Friday, October 31, 2008

Scary enough yet? Happy Halloween - Spooky Month for your RSP's and Stocks?

On the cusp of what has been quoted as the worst months for stocks in 21 years, here are some humor to brighten up an otherwise beaten day for equities.

1. Q: What is the one thing Wall St and the Olympics have in common?
A: Synchronised diving.

2. I went to buy a toaster and it came with a bank.

3. Overheard in a City bar: ‘This credit crunch is worse than a divorce. I’ve lost half my net worth and I still have a wife.’

4. What’s the capital of Iceland?
About $3.50.

5. Q: What is the difference between an investment banker and a pigeon?
A: A pigeon can still make a deposit on a BMW.

6. A British “banker” explains the subprime credit crisis in this brilliant YouTube video.

7. Leave it to a comic strip to explain a bank bailout.

8. Q: What is the difference between an investment banker and a large pizza?
A: The pizza can still feed a family of four.

9. Q: What’s the definition of optimism?
A: An investment banker who irons 5 shirts on a Sunday night.

10. “I tried to make a withdrawal from an ATM and the machine said‘Insufficient Funds’. I wasn’t sure if it meant for me or the bank.”

11. “I lent my friend $20 last week and according to the market I qualify as the country’s 4th largest lender.”

12. Broker to Client: “I’ve got good news - you’ll be paying 40% less in fees for the foreseeable future!”

13. I wrote a check for $100 to my friend but he never got it; the check was good, the bank bounced.

14. The crisis is so bad Bank Atm’s now have slot machines.

Thursday, October 30, 2008

Out of magic bullets soon? US overnight rate down to 1%, Continual slide of Currencies/Rise of USD$, Minera Andes, TNR, Suramina Resources,

In a not so surprising move yesterday - the US Government has once again lowered their overnight lending rates by 0.5%. The interest rate now sits at a historic low of 1% last achieved back in the shadows of the internet bust...

Another key indicator on a bigger worldwide scale would be the LIBOR rate, which in the case of US - reflects a similar change. 
The London Interbank Offered Rate (or LIBOR, pronounced /ˈlaɪbɔr/) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). LIBOR will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits. It is roughly comparable to the U.S. Federal funds rate.
Lower interest means cost of borrowing and risk is lower - an ideal plea for an increase in capital and liquidity. After all if it costs you $1 a year to borrow $100 (1% interest) versus $2 for $100 (2%), the expense to you the entrepreneur is much lower, giving you the incentive to create new ventures, right?

The cost of borrowing in dollars in London for three months fell for an eighth day, the longest run of declines since May, after the Federal Reserve made as much as US$540-billion available to mutual funds to resuscitate lending.

The London interbank offered rate, or Libor, that banks charge each other for such loans dropped 29 basis points to 3.54%, the British Bankers' Association said. The overnight dollar rate slid to 1.12%, the lowest level since June 2004. The Libor-OIS spread, a measure of cash scarcity, fell below 250 basis points for the first time since Sept. 30.

You ask, what does the overnight lending rate mean for me, the retail investor?

Simply put, it's the rate that banks lend to each other. In Canada and US, it's also the rate that Central Bank (Federal Reserve) will provide liquidity capital to major banks in case of anything as extreme as run on the bank to just a normal daily money excess. 

The overnight rate is generally the rate that large banks use to borrow and lend from one another on the interbank market. In some countries (for example, Canada), the overnight rate may be the rate targeted by thecentral bank to influence monetary policy. In most countries, the central bank is also a participant on the overnight lending market, and will lend or borrow money to some group of banks.

There may be a published overnight rate that represents an average of the rates at which banks lend to each other; certain types of overnight operations may be limited to qualified banks. The precise name of the overnight rate will vary from country to country.

Still, would the Fed really consider lowering interest rates below 1%? The last time rates were at 1% was between June 2003 and June 2004. Rate cuts have been a key tool the central bank has used in the past to boost a weak economy. A variety of lending rates, including credit cards and home equity lines, as well as the prime rate used to set many business loan rates, are pegged to the fed funds rate. 

So lower rates usually lead to cheaper credit, thus spurring businesses and consumers to spend money more freely.

In the last few times rates were cut - market has rallied to a certain degree despite an overall grim market - no different this time. Unfortunately with rates now at 1%, we can only realistically expect 2 more cuts of 0.5%. A zero % interest rate should sink the savings rate in the US to an all time low - waking people up to the fact that it may not be worthwhile to keep all their hedge fund redemptions in US denomination as GIC rates lower accordingly.

The HFRI Fund Weighted Composite was down 5.4% in September as hedge funds experienced their worst month since the Russian debt crisis. 

And the large drawdown is continuing in October, with the investible HFRX Global index down 9.0% to 24 October, according to absolute return funds provider 
Cazenove Capital Management. 

Writing in the firm’s October listed hedge fund dispatch, Cazenove analyst Tom Skinner said: 

“In face of collapsing NAVs, limited buybacks and heightened performance uncertainty, discounts in the listed sector have moved sharply wider. Several funds are now in danger of breaching discount control mechanism triggers.” 

With many listed fund of hedge funds trading on discounts in excess of 20%, and serious concerns over their ability to support narrow discounts in the short to medium term, the sector is coming under great pressure, Skinner said. 

“As the AUM of the wider hedge fund universe contracts, we believe that the listed sector will not be immune. Several funds, some possibly trying to pre-empt discount control mechanism triggers, are winding-up, offering exit opportunities or restructuring their funds, including F&C Event Driven, MW Tops, CMA Global, Close Man Hedge and Aida. 

“Several more funds are on the ropes, including Gottex Market Neutral, Dexion Equity Alternative and Dexion Alpha, and we believe that many of the listed fund of hedge funds do not have the critical mass to withstand this period and that the universe will shrink."  
One popular explainations for the USD$'s recent meteoric rise against other currencies is that Hedge fund redemptions in $USD means a higher demand for $USD in the marketplace as hedge funds clear their leveraged positions. The keyword here being leverage - selling equities as a loss (triple or more times) - and expecting to covert it to currency. Multiply this en masse and  you have a net effect of a dramatic increase in demand for $USD. 

Hope that brief overview of the interest rate situation is helpful - now let's take a look at what's new in our junior markets.

Yamana ( AUY ), Lundin ( ), Barrick ( ABX ), Kinross ( KGC), and a few more usual major producers all saw a drastic bump of 20%+ for the day as gold prices stabilized at $750/ounce and interest rate cuts around the globe reminded people of the pending inflation wave that is set to hit the world in the coming 6-12 months. 

Upon filing the spectacular 43-101 resource estimate of 11 billion lbs of copper last Friday on SEDAR - Minera Andes has finally seen some optimism along with the major producers. Since dropping to $0.50 - MAI has recovered to a bit more respectable $0.65 yesterday. With pending Q3 results and another likely profitable quarter, MAI is a great solid buy. Lundin Group is another steal at $1 to $1.40.

Resource rich miner junior TNR Gold continues to see waves of anonymous selling in larger blocks of $10,000 - suggesting larger fund liquidation - likely from month end redemption period. The fundamentals of the company remains very solid. Key indicators to watch for next few months includes outcome of the Los Azules legal dispute - especially with 43-101 report attracting major interest across the globe. Salto and Tapau drill results may also contribute to a nice jump, it's currently at $0.05-0.07, bargain bin prices for a quality company / management. 

With Zinc prices expected to jump back up despite Russia and China cutting GDP - another solid consideration for your investment dollars would be Canadian Zinc Metals. After a private placement at $0.90 a short 2 weeks ago, CZX.v slid down to $0.125 Monday. It has since then recovered to $0.20 range - and I think this is a very low risk entry point for another exploration junior with huge bluesky potential on a base metal that has potential for years to come. 

Tuesday, October 28, 2008

Los Azules 43-101 Technical Report out!!!

After a bit of wait time, the 43-101 (technical national standard) report is finally out on Los Azules. I recommend long time followers of Minera Andes and mining junior TNR Gold Corp take a look - even at $1.90 copper prices - a 25% conditional back-in by TNR should put the junior at at easily $1.00+ range. 

More positive news - although no formal resource has been announced yet for gold and silver, retail investors have been clamoring about potential gold and silver tonnages to the neighborhood of "1 million ounces gold+ and 30 million ounces of silver". 

Both are up nicely on Friday - unfortunately both pulled back with recent downturns... but solid companies to watch for.

Minera Andes files technical report confirming large copper resource at Los Azules

SPOKANE, WA, Oct. 24 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC: MNEAF) is pleased to report that a technical report in support of a resource estimate for Minera Andes' Los Azules copper project in Argentina has been filed in accordance with National Instrument 43-101.andis available at

The new technical report, by Minera Andes' independent consultant Donald B. Tschabrun, MAusIMM, of Tetra Tech in conjunction with Robert Sim, P.Geo., an independent qualified person as defined by NI 43-101 and Bruce Davis, FAusIMM, is entitled "Los Azules Copper Project San Juan Province, Argentina, NI-43-101 Technical Report," and summarized in a Minera Andes news release dated September 8, 2008 .

The report supports the independent resource estimate showing an inferred resource at Los Azules of 922 million tonnes, grading 0.55 percent copper, containing 11.2 billion pounds at 0.35 percent total copper ("CuT") cutoff. This resource occupies an area approximately 3.7 km by 1 km in size and contains a high-grade near surface copper core in the north (see maps in Sept. 8, 2008 news release).

Mr. Allen Ambrose, president of Minera Andes, an appropriately Qualified Person as defined by NI 43-101 for the Los Azules project, has reviewed and approved the content of this press release.

Minera Andes is a gold, silver and copper exploration company working in Argentina. The Company holds about 304,000 acres of mineral exploration land in Argentina including the 49% owned producing San José silver/gold mine. In addition to exploring the Los Azules copper project in San Juan province other exploration properties, primarily silver and gold, are being evaluated in southern Argentina. The Corporation presently has 189,621,935 shares issued and outstanding.

This news is submitted by Allen V. Ambrose, President and Director of Minera Andes Inc.


Thursday, October 23, 2008

Embry of Sprott Asset Management - Comex Defaults Dec2008? Greenspan admits defeat of free-markets and low interests, Mixed earnings continues...

I believe Gold and Silver will remain the alternative to fiat money. Keep in mind that it generally takes 12 months for the surge of credits and funds in the economy to really hit the nerve and cause inflationary numbers. Cartoon to the left was aptly named "Greenspanism".

Base metals from zinc to copper will (and has) already seen battered futures prices, with copper at a 3-year low yesterday. Embry reflects similar views to this in the interview below


John Embry - widely followed economist at one of Canada's leading mutual funds, believe there might be a case of physical calls for gold and silver come December 2008's expiry date. What does everyone think?

The premium of physical precious metal has risen so much in the last 2 weeks for Canadian (especially factored in US$ rise) that even the usual mass-panic-averse Sprott professionals are telling themselves this doesn't make any sense.

The International Monetary Fund (IMF) announced that Pakistan, Hungary, and Ukraine are amongst countries looking for financial support AKA Emergency Econ Stabilization Plan of 2008 AKA. Bailout AKA Rescue Plan, what. Smaller countries like Iceland have alreday nationalized its banks and have seen 77%/day drops in its stock market and 2,000% drop in its currency against the Euro.

The government has insisted that seeking IMF help to avoid a balance of payments crisis is only a "back-up plan", but officials said privately that they would likely seek the $4 billion the country needs. Dwindling foreign currency reserves can cover the nuclear-armed Islamic republic's import bill for only six more weeks, and Pakistan's new civilian administration admits rapid action is required. Pakistan's finances have "deteriorated significantly" according to an IMF report released on Monday, due to recent political instability, Islamic militant violence, and high oil and food prices. Its foreign reserves have sunk from $14.3 billion in June 2007 to $4.7 billion in September 2008, while the rupee has lost 25 percent of its value this year and the stock market has dropped 35 percent, it said. The Financial Times reported on Tuesday that Pakistan was in "informal discussions" with the IMF and other bodies over a $10 to $15 billion international support package designed to stabilise its economy.
On the brighter side, at least they only need as much as California was looking for to keep its doors open through October! At least they "seemed" to have found the $7 billion elsewhere, maybe it was from Mr. Allan Greenspan's accounts at the Federal Reserve Boards?

SACRAMENTO — A week after warning the Treasury Department that California might need an emergency loan of up to $7 billion, Gov. Arnold Schwarzenegger on Thursday sent another, more upbeat note expressing a “cautiously optimistic” belief that the state could find the money it needed in the credit markets. In a letter to Treasury Secretary Henry M. Paulson Jr., Mr. Schwarzenegger, who presides over the country’s most populous state and one of the world’s biggest economies, struck a far less urgent tone as California prepared to give Wall Street another try.
Thanks to the low interest rate over the 2002-2006 era, Mr. Greenspan has been criticized lately for funding the bubble growth of US during the current market crisis and unveiling of the real evils of the free-market economy. Greed.

Greenspan Calls Financial Crisis a 'Credit Tsunami'

In testimony before Congress Thursday, former Federal Reserve Chair Alan Greenspan said that the current financial crisis is a "once in a century credit tsunami" that will continue to impact the U.S. economy, spurring more job losses to come.

Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment," Greenspan said in prepared testimony.

Greenspan, who headed the nation's central bank for 18 1/2 years, planned to tell lawmakers that he and others who believed lending institutions would do a good job of protecting shareholders are in a "state of shocked disbelief," according to the Associated Press.

Jim Willie has the following to say on Contrary Investor Cafe. Things will get really bad before it gets better. Sobering presentation to say the least, but it is a good listen. Unlike most newsletter writer this gentlemen has the experience and education background (PhD in Stats) to back up some of his technical claims.

Wednesday, October 22, 2008

Short Term Recovery? Commoditie slide, Copper below $2,,, TNR

On Monday everything looked rosy as market climbed and expectations of interest rate cuts and a seemingly stablilized economy was in sight! Nikkei was up 3 days in a row and Asia was still slated for a decreased but still positive 6-7% GDP.

The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures of national income and output for a given country's economy. GDP is defined as the total market value of all final goods and services produced within the country in a given period of time (usually a calendar year). It is also considered the sum of a value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time, and it is given a money value.

The most common approach to measuring and understanding GDP is the expenditure method:

GDP = consumption + gross investment + government spending + (exports − imports), or,
GDP = C + I + G + (X-M).

But as I stated on the same day, earnings week will not look good. Guess what the headlines are today?
Dow drops 250 in early trading on earnings woes

Dow drops 250 in early trading on earnings woes and fears of deep recession NEW YORK (AP) -- Wall Street tumbled again Wednesday as investors shifted their focus from improving credit markets to worrisome corporate profit forecasts that are raising fears of a deep economic slowdown. The major indexes fell more than 1 percent, including the Dow Jones industrial average, which lost 250 points.

412 points in the early going. On Tuesday, the Dow retreated 231 points after forecasts from DuPont Co., Sun Microsystems Inc. and Texas Instruments Inc. raised fears that companies' outlooks for the fourth quarter and beyond could signal a severe economic downturn.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 26.28, or 2.75 percent, to 928.77, and the Nasdaq composite index fell 23.05, or 1.36 percent, to 1,673.63.

While reduced strains in world credit markets have eased some investors' nervousness about the economy, market anxiety remains high as hundreds of companies this week release third-quarter results and in some cases fourth-quarter forecasts that offer a glimpse of the rough conditions that may lay ahead.

In other news, MacDonalds MCD reported better than expected profits and still on rise - suggesting that people are getting more and more budget conscious - possibly at the expense of their waistlines, but I digress.

On the other side of fence - I caught an interesting segment on BNN last evening. It was a segment interview with your typical fund manager type, this time it was Don Cox from BMO's Global Strategy - he would essentially be the guy directing big big asset manager's on overall investment directions.

Some gems from the interview for those of you too lazy to watch the video:

Unwinding of credit swap non-event? Monday Oct 21 would've been the day Lehman Brothers and etc' other credit swaps are revealed - while there was a drop Mr. Cox indicated the % of risk was already factored into the massive devalued market, no huge catastrophe, yet. The system has already been building in its own defence mechanism says Dan Coxe of BMO Financial Group Asset Manager and he went on to indicate that a short term recovery may even be possible.

When asked about the recent rise in $USD against other currencies - he indicated that as debts unwind and other country's wealthy pour into $USD - demands rise in concert with bad news from Europe and overseas.

When asked if other countries may be in risk of further defaulting - he mentioned that Argentina defaulted back in 1992 - but total amount of debts in Iceland is less than funds$ the Federal Reserve Boards pump into the financial system on a daily basis. A note here - $30 billion in pension funds for the entire country of Argentina, consider that the California State Pension fund was at $250 billion+ with large losses coming from investments in Bear Sterns at $90/share! (good thing they're suing the NYSE for letting them buy that stuff maybe that will bring back BSC!!)

He says liquidity funding from FRB will continue as he believes the problem can and will be solved by dumping more money into the system.
Key recommendation from Mr. Coxe: look for what you want in the good times because it may already be higher in 3 months.

Let's hope he's right! There are truly deals out there right now... blue chip techs like Oracle who properly invested in vanguards like PeopleSoft are still projecting 15% growth per year. Likewise on mining side, GoldCorp, Kinross, Barrick, and Yamana are all trading at earning multiples below their yield.

Minera Andes (expected to make another $6-7 million Q3), NovaGold (who just earned $17 million last quarter), Capstone (recent merger announcement), and TNR Gold (43-101 and costing on Los Azules by December) are all at new lows. Could be time to find that balance you need in your portfolio in these crazy times.

As well, look for deals with Gold, Silver, and Copper down on the Commodities Exchange. The decoupling is still ongoing and 10% of your portfolio in bullion may yet prove to be a prudent investment.

Rob McEwan confirms this strategy and he's the ex-CEO of GoldCorp who brought it to the lowcost gold producer success. He is currently the CEO of US Gold and has large stakes in Minera Andes and likes Argentina - perhaps he will look into TNR Gold Corp as a possible next acquisition in light of its relations to MAI?

Tuesday, October 21, 2008

Gold at 5-week low - about to test $750/level support - with another bailout soon?? Has Helicopter Ben's speech yesterday finally broke the curse?

Ben Bernanke is now an even more-revered figure amongst traders and mere mortals. Why? With a few minutes on the television and a brief discussion about essentially how helpless FRB feels about the whole economy, typically the market falls about an average of 5% each time. (source: BNN and corresponding price chart vs schedules of his past speeches)

The curse seems to have been lifed yesterday with a promising rally of 688 points on the TSX and a nice 4% pop on the DOW.

Not so today.

As expected, yesterday's optimism stemming from possible rate cuts (confirmed) was irrational. This week is filled with earnings from major corporations in the US - and with softening demand from consumers the results are not likely to be good. With everything in sight dropping - it is a test of a goldbug (and commodity bugs)'s conviction in the tangible value of precious and base metals.

Stocks end lower amid mixed earnings reports
Tuesday October 21, 4:25 pm ET
By Tim Paradis, AP Business Writer

Wall Street declines as investors worry over earnings outlooks; credit markets ease NEW YORK (AP) -- Wall Street pulled back Tuesday as investors worried that companies' forecasts signal little easing of the weakness gripping the economy. After logging sharp gains in the previous session, the Dow Jones industrial average fell 2.5 percent, while the Nasdaq composite index lost more than 4 percent following a weak showing by technology names.

Strains in the credit markets eased further in response to a sweeping series of bailout measures by world governments, including a joint U.S. and European plan to buy stakes in private banks to boost to their lending. Demand for Treasury bills, regarded as the safest assets around, lessened further Tuesday in a sign that credit markets are gradually returning to a healthy state.

But analysts have warned that the market will see a stretch of volatile sessions as Wall Street recovers from this month's huge drop. Even though investors have been expecting third-quarter earnings, and even fourth-quarter forecasts, to reflect the damage from the financial system's problems, the reality of companies' reports have been unnerving.

"It's just this back-and-filling stuff. It's driven by earnings, yes, but also emotion," said Harry Clark, chief executive of Clark Capital Management in Philadelphia. "It's going to be this tug-of-war for a couple weeks at least."

The technology-focused Nasdaq saw steeper declines than the other major indexes after server and software company Sun Microsystems warned it would post a big loss for its fiscal first quarter and book a write-down. Texas Instruments shares fell to their lowest level in more than five years after the chip maker turned in disappointing earnings and issued a lackluster forecast amid slowing orders.

In other news, Mr. Helicopter Ben is now proposing a separate bailout package (yes, another one) in addition to the AIG, $700-850 billion, and other miscellaneous packages thus far.

The previous package had seemingly failed to do what they were designed to do, but instead reward the insider of the companies involved to unload toxic debts that will likely never amount to any "profits" as the official press records indicated. Thus, the baggage will be left again to the taxpayers. What's different about this package you ask? Hopefully instead of bailing out corporate insiders looking to dump their salary options onto the market - the money makes it to the lower income levels where they need it so badly - billions into food stamps, offset taxes and itemized mortgage, etc.

A step in the right direction - guaranteeing the GIC's and Money Market Funds are a must - investor confidence lost in equities and bonds will be devastating for everyone in the long run.

Fed would grant up to $540B to money market funds

Tuesday October 21, 11:52 am ET
By Jeannine Aversa, AP Economics Writer

Fed to provide up to $540 billion to help money market mutual funds WASHINGTON (AP) -- The Federal Reserve announced Tuesday that it will provide up to $540 billion in financing to bolster the money market mutual fund industry, its latest effort to get credit flowing more freely again.

The Fed's new program, called the Money Market Investor Funding Facility, will be used to support a private-sector initiative designed to provide liquidity, or cash, to money market investors. The Fed plans to back purchases of short-term debt including certificates of deposit and commercial paper that expire in three months or less from money market mutual funds.

The funds are large buyers of commercial paper and CDs, which historically are considered safe investments. However, the credit crisis, which took a turn for the worse last month, has put money market mutual funds under pressure as skittish investors demand withdrawals.

"The short-term debt markets have been under considerable strain in recent weeks as money market mutual funds and other investors have had difficulty selling assets to satisfy redemption requests," the Fed explained.

Our favorite mining juniors continues to take a beating, with TNR Gold holding at a low of $0.09 and Minera Andes dropping 10% to $0.60, a 3+ year low... and that was before any positive cash flow and 43-101 of 11.2 billion lb copper project Los Azules!!

On a brighter side of things, Barrick still holds on to nearly $2 billion in cash, and we are seeing some small moves into acquisition. Note: Barrick owns portions of TNR Gold.

Popular journalist Lawrence Roulston who has been taken some fire for recent picks in good country but facing downturn in market, has the following to say:

Investments are down Across the Board and Around the World, but the Worst Damage was Inflicted on Commodities.

We have all heard enough about how bad the financial situation is. There is no question that the markets are in a terrible mess. The U.S. credit crisis is serious, it is spreading, and it’s not going to get better over night. The situation is worse than nearly anyone imagined.

However, there are some bright spots and those bright spots represent investment opportunities.

As so often happens, the markets act like pendulums, swinging from one extreme to the other. A year and a half ago, the U.S. economy was booming, fuelled by a fraud of gigantic proportions that pushed housing prices and debt to absurd levels. The bursting of that housing bubble saw the pendulum swing to the opposite extreme as investors panicked and sold everything.

There may be a long period of transition as the various bailout measures kick in and get the economy back on track. But, let’s not forget that the U.S. has been through a number of difficulties and always manages to muddle along and then recover to be stronger than ever. I don’t believe that the U.S. will ever regain the level of supremacy that it once held in the financial world but the current crisis will pass, as it has every time before.

Look, the U.S. economy is not going to drop into some great black hole in the ground and suck the rest of the world in as some would have you believe.

As far as the rest of the world is concerned, it doesn’t really matter a great deal if the U.S. economy grows by 1 or 2% or shrinks by 1 or 2%.

Looking at the metals: China has been and continues to be the most important driver in the metals markets. Headlines are now screaming out that the Chinese economy is slowing. Those few investors who read beyond the headlines will see that China’s pace of growth has slowed from more than 11% a year to just over 10%.

If you think about it further, you will realize that 10% growth, coming on the larger base, actually represents the same amount of real growth as last year. India is still growing strongly, as is much of Asia. Similarly, the pace of growth is slowing, but is still at a pace that developed countries can only dream of.

Similarly, the popular press trumpets the fall in the oil price. It is only down when stacked up against the spike earlier in the year when speculators pushed it briefly to $140. When measured against the level of a year ago and two years ago, the oil price is up. Huge amounts of money are flowing to oil exporting nations which, like the Asian nations, are building infrastructure.

We constantly hear about the bursting of the commodities bubble. Yet, metal prices are still well above long term trends. Iron ore prices are still rising sharply: and definitely not driven by speculators. The prices are set by producers dealing directly with users.

When President Bush and the Treasury Secretary were trying to sell the bailout package, they painted a picture of dire consequences if the measure did not pass. That message seems to have been taken literally by many investors who are now even more terrified than they were before.

Whether the U.S. grows by a couple of percent, or shrinks by a couple of percent, other parts of the world continue to grow. It is important to note that the emerging markets are far more intensive users of metals that the developed world. The U.S. is more of a service-oriented economy, whereas China and the other developing nations are more heavily involved in building factories, housing, infrastructure and other things that use a lot of metal.

The net result is that world-wide demand for metals continues to grow. New sources of supply are needed to match that growing demand and to replace older mines as they are depleted. Much of the mining industry investment in this cycle has been directed to buying existing production.

The major producing mining companies are being valued on the basis that metal prices will fall hard based on a U.S. recession impacting the rest of the world. That hasn’t happened, and will not happen. And that means that the mining companies are being valued at exceptionally low levels in relation to actual and projected earnings. Teck Cominco represents exceptional value.

The majors have suffered, but the smaller companies have been beaten down to absurdly low levels. We are already seeing takeovers as the larger companies go bargain hunting. The smaller and mid-tier companies are beginning to merge. Those deals will be accretive to shareholder value as they will create larger and stronger companies.

Recovery in the junior mining sector will not be the same for all companies. Those companies that need to raise money in the near term will continue to face real challenges. Many will have to look to joint ventures, asset sales and mergers to find the money they need to move forward.

There are many small companies with defined metal deposits, strong management, and cash. Those companies will come back early in the recovery.

Some commentator’s worry that there will be no money for mine development. Clearly, if a junior walked into a bank tomorrow and asked to borrow a few hundred million dollars to develop a mine, they would get a rather chilly reception.

However, the smelter companies, the metal trading companies, and the majors are awash in cash and are seeking new supplies. Once the panic subsides, there will be a great many banks and other investors who welcome the opportunity to invest in tangible assets instead of the alphabet soup of financial hocus pocus that was on offer for the past few years.

I believe that the current financial mess will result in a return to more fundamental-based investing and that move will benefit mine developers. It won’t happen overnight, but it will come.

The message here is that those juniors that hold metal deposits that can be developed into mines will see a return to more rational values. Those companies that are still hoping to find a metal deposit at some time in the future may have longer to wait.

There is lots of cash available among the larger mining companies. Just looking in Canada, we see Barrick with nearly $2 billion, and Teck, Goldcorp and Inmet all sitting on more than a billion dollars of cash.

What I’m saying here applies equally to precious metals, base metals, minor metals and uranium. We aren’t looking to gains in the commodity prices. We are looking to companies that are adding value to their assets.

The most immediate market action is likely to come in the gold sector.

The cost of the financial bailout in the U.S. is measured in the trillions of dollars. The latest bailout package was $850 billion, including the tax breaks thrown in to get it approved. Add in the earlier bailouts and recognize that nationalizing Fannie Mae and Freddie Mac added $5 trillion dollars of liabilities to the U.S. government, bringing the total debt to $14 trillion.

Don’t forget the on-going wars in Afghanistan and Iraq and the huge trade deficit. The dollar was falling sharply before the burden of the bailouts was added. European governments are also conducting bailouts of failed banks.

Ironically, the bailouts have hurt the price of gold. That is a short term reaction, as traders seem to reason: “OK, the U.S. financial system isn’t going to collapse this week, I don’t need to own gold”, and they dump their holdings.

Anybody who takes a longer term perspective will realize that if a government simply keeps spending enormous amounts of money that it doesn’t have on things that do not generate a return for the economy, then the value of the currency will decline.

The whole financial mess, for many investors, has destroyed confidence in the global financial system.

Right now, investors seeking safety are flocking to U.S. treasury bills. That is particularly ironic, as the dollar, in the longer term, will suffer the most from the bailouts and the plummeting confidence. In time, gold will be the biggest beneficiary.

I can’t tell you what the gold price will be tomorrow, or next week or next month. Nobody can. I can tell you with certainty that the gold price will be high enough that the major gold producers will continue to mine it.

As long as gold companies are mining gold, they will be looking for new deposits to at least offset the amount mined each year. The juniors will continue to play an important role in finding and developing new gold deposits.

It doesn’t really matter what the gold price is: a new discovery will generate big returns for shareholders of a junior gold company. Advancing a deposit toward production will generate returns for shareholders of a junior gold company.

It’s not hard to make the case that the situation in the junior mining sector will improve in time. Of course, we all want to know precisely when the markets will turn around.

Just remember that the situation always looks bleakest at the bottom of the market and it looks rosiest at the top of the market. It requires a lot of nerve to invest contrary to what appears to be the right thing to do. At present, at least on the surface, this appears to be a really bad time to be investing. And that makes it the best time to be buying.

The greatest gains come from buying at the bottom of the markets and selling at the tops. That means buying when prevailing wisdom says it is a bad time.

We will never know exactly when the bottom is. Here are some things to consider at present. Over the past few weeks, Warren Buffet has invested $12.7 billion into the markets, including $5 billion into Goldman Sachs, one of the investment banks. The popular press thinks it strange that Buffet is investing at a time when things are so bad. But, that is precisely how he became the world’s richest investor.

Other signs that the worst may be over: the U.S. bailout has been approved. It will take some weeks for the program to be implemented, but at least bankers know there will be relief coming.

The failed banks are being snapped up quickly by other banks. In the latest deal, Citigroup tried to scoop up Wachovia within a day of its collapsing, but they were outbid by Wells Fargo.

Citigroup, which had the smarts to avoid the moves that led other banks into trouble, published a report last month that examined the commodities. They concluded:

"It is important not to lose sight of the long term picture. We regard these conditions as a correction ... in a secular bull market. The drivers of the super cycle - urbanisation and industrialization in China and supply shortfalls are intact. … Indeed the next up-cycle could be even more powerful than its predecessor."

If that report had come from one of the failed banks, I would not have paid much attention. Citi had enough smarts to avoid the mistakes that overtook so many of the other banks.

Investors are not going to suddenly rush back into the junior resource markets. But, those who buy the solid companies at the present severely depressed prices stand to enjoy big gains in the fullness of time.

The most immediate reaction will come from within the industry. Smaller companies will merge in deals that add shareholder value. The larger companies will be taking over smaller companies with good deposits.

To give an indication of the valuations: At present, major gold companies are valued on the basis of just under $200 per ounce of total gold resources.

Juniors, on average, are valued at a mere $29 per ounce. At prices like that, the juniors must look extremely enticing to the larger companies. Obviously, there would be takeover premiums that would generate returns from the current price levels.

Another interesting area is platinum: the price is down 60% from the $2,300 level earlier this year. Demand is growing and supplies are constrained. The market was clobbered by a big selloff by a platinum ETF.

It’s a similar situation for silver.

Uranium is going to come back in the not too distant future. Soon enough, investors will again wake up to the fact there is an energy shortage and uranium stocks will again become popular.

Panic selling at this stage is definitely the wrong thing to do. Taking advantage of the panic selling of others could net you some good companies at attractive prices. Be selective. Be patient. The market will come back.

Lawrence Roulston

Monday, October 20, 2008

Jim Cramer - Sells Your Stocks! Buy High / Sell Low?!? Has the market finally reached some stable grounds this week??

Good job Cramer! Self-touted entertainer and former *controversial* fund manager Jim Cramer recently said live on CNBC to sell all equities and keep yourself liquid.

Wasn't he also the one caught pumping Bear Sterns days before its collapse from $90 to $2??

This again re-iterates popular and mainstream media as the "what not to do" when investing.

Investments should nearly always selected with time horizon and objective in mind. For quality juniors, a $500-1,000 investment in 5-10 years can easily mean a 10x + return. I stress quality, because there are simply too many out there.

The credit market seems to be easing this week, but with company earnings yet to arrive, the pessimism may yet to have hit the mainstream.

NEW YORK (AP) -- Wall Street was mostly higher Monday as investors took signs of easing in the credit markets as evidence that government measures to revive the battered financial system are taking hold.

Investors shaken by extreme volatility over the past few weeks turned more
optimistic as bank-to-bank lending rates eased further.

This has helped to temper recession worries, but Federal Reserve
Chairman Ben Bernanke still warned that the economy is likely to be "weak for
several quarters, and with some risk of a protracted slowdown." He told Congress
in remarks before the House Budget Committee that a fresh round of government
stimulus might help ease the country's economic weakness.

"The market liked what Bernanke had to say, and there were hints that
he's leaving the door open for further moves in terms of rate cuts or economic
stimulus," said Ryan Larson, head of equity trading at Voyageur Asset
Management. "And, with credit easing in slow baby steps, the market has started
to realize that this is going to be a process."

Wall Street was also sifting through the first of hundeds of earnings
reports expected this week, seeking clues about future business conditions.
Among those reporting, oilfield services provider Haliburton Co. topped
estimates, and CEO Dave Lesar told investors and analysts in a conference call,
"We expect that any major macroeconomic disruptions will ultimately correct

With the world spinning out of control and volatility as an all times high, do yourself a favor and take a look at gold bullion price disparities versus COMEX (Kitco prices), and add some position of quality juniors to your portfolio.

At this rate, even mining majors are dropping to junior prices.

Lundin Mining ( is down below 20% of where they were a year ago. And this is a company that is profitable, produces gold and other base metals, and holds quality junior assets all over the world including one of the largest zinc discoveries in stable British Columbia, Canada... Canadian Zinc Metals (CZX.v).

Elsewhere in Argentina, Lundin bought out Tenke Mining who was joint with promising junior TNR Gold Corp at an equivalent of $15/share. TNR Gold remains in connection with Lundin through Lundin's Argentina miner Suramina Resources, who recently announced spectacular results at the high altitude properties... 530 metres of copper grading 0.459%.

Clearly there is huge potential for copper and gold in Argentina and there are majors all over interested. With the market at a temporary bottom (hinging on further interest rate cuts from US - and worldwide) to stimulate economy, some great bargains abound.

Minera Ande's Rob McEwan, man who brought Gold Corp to its glory days of low-cost production, is currently running US Gold, remains very bullish on longterm prospects of the precious metal and commodities market. So confident in fact, that he owns nearly 40% of Minera Andes at a likely average price of over $1.50+. Minera Andes is currently at $0.68 as I'm wrapping up today's updates.

Even the legendary Lundin Family has seen a sizable drop in their family fortune. 97% drop of the famiy heirloom. Would you think they'd sell their shares or wait it out? This is the true test of a goldbug - longterm value awaits, keep your minimum cash liquidity but long quality companies.

The Globe and Mail reports in its Friday edition that since the market's peak on June 6

Some of Canada's most famous business people have seen their shares in public-company holdings fall precipitously.

The Globe's Janet McFarland writes Vancouver's Lundin family still has $162-million of value in Lundin Mining and several other public companies. The estate of Adolf Lundin, who died in 2006, has seen its share of Lundin Mining lose 70 per cent in value since June and 97 per cent over the past year.

Lukas Lundin, chairman of Lundin Mining, said last week that he has never seen anything like the current commodities downturn. Some executives are feeling a pinch. Richard Gusella, chief executive officer of Connacher Oil and Gas, was forced to sell almost half his shares in the company because of a margin call at his brokerage firm. "Never in my wildest dreams did I expect, with the progress we've made as a company, that we'd have a market meltdown as we've seen," he said earlier this week.

Amid the gloom, some Canadians have seen their wealth climb since June. Prem Watsa, chairman and CEO of Fairfax Financial Holdings, has seen his share of Fairfax climb in value by $128-million to $605-million.

Even if you're not getting 10% dividend rates like Warren Buffet, the longterm focus is bright for quality companies with well-connected management who will, and can make deals happen.

Friday, October 17, 2008

Buffet says "Time to buy US Stocks"

...and puts his money where his mouth is. What do you think? He's even taking his personal savings out and moving it into US Equities. At your request I can put up an Excel file I have tracking Buffet's holdings, please leave me a comment / e-mail address I can send it out to you.

We're seeing what the pop media is saying a stabilizing of the credit markets. I have my doubts, but it's a great time to get back in on gold juniors... so many are making money but are still seeing their stock price tumble as if they were announcing billion dollar write downs like Merrill Lynch and CitiGroup!

NovaGold (
, joint partner with our well-connected junior miner TNR up in Alaska made income of $16+ million last quarter goes down 20% on announcement of this news yesterday. Incredible, isn't it?

Warren Buffett: Time to buy U.S. stocks
‘Be greedy when others are fearful,’ investor writes in article

Buffett: Time to buy U.S. stocks
Oct. 17: Warren Buffett said Friday that now’s the right time to buy U.S. stocks. Is he right? A panel of experts on CNBC tackles the question.

updated 21 minutes ago

NEW YORK - Warren Buffett has been moving his personal investments from safe Treasuries into U.S. stocks, according to an opinion piece he wrote in Friday’s New York Times.

“If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities,” the legendary investor wrote.

The piece, titled “Buy American. I am,” reiterated one of the legendary investor’s favorite maxims: Be fearful when others are greedy; be greedy when others are fearful.
Story continues below ↓advertisement

“Most certainly, fear is now widespread, gripping even seasoned investors,” he added.

“To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions,” Buffett said. “But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.”

Since stocks began to tumble in September, Buffett, and his investment company, Berkshire Hathaway Inc., have made large bets on U.S. companies, exacting rich dividend payments in the process.

Berkshire Hathaway agreed on Oct. 1 to invest $3 billion in General Electric Co.’s preferred shares, which carry a hefty 10-percent dividend. In late September, Berkshire Hathaway also bought $5 billion in preferred shares of Goldman Sachs Group Inc., which also pay a 10 percent dividend. He also bought warrants to purchase another $5 billion common shares at about $115 each.

“Let me be clear on one point: I can’t predict the short-term movements of the stock market,” he wrote. “I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”

Thursday, October 16, 2008

The Real Bail Out Package... Capitulation or Sucker's Rally? UBS nationalizes debt $60 billion, Merrill Loses $5.2B, Citi loses $2.8B...

A billion here, another billion there, if you are an US tax payer, it really
should make you wonder how that huge trillion (notice I said trillion, not $700 billion) package will affect you... or not. 

After the spectacular $250 billion offer of the Feds on Monday October 13th to purchase additional bank debts (in a clear attempt to avoid liquidity crunch like in 1929), things have once again become somber in the markets.

In fact, the S&P 500, NYSE, TSX are all lower this morning compared to Monday, wiping off any gains and plunging further. 

Is Consumer Price Index (CPI) really contained as popular press indicates? Realistically I can say that around here, food prices and cost of living has been steadily hiking up, so it's hard to imagine places in the US would be much different. 

Industrial production figures are falling by the most since 1974. General Motors (GM) is laying off workers and closing factories - declining auto loans except to the cream of the crop consumers... a beacon score of 700+ is necessary, which is about less than 25% of the US population. It's hard to imagine business getting better when credit is tighter, therefore less target market - and to put nail in the coffin, your major competitor Toyota is still able to offer financing at 0%. 

NEW YORK (AP) - Toyota Motor Corp.'s unprecedented offer of zero-percent financing on nearly a dozen models is trying to make the point that tight credit is no excuse for buyers — in fact, it's literally giving credit away for free.

But after the top Japanese automaker posted a 32 percent drop in September sales that only domestic competitors had experienced until now, the question is: Is it enough to get people to buy?

"I don't think it's going to just open the floodgates," said Jessica Caldwell, an analyst at the auto Web site "But it's going to help a lot of people who want a quality car, who don't want to worry about it, and are now going to be able to afford it because of this deal."

Yet, reports from Washington is rosy with CPI steady and unemployment actually declining. Real world experience from checking with your podmates and colleagues should paint a drastically different story.

WASHINGTON (MarketWatch) -- Consumers got a break on inflation in September, the Labor Department reported Thursday, as overall U.S. consumer prices were unchanged, while energy prices declined and food prices rose.
The report for September should ease inflation fears a bit -- giving the Federal Reserve room to ease rates -- even as the government grapples with ongoing and widespread economic and financial problems.
Energy prices dropped 1.9% after seasonal adjustments, the September data showed. For the second consecutive month, food prices rose by 0.6%. In August, overall consumer prices declined 0.1%, following gains of 0.8% in July and 1.1% in June.
The government's core consumer price index, which excludes food and energy price inputs, rose 0.1% in September.
Economists surveyed by MarketWatch had been looking for both the overall and core readings of retail-level inflation to rise by 0.2%. See Economic Calendar.
Inflation has peaked, wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, who sees "huge declines" coming in the overall number, and a slower core as well. He added that there should be some relief over coming weeks in food prices as global prices have "dropped sharply" in recent weeks.
The CPI has risen 4.9% in the past year. Growth in the core rate has been 2.5%, a little faster than the Federal Reserve would prefer. The Labor Department also reported that real average weekly earnings for September were down 2.5% from the prior year.
Banks in the headlines today showed a similarly dreary situation... fabled prestigious banking firm UBS accepts Swiss Government's bailout to the tune of $60 billion... or WAIT, the bill's addressed to the Federal Reserve Board as well.  

Swiss National Bank Takes $60B in Toxic UBS Assets
Swiss authorities moved to stabilize their storied banking system today, agreeing to move $60 billion in troubled assets from the books of financial giant UBS and into a special government-backed fund.

In a deal financed at least initially by the U.S. Federal Reserve, the Swiss National Bank will buy a host of "currently illiquid securities" from UBS, attempting in one step to cleanse UBS's balance sheet of the mortgage-backed and other assets that have tangled the global financial system.

UBS will post $6 billion toward the sale, but the Swiss central bank will put up the rest by turning to the U.S. Federal Reserve. The Fed, to ensure an adequate supply of dollars to Europe and other economic centers where financial activity has ground to a halt, announced earlier this week that it would allow Switzerland and collection of other central banks to have dollars in whatever amount they request.

The company [CitiBank] said it lost $2.8 billion, or 60 cents a share during the third quarter, compared with a profit of $2.2 billion, or 44 cents a share a year ago. Revenue fell 23% to $16.7 billion.
Analysts polled by FactSet Research, on average, expected the company to lose 49 cents a share.
The highlighted last sentence poses a frightening possibility. Elsewhere, we see Citiground dropping 7% on news of another $2.8 billion quarterly loss while Merrill  Lynch painfully admits a gigantic loss of $5.2 billion. 
"The core businesses did relatively well in a very difficult environment," said John Thain, Merrill's chief executive officer, in a conference call Thursday morning. "September was particularly difficult for us," he added.
Thain said that Merrill's wealth management business "continued to be a very stable, very good business," with pre-tax margins up 2 percentage points to 24% for the quarter. "I think that's a great example even in a very difficult environment the fact that that business continues to do well."
Special items in the quarter included net write-downs of $5.7 billion from the previously announced sale of soured investments called "U.S. super senior ABS CDOs," and net losses of $2.6 billion resulting primarily from sales of toxic mortgage investments.
Frightening news all around the world, Japan's Nikkei was down 11% earlier today with most of Asia following suit. 
The scenic Iceland banking fiasco (mixed with UK investors suing Iceland FI's over frozen bank accounts) seems to have finally come to a conclusion
Iceland finally opens its markets after nationalizing its banks and promptly drops 77% in the first hour of trading. Is that the bear market we can expect in the US, following the widely followed nationalization of major bank debts as above??
Iceland's benchmark stock index plunged 77 percent, the biggest decline on record, as trading resumed after a three-day suspension and the nationalization of the country's largest banks.

Investors demanded a higher premium to hold Icelandic government bonds, while the price of the country's currency remained "undetermined," according to TD Securities.

The global financial crises sparked the collapse this month of Kaupthing Bank hf, Glitnir Bank hf and Landsbanki Islands hf with debts equivalent to as much as 12 times the size of Iceland's economy. The three banks accounted for about 76 percent of the OMX Iceland 15 Index's value prior to the nationalization.

"We are quite far away from having it up and running in terms of anybody being able to invest, or disinvest in the Icelandic stock market,'' said Lars Christensen, a senior strategist at Danske Bank A/S in Copenhagen. "Given that we don't have a normally functioning exchange-rate market, a fixed income market, we don't have a clearing system between the banks internally, it's hard to talk about any well-functioning stock market.''

Is commodities still the answer? Paper trading will have us believe that gold, silver, copper, and even oil has fallen from grace. Do yourself a favor and check around the bullions or local exchanges. Last I checked, actual physical delivery is 4-5 weeks minimum, with mints offering a nice premium over the paper trading prices on Kitco.
A popular mint around this neck of the woods is NorthWest Mints, great for online shipping and quotes. 
Kitco shows Gold futures trading at $799/ounce, but if you try and order one online from - you're looking at $885.56, nice discrepancy eh?
In store bullions at your local exchange is guaranteed to be higher. Go down there and see for yourself. Now is a great time to pick up gold juniors and miners at bargain prices... when gold and commodities are again the investment of choice in uncertain times, the favor will come back very, very fast. 

Tuesday, October 14, 2008

Is this the right move? MAI, ABX, KGC, Paulson from Goldman Sachs...

After a historic 11.8+% S&P, NASDAQ, and DOW -moving additional bailout press release yesterday by the Federal Reserve Board saying they will buy whatever debts the US banks are selling - essentially opening the tap to more irrational rally, today we are seeing some pullback on the DOW and NASDAQ.

Those unfamiliar with the scale of this one day move - it's the largest rebound in a single day since... 1987. And yes, it's that 1987

The Canadian exchanges TSX and Venture surged by 1,600 and now back to 800 - expected volatility is still at an all-time high according to VIX. (pictured above)

VIX is the ticker symbol for the Chicago Board Options Exchange Volatility Index, a popular measure of the implied volatility of S&P 500 index options. The VIX measures the cost of using options as insurance against declines in the S&P 500.[1] Often referred to as the fear index, it represents one measure of the market's expectation of volatility over the next 30 day period.

The VIX is quoted in terms of percentage points and translates, roughly, to the expected movement in the S&P 500 index over the next 30-day period, on an annualized basis. For example, if the VIX is at 15, this represents an expected annual change of 15%; thus one can infer that the index option markets expect the S&P 500 to move up or down over the next 30 day period. 
If you take a look at peaks and dips of the VIX, you will quickly see that the last recent rough patches on the market such as post- September 11 attack and post crash of 2001, the index sees fluctuation up to 30-40 range. As a confirmation of just how ridiculously volatile these times are - October 2008 is now at an nearly non-sensical 54.99%.

Given that S&P 500 is at 1,000 - a swing of 55% will either be sub-500 or 1500+! Interesting times we're in, no?

With that out of the way, let us take a look at what really at with today's announcements. Even though it may appear similar that other countries have adopted a similar bailout plans - analysts are now confirming the US updated plan may have a much bigger failure likelihood.

The difference is, American banks allowed to fail

Commentary: Bank capitalization plans aren't the same for a reason

 On the surface, the American and British programs on bank capitalization look pretty similar, but key differences are apparent.

In both cases, governments are issuing preferred stock. Sure, the terms are different -- taking on the Brit preferred incurs a steep 12%-a-year payout; Uncle Sam wants 5% a year, unless the holding is still on the books after five years. 

But the real difference is to who it applies. In the U.K., the basic system was, get your capital up to certain thresholds privately -- or take the government money, and strings, to get there.

The US one, by contrast, is voluntary. Other than the "big nine" that got roped into taking the cash, there seems to be a strong incentive for all but the most troubled lender to take a pass.

 The British banking system isn't nearly as large as the U.S., and the Brits -- and for that matter the rest of Europe -- don't have a deposit guarantee program in place that the public trusts as much as the Americans have faith in the FDIC.

Banks in the U.S. can fail in an orderly way. In the U.K. and Europe, that's not the case.

And perhaps that's the real message behind the differing plans: the Americans aren't trying to save the whole banking system.

The Brits don't have a choice.         

Translation - some banks in the US are still slated to fail.

With the temporary relief of this supposely updated rescue package and the increase of FDIC insured bank account limit to $250,000 (from $100,000) - the FDR has certainly bought a bit more lifeline back into the market... you have to ask yourself though, how much longer can this charade go on for?

While Ben Bernanke has studied the Great Depression of 1929 thoroughly and understood that a tightening of credit is certainly the wrong way to go abouts (thousands of banks failed with limited credit to go around) - it remains to be seen if this is the right approach in this case of a systemic failure of depreciating assets, devaluation of $USD versus everything else, which leads to the popular fiat currency argument... a time of crisis, what would you rather have? Printed paper that says $100 on it, or pounds of copper and gold in the ground?

Quality juniors continues to take a beating in the market. Minera Andes dropped to $1.00 earlier, Canadian Zinc Metals just raised $7 million dollars with zinc in the ground on a huge property in secure Canada's British Columbia province with overdemand despite lower zinc prices, and TNR Gold Corp announced excellent copper drill results at El Tapau and is advancing their case against mining giant Xstrata for 25% back-in and adjacent property - 11.2 billion lbs copper 43-101 compliant. 

Gold bullion and silver bullion fluctuated wildly yesterday, dropping from $900 to $830 today. Popular media says the safety haven investors flocked out of gold on news of government promise to secure banks and such - but read between the headlines and think for yourself. If and when more banks start failing (like Washington Mutual) - do you think Gold will catch on again? 

Look at eBay prices - it doesn't get much more retail than that. Compare that to Commodity Exchange and Future prices - an interesting study by a fellow retail investor Mr. Gabriel Gray... do you think there will be a de-coupling of reality and futures paper gold soon?