Tuesday, May 25, 2010


Obama Administration Calls for "Second Stimulus"
As the stock market begins to show signs of the bear, policy makers look to a new $200 billion stimulus package, quantitative easing, or both.
The stock market has been showing signs of the bear for less than a month and already Washington is calling for a second stimulus package.
An article in this morning’s Financial Times says that the Obama administration asked Congress yesterday for a new set of spending measures -- called the “second stimulus” -- to keep the economy from dipping back into a recession. The plea was made by senior economic adviser Lawrence Summers, who asked Congress to pass $200 billion in spending.
His plan calls for more loans made to small businesses, an extension of unemployment insurance, and aid to states to prevent teacher layoffs. The announcement is expected to be met by resistance in Washington as right now Congress is looking for ways to cut spending, not increase it.
While $200 billion may sound like a lot, it may not be enough and it could only calm the market temporarily. Bob Janjuah, a strategist at RBS, released a note yesterday saying that policy makers won't like deflation (the US is basically one poor CPI report away from deflation) and will do everything to inflate the economy. Janjuah calls this the “last real roll of the dice,” which he believes will be a new quantitative easing program by the Fed of $5 trillion to be released sometime in the fourth quarter.
Stimulus, quantitative easing, or both, expect policy makers to make a move soon before the market loses all confidence.



  1. Special update tonight from EWI...Hmmmm, guess I close mine out for now...Today's new low occurred on lessening downside breadth, dwindling down volume and a decrease in NYSE Ticks (intraday) relative to the wave (iii) decline from May 18 to May 21. There was also a clear divergence at today's low between the VIX, which remained beneath its May 21 extreme (48.11), and both the Dow and S&P, each of which made new intraday lows beneath the lows of that day. Finally, observe the red trend channel formed by the Dow's decline from the wave 2 high on May 13. Today's close carried prices above the upper line for the first time since that mid-May high.

    As we discussed last night, waning selling pressure indicates that today's 9774.50 Dow low and 1040.78 S&P low represent wave (v) of i (circle). Minute wave ii (circle) should be a spirited rally for several days, with the potential to leak over into next week. The initial target surrounds the wave (iv) high at 10,198.50 in the Dow and 1089.91 in the S&P. There remains an open gap at 1115.05 in the S&P from May 19 (10,444.40 in the DJIA) and, depending on the intensity of wave ii (circle), prices may try to fill this gap before rolling back to the downside. A 60% retracement is 1120 (S&P), which is just above the late high on May 19 (10,488.00 in the DJIA). So the rally should ideally end in the 1090-1125 area in the S&P and the 10,200-10,522 area in the Dow. A break of 9853.30 in the Dow and 1050.93 in the S&P would indicate that another selling phase to even lower lows was underway.

    Next Update: Wednesday, May 26, 2010.
    --Steven Hochberg, Editor.

  2. From Larry Edelson..my fav gold guy...with Martin Weiss...he sent flash alert this morning,,,I subscribe...he has 4 new gold miner picks...I'll copy the entire read...this is first part...You can also access this issue on the Internet at:

    Begin Adding More Gold Positions NOW!

    My research tells me gold has made a short-term low, and now is a great time to buy aggressively. Inside this flash alert …

    Short-term cycle charts on gold’s bottoming action … and why gold should rally sharply AGAIN.
    New recommendations!
    Dear Subscriber,

    If you haven’t already read the May issue of Real Wealth Report, please make sure you do. You can download it now at http://www.weissresearchissues.com/?p=44433.

    The issue gives you all the reasons why I believe gold’s recent new record high is flashing major warning signals about the intermediate- and long-term picture for the U.S. economy — and indeed, for the world’s current monetary system, which is now breaking down.

    Meanwhile, right now, I see a golden opportunity to add more gold positions to the Real Wealth core gold portfolio. After trading as low as $1,166 on the June gold futures contract, representing a quick $83.70 decline from its record high of $1,249.70 on May 14, gold has now consolidated and started to spring back, in what should be a new leg up to new record highs — yet again!

    What’s driving gold? It’s simple: Gold is acting as it has acted for 5,000 years, when in times of crisis in currency and debt markets, gold becomes the only real currency of value.

    And that’s not going to change anytime soon. The sovereign debt crisis, which I’ve been warning about since the real estate collapse trigger was pulled, is the ultimate crisis.

    It is a disaster that will strike so deep that it will eventually give birth to the collapse of the euro AND the dollar, and eventually require that the world be put on a new monetary system.

    I have my own proposals for Washington that I am working on to help solve the debt crisis and to design a new monetary system that is not based on debt. Suffice it to say, you will be amongst the first to hear about it, as soon as I have the first draft of the proposal ready.

    In the meantime, with gold ready to shoot higher again, now is the time to add more gold exposure to your portfolio, regardless of today’s sharp sell-off in the Dow.

    In fact, today’s sell off in the markets — and any further declines in the broad stock markets going forward — will be merely symptomatic of the sovereign debt crisis, a positive for gold and gold shares.

    Now, let me give you some more details on what I’m seeing short term in the gold market.

    Consider chart #1 …

    Gold has tested the upper end of its new uptrend channel, then pulled back as expected.
    Gold then found technical support at the upper two horizontal bands of a major cyclical channel, where it previously broke out to the upside, and near my major buy signal given three weeks ago confirming the new uptrend when gold closed above $1,162.
    Daily pattern recognition (not shown) previously showed a bottom forming May 24, while the 40-day trading cycle (at the bottom of the chart) also showed May 24, yesterday, as a likely bottom.
    Now consider chart #2: This is a synthesized cycle chart of all non-random weekly cycles in gold, and it points to a double-bottom formation ending around May 26, tomorrow, and then a strong rally into mid-September.

    Bottom line: We have a nice picture shaping up for another rally in gold, to possibly as high as $1,350!

    So let’s take action, immediately.

    New Core Gold Recommendations For ALL Subscribers

    I recommend FOUR new positions for all Real Wealth Report subscribers for their core gold portfolios. Specifically, I recommend …

    1. Shares in Seabridge Gold (SA)

    2. Shares in Allied Nevada Mines (ANV)

    3. Shares in Taseko Mines (TGB)

    4. Add shares in New Gold, Inc. (NGD)

    Here are the fundamentals on each of the above gold shares, followed by my recommendations

  3. Here are the fundamentals on each of the above gold shares, followed by my recommendations …

    Reco #1: Seabridge Gold, (SA) is a gem of a gold exploration company. First, when gold was trading between $250 and $350 an ounce between 1999 and 2002, Seabridge acquired nine gold projects with substantial gold resources, and it did it on the cheap.

    Second, Seabridge has a long-term view toward the gold market, and like me, the company is very bullish on the metal.

    So Seabridge makes it a policy to remain fully exposed to the potential upside appreciation in gold — and therefore, does not and will not, hedge its gold resources.

    Third, Seabridge’s management has also made a point of investing only in North American properties, eliminating the political risk that often accompanies mining companies in other parts of the world.

    Fourth, Seabridge also believes in maximizing shareholder value by minimizing equity dilution, while piling up gold resources through joint ventures and partnership agreements, and using as little of its cash as possible (and very little debt too).

    Fifth, to minimize the potential for shareholder dilution even further, Seabridge avoids the intense debt and equity offerings most mining companies need to obtain the capital to get their mines up and running.

    Instead, Seabridge, does not mine its properties. It seeks out partners and royalty deals. In other words, it gets someone else to put up the capital to develop the mine, while it sits back and collects royalties.

    So what’s Seabridge sitting on in terms of potential gold resources?

    Over the years it’s acquired a slew of properties, including one of the five largest undeveloped gold properties in the world, the KSM project in British Columbia.

    Most importantly, the KSM project just passed a third-party independent resource review by the leading international mining consulting firm, Behre Dolbear & Company … and a major feasibility study by Wardrop, an independent consulting and engineering firm.

    The conclusions: Seabridge’s KSM project could hold …

    Up to 30.2 million ounces of proven and probable gold, making it the largest gold deposit in Canada!
    What’s more is that the company’s main property should produce gold for as low as $144 per ounce, making the property one of the lowest-cost gold produces in the world.

    But Seabridge’s gold and mineral resources don’t stop there. Seabridge also has …

    More than 7 billion pounds of copper
    133 million ounces of silver
    Almost 210 million pounds of molybdenum, to boot
    Let’s leave copper, silver and molybdenum out of the equation for the time being. And let’s say only half of Seabridge’s additional gold resources, or 15 million ounces, pan out.

    What would that be worth with gold at say, $1,249 an ounce? $56.2 BILLION.

    That’s like owning gold for 3 cents an ounce!

    And I repeat, that does not include the company’s copper or silver holdings.

    Applying an industry standard measure of 10 cents on the dollar for gold miners — that means Seabridge’s market cap should gain 233%, minimum.

    That’s based on conservative valuations. Add in the company’s copper and silver … the very high likelihood that gold is headed much higher, and it’s not hard to see how this company’s share price could easily do even better.

    I recommend 100 shares on Seabridge Gold. Details in a minute.
    OK guys, if you would like for me to post the rest from him, let me know. I don't want to take so much room unless Kli is ok with it. :) I have been following Larry and subscribe to him for years...HE ROCKS!!!!

  4. I am MORE than OK.....go for it......

  5. Reco #2: Allied Nevada Gold (ANV) is a small, Nevada-based miner with proven and probable reserves to 2.4 million ounces of gold and 32.3 million ounces of silver.

    It’s a smaller miner than I typically recommend in this service, but I like the fact that it just increased its reserves substantially and the company’s share price is breaking out to the upside and flashing buy signals.

    Allied Nevada operates its wholly owned open pit Hycroft Mine, located near Winnemucca, Nevada — plus over 100 other small mining claims in Nevada.

    Plus the company is already producing gold, and is expected to finish this year with sales of over 100,000 ounces of the precious metal at a cost of just $387 per ounce.

    All told, I value the company’s gold and silver at about $3.6 billion with gold at $1,249 and silver at $19.

    Yet its share price is trading at less than half that value, and the shares were recently dumped on by investors who mistakenly have viewed the company’s recent secondary share offering as a negative — when in reality, the company is raising more funds to expand its resources and produce more gold.

    Details on this reco in a minute.

    Reco #3: Taseko Mines (TGB) is a great junior copper and gold producer based in British Columbia with more than 16 million ounces of gold resources and 11 billion pounds of copper.

    Total gold and copper assets: Worth as much as $55.7 billion!

    Current market cap: About $925 million, a mere 1.8% of the value of its gold and copper resources.

    That’s like buying gold for about $22.48 an ounce, and copper for 5.5 CENTS per pound!

    Reco#4: New Gold, Inc. (NGD). Existing subscribers already have a position in New Gold. However, I recommend adding to that position.

    For new subscribers, here’s a summary of why I like the company: New Gold is a sweetheart, up-and-coming gold miner with global assets in North America, South America and Australia. Moreover, New Gold is on the shopping list of major gold miners like Goldcorp, who’s already gobbled up a piece of the company through joint ventures with New Gold’s pristine, copper, gold and silver properties throughout North America and Australia.

    This company reminds me of Glamis Gold, a junior miner whose share price soared more than 700% in the first phase of gold’s bull market. New Gold has …

    More than 13.5 million ounces of gold resources: Worth $15.3 billion
    84 million ounces of silver, worth $1.5 billion
    3.6 billion pounds of copper, worth $12.9 billion
    Total resources: $29.7 billion.

    But the company’s market cap is a mere $1.8 billion, or less than one-thirteenth the value of its metal.

    Moreover, New Gold’s latest financial results are impressive: For the first-quarter 2010, compared to the first-quarter 2009:

    — Gold sales increased by 44% to 80,020 ounces from 55,397 ounces …

    — While earnings from mine operations increased by 202% to $36.6 million

    With gold now having put in a short-term low, I recommended existing subscribers add to their position, while new subscribers also buy …

    Order Instructions For The Above Recommendations

  6. Order Instructions For The Above Recommendations

    First, as in any investing, risk of loss is always present. So be sure to invest only risk money in these trades, even though I consider them core, long-term positions.

    Second, please make sure you also enter the protective sell stop orders I give below. Stop orders help to reduce your risk.

    Third, for tracking purposes in the newsletter, I recommend 100 shares of each stock. However, the actual number of shares you buy is entirely up to you and your specific portfolio and goals. My rule of thumb for these four positions: The total amount you invest should not exceed 4% of your total investment capital, spread equally amongst the four shares.

    Having said that, here are my specific recommendations, including protective sell stops, and based on 100 shares in each. Please make the appropriate changes to the number of shares based upon your particular situation.

    Here are the typical order instructions you would give your broker …

    First, BUY 100 shares of Seabridge Gold, symbol SA, at the market. Then place an order to SELL 100 shares of Seabridge Gold, symbol SA, at $24.75, STOP. This order is good till canceled.

    Second, BUY 100 shares of Allied Nevada Gold Corp., symbol ANV, at the market. Then place an order to SELL 100 shares of Allied Nevada Gold Corp., symbol ANV, at $14.03, STOP. This order is good till canceled.

    Third, BUY 100 shares of Taseko Mines, symbol TGB, at the market. Then place an order to SELL 100 shares of Taseko Mines, symbol TGB, at $3.72, STOP. This order is good till canceled.

    Fourth, BUY 100 shares of New Gold, Inc., symbol NGD, at the market. Then place an order to SELL 100 shares of New Gold, Inc., symbol NGD, at $4.15, STOP. This is order good till canceled.

    For existing subscribers, who hold New Gold, Inc. from my previous recommendation: It’s time to raise your sell stop for that position from $3.79 to $4.15. To do so, here are the typical order instructions you would give your broker …

    CANCEL and REPLACE my existing order to SELL 200 shares of New Gold, Inc., symbol NGD, at $3.79, STOP. NEW PRICE: $4.15, STOP. This order is good till canceled.

    Go ahead and get these orders in and hold all other positions. Lastly, stay tuned — all natural resource markets are heating up. Not just gold. In the days ahead, I am especially keen on oil, which appears to be making an important bottom, and will be looking to add energy shares to the portfolio soon.

    Best wishes,


  7. Warning in the comments only....if they run the market up tomorrow and then finish it red.....ITS a BEAR TRAP ....buy

  8. He is also holding bullion, since 04'...other holdings and recos SCGDX, GLD, TGLDX, UNWPX, USERX, AEM, GG, GSS...hope this helps...TXB, TY KLI! I need them to finish it in the red...I need to cover some...

  9. Good Post Blondie.

    I am a big Larry fan. His calls have been very good. When the dow broke under 11,000 he said it would see 9000 before it saw 11,000.

    Larry uses his own version of TA, what he calls cycle TA. It has worked well for the couple of years I have been following him.

    His previous miner reccomendations were big winners.Larry and Shawn are the only Weiss guys worth watching.

    Interesting that some of the miners he recommended here and in previous alerts were also ones found here on this blog.

  10. Agree! Shawn good also. I doubt we see 11,000 again this year...

  11. 11,200+ on the DOW is possible based on daily and weekly, just a matter of how much "stimulus" gets thrown on the Ponzi before another Black Swan or an accident happens while beating the war drums. Short to intermediate, today was a nice Hammer candlestick on the S&P. Memorial Day weekend coming up can't let reality ruin that.

  12. Hey look at gold go!