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Nov 16, 2009

The Future in the Financial Markets and the Metals



From the Desk of Nick Nicolaas (FDNN)
Alert #62
November 16, 2009

To the Horizon and Beyond!!

The Future in the Financial Markets and the Metals
Dear Friends:

I just responded (belatedly) to an e-mail from a friend dated November 2, which nudged me into writing this quick missive. I just returned from a 2 week European trip and, although I am totally jet-lagged this morning, I felt that I should get this out to you ASAP. My trip from Zurich was another two day Airline horror story. From now on I am going to fly as little as possible and instead of Fly & Gripe, I will E-mail and Skype as much as possible (I am fed up being treated like cattle – so, sell airlines and buy Skype)!
The market is rallying but needs to correct and it will any day, probably very soon. We expected it to correct much sooner but it only corrected a little, it may only correct a little again (hard to predict). The coming correction will also hit the Metals and gold as well (to the $900s perhaps) although it may hit $1,200 or so beforehand. I am short the S&P right now but after it corrects we will probably have a Santa Clause rally going into mid December.
When gold and the metals do retract (perhaps violently), it may very well be short lived however, it will present another tremendous buying opportunity especially when everyone screams “it's all over for gold and the metals” (gold, silver, platinum and especially copper will be “the buying opportunity”). We also expect the metals as well as the financial markets to rally for a couple of years.
I met with Ian Woods in Neuchatel, Switzerland last week and he suggested that we have just skirted a deflationary depression and we are heading into an inflationary depression now. Since I met with Ian he sent me his letter noted below which he has kindly allowed me to share with you.
Over the past years Ian Woods of Abbey Investment Management, one of the most disciplined and patient investors I have ever had the pleasure of meeting, and FDNN have shared many market insights and especially what we think the future may have in store for us. His financial wisdom has guided my own investment decisions (for a private consultation you can contact Ian at abbaye@bluewin.ch.
Core positions to be added to when the market corrects in Silver: Hecla (HL), Coeur D'Alene (CDE), Tumi (TM). Copper: Amerigo (ARG), Nord Resources (NRD). Uranium: Blue Skye (BSK), Mawson (MAW). Gold: Royal Gold (RGL), Yamana (YRI), and Newmont (NMC) and Rare Earths: Tasman (TSM). If you have an appetite to Invest in a private company with a great new and innovative exploration and mining Business Model then have a look at, and call me about Eagle Peak Resources (see: www.mininginteractive.com)


Ian Woods: Friday, November 13, 2009
“The rise over 10,000 in the Dow attests to the brilliant call given last November and again in March this year to buy into the stock market.
Swiss banksters have not arrived to buy yet...they hold little or no precious metal positions in portfolios. I see a good cross section of these portfolios every month. Big fees and less than mediocre performance. Others responsible for pools of capital are still musing over the up move in the market and wonder if it is time to buy...they > are 9 and 12 months late to the market party. Yet this we see real time! They will in all probability arrive when it's about time to leave! As Granville says when it's obvious, it's obviously wrong!
There is a time to buy and a time to sell; cycles are as old as the Scriptures themselves. Going into September 2008 we were heavily in cash having sat for a long time in the cash parking lot watching the market play out its final distribution antics.
On October 21 after noting the record number of new lows and seeing the cycles in a bottoming mode we decided to buy and continued buying through November and December especially concentrating initially on gold and silver stocks which we later sold in March with very substantial profits...300% in one case (Aurizon Mines). We also heavily entered into copper stocks...buying Teck too soon but we all recovered selling out in October for a healthy profit. One of our clients bought a car with the proceeds of the Teck sale! Why were we so bullish at the time and where are we now?
At that time, the fall of 2008, the world was crying in its soup about the failed banking system; the banksters had robbed the house clean and the Federal Reserve (a private bank, and not an arm of the US Government as everyone thinks it is) proceeded to flood the world with dollars....pieces of paper with NO GOLD BACKING...the dollar bills are just pieces of paper. The corruption among the bankster community was (and still is) rife.
Back in 1979 the late Ian Notley perhaps one of the world's greatest cycle analysts of all time trained me in Toronto and to him I owe a lot for sharing his great wisdom and market foresight with me. On the last day of the training session we looked to the future...to the 21st century still 21 years away at that time.
He saw a period when it would be vital to be heavily invested in hard assets...copper, gold, silver, zinc, molybdenum, platinum and oil...all the things you draw out of the ground....this would be Canada's great era! He saw the rise in the price of gold and called the bottom to the month in November 2000. He issued his now famous sell signal for gold and gold stocks in May 2006 during which we headed for the exits and began to increase our cash positions...this was just after my visit to the European Gold Conference in Zürich where the mood was wildly bullish.
He then saw a big dip about the middle of the decade...it came in 2008 sometime after the middle but at least he gave the necessary sell signal to exit in time. He again stated that into the correction one should re accumulate the hard asset stocks which we did...he foresaw an inflationary depression...the opposite to the deflationary depression of the 1930s...the worst of both worlds.
Why? Because politicians are the most irresponsible people on the face of the planet, managers they are not...anything but...and they are dutifully pumping out dollars accountable to no one, not even subject to audit....just plain irresponsible and they are supposed to represent the people...so much for the fallacy of the great democratic experiment...Why has there been no audit of the US gold in Fort Knox since 1954? WHa is there no audit for the Federal Reserve? Ask yourself these hard questions which demand an answer!
Government is not your friend...it is your enemy...we used this quotation many times in our newsletters.. You have to protect yourself. What lies up ahead is not a pleasant scenario...yes deflation may have been avoided for the time being...but inflation + depression are a recipe for great trouble. The market is not going up on earnings or great improvements in the economy...the market smells the coming inflationary results of printing dollars ad infinitum...gold has already reacted, silver has yet to react...it is not at a new high. Its day will come, hence our investment in Hecla Mining.
Gold may reach into the 1200/1250 zone before correcting back to 900/1000 and then going higher...we are greatly troubled by the non-confirmation of the gold stocks to the move in the metal...they do not necessarily move together...the stocks discount ahead of the metal, hence the new highs and great performance in March this year as they discounted the move in the metals which you see playing out in real time.
Joe Granville is another market legend...and has also been responsible for some of the fabulous profits and outstanding performance all of us experienced during the first nine months of 2009.
Joe is also troubled by the gold stocks and their performance but allows for a sympathetic move with the price of the metal...but note they are not at new highs.
Sadly Ian Notley has left us...but his knowledge and wisdom live on...his market cycle system work carried on by Jonathan Arter who worked closely with him. Joe Granville produces his weekly letter and his overnight comments.
We have followed the discipline of the market and its message which brings me to where are we now.
Gold and silver stocks are in an uptrend long term, intermediate trend (not all of them are running at the moment) and short term.
The market in general is moving up long term, the intermediate trend is correcting, hence the seesaw crosscurrents of the last six weeks as we move back and forth around the 10,000 mark on the Dow.
This intermediate correction should complete by mid-December just in time for the Santa Claus rally and year end rally...when the market should resume its upward advance. As I write, there are possibly two years or more left in this bull market rally in an ongoing bear market.
When it's over, it's over! The cycles out to 2060 do not look good at all...but that is for another era...many of us will not be around to see it...for the moment we concentrate on the present and the immediate future...and the trend remains bullish for the long term, somewhat cautious for the intermediate term and the short term is rapidly approaching a top...it should come this week...We should be ready for another opportunity to buy again into the completing correction.
There may even be a newsworthy story to accompany the end of the corrective phase which should give you the clue for re-accumulation and maybe sale of gold positions into the strength for repurchase later on...one day at a time!
And if you want to make a great investment in your children's futures, have them learn Mandarin...forget the French and look to where the future opportunity will lie...It is is the Far East.
Ian Woods”
END
Yes Friends “you've got to be in it - - - to win It!!


From Vancouver regards and as always - - Stay Tuned!!

Regards,

Nick L. Nicolaas
Mining Interactive "Ahead of the Pack"
Skype: nicknicolaas


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