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The Wallstreet Big Boys Are Not Interested in Junior Miners

Commodities / Gold & Silver Stocks Sep 11, 2007 - 10:20 AM GMT

By: Captain_Hook

Commodities And Now For Something Completely Different: What good would it do you if Michael Bloomberg became the next President of the United States ? Answer: In spite of all the platform promises he would undoubtedly make, no good in all likelihood, just like with Bush if you were not a defense contractor or oil baron. That is to say, like Bush, he would work on ways to reward his buddies for supporting his campaign. Good or bad depending on who you are – that's how the game is played.  As mentioned here many times now, and highlighted in our piece The Bourgeoisie Of America , what should begin to become more plain to everybody very soon is that guys like Bloomberg, in the top three-percent for sure, are only worried about lining their own pockets – and it's to hell with everyone else. And on a larger scale, and increasingly, official policy is being run on this basis, where again, such actions are not about to help you and me in anyway past putting off the inevitable – that being through a painful process bring us back to a system for the people as opposed to the one we have – designed to rape, pillage, and plunder.

Below is a commentary that originally appeared at Treasure Chests for the benefit of subscribers

Further thoughts along these lines are presented here by Richard Cook, who does a good job of pointing out the obvious, like we are already in recession, which of course is not mentioned on bubble-vision (think Bloomberg) because this kind of thinking threatens the paper empires of New York and London . And you may have noticed on the bounce off the lows in stocks that some issues are doing much better than others; again, reaffirming the tendency for the powers that be to support their own interests, which involves keeping the broad market bubbles inflated. The New York boys certainly are not buying junior mining stocks I can tell you – that's for sure. And unfortunately for some, they are living in a ‘dream world', mistakenly thinking that all of a sudden liquidity will show up in the current environment to bottom fish their undervalued resource plays . Here, for some crazy reason they think the people with money to invest in New York are poised to pounce on the particular little group of junior resource opportunities they are invested in, and to this point it's only been ‘normal' market action that they get ignored, with good companies plunging by 30-percent in one day when liquidity dries up. Perhaps these people should take a look at the chart below. (See Figure 1) 

Figure 1

As with the little guy in society today, increasingly little stocks are being ignored, as can be seen above. For the big guys / capitalists / brokers (New Yorkers / Bay Streeters / etc.), they have made their money issuing thousands upon thousands of these stock offerings throughout the years and now the market is flooded. And as can be seen in the price action, the market has been flooded to the extent that even when one is invested in a ‘good company', with great future prospects above and beyond it's peers (the ones we endeavor to identify for obvious reasons), they still can't catch a bid. Oh yes, and what if you do find a good one? Chances are some self-serving politician will show up at some point to line his own pockets, as with the games currently being played in Russia – soon to be coming to a theatre near you without a doubt if our current condition is just a dress rehearsal for worse.

So, the message is be careful out there. And again, plan your portfolios carefully, with small junior companies comprising positions / weighting within your overall mix commensurate with risk. And be aware of the bull-horners out there, who like the Bloomberg's, remain very interested in building their own fortunes at the expense of the little guys.

Question: Is this a good time to sell my junior holdings if I'm over-invested in the sector.

Answer: No – definitely not. At some point in the not too distant future the Fed will need pander the mob with a rate cut, along with further liquidity related measures to support prices, which may even provide with a glimpse back at Weimar Germany (or Zimbabwe for a modern day example) through the full measure of time. So, although prices could see a great deal more weakness this fall, as we move into next year, liquidity measures being taken today, along with possible fiscal measures not currently in play (think election related panic in the White House), good companies should find a bid at some point. Thus, as long as you can live through anticipated volatility this fall, where tax loss selling could keep pressure on the group right into December, again, as postulated on these pages numerous times in past weeks, certainly the January Effect (price strength associated with the absence of tax loss selling) should provide some relief, along with seasonal strength for the sector that generally shows up post Christmas. 

Add to this potential drastic monetary / fiscal measures bringing to light renewed interest in the larger sector by then (January), and it should become obvious this time of year is generally a very good time to lighten up on positions, with present times usually providing good buying opportunities with liquidity conditions stressed. And in paying deference to the primary message in the above then, make sure you take some money (hopefully profits) off the table in January / February this coming year (and as recommended by us last year) all things considered; again, especially if over-invested in the group.

It's not difficult to get carried away on the buy side when prices appear cheap, but it sure is much harder finding liquidity when it's not there, meaning one must pay attention to investing rules and timing considerations. What's more, perhaps now one can better understand my love affair with bullion at this stage. The current set-up for bullion could not be better past some short-term liquidity related concerns. Here, not only is supply winding down due to our banker buddies not allowing gold and silver out of the closet, with more and more miners stressed to the limits operationally because of this, and the realization production is set to drop off a cliff like oil due to high grading, the big picture for bullion has never looked better in some obviously meaningful respects. Something to consider within your portfolio mix, where personally I'm not afraid to tell you bullion percentages are being beefed up in my own portfolio.

Why take unnecessary risks when chances are in the full measure of time results will be the same, or better perhaps. How well will mining companies perform in hyperinflation conditions if they can't survive now? And if we are witnessing  peak gold for various reasons, shouldn't this make existing stocks more valuable as it becomes better understood. Peak gold – what the heck is peak gold? On my eyes the answer to this query is typified in one easy understanding. If peak oil is a reality, and energy is to become an issue quite soon, then how is gold and silver mining to accelerate past this constraint even if demand is rising? Will we chose to heat our homes or mine precious metals? These are some tough questions (and there are more) that cannot be fully understood today. Again, I am in love with bullion due to this picture. Eventually it will shine one way or another. Just think of when the top three-percent wish to secure their wealth. Eventually this will happen and insufficient gold supplies will be available. Unfortunately, because of changing circumstances, this view cannot be shared as it pertains to all mining companies.   

If this is the kind of analysis you are looking for, we invite you to visit our newly improved web site and discover more about how our service can help you in not only this regard, but on higher level aid you in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts ,   to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented ‘key' information concerning the markets we cover.

On top of this, and in relation to identifying value based opportunities in the energy, base metals, and precious metals sectors, all of which should benefit handsomely as increasing numbers of investors recognize their present investments are not keeping pace with actual inflation, we are currently covering 62 stocks (and growing) within our portfolios . Again, this is another good reason to drop by and check us out.

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters, although we may not be able to respond back directly, so please do not be disappointed if this is the case.

Good investing all.

By Captain Hook

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

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