Gold - Inflation expectations are rising. GDX, AUY, ABX, NEM, RGLD.

Gold Inflation indicator is still to be confirmed by decisive move up from recent Low. On a positive we have Buy cross on PPO and very strong candles. Danger here is a break down from Bearish flag. We need US Dollar to come down and implosive move in Gold up with Short squeeze, like in the beginning of September. First step will be to close above 750 weekly and then above 800.

Gold Miners GDX H&S Bullish reversal.

After three legs down from July's high GDX is turning up in reversal H&S, it is important that RS will be formed above 20 for powerful come back. Watch the US Dollar as we have pointed before. With strength in Gold this sector will fly back to normal valuations very fast. We need just 1% of all money allocated to equities to change this game forever.

Basic Materials is coming back.

Basic materials are showing the same reversal pattern: economy will recover much later, but demand will come before it at some level and at some price. Here is the key: level of price is killing the Supply side more then Demand is diminishing. Decision to close the mine will come quick without the credit available, but to build a new one you need 5-7 years with all favorables in place. Study Zinc as one of the examples.

Dow Jones World Stock Index - Following Bullish Reversal

I am not sure whether there is any life on Mars, but Earth is still spinning around. We must overtake 188.36 for definite move and Decoupling to be recognised. It has already happen: US Corp will have 1 trillion Deficit after all these bailouts, China has 1.9 trillion Reserves.

Dow Jones Transportation is staging a Bullish Reversal.

Reversal in Dow DIA must be confirmed by Bullish Reversal in Dow Transportation: 107.76 must be taken out above 110. Oil below 100 will help here.

Panic has lifted the US Dollar with collapse in the markets.

I like this chart. It is USD to Dow DIA ratio: just look at that perfectly managed picture before Mid September Lehman collapse. USD was rising with manipulation and Dow was sliding: my guess idea was to shake out Oil, Gold, Silver and Commodities Speculators, bring prices down and then stop pumping dollar and bring election rally. Something went terribly wrong for someones: after Lehman Dow collapsed with all markets and US Dollar made a shooting star killing the masterminds behind this with last economic strength - export. Good news here is the Reversal H&S formation which show new unusual for us reality: Strong market in Dow means weakening US Dollar losing its "safe haven status".

Fear Index VIX is confirming Bullish reversal in the Markets.

So far so good here in confirmation of Bullish Reversal H&S in Dow VIX is staging Bearish reversal in its chart. Less Fear - more appetite for risk, more Buying into Stocks, US Dollar is weakening as "Safe haven" helping to exporters to gain some legs while domestic consumers are underwater. Friday was really important: break out of 70 on VIX could lead to Double Top Retest and self reinforcing selling into the waterfall on Dow. Free White soldiers could be formed - strong reversal pattern, it did not happen with all those bad news - it is a good news.

Dow Jones Industrial DIA - Holding the World on its Shoulders.

Cream of the cream, Blue Chip stock former pride of USA Corp. Most liquid they took the hit first with Margin calls and Redemptions - they will show signs of life first. Strong Reversal H&S pattern is forming. With awful news on unemployment 6.5%, Ford F and General Motors GM on Friday market has managed to rally after two day shock of slipping back into abyss. We are on the one side here: we need reversal confirmation and that 9750 on Dow will be taken back. Risk if that it still could be a continuation Bear Flag pattern if 9750 will not be taken back - then the waterfall.

US Dollar USD - One Trillion Dollar Question. SSRI, SLW, GDX, AUY

Faith has been lost and gravity laws were shattered. Sun has risen in the West and US Dollar has rallied after initial manipulations crashing all commodities, Gold and Silver. Juniors has been sinking below cash value. Time is to jump if you are leveraged, Bubble Vision has found "new" thing to talk about - Depression and Deflation. We must admit: Decoupling has happen so far only between us and our paper capital gains. We get so much emotional torture that are not sure any more is it Very Bad Already or could it get Worse? All is tighten up now to one simple thing - Fear. US hit the wall so rapidly that all world seems to be ending in front of our eyes. Fear and forced selling have pushed valuations to the meaningless levels, who would look for value when world is ending? Nobody - and we can not do anything if it is true. But there is another One Thousand steps before End of the World which could separate you and what has left from your money if those who run the world will chose to continue the show.

Our strategy is not against USA or any Free Will for that matter (we were positively surprised in our cynical thinking on November, 4th). We are still following the tide. Do not fight the FED. Bankrupt government can not go bankrupt if it is borrowing in its own currency: it can always print more. There is only three way out of trouble for the new positive energy in the falling Empire:

1. Rise taxes, it will not allow to solve the problem (economy is in recession) and could kill any recovery. Little step will be done here. Social unrest and Depression is picture here, back to 1930s.

2. Borrow. It is what going on and will be done next. But you can only borrow some time. Next year budget deficit will reach astonishing 1 trillion dollars. Who will be those suckers to lend? At what price?

3. Print more money, it will be the answer. US will destroy its currency but it is the only way. Clever way will be to use at least part of this money for Infrastructure development. Strong dollar is killing what have left from US economy: you need weak currency in order to stimulate your export when your internal consumers are under water.

Medicine here now is to make the yield curve steeper as soon as possible: it is the only way for banks start to lend and make money, do not touch them, in our plan they are only means of creating wealth in super inflation environment. Banks are borrowing short and lending long in normal economy. You need fast Negative Real Rate: low short term rate "targeted" by FED and higher long term rate determined by the market on 5, 10 and 30 years Treasuries. The more money you print by way of selling Treasuries the bigger discount, higher yield. You are debasing your currency. After you stop to worry about your bank and that the world will end tomorrow you are looking for protection of your capital and risk to deploy it for profit.

I will leave all worries about Deflation to the FED, we will deal with what will come out of their fight with the Monster - Inflation, it will be the same things like in 2003 or in 1970s: "limited" by its nature Gold and Silver as value preservation and Commodities as means to develop and feed the world in EX "Developed and already Obese" societies. Recent developments has brought us into the powerful picture of New Bull Leg if our analyses is right: all even true believers are shaken, pessimism is at its high, Fear just only now is subsiding. Majors are selling at levels of Long World Wide Recession, Juniors at near bankruptcy levels ( and many will vanish for sure).

Now it is important that it will start happening in the nearest future: transition from Fear of Deflation and forced selling to Tide of new liquidity. I will run a few charts which will be important for progress in our strategy.

We can try to be very clever (we did it with reasonable success) and trade in or out all the way. In the end it will not be so important if you are not forced to sell at the Low and not stupid to Buy at the High: Tide will lift you if your boat still in the right place.

Inflation, remember this word, we know how to deal with it, now lets search for The Signs.

Silverstone Resources SST.v - Bull in Silver continued.

This is the place to be and accumulate if you do not buy deflation argument and that Silver will go below 5.0 USD again. Finally we have great news for the company:

"The Northern Miner, 11/7/2008
Silverstone moves into gold, may double 2009 sales
Vancouver – Silverstone Resources (SST-V) secured the life-of-mine silver and gold production from Sherwood Copper’s (SWC-V) Minto mine in the Yukon.

The move should more than double Silverstone’s silver equivalent sales in 2009 to 4.5 million oz. and, as Silverstone president and CEO Darren Pylot notes in a conference call, it marks Silverstone’s first foray into gold.

The Minto mine, though primarily a copper mine, has proven and probable reserves of 9.13 million tonnes grading 0.74 gram gold per tonne and 7.73 grams silver per tonne. That translates into 204,000 oz. gold and 2.1 million oz. silver - or around 16.4 million silver equivalent oz. assuming Silverstone’s 1:70 ratio of gold to silver oz.

In 2009 Sherwood forecasts production of 30,000 oz. gold and 300,000 oz. silver as a by-product of copper processing.

To get its hands on that and future production Silverstone will pay Sherwood US$37.5 million upfront and US$300-per-oz. gold and US$3.90-per-oz. silver on production up to 50,000 oz. gold. Over 50,000 oz. gold Silverstone has the right to 50% of gold and silver.

Sherwood will immediately receive US$12.5 million with the rest to follow within 14 days of signing a letter of intent.

To make the payments Pylot says Silverstone will draw about US$10 million from a US$15 million line of credit and the rest from its US$28 million cash reserves.

As part of the deal Silverstone also gets the right of first refusal on potential silver and gold production from Sherwood’s Kutcho copper project in northern BC. Pylot says, if it goes to production and Silverstone was on board, Kutcho would be about 80% the size of Minto in terms of contained metal as a by-product. It would primarily come as silver.

Prior to the agreement with Sherwood Silverstone was focused on buying silver by-product.

Although Silverstone didn’t have an explicit goal to diversify into gold, Pylot says it was becoming difficult to find quality silver assets “with zinc and lead prices the way they are and silver suffering.”

That primarily accounts for its interest in the Minto mine where he says Sherwood can still operate at prices as low as about US$1-per-lb. copper.

Gold, in other words, just happened to be the main by-product (in terms of value) at a project where, more importantly, the underlying fundamentals impressed Silverstone.

“We want to get bigger by minimizing risk by getting mines that will run at all times of the cycle,” Pylot says. Minto fit that criteria.

With Minto on its roster, gold and silver’s share of Silverstone’s 2009 sales will respectively be about 40-60. Pylot says that the company does not have an explicit goal to diversify further but won’t say no to good deals outside the “silver space”.

“If gold comes up again, we will do that,” he says.

Pylot estimates that Silverstone will generate about US$27 million from Minto over the first 12 months.

For his part Sherwood president and CEO Stephen Quin says in a statement that given Sherwood and Capstone’s pending merger, "Some of the benefit to Silverstone from this transaction should flow back to Sherwood…since Capstone owns approximately 22% of Silverstone."

On news of securing production from the Minto mine Silverstone’s share price increased 6¢ to close at 74¢.

Silverstone has similar off-take agreements with Capstone Mining (CS-T) for silver from its Cozamin Mine and Lundin Mining (LUN-T) for silver from its Neves-Corvo and Aljustrel mines. It also has the right to purchase 12.5% of the potential life-of-mine silver from Aquiline Resources’ (AQI-T) Navidad project.

TNR Gold TNR.v Minera Andes MAI.to Los Azules first valuation of the third party.

All data must be verified and do you own DD as always, but it is very good start:

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIzouZjF8718kbkr5H2HFUQRlkUs8EnPneWXMcCxQljHRZNAcJEQo6pollhPKD4nxFFRjmhlyARmJTxwmQ2p4c6fVyFxO4K3KJQuVMmuZoBMpNmISGgwVb1Bj4CmyvKAPTd4avxg/s1600-h/mai1.jp

"TNR Gold has a "conditional" back in right of 25% in the Northern half (with higher grade core according to MAI) of the property. Now company is conducting a legal action against Xtrata to remove the "condition". More could be found here."

http://mining101.blogspot.com/2008/11/one-less-issue-to-ponder-over-obama.html

TNR Gold TNR.v Minera Andes MAI has filed 43-101 on Los Azules.

TNR Gold has a "conditional" back in right of 25% in the Northern half (with higher grade core according to MAI) of the property. Now company is conducting a legal action against Xtrata to remove the "condition". More could be found here.

"Minera Andes files technical report confirming large copper resource at Los Azules

Friday October 24, 5:07 pm ET

SPOKANE, WA, Oct. 24 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC: MNEAF) is pleased to report that a technical report in support of a resource estimate for Minera Andes' Los Azules copper project in Argentina has been filed in accordance with National Instrument 43-101.andis available at www.sedar.com.
The new technical report, by Minera Andes' independent consultant Donald B. Tschabrun, MAusIMM, of Tetra Tech in conjunction with Robert Sim, P.Geo., an independent qualified person as defined by NI 43-101 and Bruce Davis, FAusIMM, is entitled "Los Azules Copper Project San Juan Province, Argentina, NI-43-101 Technical Report," and summarized in a Minera Andes news release dated September 8, 2008 .
The report supports the independent resource estimate showing an inferred resource at Los Azules of 922 million tonnes, grading 0.55 percent copper, containing 11.2 billion pounds at 0.35 percent total copper ("CuT") cutoff. This resource occupies an area approximately 3.7 km by 1 km in size and contains a high-grade near surface copper core in the north (TNR Gold option area - S) (see maps in Sept. 8, 2008 news release).
Mr. Allen Ambrose, president of Minera Andes, an appropriately Qualified Person as defined by NI 43-101 for the Los Azules project, has reviewed and approved the content of this press release.
Minera Andes is a gold, silver and copper exploration company working in Argentina. The Company holds about 304,000 acres of mineral exploration land in Argentina including the 49% owned producing San José silver/gold mine. In addition to exploring the Los Azules copper project in San Juan province other exploration properties, primarily silver and gold, are being evaluated in southern Argentina. The Corporation presently has 189,621,935 shares issued and outstanding."

Gold, GDX and HUI, US Dollar and the market. AUY, SSRI, SLW, CZX.v, TNR.v

Warren Buffet is buying Equities, Jim Rogers is buying Commodities, I am in a very good company and buying Commodity Equities.

US Dollar has rallied today to the new high of 83.22. It has rallied contrary to all last days actions together with a big rally in General markets with Dow +4.67%, S&P +4.77% and Nasdaq +3.43. Is it because of Lehman settlement day? I am not sure, but the higher it goes the faster it will come back. Last time I gave such a comment was about Google GOOG riding to 700. Treasuries had a very volatile day and rallied in price together with markets.

But the real action was in Amex Gold Bugs Index HUI which is +9.38%

GDX +11.53%, AUY +11.3%, SSRI +17.75%, SLW +14.86%. Now we have last confirmation of continued Bull market in Gold: Gold miners took off before Gold and Silver. As I have mentioned it is important that Gold will confirm H&S Bullish reversal with RS at above 750USD.

Gold rallied in Asia to 810 and closed up 1.66% at 795 in NY. Silver was up 3.85% to 9.71.

As we have discussed before, public has a very short memory and we are now in an Election Rally. Greed is taking over the Fear and VIX is down almost 25% to 52.97. Actually this level of VIX over 50 was an entry point for a lot of professionals and Rally is only in its start phase.

Gold has rallied today even with US Dollar in a very strong rally, it has rallied against all FIAT currencies. Looks like FED do not like to have any chances and is preparing next Rate Cut.

Once Gold will cleared 800, HUI and GDX (trashed by forced selling into the levels of Gold at 500USD) with all Majors will be in a Rocket stage. Canadian Venture has shown some life with +4.1%. TSX was up 7.2%.

Positive emotions will spill over into the Juniors with 25-50% intraday rallies within next few weeks. Those who did not Sell will enjoy the Rally. You can not simply accumulate any meaningful position in this sector without driving the price. We were suffering the most, we will gain the biggest. M&A will be the driver of wealth creation with five and ten buggers to come into play again.

By the way all stimulus packagers are more then welcome: we need a lot of inflation fuel for our Bull in Gold, Silver and Commodities.

Jim Rogers Buys Agriculture, Considering Metals, Oil GDX, FXI, EWZ, AUY, SSRI, SLW, CZX.v, TNR.v

"Oct. 20 (Bloomberg) -- Investor Jim Rogers bought gold coins in Frankfurt last week, added more agriculture commodities today and is considering industrial metals and crude oil.
``Agriculture is cheap,'' Rogers, chairman of Rogers Holdings, told reporters at an ETF Securities Ltd. meeting in London today. ``The fundamentals for most commodities are not impaired.''
The 19 commodities in the Reuters/Jefferies CRB Index have dropped 21 percent this year as falling equities, reduced lending and slumps in manufacturing and construction trimmed demand. Copper is down 47 percent from a record in July.
``We're in this period of forced liquidation,'' Rogers said. ``This bull market in commodities is here because of supply and demand.''
``Excessive'' amounts of cash added to the banking system have ``always led to rising prices,'' Rogers said. The Federal Reserve rescued American International Group Inc. with an $85 billion loan last month, the U.K. last week announced plans to spend 37 billion pounds ($63.4 billion) on Royal Bank of Scotland Group Plc, HBOS Plc and Lloyds TSB Group Plc and ING Groep today got a 10 billion-euro ($13.3 billion) lifeline from the Netherlands.
Commodities had gained for six years before 2008 as underinvestment in refineries, mines and land sent prices for oil, gold and wheat to records earlier this year. Oil has dropped 50 percent from a record $147.27 a barrel in July as tightening credit choked demand.
``Farmers cannot get sufficient loans to plant their crops at the moment even though they've been farmers for decades,'' Rogers said. ``Nobody can get a loan to open a zinc mine. People cannot get loans for their inventory which is part of the forced liquidation. So all of this also means even less supply.''
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net. Last Updated: October 20, 2008 11:46 EDT "

U.K. Government to Raise Spending, Borrowing to Ease Downturn. Beat Depression by Inflation.

It is very important development.

This could bring some wealth preserving strategy into US Corp. as well. As I have mentioned before: Infrastructure spending is the best place for all these newly printed dollars. At least part of it which will not be spent on debt servicing will create new base for a future growth. During Depression in 1929 USA has build their interstate road network.

You are fighting with inflation at least most dire Depression consequences: unemployment and stagnation in industrial output due to consumer debt squeeze.

Here where decoupling will take place: Russia will do it with 500 billion in reserves, China will do it with 1.9 trillion reserves, USA will have to do it with 1-2 trillion deficit this fiscal year.

This is the best outlook for our Gold, Silver and Commodity play.

Oct. 19 (Bloomberg) -- The U.K. government will step up public spending projects and increase borrowing in a bid to curb the country's biggest economic slump since 1991, ministers including Chancellor of the Exchequer Alistair Darling said.
The U.K. will prioritize spending on housing, energy and small businesses as well as bring forward construction projects on schools and hospitals, Darling told the Sunday Telegraph in an interview published today. The government will increase debt to provide the funding, the newspaper reported him as saying.
``We will get the country through this period in every way we can,'' U.K. Business Secretary Peter Mandelson said on the BBC's Sunday A.M. television show today. ``The costs of doing too little will be greater than if we take the action to maintain spending and investment in the real economy, in public services and infrastructure.''

Buffet to Treasuries: Your Bubble Time is over. GDX

Formula is simple, but so painful to stay on: more supply of treasuries to finance bailouts, more discount - higher Yield demanded. Buffet sells and buying equities, Bill Gross is not advising to buy Treasuries - world will listen. Higher Yield, higher Long Term rates, with artificially collapsing Short term rates determined by FED we are in a Negative Rate territory again like in 2002. All these talks about Deflation were at its high in 2002-2003 when rates were kept at 1% and Gold Bull has started its Run. When FED is choosing between debasing the currency US Dollar in reflation attempt and Depression with Deflation, Japan is all over their eyes: they will always err on Inflation side.

Warren Buffett leaves Treasuries to embrace equities

Gold: It is my 1% coming into our sector. GDX, AUY, ABX, NEM, TNR.v, BVG.v

Spending on gold nears $3bn as investors flee shares

Investors spent $2.8bn (£1.6bn) on gold on world stock exchanges in the third quarter this year, as individuals and companies fled volatile share markets.
According to the World Gold Council (WGC), 145 tons of gold were bought on stock exchanges in the three months to September. This meant that gold held by investors on the exchanges hit 1,000 tons for the first time since the metal was introduced on the US bourse in 2004.
Natalie Dempster, the WGC's head of investment, said: "The question we get from high net worth individuals and funds is no longer 'why should we invest in gold?', but 'where can we go to buy it?' "
Gold offers a product with a more stable price in the current market than company shares.
James Turk, founder of Gold Money, the Jersey-based company that stores precious metals for investors, said he had seen his customer base triple in September. He added that at the end of the third quarter, the company was looking after gold and silver deposits worth $400m, more than double the value a year earlier.
Mr Turk said: "Gold is seen as a natural safe haven given the uncertainty in the banking system and the volatility in the stock market."

Gold: Barron's "Shining Through the Rubble"

WITH FINANCIAL MARKETS AROUND THE WORLD COLLAPSING, about the only thing that still glitters is gold.
Unlike just about every other asset, gold has risen in the past year. Though it fell markedly last week, to $785.10, it's still up 3% from a year ago.
Gold has "shown its stripes as something investors will turn to," says Leanne Baker, founder of Investor Resources, a metals and mining advisory based in Mill Valley, Calif.

JIm Rogers, FED, Bailout and Inflation.

Global investor Jim Rogers says the Federal Reserve is "Unleashing an Inflationary Holocaust" on us all Calgary, Alberta CANADA, October 14, 2008 /FSC/ - Agcapita Farmland Investment Partnership (AFIP - 0), Legendary global investor Jim Rogers says the bail-outs being conducted by the Federal Reserve and the US Treasury are "unleashing an inflationary holocaust' on us all. The US runs massive current and fiscal account deficits; therefore, the trillions of dollars involved in the bail-outs will inevitably be printed as the only realistic way to pay for them is via inflation. To put $3 trillion into perspective, it took the US over 200 years to reach approximately $10 trillion in money supply and no more than 12 weeks to commit to another $3 trillion and counting. Jim Rogers continues to advocate investments in agriculture commodities and farmland in selected markets - including Canada. As part of his belief that western Canadian agriculture has a bright future ahead of it, Jim Rogers recently joined the advisory board of Agcapita Farmland Investment Partnership a Calgary based, agriculture, private equity firm. Agcapita's investment team has over 40 years private equity and fund management experience and over $1 billion in total career transactions. The team currently manages a group of private equity funds with almost CAD$ 100 million of assets under management and previously managed a group of emerging market funds with almost C$500 million in assets for one of the largest banks in Europe.

More signs of life in equities. Intel INTC expecting Sales to rise.

Strong Growth in China, strong Growth in Japan. I will not buy this stock - there are more appealing bargains in my commodities sector. But the story is interesting and it is talking about Asian economy health. Intel produces chips which are used mostly in Asian Electronics producing countries. Orders for chips are placed before production cycle and bullish guidance is very important: producers are not expecting End of the world in the next 6 months. Stock itself is like value play with 3.5% dividend. It is more then 10 year treasury bond! Another bullish sign of extreme valuations.

If you ask me what am I looking for: for more value: I do not like to be restricted to consumer even in Growing Developing markets. I like solid production cycle in infrastructure developments like Power plants in China and Electric grids in Russia, China and Brazil. Like pumps in Oil Pipelines. Markets up or down they will be built. What you need is Copper. Now Freeport-McMoRan Copper & Gold Inc FCX is trading at 30 dollars with 6.5% dividend! Yamana Gold AUY is even more leveraged to the price of Copper.

So it is again ends with a Question is it the end of the world or a Buying opportunity of a lifetime?

Future rich and poor people are answering this question these days all over the world.