Originally posted on June 20, 2008 at argmaur.blogspot.com.
Yesterday marked a full moon and, contrary to our forecasts, our mining stocks did not see cycle highs. Instead, they moved sideways and even decreased slightly over the past 2 weeks. You needn’t worry about recent mining stock behavior as it’s signaling a change in cyclical patterns. The change will likely produce cyclical highs near the new moon and lows near the next full moon—a pattern contrary to what we’ve seen over the past year. Of course, it’s not a coincidence that this change is occurring on this year’s summer solstice!
The best thing to do is to monitor technical charts, detach yourself from your urges to sell, and practice patience even if it hurts! If you haven’t yet bought, then the best buys are RBY (Rubicon Minerals between $1.15 and 1.25), ROY (International Royalty between $5.20 and 5.70), ANO (Anooraq between $2.85 and 3.00), and AGT (Apollo Gold between $0.54 and 0.60).
The reason you should hold is because we’re presently witnessing a run from the banks unlike anything we’ve seen in most of our lifetimes. Just look at the following news items from the past 2 weeks:
This Week:
- “Wealthy Investors Shift Funds From Global Banks to Reduce Risks” in which head of Wilmington Trust Corp. said “For the first time in my career, I saw concern about the location of one’s assets.” (Bloomberg Article)
- “UBS Clients Probably withdrew CHF41 B ($39 B in Assets” (Bloomberg Article)
- “RBS Issues Global Stock and Credit Crash Alert” telling clients to “brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks” (UK Telegraph Article)
- “Russians Withdrew $55 B from European Banks” which was the first time they withdrew since 2003. (Kommersant Article)
- “Iran Withdraws $75 B from Europe.” A possible, although denied scenario to prevent blocked assets as part of the West’s threats of sanctions. (Reuters Article)
- Total bank losses and write-downs may amount to $1.3 TRILLION (Bloomberg Article)
- “Morgan Stanley’s Quarlerly Profit Fell 61%” (Washington Post Article)
- “Morgan Stanley Warns of ‘Catastrophic Event’ as ECB Fights Federal Reserve” (UK Telegraph Article)
Last Week:
- “Watchdog Feared a Run on B&B” which discusses how the British Treasury and Bank of England are concerned that mortgage bank, Bradford & Bingley’s might end up like Northern Rock last fall (UK Guardian Article)
- Central Banks express concerns over heightening inflation , signaling rising interest rates are imminent. Are the rate hikes actually a way to attract money to banks?
- “Central Bank Body Warns of Great Depression” discusses a warning realeased by the Bank of International Settlements based in Basel (Banking Times Article)
A financial consultant had it right when he expressed client sentiment and said, “If UBS, ‘the Rolls Royce of the industry’ can’t manage its own capital, then what the hell are they going to do with mine?” That sums up our opinion exactly!
It’s worth mentioning that this new “bank run” follows the panic over both Northern Rock and Bear Stearns, in which clients withdrew $4B and about $10 B respectively (and after both incidents, precious metals surged). That’s peanuts compared to what’s going on now. The only difference is that the media is remarkably silent about our present bank run. If this trend is legitimate, then all that money from the banks has to go somewhere else. It will go to precious metals—a timeless safe haven.
