions and bought after this month’s new moon, then you would have seen tremendous gains, especially amongst our recommended metals mining stocks (see 2008 Investment Guide).
For example, take a look at the major advances that have occurred over past few weeks:
RBY +30%
Rubicon Minerals (one of our premium penny stock picks) told investors to expect higher amounts of gold at its Ontario, Canada mining site. If you’re thinking about owning the stock for 2008, then wait until it corrects to between 1.30 and 1.40 before buying.
ANO +25%
Anooraq Resources (ANO, another recommended penny stock), released further details of its successful acquisition of Lebowa Platinum’s mining sites in the Bushveld, South Africa facilities. Moreover it reported an increase of 7,7% in discovered minerals at the site. Wait until the stock corrects to the 3.40’s before buying in.
AGT + 15%
This week, Apollo Gold (another premium penny stock) announced the completion of its Black Fox pre-feasibility study and is valuing the project at over $300M.
Finding new mineral deposits is the most reassuring thing in the metals mining sector. Such news confirms that the companies’ futures are bright and their stocks are safe for investment.
As stocks continue to climb, some are asking, “Is the sub-prime mess really over?” Think again! Just when things seem to be improving, more awful sub-prime news surfaces. This time it’s yet another detrimental loss for Merrill Lynch and Citigroup. The former posted a $6.5B loss and 3,000 planned lay-offs and the latter posted a $5.1B loss and 9,000 job cuts. Do people actually trust these “money-managers” with their money?
The interesting thing about the scenario was that in spite of the news, the markets surged ahead. The DJIA was up by over 230 points today. Usually when the banks are posting huge losses and huge job cuts, market sentiment turns sour. Today, there was purely an upward trend–also unusual for a Friday.
The market is sending us a clear message: everything will be alright–at least if you have the right investments like we do. No, the sub-prime/banking disaster isn’t over, but there are still great investment opportunities. So, wait for the next correction (after next week) before jumping in.
