Phantasmix

In the past, industries whose profitability rose 12 months following the rise in the US dollar were:

1. pharmaceuticals
2. food products
3. insurance
4. household products
5. commercial banks
6. tobacco companies

These are consumer driven industries……

All of the major commodities trade in US dollars. If the US dollar is rising you can bet that the global price of commodities is falling. This fact is often overlooked when investors try to find reason for share value declines. Crude oil and gold have recently fallen from record highs. These drops correlate directly with the rise in the US dollar. We are in the heat of the American economic slowdown. As the ripple effect from the sub prime fiasco continues to expand, we urge all of you to remember the following statement: The United States fell first and fell the hardest. The world will look to them to rebound just as strong and just as fast.

PinnacleDigest.com

Silver spot price is down about $2 overnight (about 15%), while gold is down about $16 or 2%. The rumor has it that some hedge fund in Hong Kong is forced to liquidate its holdings, particularly silver.

Tomorrow silver stocks must sell off, by at least 15-20%. I will be catching that knife.

I’m even happier about selling SLW early on Thursday. In part, it was pure luck, in part it’s all the lessons I learned - don’t get too greedy. Too many times I got stuck with a stock for a nickel. A profit is a profit.

I will be buying SLW again. Not SLV. I don’t like that ETF, seems to me it’s more like paper than a mining stock. Well, I know SLW is not truly a mining stock, but what I mean is SLW is much more real to me than a certificate, which is what ETFs are. You can, of course, use ETF for day trades, but sometimes when I get stuck with SLW, my mind is at peace because I know it’s okay. They make money and they’re real.

Other than this, I don’t have any strong candidates for tomorrow, just a watchlist of about 15 stocks. Will have to see what they do in the morning.

Suppose you found a junior minor that you think is a hidden gem and its share price is just so ridiculously low that it can’t get any lower. Time to buy! Or is it?

If the company on your radar is:

• about to start building the mine, or
• in the process of building the mine, or
• in production but in very early stages and may be having cash flow problems

…before you invest, you need to find out:

• the company’s “burn rate”, or how much money it needs to spend per month
• how much money they have in the bank
• if any big capital expenditures are planned and for when

All of this is not insider information, it’s open to the public, just go through the quarterly statements. For the latest facts you should email the company’s Investor Relations department (that’s another thing - email them and see how quickly they respond. Some juniors never replied to my repeat messages and that was the final straw in some of the decisions I made.)

The point of the above exercise is to try and time buying on the dip. When you know how much money they have and how much they spend, you can figure out when they’ll be needing financing. Before the financing share price is usually manipulated down (by the “smart money” that provides the financing), so that the offering can be made at the lowest price possible.

Private placement shares usually can’t be sold for several months (4 to 6 is typical). You can look forward to that time, because the PP investor will likely want to dump the shares for more than they paid, and if they had the ability to depress the share price, you can be sure they can manipulate it higher, too.

Juniors are much more driven by company events/news releases than by technicals. It’s just the nature of this beast. Technical analysis works for juniors in the relatively stable periods when no new announcements are expected - but only if the trading volume is sufficient.

ORION SECURITIES Changes EPS Estimate of CROWFLIGHT MINERALS INC: Current Recommendation is Outperform

Company: CROWFLIGHT MINERALS INC Report Headline:
‘Crowflight Minerals - Forward Sales from Bucko Lake’ Report

Date: July 31, 2008

Current FY EPS Estimate [FY2008]: -0.04
Previous EPS Estimate for Current FY [FY2008]: -0.02

Current Quarter EPS Estimate [Q3]: N/A
Previous EPS Estimate for Current Quarter [Q3]: N/A

Next FY EPS Estimate [FY2009]: 0.13
Previous EPS Estimate for Next FY [FY2009]: 0.14

Current Recommendation: OUTPERFORM
Research Firm: ORION SECURITIES
Analyst: PIERRE VAILLANCOURT
Industry: BASIC/METALS

Estimates reported in CAD

Stock symbol: CML.V, listed on Toronto Venture.

Maybe you’d like to know this…

Historically, silver was used for daily transaction, for smaller amounts; gold - for storing wealth and for larger transaction.

Zinc spot price has dropped very far, very fast this year. Analysts are saying this is due to the rising zinc stock at the warehouse. Well, let’s see here… I overlaid 5 year London Metals Exchange stocks and 5 year spot price (charts picked up from Kitco.com):

The price drop is not proportionate with the stocks increase. Logic here tells me that companies will be limiting production due to it not being economical, especially since expenses are increasing everywhere.

Teck Chief Executive Officer Donald Lindsay said in a May 23 interview that falling zinc prices will prompt companies to shut mines, cutting global supplies in 18 months. Production may trail demand in 2010 and 2011, compared with a surplus now.

In addition, there’s a high short interest on zinc right now, so when the warehouse stocks decline and price increases, shorts will have to cover, further boosting the zinc price.

Desjardins have been by far the most optimistic about zinc. Here’s a couple of pages from their Commodities Outlook report from Feb 2008.

Below is their May 2008 re-iteration that they expect a balanced zinc market. In May China was still a net importer of zinc, defying everyone’s predictions.

Financial Post
http://www.financialpost.com/trading_desk/mining/story.html?id=540073
Published: Monday, May 26, 2008

BALANCED COPPER, ZINC MARKETS GOOD NEWS FOR TECK

The latest zinc trade data out of China came as a positive surprise to the market and should bode well for a balanced zinc market this year and next, according to Desjardins analyst John Hughes.

On Thursday, the Chinese government said the country imported net refined zinc of 4,672 tonnes in April, compared with net exports of 119,218 tonnes in the same period in 2007. Net imports from January to April now stand at 4,334 tonnes versus net exports of 119,218 tonnes during the first four months of 2007.

“We view this as very positive — recall that the market was expecting China to be a net exporter of zinc metal at an average monthly rate of 12,000 to 17,000 tonnes at the beginning of the year,” Mr. Hughes said in a note to clients.

Going forward, the analyst said the country will record net imports of about 5,000 tonnes in May, 2008, and be a net exporter by 50,000 tonnes in 2008. In 2007, China exported net 126,159 tonnes of zinc.

Mr. Hughes told clients the data supports his forecast of a balanced zinc market in 2008 and 2009, and based on the expectation for inventory levels to remain at current lows, he estimates average zinc prices of US$1.25 per pound in 2008 and US$1.50 per pound in 2009.

The Desjardins analyst also foresees a balanced world copper market in 2008 and 2009 after China also reported strong data for refined copper, with net imports at 109 kilo-metric tonnes during the month. For the year so far, net imports equal 486 KMT for a annualized rate of 1,467 KMT versus Mr. Hughes’ estimate of 1,200 KMT.

David Pett - More info: fptradingdesk.com/mining

And in case you didn’t know…

The major uses of zinc are:

• anti-corrosion coatings on steel (galvanizing)
• precision components (die casting)
• construction material
• brass
• pharmaceuticals and cosmetics
• micronutrient for humans, animals and plants

Photo credit: gnuf

My friend and I have bet on oil price: he says oil price will drop to $100 first, and I say we see $200 before $100.

Should I win - and of course I will - my reward will be cheesecake.