It is both and my money are on this story. It is the end of the world as we have known it before and it is Second chance to Buy into Junior Mining story. We all heard about the hurricanes, heavy storms and after getting into a wavy sea with some wind we are thinking that we know the story. Real life experience is something else and completely overwhelming in its brutal force.
Recent sell off in Junior mining companies is that kind of event which is separating boys from men. I am still here with my dairy and could be in much better shape as my treasures which are still in the ground or some do not even know that we are looking for them.
I will not go into a deep analyses of the recent geopolitical and economic developments and just will outline my big picture:
1. Using the Austrian definition of inflation as expending money supply with all bailouts of GSEs, fallen investment banks and Auto "retooling" inflation is out of control and USD will be worth close to nothing.
2. Deflation pressure of collapsing over leveraged housing sector will keep FED overreacting on the soft side in order not to allow lost decade Japanese style in USA.
3. Recent well organised intervention in USD in the thin holiday market has shown vulnerability of all FIAT currencies, now we will have stage number two in the Gold Bull market - run off from USD not only into other currencies, but run from all Fiat currencies into Hard assets.
4. Recent geopolitical events in Russia have shown that there is no such definition as energy security in that part of the world, West can not do anything because is using the double standards and my fear of wars for resources is very close to reality. My only hope is that this conflict will not put us to the real End of the World situation. All situation was played around and USD has benefited from it. USA have only one real Super Power attribute left - its military machine. Russian side was happy to show that the world has changed and will never be again the same. Brutal mistakes were done on the both sides and the world is certainly not better off: Russia will be pushed closer to align with China. One of the further complications from this situation will be mutual distrust, new cold war and diversifying from the USD. I do not like this situation at all, can not change it and invite you to participate in my plan and do not let evil forces to force you to sell at the Bottom and to buy at the Top. Maybe all the world will be better, if we become smart enough not to fool around each other.
5. "Decoupling story" is dead or just ongoing and its implications. The biggest torture in our investment world is to foresee the situation, to be right about the big picture and still experience that stomach feeling when everything is sinking together in the market sell off. I guess it is determined to be like this otherwise when everybody is rich around will we ever appreciate it? The trick of positive thinking is to fool yourself that you can profit from any outcome. If the world will become still I will profit from my puts on Google GOOG: hardly anyone will be clicking on anythings without house left, no electricity and running water. In all other cases China's stock market FXI chart looks very good for me, time is to push it up with recently rumored economic stimulus package. With retail sector growth more then 20% Y/Y internal growth will start to run the engine instead of pure reliance on export. Recent geopolitical tensions will emphasise once more time that the resources must be found, developed and protected with all necessary infrastructure in place. Decision will be taken more from military and geopolitical point of view then from economic efficiency. It will ensure strong demand for all raw materials. Another big kick start could come from USA should the new administration chose not the war in order to stimulate economy, but infrastructure development. USA was taken out of Great Depression by Second World War and interstate roads construction. Recent reports are showing that infrastructure in USA is in a miserable state including refineries, water treatment facilities, bridges and etc. Money will be printed anyway so maybe more careful approach on internal problems will safe the world and USA economy.
6. My market university paid off when I have entered this brutal phase of the Junior Mining sector this summer. I was without leverage and was not forced to sell at the wrong time. Now I am busy to accumulate great bargains if my writing here will get into God's office and he will like it.
7. My first pick is still TNR Gold TNR.v and I am stubborn to see exceptional speculative value here. It is a pure call on their value tighten up at Los Azules at the moment. In its recent SEDAR filing company disclosed that they have filed law suit in BC Canada against Xtrata in order to clear the title of Escorpio IV and, what is very important now, is to take out the condition that 25% back-in right could be exercised only within 36 months after option exercised by Xtrata and it has received Feasibility study. They are stating that it was added in the final version of the contract contrary to Memorandum of Undestanding which did not stipulate that condition. Alaskan projects in the proximity to famous Pebble deposit are not valued at all. Recent drilling on El Salto and El Tapau are underway. A lot of interesting thoughts about the Argentina and Mining can be found here.
My another pick is Mantle Resources MTS.v : it is pure Zinc market recovery story. Right metal - Zinc was under pressure when copper holds to its gains. Right place - BC Canada, even I could be fed up with high risk high-opportunity place. Resources have been published recently and are expending. Lundin has 10% stake. Lundin Mining has become trading situation with Tenke Fungurume in a slow motion. Strategy here is to take upside of the Zinc market in pure Zinc Canada M&A play and come to Lundin Mining LMC LUN.to should they overcome their spell. Sutors should include Lundin Mining itself and Teck Cominco with its J/V with Korea Zinc in Cirque deposit in the area. Story is known to industry people and not followed by investors at all. Sometimes it is a very good combination.
My old love story with Silverstone Resources SST.v is still under way. Stock must be jeolous and did not like when I took some profit at 2.5-3.15 levels. Beeing in the small brother of Silver Wheaton SLW story from the very beginning of its spin off from Capstone Mining CS.to was very fruitful. Our love was cemented in my belive in the Silver Bull when I was buying at 0.65CAD. Now when stock is messing around 1.5CAD my feelings are back. Some things are not in favor of the company: Lundin Mining Aljusterl is struggling with start of production cycle. No more silver streams were brought during the recent slump, but the selling was overblown and somebody has gotten into real liquidity story and was selling at any bid like there was no tomorrow. Recently announced normal cause issuers bid will help to stabilise the market and present another good entry point. Silver Standard SSRI, Silver Wheaton SLW, Yamana Gold AUY and Royal Gold RGLD are all my trading partners on options side of things as first money are pouring into big names in the sector. Water PHO, India EPI and Brasil EWZ along with China FXI my calls on recovery of decoupling story.
My diary do not forget that it is my own story and allow for all necessary DD, homework and other efforts necessary to become Mr Warren Buffet should you decide so.