The long-awaited, overly-predicted correction in Gold, Silver and mining stocks has now begun. After the smash on Tuesday for 30 bucks in Gold we have what appears to be a continuation pattern with today's further drop of additional drop of another $20. What's a "continuation pattern" you ask? A highly technical term? Nah, it means a top below a top followed by a new low beneath a low. That is the initial condition for establishing a new downtrend.
The correction ought to be sharp but not very deep. Gold's 200 Day Moving Average (DMA), which ought to contain the decline, is now at $1,200, suggesting additional downside of about 10%.
The Gold Bugs Index (HUI) has now dropped back below 500, after reaching a false breakout high of 535. In just a few short days, miners have dropped by nearly 10%. The HUI's 200DMA is above 450, which ought to cap further reactions to another 10%. Therefore, the correction is half over already. Get ready for a terrific entry point!
In recent news, as predicted in this column, China has suspended exports of rare earth metals. For a great play in rare earth metals, we have discussed the merits of Avalon Rare Earth (AVARF) http://markostake.blogspot.com/2010/06/avalon-rare-metals-inc-rare-opportunity.html.
As far as the stock market goes, the surprisingly violent bear market rally that has taken place all summer continues, but ultimately all markets must obey "The Law of Gravity". http://markostake.blogspot.com/2010/10/markets-to-obey-law-of-gravity.html.
The downside leadership in the coming stock market crash will undoubtedly be the financial sector. The Philadelphia Banking Index (BKX) has continually under-performed every market sector and with economic conditions deteriorating, an inevitable banking crisis looms directly ahead. Despite all the efforts of our friends at the Federal Reserve to pump out money, it appears that this privately held group has now been relegated to "toothless tiger" status http://markostake.blogspot.com/2010/08/unusual-uncertainty-meets-qe2.html.
But what about those great earnings reports? What about the coming Republican take-over of Congress? Won't these matter? No! These are old news and already factored in and discounted. The markets are looking 6 months ahead and, believe me, they DON'T like what they see. Markets anticipate. Once news is understood by the masses, it's WAY too late to matter!
So while that dirigible known as Hindenburg continues to levitate on a cushion of hot air from politicians, it has sprung a whoppin' leak http://markostake.blogspot.com/2010/08/hindenburg-omen-all-over-financial.html. Of course, the Omen isn't always right, but why take a chance on getting wiped out?
What's an investor to do here? Easy. Hold cash and wait for the correction in commodities, metals and mining stocks. Then, get ready to get rich as the mother of all bull markets shifts into turbo-charged high gear.
Marko's Take
Showing posts with label Avalon Rare Metals. Show all posts
Showing posts with label Avalon Rare Metals. Show all posts
Thursday, October 21, 2010
Wednesday, October 6, 2010
Gold And Precious Metals Miners Set To Explode
There are at least a dozen reasons why both Gold and the precious metals mining companies ought to correct, as outlined in this recent blog: http://markostake.blogspot.com/2010/10/die-hard-markets.html. But, at the end of the day, only market action itself matters, not "Marko's Take". (Gulp!)
In this morning's trading, the Gold Bugs Index (HUI) appears to have decisively broken the 525 zone that we outlined as the trigger point to begin its long awaited parabolic rise. The situation reminds me of late 1999 when the Nasdaq was severely overbought and overvalued and yet doubled in a period of just a couple of months. The difference, in this case, is that the mining sector is NOT OVERVALUED!
The kind of technical indicators discussed only handicap the race. None of them is flawless. It's important, therefore, to issue a mea culpa, accept reality as it is, not as we think it should be.
Given the increasing likelihood of an imminent upside explosion, what should investors do? Fortunately, a whole slew of junior miners are still at incredibly attractive levels. Among them are some favorites that we've written about in the past, such as ECU Silver Mining (ECUXF), Explor Resources (EXS.V), Seabridge Gold (SA), Hecla Mining Company (HL) and Avalon Rare Earth Metals (AVARF). We will update research on these firms, however, their merits can be reviewed by clicking the links, below:
http://markostake.blogspot.com/2010/06/avalon-rare-metals-inc-rare-opportunity.html.
http://markostake.blogspot.com/2010/05/ecu-silver-mining-update-it-keeps.html.
http://markostake.blogspot.com/2010/04/exploring-explor-resources.html.
http://markostake.blogspot.com/2010/03/hecla-mining-at-119-years-old-producing.html.
http://markostake.blogspot.com/2010/03/seabridge-gold-how-to-buy-gold-for.html.
If you wish to do your own research, you may wish to review this piece, which outlines some of the key risk factors to consider in selecting any mining company: http://markostake.blogspot.com/2010/06/some-considerations-for-selecting.html.
In terms of resources, you may wish to review this piece, which outlines all the places that are available to access http://markostake.blogspot.com/2010/09/information-is-more-than-power-its-gold.html.
Honestly, there are times when one prefers to be wrong, and this is one of them.
Time to make a ton of money!
Marko's Take
In this morning's trading, the Gold Bugs Index (HUI) appears to have decisively broken the 525 zone that we outlined as the trigger point to begin its long awaited parabolic rise. The situation reminds me of late 1999 when the Nasdaq was severely overbought and overvalued and yet doubled in a period of just a couple of months. The difference, in this case, is that the mining sector is NOT OVERVALUED!
The kind of technical indicators discussed only handicap the race. None of them is flawless. It's important, therefore, to issue a mea culpa, accept reality as it is, not as we think it should be.
Given the increasing likelihood of an imminent upside explosion, what should investors do? Fortunately, a whole slew of junior miners are still at incredibly attractive levels. Among them are some favorites that we've written about in the past, such as ECU Silver Mining (ECUXF), Explor Resources (EXS.V), Seabridge Gold (SA), Hecla Mining Company (HL) and Avalon Rare Earth Metals (AVARF). We will update research on these firms, however, their merits can be reviewed by clicking the links, below:
http://markostake.blogspot.com/2010/06/avalon-rare-metals-inc-rare-opportunity.html.
http://markostake.blogspot.com/2010/05/ecu-silver-mining-update-it-keeps.html.
http://markostake.blogspot.com/2010/04/exploring-explor-resources.html.
http://markostake.blogspot.com/2010/03/hecla-mining-at-119-years-old-producing.html.
http://markostake.blogspot.com/2010/03/seabridge-gold-how-to-buy-gold-for.html.
If you wish to do your own research, you may wish to review this piece, which outlines some of the key risk factors to consider in selecting any mining company: http://markostake.blogspot.com/2010/06/some-considerations-for-selecting.html.
In terms of resources, you may wish to review this piece, which outlines all the places that are available to access http://markostake.blogspot.com/2010/09/information-is-more-than-power-its-gold.html.
Honestly, there are times when one prefers to be wrong, and this is one of them.
Time to make a ton of money!
Marko's Take
Wednesday, June 16, 2010
Avalon Rare Metals, Inc.: A Rare Opportunity
While investors are starting to wake up to the incredible opportunity in precious metals mining stocks, the sub-category of rare earth metals remains largely unknown.
Both "light" and "heavy" rare earth elements represent a family of minerals found in consumer products such as TV displays and cell phones, as well as environmental applications such as hybrid engines and wind turbines Rare earths are also instrumental to medical equipment such as X-ray machines and MRI machines
U.S. military technologies such as guided bombs and night vision rely heavily upon rare earth elements currently supplied by China. Securing an independent U.S. supply could take up to 15 years, according to a new report by the U.S. Government Accountability Office (GAO).
New rare earth mines in the U.S., Australia, Canada and South Africa won't commence operations until at least 2014, based on industry estimates. The GAO report listed rare earth deposits in states that include California, Idaho, Montana, Wyoming, Colorado, Missouri and Utah.
Of particular concern is that many U.S. deposits lack the "heavy" rare earth elements critical for much of today's technological innovations. In addition, Chinese corporations are using their vast dollar holdings to buy mining companies that hold various U.S. deposits.
China has set quotas limiting rare earth exports and added on export taxes, despite supplying as much as 97% of the world's rare earth oxides. Over the last 7 years, China has reduced the quantity of rare earths for export by 40%. Even more troubling is Beijing's official plan through 2015, in which it warns that its own industrial demand might force it to stop exporting entirely.
There are very few publicly traded miners of rare earth metals, although investment in building capacity is growing rapidly. One such company of note is Avalon Rare Metals, Inc. (TSX:AVL)(OTCQX:AVARF).
Avalon is a mineral exploration and development company focused on rare metal deposits in Canada, including a wholly owned project known as Nechalacho, which is emerging as one of the largest undeveloped rare earth elements resources in the world. Nechalacho is particulary well endowed with the more valuable heavy rare earth elements, which are critical to environmental and high-tech applications.
Avalon presently owns 4 other rare metals and minerals projects in Canada including a lithium project in Ontario, an inactive calcium/feldspar project in Ontario and a tin-indium-gallium-germanium mine in Nova Scotia. None of these are expected to be operational any time soon, however.
The Nechalacho deposit now ranks as the second largest rare earth element deposit in the world, after the giant light deposits of Bayan Obo in China, yet the full extent of the Nechalacho deposit is still undefined. Especially important is the fact that Nechalacho has the highest proportion of heavy metals of any major known deposit, giving it a higher value per ton.
The Bayan Obo deposit in China is believed to contain 56.9 million tons, but with a proportion of heavy metals of only 2%. By comparison, Nechalacho has a much smaller resource base of 2.5 million tons, but contains a bountiful 22% of the more valuable elements. Thus, in the heavy category, Nechalacho has nearly half the resources of the giant Chinese mine.
The 2 largest other deposits in the world lie in Kvanefeld, Greenland with 2.15 million tons (14% heavy) and Mountain Pass, U.S. with 1.84 million tons (0.98% heavy).
Avalon has 77 million shares and closed yesterday at $2.43, giving it a market capitalization of less than $200 million. The company has no debt, but a relatively small cash balance of $10 million. The stock is reasonably liquid.
As a disclosure item, I have a position in Avalon and expect to for the forseeable future. While this is a higher-risk investment, it is well worth looking into and possibly adding to one's porfolio of mining companies.
Marko's Take
Some links we like and hope you'll check out: http://www.lemetropolecafe.com/, http://www.aegeancapital.com/, http://marketviews.tv/, http://www.shadowstats.com/, and, of course, our so informative and entertaining You Tube channel at http://www.youtube.com/markostaketv.
Both "light" and "heavy" rare earth elements represent a family of minerals found in consumer products such as TV displays and cell phones, as well as environmental applications such as hybrid engines and wind turbines Rare earths are also instrumental to medical equipment such as X-ray machines and MRI machines
U.S. military technologies such as guided bombs and night vision rely heavily upon rare earth elements currently supplied by China. Securing an independent U.S. supply could take up to 15 years, according to a new report by the U.S. Government Accountability Office (GAO).
New rare earth mines in the U.S., Australia, Canada and South Africa won't commence operations until at least 2014, based on industry estimates. The GAO report listed rare earth deposits in states that include California, Idaho, Montana, Wyoming, Colorado, Missouri and Utah.
Of particular concern is that many U.S. deposits lack the "heavy" rare earth elements critical for much of today's technological innovations. In addition, Chinese corporations are using their vast dollar holdings to buy mining companies that hold various U.S. deposits.
China has set quotas limiting rare earth exports and added on export taxes, despite supplying as much as 97% of the world's rare earth oxides. Over the last 7 years, China has reduced the quantity of rare earths for export by 40%. Even more troubling is Beijing's official plan through 2015, in which it warns that its own industrial demand might force it to stop exporting entirely.
There are very few publicly traded miners of rare earth metals, although investment in building capacity is growing rapidly. One such company of note is Avalon Rare Metals, Inc. (TSX:AVL)(OTCQX:AVARF).
Avalon is a mineral exploration and development company focused on rare metal deposits in Canada, including a wholly owned project known as Nechalacho, which is emerging as one of the largest undeveloped rare earth elements resources in the world. Nechalacho is particulary well endowed with the more valuable heavy rare earth elements, which are critical to environmental and high-tech applications.
Avalon presently owns 4 other rare metals and minerals projects in Canada including a lithium project in Ontario, an inactive calcium/feldspar project in Ontario and a tin-indium-gallium-germanium mine in Nova Scotia. None of these are expected to be operational any time soon, however.
The Nechalacho deposit now ranks as the second largest rare earth element deposit in the world, after the giant light deposits of Bayan Obo in China, yet the full extent of the Nechalacho deposit is still undefined. Especially important is the fact that Nechalacho has the highest proportion of heavy metals of any major known deposit, giving it a higher value per ton.
The Bayan Obo deposit in China is believed to contain 56.9 million tons, but with a proportion of heavy metals of only 2%. By comparison, Nechalacho has a much smaller resource base of 2.5 million tons, but contains a bountiful 22% of the more valuable elements. Thus, in the heavy category, Nechalacho has nearly half the resources of the giant Chinese mine.
The 2 largest other deposits in the world lie in Kvanefeld, Greenland with 2.15 million tons (14% heavy) and Mountain Pass, U.S. with 1.84 million tons (0.98% heavy).
Avalon has 77 million shares and closed yesterday at $2.43, giving it a market capitalization of less than $200 million. The company has no debt, but a relatively small cash balance of $10 million. The stock is reasonably liquid.
As a disclosure item, I have a position in Avalon and expect to for the forseeable future. While this is a higher-risk investment, it is well worth looking into and possibly adding to one's porfolio of mining companies.
Marko's Take
Some links we like and hope you'll check out: http://www.lemetropolecafe.com/, http://www.aegeancapital.com/, http://marketviews.tv/, http://www.shadowstats.com/, and, of course, our so informative and entertaining You Tube channel at http://www.youtube.com/markostaketv.
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