Member Profile for sparkyy

We know insiders are buying at a pace not seen since the market bottom of March 2009, when the rally began. They are buying big time. According to Vickers Weekly Insider Report, the long term average of the ratio of insider sells to buys falls in the 2:1 and 2.5:1 range. In other words, the norm is that insiders sell more than they buy. Recently the ratio was 1.68:1, which is bullish. After last week's 513-point plunge, the ratio was 0.33:1, extremely bullish. Just weeks ago, the Vickers report had the sell-to-buy ratio at 6.43 to 1. This is higher than 95% of other weeks' readings over the last decade. The insiders sold, forced the market downward and are now buying back millions upon millions worth of stock at much cheaper prices (see Far From Over).

We know that when you see stocks that have been badly battered more on fear and panic than fundamentals, you tend to see a strong rebound over the following few months. The way the markets tanked was a clear indication to me of panic selling over the last 7 trading days.

We know this isn't 2008. A week before that (see The Real Deadline) I said:

"The phones of my brokers haven't stopped ringing - but they're not phone calls from retail clients - those are dead. They're phone calls from deal makers and institutions. That means deals are being done and some hot issues are being worked on in anticipation of the next rally."

Trading ideas and projects are still being pitched to money managers. In 2008, no one would even try to pitch anything because everyone had gone into hiding. Not so today. Pitches are still being thrown around, and in Canada at least it's clear that many are acting on them. This is not 2008.

The Bottom Line

With all that being said, I remain cautiously bullish - especially towards the gold miners and the juniors.

If I see a bigger dip, I am looking to buy. There's a reason I haven't sold any of my mining shares lately.

My current portfolio is clearly focused on emerging production stories and strong exploration plays. Almost all of my stocks or stocks I plan on buying have a resource in hand or have drilled into something special. These are the projects I think will really flourish way when the rally begins.

I am expecting a very strong rally in the gold sector so if you see something that's good value with good management, I'd be picking away at it. Don't stay out of the market because the media says it could go lower. Why? Because aside from the history-making volatility last week, there was one signal that mattered more to my portfolio than any others.

The Big Signal No One Talked About

When the indices plunged mid-week, gold hit a record high of $1800. That's hardly a surprise for me and if you have been reading the Equedia Letter for a long time, you would know this. I think gold will continue to go much higher.

But that's not what caught my attention.

When the indices plunged mid-week and gold hit a record high of $1800, guess what companies soared? That's right, all of the gold majors.

For the first time in a long time, I saw gold stocks rally with the price of gold. Every gold major surged when gold hit $1800: Barrick, Goldcorp, Kinross, Freeport McMoran, Yamana...you name it.

Just take a look at the Market Vectors Gold Miners ETF (GDX) which surged 4 out of 5 days, ending up nearly 6%. Even the Market Vectors Junior Gold Miners ETF (GDXJ) soared, ending up just over 7%.

This is a big signal - one I am shocked that media outlets and other prominent newsletter writers failed to mention. All they saw was the volatility.

The gold mania is beginning and gold stocks are going to be a lot higher soon as gold looks to crack the $2000 threshold. The gold producers climbed significantly when gold rallied to $1800 last week. Imagine what they will do when gold hits $2000. Imagine where gold will go once QE3 is announced. Imagine where gold will go once Europe spends its way out of trouble.

Just imagine.

Once the majors get rolling, the juniors will follow as buyouts and takeover rumours begin. The majors will take advantage of beat up juniors and this will fuel speculation into that market segment. Then the triple digit returns will begin.

Lock 'n load.

Until next week,

Ivan Lo

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When Buying Gold Becomes a Life-or-Death Question

By Jeff Clark, Big Gold

I was recently asked in an interview if I thought gold was going to $5,000 an ounce. "No," I said bluntly. "I think it's going higher."

"You're that optimistic?"

"No," I replied. "I'm that pessimistic."

Imagine the condition of our world if gold reached $5,000 an ounce - and kept soaring. We'll likely be in a mania if that happens - but what kind of mania will it be? There'll be some greed to be sure, but I think there's a good chance a deeper reason will be at play. And it's the same reason that will drive you to keep buying gold at $2,000 an ounce.

You'll have to.

There are 101 reasons to own gold right now. You might buy because of the debt turmoil you see around the globe. You may think it wise, like the Chinese and others, to keep some of your savings in gold. Negative real interest rates may draw you to gold. You might buy because of the mere fact that demand is overwhelming supply. Or you fear inflation. Or deflation.

But most of these factors are missing one critical element: They're not yet personal.

Most reading this have not had to flee their country, been the victim of hyperinflation, or watched helplessly as their currency went poof! Longtime investors have made money on their gold investments, to be sure, but most of us bought the yellow metal as an investment and not because of a do-or-die situation.

It's doom and gloom to say this, but I think it's possible and perhaps even probable that at some point we'll all feel forced to buy gold, almost irrespective of price, due to a sudden and rapid depreciation of the U.S. dollar.

How do we get to that point? Simple: You go to buy something and realize you've just been priced out of the market, not because the item is too expensive, but because you suddenly realize the money in your hand no longer has purchasing power. Your reaction to that event is predictable: You feel cornered, maybe even scared, and the urgency to seek an alternative takes over.

This is obviously an inflation scenario, but it's not exactly a stretch to get there from where we are today. Here's why.

The following chart tracks the dollar and gold adjusted by the CPI from 2000 to present. It catches many people off guard, once they realize its implications. Look what's happened to the greenback in the past 11+ years:

Since the Y2K scare, the dollar has lost an incredible 25% of its purchasing power. Even adding the measly interest one would earn in a traditional savings account doesn't make up for this loss. This isn't a picture of the dollar since the creation of the Fed or since Nixon took us off the gold standard. This is what's happening right now - a gross devaluation of your dollar-based savings. Gold, on the other hand, has not only preserved but increased our purchasing power.

Now, imagine this scenario on fast forward. Instead of a 25% loss in 11 years, what if it occurs in, say, two years? That's what can happen in a highly inflationary environment. At some point, given the baked-in consequences for our currency and the unwillingness of politicians to effectively deal with the problem, you one day instinctively realize, as you hand money to a cashier to buy milk and she asks for more, that it is a depreciating asset and no longer a stable form of exchange.

In other words...

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Forward-Looking Statements

Except for the statements of historical fact, the information contained herein is of a forward-looking nature. Such forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the Company to be materially different from any future results, performance or achievements expressed or implied by statements containing forward-looking information.

Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that statements containing forward looking information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on statements containing forward looking information. Readers should review the risk factors set out in the Company's prospectus and the documents incorporated by reference.

Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources

This presentation uses the term "Inferred Resources". U.S. investors are advised that while this term is recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize it. "Inferred Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of "Inferred Resources" may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an "Inferred Mineral Resource" exists, or is economically or legally mineable.

In This Issue

Molycorp Announces Major Rare Earth Supply Agreement with Hitachi Metals

When Buying Gold Becomes a Life-or-Death Question

Trelawney Provides Update on Offer for Augen Gold Corp

Tactical Trading with Naked Puts

Featured BNN Clip: Will Gold Stocks Catch Up With Gold?

Technical Trading with Harry Boxer

Morningstar: Good Time to Buy on the Dip?

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