Originally posted on July 15, 2008 at www.argmaur.com.
In our last 2 commentaries we described a disruption in the normal cyclical behavior of our selected mining stocks and now things appear to be back on track. The disruption coincided with rare astronomical events that occurred over the past two weeks. On Independence Day, astronomers observed the alignment of planets Mars and Saturn with Regulus. Then on July 5th, a crescent moon (exactly 25% complete) joined the planetary alignment giving astronomers a spectacular show. By Thursday July 10th, Saturn and Mars converged in an occurrence we won’t see again for another 14 years.
As we expected, precious metals and some of our mining stocks have increased in value and have returned to normal cyclical behavior. The price of gold went from below $900/oz. to $980 (9%) and silver went from under $17 to a high of $19.40 (+14%) as the threat of war with Iran ensued over the past 2 weeks. Our stock pick (recommended on June 20), Rubicon Minerals (RBY) increased from $1.15 to $1.50 (+30%) on news that miners have intercepted a “Bonanza Grade” (mineral rich) gold zone at its Phoenix, Red Lake, Ontario mine. As we near a full moon, gold, silver, and some mining stocks are now sending overbought signals.
Platinum, oil and our other mining stocks spent the last 2 weeks in a continued correction phase. Nevertheless, on July 10th, platinum, Anooraq Resources (ANO), Apollo Gold (AGT), and ROY (International Royalty) reversed both a short downtrend that began 2 weeks earlier and a longer one that began in late May. The test to see that the correction has ended will be a convergence of the 50- and 200-day moving averages, leading to a greater MA (50). Since it’s still possible that platinum, ANO, ROY, and AGT will get back on track with normal cycles, we’ll wait until Friday July 18th before taking action; however it seems as though we could expect an uptrend for July 21- 31 for both Anooraq Resources (ANO) International Royalty (ROY).
This week we received more news that affirms the positive outlook for precious metals. Lenders Freddie Mac and Fannie Mae are in lot of trouble, housing prices are still on the decline, inefficient companies are shedding their workforce, consumer inflation persists, and once again, the threat of an attack on Iran are all issues that are forcing the most astute investors to shift their money into commodities. Billionaire investor, George Soros echoed what we said all along: the banking and lender crises are far from over and are the worst in our lifetime (http://www.reuters.com/article/newsOne/idUSN1444921820080715).
Most notably of all was a Reuters article that said UBS, who had previously estimated gold at $850/oz. for 2008, changed its forecast to $1,050 based on a surge in ETF holdings. Remember a few months ago when Goldman Sachs also told investors to sell gold positions at $870/oz? We told our readers not to listen to them and now gold is at $975 an ounce and is on its way back to $1,000 in a month. Now as platinum and mining stock prices reach lows unseen since mid-March, we now have another great buying opportunity. So, if you didn’t invest in precious metals or quality mining stocks in mid-March, it’s still time to seek, find, and wait for that perfect entry.
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