Rubi Tuesday

Yesterday (Tuesday, August 26) we witnessed a 26% increase in the value of our recommended mining stock RBY (Rubicon Minerals) and another 12% increase today. The rise came just 1 week after we reiterated our bullish sentiment on this stock. Rubicon executives reported that it hit yet another Bonanza grade (mineral rich) gold zone at its Red Lake, Ontario mine.

We couldn’t be more ecstatic, especially since 2 weeks ago, RBY dipped all the way below $1.10. If the correction didn’t scare you, then your investment would have grown by nearly 75% in less than 2 weeks. The new wave above the previous $1.50 resistance level to $1.88 means that we’re headed much higher than previously forecast in the long run.

You may recall that on August 4, we presented our research showing upward momentum in RBY as well as other precious metals and mining stocks in the few months following nearly every solar eclipse (much like the one that occurred on August 1, 2008). Today we’re pleased to announce that this time was no exception.

Now, it’s time for us to wait for the next buying opportunities in the markets whereas we’ll see new price levels that haven’t been reached in nearly a year. Brace yourselves for an exciting fall 2008.

We couldn’t be more ecstatic, especially since 2 weeks ago, RBY dipped all the way below $1.10. If the correction didn’t scare you, then your investment would have grown by nearly 75% in less than 2 weeks. The new wave above the previous $1.50 resistance level to $1.88 means that we’re headed much higher than previously forecast in the long run.

You may recall that on August 4, we presented our research showing upward momentum in RBY as well as other precious metals and mining stocks in the few months following nearly every solar eclipse (much like the one that occurred on August 1, 2008). Today we’re pleased to announce that this time was no exception.

Now, it’s time for us to wait for the next buying opportunities in the markets whereas we’ll see new price levels that haven’t been reached in nearly a year. Brace yourselves for an exciting fall 2008.

The “F” Word

In our last commentary we discussed how fear is generally associated with solar eclipses, the consequences of which lead to higher precious metals prices in the long run. Although a decline was foreseen, precious metals and mining stock prices plunged into unimaginable over-sold territory as investors became frantic. As we are fully aware, fear boggles the mind and leads to confusion. Now, it seems that a buying frenzy in precious metals has begun and nearly every major coin and bullion retailer is facing a huge shortage:

- Gold Demand Increases Despite Price Rise – The Economic Times, 8/19/08

- Heavy Demand for India Gold Amid Dwindling Stocks – Reuters, 8/18/08

- The US Mint Suspends the Sale of Gold American Eagles and is not Accepting Orders – APMex Blog 8/15/08

It’s not the first time this year that the US Mint, Kitco, APMEX, Monex, Perth Mint, CNI Numismatics and other precious metals coin and bullion dealers have had trouble filling orders. With prices so low, who wouldn’t want to start buying? Besides the fear ushered in by a solar eclipse, the other main catalysts for such a sharp and sudden decline in metals prices were: a full moon, conflicts in the world’s major natural gas region, the Olympic games, write-downs, and recent ETF sales:

- As you’ll recall, a full moon (one occurred over the weekend), brings about fear and lunacy.

- Russia and Georgian forces battled in secessionist Ossetia causing many to fear a disruption

in energy supplies and to fear a start to World War III.

- The Olympic Games have halted metal and industrial production in China as officials exchanged economic production for cleaner air.

- Big bank write-downs over the past 9 months have forced the liquidation of precious metals ETFs, contracts, and mining stock positions in order to raise funds.

- As the popularity of gold and silver has expanded this year, ETF sales and contracts have increased more than the direct purchase of the physical metal in 2008.

- A late summer volume slowdown is typical during the weeks prior to Labor Day and usually means low upward momentum.

Many traders and investors are wondering how metals will recover given that demand has grown but prices remain low. It’s not really our job to wonder how, but why. For example, silver has corrected to $ 13 because its price has skyrocketed from $ 5 just 5 years ago to over $ 20 a few months ago. If it’s expected to go as high as we’ve forecast this year, then the recent correction was certainly in order. Think about a slingshot–the more it’s pulled back, the farther it will launch.

There’s nothing wrong with our present situation in the precious metals market and it’s by no means the beginning of a long term trend. When investors wake up and realize that ETFs and contracts are still expected to be backed by the physical metal (which is in short supply), then things will change. Moreover, they’ll soon realize that demand for the physical metals has picked up tremendously in such a short amount of time and in such a tight market.

Make no mistake about it — the long term implications of our present situation are bullish. Things are shaping up quite nicely. Over the past week we’ve already witnessed RBY (Rubicon Minerals) settle around a support level of $ 1.15 and begin to inch higher. We find no reason to fear what’s going on. After all buying at very oversold yet reversing prices should be your primary goal anyway.

Totally Eclipsed Markets

August 4, 2008 at www.argmaur.com

On Friday, a total solar eclipse was visible from Northern Canada to North India signaling the start of a new cycle. A solar eclipse, unlike a lunar eclipse is when a new moon aligns with both the Earth and sun. Like every new moon, it signals change and a new beginning. Any solar eclipse is special because, historically speaking, precious metals and mining stocks have behaved quite positively after one has occurred.

The last one was an annular solar eclipse that occurred on Feb 7, 2008 and sent RBY (Rubicon Minerals) up 40 % in 2 weeks and GLD (StreetTracks Gold ETF) from $ 87 to over $ 100 in over a month. After the solar eclipse on September 11, 2007, RBY jumped 45% in less than 2 months and GLD moved from $ 66 to $ 77 in 2 months.

This is by no means a coincidence as prices commenced a 2 to 3 – month upwards trend after nearly every solar eclipse. Following a partial solar eclipse on March 19, 2007, RBY increased by 250% and GLD moved from $ 64 to $ 68 in 1 month; and after an annular eclipse on September 22, 2006, ANO (Anooraq Resources) doubled and GLD shot up from $ 56 to $ 64 in 2 months. The last time a solar eclipse occurred in early August was 1999 and and the $XAU (Philadelphia Gold & Silver Index) rose from $ 65 to $ 92 in less than 2 months.

Is the same likely to happen again? If you examine historical prices during the 2 months preceding solar eclipses, you can’t help but notice that the precious metals prices have followed a bearish trend similar to what we’ve witnessed in June and July 2008. If you consider the implications of the ongoing bank run, massive bank write-downs, increasing inflation, weak housing market, and poor performance of the major market indices, then you’ll see an overwhelming amount of fear and distrust. Investors are simply running out of options of places to put their money. Today, Citigroup is reportedly closing its Tribeca Global Fund, a convertible hedge fund unit, because of investor redemption (See Bloomberg article). So the bank run that we’ve been discussing all summer is continuing as investors no longer think that banks and investment groups are safe.

Bear in mind that fear is traditionally associated with a solar eclipse. For instance, the Chinese have held on to traditions of shooting arrows at the new moon, because it represents a dragon swallowing the sun. When fear is heightened the markets respond accordingly, although not instantaneously, and that response has usually been positive for precious metals and mining stocks.

The timing of the Federal Reserve’s meeting tomorrow, just five days after the eclipse is not a coincidence either. In September 2007, the Fed cut interest rates just 1 week after one had occurred. This year, the Fed is expected to keep interest rates unchanged. At its last meeting on June 25, 2008, it left interest rates alone and the next 3 weeks sent GLD from $ 87 to $100 and RBY from $1.15 to $1.50.

Perhaps it’s a good idea to wait for the Fed’s decision before coming to a conclusion. Nonetheless, precious metals prices already seem to be near support levels and we’re just beginning our waxing lunar phase, which is usually positive. Of course things could go slightly lower for a while for some metals and mining stocks, but we expect most prices to advance by next week. We think that highs will be reached around October 1-7, during the Chinese Golden Week festival whereas many people traditionally buy gold items.

Whatever happens, one thing is sure–a solar eclipse has ushered in a new cycle and we must connect with it in order to be successful traders and investors. Whenever we succumb to fear we hinder ourselves from tapping into opportunities that are in plain sight. It’s time to shift our energy and attention away from the bank crisis and all its effects to the realization that there are great investments in precious metals, energy, commodities, new technology, infrastructure, and efficient consumer based companies.