Beyond The Fringe

Countless times during our long and profitable investment career, our political judgment has been invaluable in helping us make accurate market predictions, enabling us to pick trends well before they are common knowledge and every man and his dog is on the gravy train. A current example is the certainty we had that the ALP conference would lift the no new mines ban yet not back nuclear power stations. We lined up our U investments accordingly, choosing only shares with interests in South Australia, the Northern Territory and overseas. Our knowledge of the loosening of political control in China and subsequent market relaxation encouraged us to lash out with our investment in OCO, now paying off. Likewise with that goldie of goldies, LRL and the enticing LYC.

Without a political perspective refined and polished in debate with others, one flies in a fog.

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We borrowed the terrific post title above which was conjured up by one of the ingenius HotCopper denizens, no-ball, for Trafford Resources’ meteoric rise on Tuesday. As one would expect, this promising ASX star came off the boil a little yesterday and may remain stable or lower for a Friday 13th trading. Still to come are its uranium results which will really set the cat amongst the pigeons if they are significant, and the proving up of its superior high grade magnetite, which will do wondrous things for it as well. Add the interest from Chinese investors and then consider its lovely rich gold seams - 36m @ 5.71g/t and 32m @ 3.44g/t are not to be sneezed at.

Managing Director Ian Finch was ‘adamant’ in his November 06 Resource Stocks interview that

“the company is progressively closer to finding what he’s repeatedly told the market has always been there - an open pit similar in proportions to Roxby Downs, the largest uranium project in the Southern Hemisphere.”

The glory of the booming bourse continued unabated - yesterday was the Day of Thunder as THX revved up at last. A foreign insto, Evolution, has sniffed out its uranium, and has now been revealed to have been accumulating assiduously since January, culminating in a substantial shareholder notice which set the share alight. Since we’ve brooded on these for a while trusting our fundamental analyses and fey Scottish instincts, we’re pleased to be vindicated. It may even keep going up today without a correction, as there’s plenty of buying interest. On the other hand, as monstrous amounts of foreign cash gushes in to jump on the shameless rodent’s CGT-free merry-go-round, if there is enough interest, the price may fall due to heavy manipulations.

We’re now wondering whether a similar sneaky accumulation isn’t happening with INL. Since December, someone/s has been smashing it down every time it looks like poking its head up. Some folks think it’s a pathetic trader/s going for miserable half cent daily gains, yet we think it might be a similar style of accumulation to THX’s - surreptitious and ultimately rewarding. Why go for such a puny daily gain when there are much surer prospects around, like WMT, BLR, TRF, NTU or AVX, if one wanted a quick, far more decent profit? We’ll hold tight. There must be a lot at stake if that someone/s thinks it worthwhile enough to continue doggedly with their dastardly daily game - if our suspicions are on the ball, that is.

With an estimated $45b to flow back into the market after Coles, Rinkers and who knows what other private equity takeovers, hedging snaffles, grabs and nibbles, the market appears destined to continue its upward surge. Insto cornucopia! Costello wants another useless surplus to look dandy for the election whilst for the average Whorestralian, non-WorkChoiced prices continue upward, WorkChoiced wages stagnate, nonWorkChoiced company executive salaries gambol toward the heavens, WorkChoiced job growth is deceptively high and non-WorkChoiced unemployment equally deceptively low.

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Time to assess the treasure in preparation for reorganisation in view of serious impending opportunities. SNU floats on Tuesday, and we’ll be trying to buy as many as we can cheaply. We feel multiple bids might be in order to maximise our chances of increasing our holding as swiftly as possible. Seems as if most SAU holders, like us, had their requests for entitlements cut back, so we project a massive immediate demand. SAU is now a 3 bagger¹ for us, and it should follow the lead set by SNU.

We will also be taking advantage of our 2 for 5 new share offer to top up our lovely AVX holding. AVX, currently a 6 bagger plus for us, may well be able to fasttrack their Phase 111 trials given their HIV drug’s incredible success in previous trials to date. Then there’s their VRI drug to consider as well. The third opportunity comes with KOR (2 bagger), which will be offering a priority entitlement to their float, where we will already acquire a free 1.6 to 2 share interest for every KOR share held.

Other little darlings this week include TRF (5 bagger), which has performed stunningly on its desk top study projections. U results are expected very soon. We’re hoping for $2+ after this news. Then there’s NTU (3 bagger), for which we await our free oppies.

We missed out on acquiring some MKY, which has U tenements in Queensland, where Beattie is sounding positive about allowing mining. There are gaps to be filled in the MKY chart, and thus we’ll be watching it closely for opportunities.

APG continues to look healthy, consolidating this week around 16c (4 bagger). On firm news about BHP’s interest, it will skyrocket.

¹ “Bagger” = Number of multiples on original price.

With the passing of the Ides of March, we have strong suspicions that the second market correction may be over - will there be a third? It is possible the subdued buying of resources - first copper, then zinc - by the Chinese in the past little while was deliberately orchestrated to engineer prices down to coincide with the beginning of the Year of the Gold Pig. Of relevance here may be the decision by the Whorestralian government last December to remove capital gains taxes for foreign investors and the more recent Chinese government decision not to impose capital gains tax on their investors. Metals prices rose strongly last night. Will the bull market resume or will the crazy crazy selloff of our precious resources continue unabated?

Who wouldn’t like to have been a cashed up Chinese investor this year, rolling in US dollars, eager to drop them into cheap physical resources as the United Stupids economy sags under the weight of precarious hedge and subprime mortage funds and a tenuous bond market?

And where better to invest than in relatively insulated CGT free rich Australian resources at bargain basement prices - particularly uranium (Citic has been buying up more SAU this week), gold and zinc.

Kiss goodbye to your birthright treasures, fellow Whorestralians - and don’t expect to reap any of the proceeds of the fire sale in additional community services in this election year - Howard’s mudslingers need every cent to artificially deflate the trade deficit, to buy more crappy US jet fighters and electioneering pork. And as for you pathetic, whinging Whorestralian mortgagees, get ready to wear another interest rate rise you have to have, trust me, it’s for your own good,.

And we’re off to a great Monday morning start, with the SAU SNU float closing early heavily oversubscribed. We have strong premonitions of a very exciting listing, and hope we do receive our total priority shareholder allocation.

The market heads up after an initial small downward push - the chart target for today is 5890.

Chartists of BPO look like they are right at this point about this week being *the* week for a push to the next level. Early trading has gobbled up to 3.8c. Once 3.9c is taken out, there could be a sustained climb to 4.5c. For breakout, BPO has to crack 4.1 and hold. By the end of the day, some sneaky trader dumped several million, dragging the price back down at close to 3.6c, VRAP around 3.8. We may obtain another top up at 2.8c yet.

APG *has* broken out though. 20c annihilated and an assault now on 20.5c. Leak of fabulous BHP news?? Ranging between 19.5 and 20.5 now. Ends up closing on a very healthy 20c!

NAV announces some excellent drilling results - on the rise again. It remains to be seen whether the current share issue erodes any gains.

However, the Ides of March approach - superstitious traders may take early profits this week!

Checking the DJAA we see a series of spinning top candles which may signal exhaustion and recapitulation. Its MACD looks like both buyers and sellers are losing steam too. We’re heading for a down week on the markets, we feel, except perhaps for the preciouses, which are booming with a rising oil price.

So finally are we going to have our long awaited and till now plunge protected gold spike? T’would be most pleasant to take some gold profits and cash up for the inevitable blue chip correction. Some cunning CBA accumulation will be our target in that realm this year. $48.50 looks possible - will it be achievable? Seems odd to be buying more at these levels considering the last time we bought was when they were $24 odd a few years back.

The rest of the profits will need a friendly home till precious metals drop after their spike and possibly a newcomer might be another potential target - the carbon trading company, COZ, at which we are having a closer look this week. We will definitely store away some loot to buy the wonderful LRL back too. It is nowhere near its potential - due for production at the end of the year. The balance may find a profitable home in more U shares if they correct slightly alongside the overall market correction. Hard to tell - if the spot price keeps climbing, there may not be a U correction, despite the forebodings of some on the forum. So many variables - we still don’t know whether the mad chimp is actually going to add insult to injury and whack Iran either unilaterally or in support of Israhell.

Israhell is still sounding incredibly belligerent toward Iran whilst the United Stupids are plaintively claiming they don’t intend to whack them. But of course, they said that before they illegally invaded Iraq. The military buildup is nearly complete for a whacking. We think Israhell may whack Lebanon ruthlessly again first to gee up United Stupids support (they are infringing on Lebanese air space and firing across the border already), then extend their aggression to Iran whilst whinging about the supposed “real” source of terror, Hezbollah and Iran. The ulterior game plan may be to grab Lebanese water, secure the Shebaa farms for Israhell and prevent any land deal with Syria over the Golan Heights. The provocation of another conflict with Lebanon and yet another with Iran would also provide ongoing cover for staving off any peace talks with Palestinians.

We had to laugh when reading that the United Stupids and Israhell aren’t amused by Abbas and Hamas resolving their differences - it appears that civil war and more Palestinian bloodshed is preferable to reconciliation - how obvious is that colonial imperialist divide and conquer trash. The democratically elected Hamas don’t qualify as part of the oft-stated wish of the United Stupids to spread democracy in the Middle East. Thus the Stupids prefer to attempt engineer and bully another “regime change”, wanting Abbas to purge Hamas altogether. Meanwhile, Israhell may wish to delay reconciliation so it can grab as much Palestinian land - establishing more grotesque facts on the ground - as it can before the United Stupids, out of sheer necessity as the American people become sufficiently wise to neoziotard manipulative games and realise how they are held hostage because of their blank cheque support for the ziotard state, to being an “honest broker” again, forcing them to adher to the terms of Res 242 and 1967 borders, which Hamas has stated it supports. At least that would be a positive start. Then there is the question of the right of return of Palestinian refugees. However, it also serves Hamas’ interest to delay recognising Israhell for as long as possible - within decades, demographics alone will alter political realities. At present, with religious fanatics and political loonies on all sides running the show, ongoing war looks horribly likely.

We’re still regretting not grabbing CFU around 50c when we had the chance. Don’t feel like going for hot rocks - they are unproven and too high sps at the moment, yet if there’s a dip, we’ll have another look.

The other share we should have bought is TFC when it was 38c - it’s now up in the 50c range and climbing. Nice divvy too. Maybe we’ll have another look at it though.

This week is positioning up to be very volatile - with the Sauds cutting production, the POU up to $75, the POG may follow, depending on how the market reacts to Fed Reserve data released in the US tonight. Interest rates in the US are forecast to remain steady.

No great movement upward with our goldies as yet - there has been a run to banks and property trusts etc based on containment of interest rates in Australia. Is inflation really under control and will a rising POO induce a rise next quarter?

When will the new gold EFTs begin to impact the POG or are these already factored in?

POG is hovering between US$640 - $650. Today though, it’s driving energetically toward the upper limit.

This little snippet in the crazy ape’s SOTU speech has eluded the notice of many, but we think it may put the POG and POO into orbit.

“And so as we continue to diversify our fuel supply, we must step up domestic oil production in environmentally sensitive ways. And to further protect America against severe disruptions to our oil supply, I ask Congress to double the current capacity of the Strategic Petroleum Reserve.”

The traitorous twerp wants to double the size of the United Stupids Strategic Reserve - a cool $40b into Saudi dictator pockets. The Saud tyrants will be able to buy a heck of a lot of gold and other loot with that.

Glad we are holding lots of gold stocks - because we are about to hit paydirt bigtime if the idiot chimp gets its way. Will the Dems be blinded by promises on health care, climate change and education and allow this monstrosity to proceed?

US Energy Secretary Samuel Bodman said on Tuesday that the government “will acquire crude oil in a manner that does not adversely affect the market or raise gasoline prices.” The purchases will begin in about two months using funds from the sale of reserve oil after the hurricanes. The effect on the market will be reassessed a few months after that, he said. “At current market prices, we believe that we can purchase about 11 million barrels of oil over the course of a few months,” Bodman said.”

http://www.finfacts.com/irelandbusinessnews/publish/article_10008796.shtml

POO rose on the news then dropped - currently $54.60, with the USD at $84.60. Gold is climbing in London, but we think it will fall in New York later, led by the falling POO and rising USD. The mad monkey’s report on the economy is next week - maybe *then* the cookie will really start crumbling.

COMMENTS FROM THE OLD HC BLOG:

chimp666:

Oil Shortages & My Pet Unicorn.

http://www.elliottwave.com/ezine/preview_email.aspx?id=261

Fringe:

I agree that it’s mainly psychology driving the markets - if enough people *perceive* that doubling the United Stupids oil reserves is going to impact the POO, then the market will behave as if it actually does, regardless of the true state of supply and demand.

And if enough people *believe* that the United Stupids economy is in the toilet after next week’s figures are released, then they will run to gold.

The zookeepers have let Georgie the ape run rampant again. Instead of learning from his mistakes, the chimp is now compounding them, adding more troops to the raging civil war in Iraq.

And now he is raising the antes and threatening Iran and Syria, wrongly accusing them of fuelling the insurgency and terrorists. When one considers that Bush is supporting the Shiite dominated Iraqi parliament, does he think Iran (Shiites) would really be supplying Sunnis?

One can have no other conclusion except that the chimp is completely insane and this is his last ditch attempt to save his name in history. It won’t work - Iraqis want the United Stupids out.

The zookeepers - the despicable Christian/Zionist/Wahhabi neocons and corporate moguls who manipulate the chimp all have their own variously crazy, selfish greedy interests at heart and not the welfare of American or Middle East citizens.

Perpetual war suits the wealthy - and the Sauds, who have recently invested in much gold, will be most happy to see both their new acquisitions and the price of oil rise with the uncertainty that comes with imperial madness.

The United Stupids kidnapping Iranian diplomats at an Iraqi consulate is a clear provocation and act of war. No reaction much from the Iranians - they know the game being played. Juan Cole’s commentary is interesting.

As we predicted, following the madman’s rant, the POG and oil rose and the USD dropped, and resources rose markedly on Friday to match.

Fortunately we are already stoked to the brim with lovely, cheaply acquired preciouses which should thrive nicely in the coming week. This week we accumulated more THXO. THX is way overdue for an upgrade. Phil Crabbe exercised a stack of options at 47.5 leading us to think that he expects a large premium on that price within the near future. Additionally, THX is not going ahead with its U spinoff which means oppies will now be back in favour. We haven’t converted any of ours, though many may have.

We have also bought into a stunning little company, AWS, which has been refinanced by Westpac to expand with its water device stores across Australia. This could have very significant potential given the timing for water awareness, the company’s recently opened new stores and handsome increases in sales already experienced. A 2006 profit of $1m plus is forecast, which should lead the sp over 10c, making our investment a multibagger in a very short period.

We also acuumulated more of our dead cert, EVZ, which is due some news about more contracts with big companies, and more INL which sp should improve soon with news about zinc concentrate shipments and initial profitability estimates.

An exciting week to come! RRS still hasn’t announced its JV, but news on that should be very soon, with President Muse alluding to foreign mining investment the other day. We expect our holdings in NWR, NWRO, GAU, CTO, CQT, NAV, NAVO, SAU, TRF, TRFO and even BAR to soar.

We’ll take a profit from some of them and buy back later in a couple of months.

Uranium is the darling of the bourse. Our U stocks are accelerating up the charts - still holding BLR, SAU, NTU and WMT. Annoyingly we have taken profits already on WAS, GPN and PEN - yet to sell too soon and make a profit is still most fortunate.

Other stocks with U as part of their picnic basket that we hold are THX and GDN, both still to perform.

Goldies are also very pleasing - our stars include LRL, NAV, NAVO, SAU, NWR, NWRO and CQT. GAU and CTO are still to shine. TRF should also jump upwards again soon.

With a deteriorating United Stupids dollar, gold should spike soon before dropping back - the question is, how high will the spike be. We’ll be ready to take some profits then rebuy during the predicted slump in March/April.

Other shares we hold which are showing gains at present and are likely to continue to climb are SMN, AVX, EVZ, APG, VCR, GYNO and AAQ.

We bought back into OCO at 4c - there’s some movement already and we are hoping for signficant gains on news. BPO continues to hold around 2c so we haven’t accumulated more yet.

We also bought more MMNO to build our parcel - and it’s improving in price already too. Our prediction for next week is RRS - should hit 4c with any luck on speculation about Canmex signing.

Will the gold rise consolidate around 640 for a while or penetrate higher, rapidly? Bernanke talks to the world tonight.

The USD is stuffed - might it bounce? Dow is down, All Ords down.

Feels to me like the blue chips in Australia will continue to take a bashing. Some of the more vulnerable small commodity stocks could slide as well. Copper stocks may sink, so being prudent, we sadly took a profit on SMO. We’ll definitely buy that one back later on.

We are cashed up and waiting for bargains again. Fortunately picked up some of the lovely LRL shares back and will try for more. LIkewise we’ll attempt to restock our BPO larder. Otherwise we’ll try for as many NWR new shares as they permit us. At present NWR is trading at a 5c premium to the new shares. Doubtless some will be taking an instant profit and they will slide after the 8th if there is no significant news. But news is anticipated any day!

Heading toward the long awaited gold spike. Given the state of the US economy, it was only a matter of time.

We hold numerous gold stocks, some of which should surely blow off bigtime after astronomical rises if market hysteria rules. Thus we’ve also retained cash to buy after any crash.

Two scenarios seem possible.

1. Immediate spike - estimated blowoff mid December.
2. Steadily rise increase into February.

We foresee a downturn after February then another spike in May.

Stocks we hold with gold exposure are : NWR, NWRO, NAV, NAVO, CTO, GAU, BAR, GNL, GPN, SAU, PEN, SMO, LSG, LRF, LRFO, APG, TRF, TRFO, THX and THXO.

Looking to buy some LRL back and accumulate TRFO and LRFO.

From http://news.goldseek.com/Zealllc/1163783240.php

If you want to add gold or related positions to your portfolios, the best time seasonally is when gold is languishing near its seasonal support. This tends to happen in late March/early April, late July, and early November. Off of each of these three major seasonal buying points marked above, gold’s trio of seasonal rallies tend to launch.

Gold’s first seasonal rally from mid-March to mid-May lasts about two months and carries the Ancient Metal of Kings from around 100 indexed to 105ish, a 5% gain on average. This seasonal tendency certainly exerted itself with a vengeance this year, as gold blasted 31% higher during this period in 2006! It was the biggest single rally of this entire gold bull and it happened, interestingly, when seasonals were favorable.

After gold’s strong seasonal surge into May, it enters its seasonally-weakest time of the year during the summer. This is logical on multiple levels. Since sentiment has to get quite unbalanced to the greed side to drive the steep spring rallies, it makes sense that greed has to then be gradually bled out until fear begins to loom. There is no better antidote to greed than a price that grinds lower in a consolidation over some months. Consolidations kill greed dead, almost without fail.

In addition, summers are just a slow time for trading anyway. Kids are out of school so families go on vacations and enjoy the warm summer sun in the northern hemisphere, where almost all of the world’s most important financial markets are located. Summer is almost always a slow lethargic time in the markets with little enthusiasm, the perfect breeding ground for sideways trading and consolidations.

This seasonally-weak summer in gold takes from two to four months depending on how you slice it. Gold hits its seasonal support in late July, a little over two months after the mid-May seasonal interim high. But gold doesn’t eclipse its May highs again, around 105 indexed, until early September or so which gives the weakness a duration approaching four months. Either way, we shouldn’t enter summers with great short-term expectations for gold.

Gold’s second major seasonal rally starts in late July and runs until the end of September on average. It takes gold from around 103 indexed to nearly 108 indexed, or just under 5% higher. The timing of this rally is intriguing because gold has long had a harvest component to its seasonality. In Asian cultures, particularly India, fresh income from the August/September harvests are plowed into gold as a form of investment. We could learn a lot from the Indian farmers, as putting the surplus fruits of our labors into gold is probably the best and safest way to preserve them.

Then gold tends to correct in October, which really didn’t happen this year. Last month gold bottomed early in October and has been strong ever since. This just emphasizes the critical point that seasonals are merely tendencies and they are not strong enough to trade upon solely. It is sentiment that drives the markets over the short term, and sentiment and seasonals certainly do not have to be aligned.

Then seasonally gold is done correcting and back down to its seasonal support by early November. And it is here we enter its seasonally-strongest time of the year. On average gold rallies from early November to early February, a big three-month span. This rally is exceptionally strong too. It is the only rally of the year that breaks out well above gold’s seasonal resistance. From its 105ish start to its 114ish finish when its wraparound into January is considered, this big rally approaches 9%!

This large seasonal rally makes logical sense as well. The busiest time of the year for trading the markets is during the winter. Kids are back in school and people are working hard, so they start to refocus their attention on their portfolios. In addition to this, both the end of one year and the beginning of the next are times when people are most reflective on their investments. Most individual portfolio rebalancing seems to happen in December and January since year end triggers so much thought on the future. So it is probably natural for people to buy gold in a gold bull during this reflective period.

More dodgy obsfucatory economic figures from the US and the POG still artificially deflated.
Waiting, waiting. US retail figures are out tonight.

Our thoughts about DYL dropping way back have proved illusory - still at 36.5 this arvo post entitlement. We’ll keep an eye on it, but given how PDN is sagging, may pick up some of them instead if they hit $5.60.

Overall we are dancing with those DYL proceeds.

WAS went up, then back to 3 - we’re still in front - while PEN holds around 4.4 - a nice gain for us. UCL vacillates and ends at 4.4c - Bush isn’t going to back Blair’s Iran and Syria conciliatory moves until the effect of Olmert’s visit evaporates somewhat. The Israhellis would just love the US to take on Iran on their greedy behalf.

TRF finds premium grade magnetite - goes up and then drops back slightly. Oppies still not absorbed? U and AU results are pending for Weednanna.

GPN still hasn’t taken off - tentatively hits 1.8c then falls back to 1.7c. Waiting to see if our dream has cred still.

CTO must be very close to its pour - up round 47.5c so we’re in profit there too. THX’s star must be the next to shine, one would imagine.

Fortuitously we sold our DYL yesterday at 4 times our buy price - plenty of room to get back in if they approach our next buy price - hoping for under 20c during the probable panic to come ex entitlement tomorrow. In the meantime, we successfully bought more SMN at 10c, more lovely THXO which were going cheap and grabbed a heap of PEN at 3.2c before they took off in the U race, closing at 4.3c today. Maybe we *should* become day traders at the rate we’re going!

Having had a propitious dream, we also bought GPN, which should do well soon with its YRR U spin off. On the strength of a tip from our trading mate we also devoured some WAS on spec - exposure to coal, shale oil, biodiesel and uranium as well.

In honour of the Demoncrats reaming the Repubiclice in the United Stupids elections, and the distinct possibility that it may benefit from the world zinc shortage, we specced on UCL. As UCL’s resource is in Iran, we think it may prosper from a nobbled Bush and thwarted Israhell. Time for champagne!

Waiting now to see how the POG moves tonight! LRL, solid gold, has moved up already on no news today.