We have here very interesting and important formation. TYX 30 Year Treasury Yield has hit double bottom at 3.895% and 3.897 respectively. I already have mentioned what kind of joke is it to buy 30 Year Treasury Paper of USA with 10 trillion debt and counting for the interest below 4%? Mr Market seems to agree for now and with recent panic during last week 30 Years Treasury actually fall in prices, they suppose to rise when investors are shifting out from Equities into "Safe" Treasuries. For me it is another indication that market is ready to turn up. Only professionals are investing in 30 Year Treasuries to match their maturity on obligations. So there is a sign that they were selling treasuries during retail panic and Fear collapsing the prices in equities. When all these guys will run for an exit we will have a fireworks in Gold and Silver and waterfall in Treasuries and US Dollar. Supply and Demand will rule in normal economics here. It is a very big market and can not be so easily manipulated like in Equities, Gold and Silver which particularly could be turned on a dime.
What kind of Equities to buy? Simple and solid. Hard assets. Why touch financials if you can not figure out what kind of value is there and what kind of strings in the form of "Swaps made by Play Station kids" are attached. Most of them are insolvent anyway. They will not collapse now as a system guaranteed by printing presses of all developed world, credit could start flow again with Interbank Guarantee from the same FIAT money supply. But what kind of value you are getting there? Earnings will be diluted with all capital increase necessary for solvency, financial models will change to simplified ones and suppression of margins will make these guys a bleak investment story for another 5-10 years. I will go as usual for the Hard assets needed by those who have cash, which is the King now. Story should be simple, on one page and understandable in five minutes. All those CDS, CDO and CTNs "Close To Nothing" with AAA rating are finished for another 10 years until new suckers will be born into the market place. The secret for the wealth building will be same old as during centuries: Buy at the rock bottom prices things that are necessary for growing population and developing world, sit on them and develop value during coming Boom times when Greed will be in play again. Retail panic and redemption from Hedge Funds (I still can not get what they were hedging all this years - their Villas from Bagholders?), Mutual Funds (managers are having fun all they way and you are Mutually sharing losses during the hard times) has brought unbelievable value to Resource sector. Do not get me wrong, Supply and Demand all the way and if Raul Castro will be elected in USA in Depression and Congress will be rationing Soap my theory will not work.
In all other circumstances Buy when "the blood on the street" we are here and Fear is so strong that babies are thrown away even without bath water.
Majors will appreciate first ones credit will be flowing again: Yamana Gold AUY growing producer with assets in Americas and low cash cost, Silver Wheaton SLW highly leveraged to Silver recovery with fixed cost for Silver streams at 4.0 USD, Silver Standard SSRI upcoming producer with huge resources in the ground.
General public will hit back on all names ones will be assured that the End of the World is postponed: NEM, ABX, GG, FCX, BHP, RTP.
Fortunes will be made in Juniors if you can manage to stay solvent before you get rich. Good homework is a must here. Margin is all but a swearing in the Church in this sector: you will have enough adrenaline without it, you can trust me on this one.
Silver Stone SST.v small brother of Silver Wheaton SLW - can I dream selling it at over 3.0 CAD that stock will be missing me so much that will make all way back to 0.7CAD? Hardly, I am not even close to be so clever here. But it is here dating me again and I have checked all background and apart from dumping by funds who bought it at 2.9 CAD latest PP could not find any Evil.
TNR Gold TNR.v back to 0.15CAD from 0.12 CAD during sell off, but try to buy something for 500k you will drive it all the way back to 0.25-0.3CAD before collapse in the Canadian Venture.
Interesting view on mining Argentina is here.
And here is a very important observation for Junior markets. Stocks are at the level of 2003 when Juniors took off and performed 5-10 times rally into 2005. All these years they have spent billions on exploration, found deposits, defined resources and even start building mines. Literally value were build in the ground and they are back to the level when they were dreaming about The Bull Market.
Canada Zinc Metals CZX.v we have a very special relationship here. It is a recovery story and contrarian play on Zinc. Just tell me when when the housing will recover (we will not talk about China for a while) - 2, 3, 5 years. I am even OK with 5 years here - you will not put a mine even if you start looking for Zinc now. Once the dust will settle Zinc will recover from 0.6 USD - it is the level of closing mines, 0.75 is a cut off for Chinese smelters. All these calculated Oversupply will never come at this level and half of the big deposits are in Afganistan, Iran, Russia and Africa. Thank you very much, I do like Canada and 10% Zinc grade and 50 million t deposit next to Akie surrounded by CZX.v land.
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