Markets Look Set to Rally

From the August 24th Edition...

Special Alert: Gold Tanks… Markets Roar to Life, Look Set to Rally

In the face of all this bearish sentiment on global markets, global recession fears and debt Armageddon in Europe… the markets are now overextended to the downside and are set for a fierce rally. Over the last 3 weeks strong support for the S & P has appeared at 1120 where investors have clearly drawn a line in the sand. At the same time a big technical buy pattern is forming in a double bottom that looks to be shaping up in favor of the bulls.



This market has been driven on emotions, not fundamentals. The machines are manipulating your emotion creating huge swings in volatility. One thing is very clear in my mind, no one wants to sell below 1120. With gold tanking making a classic top, that signals fear is coming out of this market for now. It is time for clearer heads to prevail and value hunters to go out and find bargains.

It is time for a rally.

Gold was a huge fear trade and today signals a change in sentiment. There is at least $100 to $150 dollars of fear built into this trade and ther fear needs to unwind before gold can go higher.



It is now time for a general market rally.

Jackson Hole

The market has priced in as much bad news as it can over the short term including Ben not announcing further QE measures. A lot of selling on the North American markets was investors preparing for a worst case scenario in Europe. Fears that Ben will not announce more asset purchases which is what the market wants has markets really spooked. Asset purchases deal directly with debt monetization which is what the market wants the FED to do. If congress can’t deal with the looming debt problems, then the obvious choice is for Ben to deal with it. As bad as this sounds, no better news for the markets will be than for Ben to announce that he is printing a trillion dollars to pay down the debt to help mitigate what the retards are doing in Washington.

Many traders and speculators seemed much more confident Ben would announce QE3 at Jackson Hole this Friday. That sentiment seems to be waning in favor of Ben hinting at other forms of QE inlcluding maniupulating maturity dates which in my opinion is just dumb. In essence what that does is just extend the time that one can borrow which just adds to the interest burden and does not get to the crux of the problem which is paying down the debt. Ho Hum.

Start the printing presses and pay off the debt while you still can!

This is really what all this is coming down to… QE is about manipulating the US debt situation so they don’t default. It is not about stimulating the economy. IF the economy was doing well, debt service problems woudln't be an issue. Just print the money and pay it off please. That is what the markets want. It is better than the alternative in my opinion. At least you allow for growth. At least you allow the banks to continue to lend, (for the first time in years there has been an imporovement). Bank lending means small business is back in business which is a huge part of the economy that needs a big lift that Ben and Barak always seem to ignore. It is also a part of the economy that won’t automate and will continue to hire with they have the funds to expand. You snuff out the banks, you snuff out any hint of a small business recovery for at least the next 2 years.

All I know for certain is that another round of bond purchases is coming at some point. Jackson Hole may or may not be the date he lets it slip, but make no mistake, more bond buying is coming. They may try other things but what they will find is that they are wasting time not buying their bonds while they still have the authority to do it.

Look at the banks… they will not survive without another injection.

The charts on America’s finest institutions say it all. Ben has no choice, he has to shore up the banks again so they don’t fail. Bank of America is about to fall off a cliff if it goes under $5 and Citigroup isn’t far behind having been rolled back and now losing 40% of its value again. I recall many calling Citigroup a buy at $30 in 2008. Are there any takers this time around? Certainly with the reprot going out on B of A today... no one wants to go near this sector. The US banks are a bunch of lepers.

Even the bad boy investment bank Goldman Sachs is looking anemic and in further peril over the next quarter without an injection of tailored made steroids for the markets. The question on my mind is will Ben be proactive and shore up the banks now or will he be reactionary waiting until the last possible moment like the Europeans? Something tells me that if Europe fails, there will be contagion on our shores and without the banks getting through the mortgage crisis another blow to their balance sheets from the Euro debt crisis might put them over the top... or under. The only banks I would recommend are our Canadian Banks which are a cut above the rest. They are great buys on these dips with BMO beating the street today, that reinforces just how strong our banks are.

Most argue that inflation is too high for Ben to announce bond purchases but I would argue that Ben will say those are lagging indicators and deflation is much more a risk over the short term to medium term than inflation. I am sure he will use negative language about the economy, although I doubt Ben will admit anything is structural because that starts to begin to tread on the Obama’s department. If Ben admits things are more than transiroty he admits his role at the Fed is less important and this is somethign beyond what the FED can fix. All this bad data gives Ben the ammo he needs to do what he wants.

The government embarked down this road of QE when they probably should not have. They should have let all the bugs work through the system the first time and we would be clear sailing or closer to a real recovery insteading of risking goign back into recession. They cannot pullout now or the effects on the economy could be dire and truly send us back into recession like the 30’s except this time inspite of a recession and deflationary conditions, we will still see rising prices in the face of defaltionary conditions. Don’t think so? Just look at what gold has done. All money in the world is dong the opposite to gold.

If the markets can get traction the rest of the week and Ben can give us a carrot, markets could track back to challenge the popular moving averages. I doubt downward momentum is done, but at some point you have to separate reality from emotion and the reality of the current situation does not call for market to go lower. Ultra low interest rates guarantee that... there are too many risk adverse retiring baby boomers that will take the 'percieved risk' and the yield of an equity or over the 'illusion of safety' and no yield with governemnt debt. The last place I want to be is tied up in a 10 year bond while we have simlutaneous curency and debt crisis going on.

All is Quiet on the European Front

Europe needs to fall apart a lot more for Armageddon to happen and I doubt that Europe is going to fall apart over the next 3 weeks. In fact, negative sentiment in Europe is waning as well. The European Union is there for good and leaders will do what is best to save the union as it is to everyone’s advantage to remain an economic block. Germany has taken a hard stand for a negotiating position, but they are no dummies, they need the Euro as it benefits them for trade keeping German quality priced at American prices. If they want to kill German industry, then leaving the Euro is an obvious choice. That is not going to happen. Not only does Germany have the best advantage of all nations from participating in this union, they get to bully everyone else around. They are truly the rulers of Europe. 100 years later, who would have thought that all the Germans would have to do to achieve their dreams of continental domination was to lend their neighbors money for profit.

Comments on Gold

I am relieved to see gold top out. It means it is not going parabolic yet, but is creating a new trading range. It also means that there is much more to this gravy train for the rest of the year and 2012 because it is not going parabolic yet. The last thing I wanted to see was gold going parabolic. If you look at the silver chart which went parabolic in March, it took almost 2 quarters to start to heat up again, gold going parabolic and collapsing at this point would see a major correction and take momentum out of the whole sector once it crashed.

I expect gold to come down to at least $1780 before it starts to gain upward traction again. I have even deeper targets of $1750 and $1640. It formed a classic top, opening higher than yesterdays high, then closing below yesterday’s low. Gold is not done, but it has made its highs for August. I expect that at some point in September we will be challenging recent highs. What is great about the gold trade is there is always a bottom much higher than most analysts expect and predict. If people are telling you $1600, starting buying anywhere in the $1700’s.

The fundamentals for the long term gold market have not changed although if I was an investor I would have my eye on leveraging out of the metal and into the miners and developers and premium explorers were they can still benefit from a rising market. As long as our leaders keep on taking the current approach to the problems at hand, which is for European leaders to stick their heads in the sand; the long term debt problems are here to stay until we default, monetize or grow with fiscal responsibility out of our debt problems.

The last minute solution will always be to print money and monetize.

With the fear trade coming out of gold, it gives the markets room to rally. The last $150 in Gold was all fear and then silly momentum.


Option Trade for the Month MCP $49 Sept calls (unhedged)

I am introducing a new feature for the letter, a monthly option trade. Last months trades on the G and AEM were very successful. This month’s trade is MolyCorp. The premium on this company is a much more than compared to Goldcorp which is priced the same, but the range that MCP trades in is much more than Goldcorp and could easily run up to $70 or $80 in a relief rally whereas G will have a hard time breaking $55 to $60 until next quarter. MCP blew away earnings and is a growth story that has earnings growth, high margins, and is ramping up production of rare earth’s. They are they name to go with in the sector. I am recommending this buy on a chart pattern.



Some fundamentals…

Q2 earnings for MCP were $0.52 a share which beat even the highest analysts’ expectations of about $0.40 cents a share. Phase one, which is targeted to be in full operation early next year is expected to produce 20,000t of rare earths a year. Phase 2 planned expansion will double that to 40,000t production by 2014.

This is a buy low sell high trade. I found MCP at an attractive valuation yesterday at $49 and the chart is indicating strong support at $50 and a potential double bottom with markets. MCP will grow no matter what the market does over the long haul being showing very nice profits already without being in production. It also bounced off its 50week moving average which is another strong area of supprot for stocks.

I bought the $49 contract yesterday while it was just in the money for a price of $4.69. I plan on exiting my $49 calls over $60 this week or next. Don’t let the premium scare you away unless you plan to hold this till expiration. MCP moves $5 a day and if the markets get a lift then MCP will benefit in a big way. This is another really cheap growth stock based on forward earnings. In times like this I find the big stocks are just as volatile as the little guys and a great way to get exposure is to play the options.

Breakout Gold Stock…

Calico Resources CKB-V $0.56

Premium @ $0.35 +$0.21 / 60%

Calico Resources has been a top gold pick in the explorer category since the spring. It has been range bound in anticipation of the drill program starting up at their 1 million ounce Grassy Mountain Property they optioned off Seabridge Gold. On August 10^th Calico announced they had started drilling, targeting a rich area on the property. The team at Calico speaks of class as they announced options on August 22 at $0.60. The directors could have easily given themselves cheap out of the money options in the $0.30’s, but instead gave themselves options where they believe the fair value is. If you look at the drilling history of the property there is a very nice high grade core that may extend to depth which could support an underground mine. Seabridge Gold had some very rich hits that will make this tiny $13M market company look like a steal at current prices, especially with 1M ounces under their belt.

The global resource grades around 1 g/t so it is not classified as a high grade deposit, but when CKB announces results from the initial drill program, the numbers will be very lucrative. Historical results at Grassy Mountain include 67.67 meters grading 9.78 g/t au and 38.89 meters grading 12.44 g/t au. That is 661 and 484 grammeters.

When evaluating an underground operation you want to see consistent intercepts of atleast between 25 and 50 grammeters. An open pit operation can generally operate 10 – 25 grammeter ratings. A real quick rule of thumb… if a company consistently turns in 100 plus grammeter ratings on any type of proposed deposit, generally that will be a mineable deposit.

CKB-V is a top 2011 spring/summer high grade gold pick along with GWY-V, NCG-V, GCM-T, NES-V and MGP-V. I advocate buying a basket of gold stocks as buying 5 to 10 gold stocks will mitigate any risk that one poorly performing stock will have without diversifying away your leverage.


Make like Warren Buffet and buy iron ore…

The most beat up sector is iron ore. Within this sector there are companies like Cap-Ex CEV-V and West Africa Iron Ore WAI-V who have some of the most sought after land in their respective regions, initiating low risk exploration programs and are set to add material value. These companies scream long term value with multimillion dollar potential. Picking up stocks that traded at 80% off their high from the spring represents the best value anywhere in the materials market.

The long term fundamentals are still in place for global iron ore demand to double over the next 10 -15 years. One of China’s main industries is steel production and any time the iron price comes off in an anticipated recession, it is number one on the Chinese list of commodities to buy. The Chinese ramp up their orders to take advantage of the lower prices in times of recession as their long term growth plans include a lot of steel for Chinese and other developing nations controlling over 60% of the world’s steel production.

If the Chinese doesn’t want the Big 3 (Vale, Rio, and BHP) to do to them what the they are doing to the rest of the world with rare earths, the solution is to develop their own long term supply chains. Several Chinese companies have already done this making strategic investments in both the Labrador Trough and in West Africa. CEV and WAI represent low risk exploration adding material value for shareholders, when the global economy kicks starts into gear after this current stall, iron ore will again snap to life. The 2 places in the world that have can support long term supply growth of iron ore is in West Africa and the Labrador Trough. Australia’s reserves are depleting at an alarming and Brazil and India are nations that need to support their own internal growth demands for the raw material.

CEV will have a steady flow of news this summer and fall that will hopefully lead to a big discovery on Block 103. Rumor has it that CEV’s magnetite potential on Block 103 might as large as NML’s massive deposits. They are also higher grade at around 32%. If CEV can prove a higher grade resource next door on Block 103, they may jump the queue in front of New Millennium’s NML-V Lab Mag and Ke Mag deposits simply because of location being closer to Schefferville and infrastructure and having a higher grade.

Cap-Ex announced the first results of the year outlining high grade hematite zone at their Porky Lake Property over a 750 meter strike length with a 91 meters thickness. Samples graded 54% and 62% iron respectively and the high grade sampled return very low silica content which is important for DSO.


Ethiopian Potash FED-V $0.76

EPC is back in play having recently announced they successfully intersected potash horizons on the property in the Danakil Basin. They are 6 months behind Allana Potash and arguably have a higher grade resource amenable to open pit mining. Allana also disappointed on their grades from historical results so EPC has an opportunity to better AAA’s resource on grade. Ethiopian Potash is my top potash pick and I expect now that assays are less than a month away that this one will start to run. The warrants provide great leverage as the strike is at $0.75 which means that once FED is over $1, the warrants should trade penny for penny with stock. Ag stocks also seasonally start to run at this time of year.

When looking for resource development plays like FED or WAI or CEV. I am looking for a strategic area that can support major development. I also look for a strategic commodity that a country will need in the future. Potash and iron ore are 2 materials that the developing world cannot live without. Copper comes in third and may end up being one of the most fought after commodities in the future. It is key to grid development and the world is slowing going electric no matter how addicted we are to fossil fuels.


Some news this week…

Pretium Resources Inc.: Brucejack Project Drilling Update

Prophecy Drills 49.5 Meters Grading 1.27 g/t PGM+Au, 0.71% Ni, 0.45% Cu within 472 Meters Grading 0.43% NiEq at Yukon Wellgreen Project

GALWAY RESOURCES LTD. | Galway intersects 138 g/t Au over 1.1M, 44.7 g/t Au and 1,120 g/t Ag over 1.2M, 26.8 g/t Au over 1.9M, and 7.5 g/t Au over 7.6 M at Vetas

AUREUS MINING INC. | Multiple High Grade Intercepts from New Liberty Project - Deposit Open to the East

KOOTENAY GOLD INC. | Drilling Success Continues at Promontorio as Kootenay Hits 205 meters of 117 gpt Silver Equivalent in Step-Out Drilling in Southwest Zone that includes 169 gpt Silver Equivalent over 50 meters.

PMI GOLD CORPORATION | Further Strong Drilling Results from Obotan Gold Project, Ghana

Have a great rest of the week!


Happy Trading


Christopher Skidmore


Beat the Market Stock Picks

Gran Columbia Gold - TOP GOLD PICK!!!

Gold Producers – Never has there been a better time to buy

For the last 2 weeks I have been trying to point out that the gold producers have the best risk adjusted value anywhere on the market. In this type of market I am looking for yield and guaranteed earnings growth. Certainly most producers won’t pay much a yield compared to others on the market, but with guaranteed earnings growth for at least the next 3 – 5 years... a well timed purchase may yield quite well when compared to book value on original purchase. Plus you get better than average capital gain potential than any other sector on the market presently. You also have downside stability with the obvious trend of gold going up over the long term. With too much liquidity in the system… it is now rushing to gold in times of crisis and not being liquidated which is an obvious sign of the underlying drivers for gold. Gold will go up and down yes and will probably fall dramatically once it touches the psychological mark of $2000. Don’t make a foolish mistake at that point… the run in gold is far from over.

Gold is in a bubble yes… but some bubbles last for years.

When developed nations have stable balance sheets and are not backed into a corner of keeping rates artificially low and printing money to purchase their own debt… then you might have a case for gold to downside. This debt situation may be with us for up to a decade depending on the outcomes of several scenarios. The fact of the matter is that none of the basic fundamentals have changed or look to be changing in the near future making the case for gold still extremely bullish. Ben may stall on the bond purchasing side of QE3 as long as possible which might put markets into a further tail spin, especailly with all the bad economic data coming out in the past 3 weeks and further European woes which are going to intensify this fall… the fact of the matter is that everything that is developing on the macro horizon will force the FED into another round of bond buying just too maintain debt servicing costs.

There has never been a better time to buy the producers as they represent extreme value. First, you have the double whammy growth story. You have 1) immediate earnings growth and you have 2) production growth as almost all gold companies are significantly ramping up production over the next 5 years. Second, you have extreme value with gold stocks trading at historical lows. On an earnings basis, on a cash flow basis, priced against gold, or even on a yield basis… the miners have never been cheaper. On a relative basis they are much cheaper than the developers.

How often do you get a theme like this?

• SUPER CHARGED EARNINGS POTENTIAL IN A GROWTH OREINTED INDUSTRY….
• AN INDUSTRY RAMPING UP PRODUCTION OVER NEXT 5 YEARS…
• AN INDUSTRY TRADING AT HISTORICAL VALUATION LOWS

Not many themes get better than this…

Q3 earnings for many producers will be the best quarter yet for this asset class making it ridiculously undervalued. I expect earnings for many companies to grow at least another 50% and some producer’s earnings will grow 100% from this quarter to next if gold goes over $2000 and stays there this fall. Here is how good Q3 is starting to look. The price of gold has averaged $1681 over the last 6 weeks which represents the halfway mark of Q3. I can guarantee you gold will never see $1681 again. Undoubtedly it is on its way to $2000 before the end of the quarter and the way it is going it could get there as early as next week. Q3 costs should also come down as the price of oil has come off significantly which is a major operating cost for miners.

For the miners… the party is just getting started

Why do I think POG won’t come down? Gold is starting to turn into a demand story with no one selling. In addition the volume that made this latest historical push in August is not that much higher than the averages for the last 2 years signifying that this is not a blowoff top in POG. It signals all things normal on the volume front and that this is jsut more lack of sellers at the current price than any abnormal volume. There is still further momentum to the upside both short term and longer term.

Napkin Accounting Tells You BUY NOW!

A little tweaking of Goldcorp’s latest numbers should demonstrate this point. Assuming all things constant except gold sales… Goldcorp produced 597,100 ounces last quarter for net income of $420 million or $0.52 per share. At $1500 that produces $895 million in revenue. At $2000 that produces $1.194B in revenue. That is an additional $300 million in revenue that will flow directly in to the bottom line increasing net income to $720 million which is almost double. At $2000 gold sales, Goldcorp would have earnings over $4 a share. And that was a bad quarter production wise for G where everything that could go wrong went wrong.

Goldcorp is a bad example, they are one of the lowest cost producers in the industry so already have high margins with less earnings leverage.

Take Kinross who has average costs or bit below average costs for the industry.

K produced 676,245 ounces for the quarter at $513 on a by product basis which is $330 higher than G’s on a by product basis. K sold their Q2 ounces at $1450 for $980 million. At $2000 gold those ounces become $1.352B in revenue, an additional $372 million flowing to the net income category. Kinross had $226.5 million in net income which would put Kinross up to $600 million in net income more than doubling their profits for the quarter and increasing their EPS from under $1 to a whopping $2.10 per share in earnings. Implying that Kinross should at least double over the next 6 months as K is potentially trading at less than 7 times forward earnings of a less than half a year.

These companies are priced like no one wants them. Really, no one does want them with so many other financial products out there that reduce the risk dramatically than owning an individaul miner. This implies that you are getting there ahead of the herd. It is clear to me that on a risk adjusted basis... the miners now present the best opportunity. What would be great for the industry is if they made more ETF’s based on the miners and not just the top miners. Gold companies are some of the few companies that have any future over the next decade when it comes to growth of any sort. I cannot stress enough that the time to buy the miners is now. The only people that print real money nowadays are the gold miners.

Usually I like to find the gold discoveries or early stage development plays as they consistently provide the highest risk adjusted returns. Right now I feel the best gold development plays are at least fairly valued where the producers are much more undervalued for their assets, their growth potential and the fact that a gold company in production is much less risk than a deposit that is not in production, especially when it comes to financing and dilution. All developers have to go to production one day. Yes, mines have problems, but careful scrutiny of the company and its track record on delivering and its cost profile should eliminate a lot of this risk. The fact that gold will trade above $2000 all year in 2012 will also eliminate a lot of this production risk with the worst miners just not perfroming as well as the top miners.

The earnings leverage that these gold companies have to the price of gold will attract the herd at some point and it already looks like a few investment managers who were only holding bullion are now looking at the miners. All investment mangers queried admit that the miners are sickly cheap. All investment managers also admit spot getting risky to buy now. Certainly when you factor in leverage and potential short term price drop. The risk of getting creamed on spot at some time this fall is very high... it is way too much for the average investor to take on the spot market. Especailly if they haven't been holding gold under $500.

Put the two together and this is the no brainer trade for the rest of 2011 and going into 2012. I don’t care what the market does over that time… just like stocks have yield and will keep the market from crashing because treasuries are so low… this will be one of the only bright spots on the market while global debt woes continue... especially if economic conditions worsen which will exasperate the debt crisis. The time to buy the miners is now. Capital is risk adverse and there is now a perceived risk with a lot of assets... everything is relative where all currencies are losing value on a purchasing power basis. One day investors are going to get it... the idea that pretty much all developed world government debt is JUNK!!

NOW IS THE START OF A MAJOR MOVE IN THIS SECTOR. IT’S PRICED RIGHT AND THE EARNINGS STORY DOESN’T GET ANY BETTER.

With earnings set to double from Q2 to Q3 for many of these companies, there has never been a better time to own a gold miner. They are cheap and you are getting there just before the herd. Over the next year the best gains will be made in this sector. Once the majors are cashed up from fat profits over the next couple years… you will then see a major buying frenzy among producers, developers and explorers. They won’t be able to help themselves with all that money burning a hole in their pockets.

4 Keys to finding early stage highly production growth stories…

Already in production

• Earnings leverage
• Minimal dilution with revenue from existing operations
• Less financing risk
• Proven management
• Minimal production risk

Production growth profile

• Key development asset
• Ability to expand maximize current operations
• Exploration potential of existing assets

Low cost production

• Low cost producers in the industry receive a premium
• Lower risk to gold price vs. high cost producer – long term value vs. leverage
• High grade or low grade… who cares? What I care about is how much it costs to pull that ounce out of the ground.

Longevity

• Mines with longevity have value. Lots of value.
• If investors know you are not going out of business in 5 years, they are much more willing to park their butts at your AGM meetings

One often overlooked factor… companies whose sales and costs are denominated in USD have a decided advantage over operations in mineral currencies such as Canada and Australia.

My top gold producer over the next 5 years…


Gran Columbia Gold
GCM-TO $0.77

Shares Out… 389M
Market Cap… $300 million

Initiating coverage @ $0.77
52 week high... $2.49
52 week low... $0.73


Gran Columbia has everything in place to be the next big producer and may be the South American version of Goldcorp one day. Gran Columbia is a leading gold producer in Columbia producing 120,000 oz’s by the end of 2011 from some of the deepest, richest mines in Columbia. GCM has the largest growth profile of any producer going from 120,000 ounces of gold in Q3 to 630,000 ounces per year by 2016. GCM has been in production since 2010 and a stage in start up operations where they are smoothing out efficiencies and maximizing initial start up operations. GCM isn’t receiving any value for its operations at Sergovia even though production costs will be around $600 which is below industry average of $700.

Kirkland Lake Gold KGI-T has a $1.25B market cap and is set to produce 130,000 ounces in 2012 at a cost of $750. This certainly seems like a price mismatch to me… KGI producing 130k ounces for $750/oz trading at $1.25B while GCM will produce $165k ounces by the end of 2012 at close to $600/oz trading at $300M. WOW.

I know some of you… or at least your wives will equate to this type of sale.

Ladies and gentlemen... GCM is trading at a 75% discount!

This is equivalent to HP blowing out their tablets for $100 this weekend. They were gone at Costco at open. (If you didn’t line up you didn’t get one.)

Most companies that produce 600,000 oz’s per year trade from a $5B - $10B market cap while tiny little GCM trades at a paltry $300M market cap so the growth profile for GCM is at least 20 to 3 times its current market cap holding arguably some of the best projects in Columbia which is has been and will continue to be the land of opporuntity for gold companies. GCM’s long term future is in the million ounce range with there underground operations having half a million ounce potential over the long run.

Columbia… the hottest ticket in Gold Development

Columbia is arguably the hottest ticket in gold exploration and development over the last few years with several major discoveries. My other big Columbia pick is Galway GWY-V at $0.90 who is an imminent takeout of Ike Batista, but they are a developer ... which not this months theme that I am trying to hammer home. The next stage for Columbia from discovery and development is to produce from these deposits and GCM is on the inside track in the lead at the quarter post. GCM is already producing, is at the stage where they are realizing operational efficiencies, is the leading Columbian gold producer and has a growth profile unlike any other miner in Columbia, or any where else in the world for that fact. With 2 major projects, one undergound high grade and one open pit bulk tonange low grade project, GCM has both ends of the spectrum covered when it comes to large scale lucrative mining projects.

Sergovia

The Segovia operations have a global resource base of close to 700,000 ounces in all categories grading between 13 and 15 g/t au. This is plenty to support current operations especially since the property has plenty of potential to grow the resource. The property has received little exploration since the mine was placed in receivership in 1989. Historically the area has produced more than 5M oz’s of gold in the last 150 years with an average grade of 9.3 g/t gold. The land package covers a vast area with potential to ramp up operations and expand beyond the current targets. Current mining only covers 4 of 29 known veins that have a total strike extent of over 50km on the property. The property is fully permitted, is close to excellent infrastructure and has access to power and water.

GCM is planning a 50,000 meter drill program to upgrade and expand the resource at Sergovia. GCM is increasing the mill capacity from 600tpd to 1200 tpd which will get GCM to over 100,000 oz’s per year and is considering adding a second mill to the site for longer term development plans which would put the site well over 200,000 oz’s per year.

Gran Columbia has another small operation at El Zancudo which is near their flagship development property Marmato. El Zancudo project has commenced trial mining with year end production estimated at 25,000’s andcosts at around $600 per oz. GCM is drilling 12,000 meters at this site looking for large near surface disseminated gold systems.

Marmato

Marmato is Gran Columbia’s flagship asset for long term growth. It is expected to produce close to 500,000 oz’s a year once in full production. Marmato is a classic bulk tonnage open pit operation with an 18 year mine and still room to grow. It is a mammoth gold deposit containing 10M ounces of gold at just under 1 g/t gold and an additional 60M ounces of silver at a grade between 5 and 8 g/t ag. Cash costs are project at less than $500 per oz which will make GCM one of the lower cost producers in the industry similar to Kinross once all their projects are in production. With Marmato in production and Sergovia at full steam… Gran Columbia has a chance at being a million ounce gold producer in Columbia with attractive costs when compared to the industry.

GCM has the biggest growth profile of any miner

The growth profile of Gran Columbia is almost identical to a company I used to trade options of 6 years ago ELD-TO. Eldorado Gold went from being a 100,000 ounce producer to the 650 – 700 k ounces they currently produce and will be producing a cool million ounces by 2015. That took 10 years to go from 100,000 oz’s to a million ounces and GCM in my opinion has a chance to do it faster because it is all organic growth in a nation whose goldfields sat idle for 30 years. ELD’s cash costs are some of the lowest in the industry at around $400 per ounce which makes GCM very comparable once in full production.

Bottomline… I have never seen more of a ‘no brainer’ buy in the industry than Gran Columbia Gold. It is truly undervalued when compared to its peers trading at 25% the price of KGI and has a growth profile that goes from 100,000 ounces to 600,000 plus in 5 years. There is no other gold company that I have reviewed over the past year that fits my newsletter theme any better than GCM-TO.

It’s both stupidly cheap and has the highest growth rate of any producer I can find.


Happy Trading


Christopher Skidmore


Beat the Market Stock Picks

Developed World Debt Crisis Accelerates...

Developed World Debt Crisis Accelerates

It’s been quite an eventful week as events around the world unfolded in a negative light which saw global markets crash and see their worst weekly losses since 2008. The S& P showed a clear technical sell on Tuesday with the neckline of the right shoulder in a head and shoulders pattern being broken. The market then tried to capitulate but failed to break resistance confirming a new downtrend which led to a very ugly drop in markets the rest of the week. And then we had the downgrade after market close on US debt by S & P. Just what everyone needed.

The markets reacted negatively to the US debt deal with nothing being resolved leading everyone in the world asking what is wrong with American politics? If nothing changes, we are all doomed. If political gridlock remains for the next decade with no change in fiscal policies then the proverbial ‘worst is certainly yet to come’. What makes this insanely frustrating for everyone in the world who is not in Washington is that it is clear to all that a dual pronged approach of increasing revenue and spending cuts is what the country needs to even start to right its debt problem. It also leaves us precariously close to one more downgrade from either Fitch of Moody’s setting everything in motion to have things spiral out of control.

Add all this to the fact that Europe can’t keep their house in order long enough to go on summer vacation, we really do have a problem.

What should have been a positive or at least a ‘none event’ has become a landmark sentiment changer as political gridlock and bipartisanship have led capital markets to lose faith in America’s government to find a real solution. The 2 trillion in cuts that were made to the deficit over the next 10 years in a last minute deal fall way short and do nothing to alleviate one of America’s biggest problems. The widening wealth gap that threatens to destroy the middle class in American and turn them into the working poor, all the while corporations continue to real in record profits.

If the unexpected drop in markets after the debt deal was signed was not a big hint of a huge change in sentiment... then the S & P downgrading US debt to AA status should be another reminder of how close we are to going over a cliff. Real arguments can be made for inflation and deflation which I know sounds absurd but we have economic conditions for both going forward. Certainly when the debt bomb goes off, all we are going to hear about is inflation as the USD spirals into oblivion. Austerity measures taking place all around the world make the case for deflation.

We are not there yet and bets are that Europe takes it on the chin first but Friday’s downgrade no matter how telegraphed days before is still a landmark event where global markets will react negatively. This is all the beginning of the end as the USD being the global reserve currency. Ultra low interest rates will be coming to an end very soon. The only thing propping up US debt is China. As long as China follows a policy of pegging to the USD they have to buy treasuries and the USA has a buyer. But if China changes policy… the US may find it increasing ly hard to find a creditor. ANtoher thing that keeps the USA debt scam alive is that there is no other alternative around the world. Certainly not in times of panic… buying T-bills on a bad day in the markets is almost like a knee jerk reaction. The S & P downgrade will not have that much of an effect on global interest rates over the short term because of China, but this is a major shift in sentiment which is going to get the ball rolling towards what no one is really certain. But it is most likely not that good if the USA can’t get their house in order and many people think it is already too late.

AKA BEN and is QE.

The FED has to keep the rates low as they cannot afford the extra debt maintenance and will continue to keep them as low for as long as possible to keep from issuing even more debt just to pay increasing interest costs. This is the crux of QE. It is not stimulus and never was intended to be stimulus…

QE is all about…

Uncle Sam printing money to pay down his debt because he is broke.

It is only a matter of time until the bond vigilantes string Uncle Sam up by the gonads and start demanding higher rates to hold US debt. Is it next year? I doubt it as this will only happen when there are no more buyers of US treasuries. When that happens I do not know as I cannot predict Chinese policy or any other foreign policy. Certainly not the timing of it.

Obviously the politicians play to the ‘not in my term of office’ tune and will try and push it as far down the road as possible, but it is not up to them. China has been grumbling mightily this weekend and last about American politics not comingto a solution and now the downgrade by S & P. What I do know is it will put a spur in Ben’s butt to buy more treasuries as the US now has much less time than anyone predicted.

If interest rates shoot up overnight to 10% then the US will go straight to default. This will not happen of course, but I do expect 10% rates by the end of the decade and maybe even higher which makes the debt market the worst place to be. It certainly would make Uncle Sam;s debt payments by the end of the decade at only $2 trilion cuts unmanageable. Without QE… the US might already be in default. QE isn’t about stimulus, it’s about paying off their bills. The easiest way I know how to pay the bills is just to print more money. Paper costs nothing. It's what the crooks do. When did the mafia start running America?

Unfortunately the crooks mindset is this...

You tell me what is better? Default by debt monetization or an outright slowdown in the economy, a double dip recession which forces the country into bankruptcy. Ben better print those dollars as fast as he can because sooner or later someone is going to slap the handcuffs on the US printing press which will be around the same time the bond vigilantes start to ratchet things up. This situation could eventually lead to huge global tensions but USA will do what is best in their interest as other nations will do for themselves. In my opinion debt monetization is the least painful solution to a very bad situation... but morally the wrong way to go... especially when you are supposed to be the gatekeeper of the worlds financial system. Here is the image I like to leave you with. We are all playing monopoly and we all get a certain sum of money to buy proeprty and houses and have to pass go to earn money or get rent later in the game. Except for Sam the banker who gets his sum of money, but buys all his properties and house and hotels with the banks money and he still collects for passing go!

If Sam was playing with any of US.. we would accuse him of cheating. Problem is that the world is passive because the alternative scenario is worse. Especaily in the short term. What do I tell my subscribers to do in unceratin times like these? Buy gold… ETF’s, producers, majors, developers, and explorers. Seasonally it’s the time to load up and gold is just starting to gain some real steam with the impending debt crisis showing some legs.


Current downgrade… likely a “Capitulation Event” for Traders

This is certainly what you call the ‘dog days of August’ and with the S & P futures already down 25 points and gold up to $1700 this Sunday evening you know Monday is going to be a blood bath. I wouldn’t be making any long bets on Monday but at some time this week you are going to see some pretty good trading buys appear in the market. Despite my doom and gloom comments above, this is not the end of the world, not yet and recent events will push the fed to ramp up QE again. The last thing everyone wants to see is a double dip recession which is now looking much liklier with signs of the global economy weakening especially without QE. Keep your eyes and ears glued to Ben at Jackson Hole, if QE is not announce, it is almost a 100% certainty that the markets will acceleration to the downside this fall. With QE… it will be a tug of war. Certainly relief will come into the markets as QE in my opinion staves off default but not much more than that. It certainly creates a grae envirnoment for commodities and the risk on assets that I talk about.

Global markets are weakening

There have been several global macro trends that lead me to believe that the developing world is about to hit a recession. There has been a decline in the service sector globally. This is never good news as the service sector benefits from the fat in society and if there is not much fat the service sector is the first place that gets hit. Another big clue that global markets are at a head… INVERTED YIELD CURVES. Yes this is an old clue, but it is tried, test, and true and 99% of the time indicates that a recession is on the horizon. The US economy is still the engine that drives the global economy and a faster than expected slowdown in the US is showing up everywhere else in the world. Many will have a false hope that QE will save the global economy. QE is just softening us up for the inevitable. A default… in fact we are in a soft default. If FED couldn’t print money. There would already be a very different tune.


Gold Producers lagging Gold Price – Changes in the wind ahead

For the first part of the gold bull run from early 2002 to 2007, the gold producers outperformed the spot price of gold. The producers led the charge. Since then the spot price has led while producers have lagged big time. There are several reasons for this with a lot of people saying the wide choice of investment alternatives as the culprit. I am not so sure. The real reason’s the producers have lagged is rising costs in the industry over the last 5 years which pretty much matched the rise in price of gold until early last year when gold traded above $1100. The price of gold has accelerated so much that there is no way that costs can out pace the recent price gains or future projected gains. This is now being realized with the majors recording record revenues over the past year and these earnings are going to get that much crazier as gold continues its onslaught towards $2000. Last year was a land mark year for most gold producers as they are now profitable on a real return basis and not just nominally. I would buy the producers b/c this year is the year that the pendulum starts to swing back in favor of owning gold equities over the physical metal or an ETF.

Another reason the producers do not get much love from the investment community is that they pay a paltry dividends. This is now starting to change with producers like Newmont tying the dividend to the price of gold which will inevitably attract a new class of investor to the producers that are seeking yield. This is in addition to the risk adverse investors and the growth investors. The perfect storm is finally brewing for the gold producers.

This gold fever about to hit the market will trickle down into the developers as gold companies have never had so much cash in their lives and they need to replace the ounces. It is much easier to buy the ounces and put the final touches on a mine than start from an exploration project…. especially with the value that a lot of these gold stocks represent. The producers could never add the ounces for the price that many of these stocks are trading for. Why drill when you can use cash from operations to buy the ounces at hugely discounted prices?

All gold stocks from here on out are going to sell at a premium!!! Even if the market crashes… gold stocks will barely flinch as people will see this as the only way to hold real money with impending debt crisis and currency crisis issues happening globally.

We are now entering a period of seasonal strength for the entire gold sector so this should be another stellar late summer run for all gold stocks.

My initial thesis was that QE3 would come on the heals of a rocky summer that would guarantee another stellar season for the gold sector and save the markets. I am now doubting QE3 will save the markets and will only provide a temporary relief. Half the world is bankrupt, the other half is cash rich trying to figure out how to protect itself from the other half going broke. The only solution that anyone will find to ease the pain during the crisis is to buy and hold stuff, certainly not paper.

BUY SILVER… It is going to be trading $50 plus by the end of August!!! POS always lags POG in the summer by approximately 3 weeks. BACK UP THE TRUCK!!!

Gartman says that anything you can drop on your foot that hurts is a good investment. I tend to agree… with the caveat that precious metals will lead all materials. Non-precious metals will play catch up according to their strategic nature. This will continue to happen until the debt crisis is solved.


Some stock picks…


It’s time for the producers to outperform and outshine all others. It’s time for gold to bring back its shine... especially to the producers. I got 3 small guys that are close to home and deserve a serious look, all being in historical areas.

Barkerville Gold Mines $1.50 is going to be hot having consolidated the historical lands surrounding one of BC’s biggest gold rushes. This producer is a top pick for small scale producer that could seriously ramp up to well over 100,000 ounces per year once in full production. Barkerville has been consistently been getting excellent results so expect a very large resource on this project.

Bralorne Gold Mines BPM-V $1.04 is the site of another historic gold rush in BC where millions of ounces have been produced between BPM’s current site of operations near Gold Bridge in BC. BPM is easily a 5M – 10M ounce deposit of untested high grade gold. These guys are starting small with 20,000 – 30,000 oz’s of production a year and financing future exploration and expansion out of cashflow. BPM could eventually be an underground operation capable of producing 3 – 4 times the current start up focus.

Sutter Gold Mining SGM-V $0.205 is another gold producer who is focusing on initial production of 25,000 ounces at their Lincoln Gold Project in California. They are fully permitted, fully financed and on track for production in the first quarter of 2012. Lincoln is a site similar to Bralorne where the company is mining a site between 2 historic sites with millions of ounces produced and multimillion ounce exploration potential.

With projects like BPM and SGM… it is easier to put in production without going through all the stages of feasibility and spending half a billion dollars chasing high grade veins with a drill bit when you can just dig it up because the mines never dried out, they just went out of business when the gold prices came down.

Another that might be fun if markets continue to crash… TVIX.

Happy Trading and buy gold. You will lose a lot less sleep over the next couple years.


Christopher Skidmore


Beat the Market Stock Picks

Augen Gold

Trelawney Makes Hostile Bid to Consolidate Timmins Style Gold Camp

Augen Gold Corp

GLD:CDNX
AUGNF:OTC

SP… $0.32
Shares Out… 127.7M
Market Cap… $41M



Augen Gold (GLD) CEO David Mason is in the fight of his life to retain control of his company as Trelawney Exploration (TRR) has launched a hostile takeover bid for the shares of Augen in an all share deal at 0.066 per share of TRR. The deal values Augen Gold at roughly $0.32 or a $50M market cap company fully diluted. Augen Gold has one of the most sought after gold exploration and development properties in Ontario located in the South Swayze Greenstone Belt between Timmins and Sudbury. This area is thought to be the next Timmins or Kirkland Lake style gold camp.

Augen Gold owns the dominant 40km long land position in the area which surrounds TRR’s recent discovery at Cote Lake at the east end of the property. This emerging gold camp has added 5M oz’s in 2011 between GLD and TRR. Augen recently announced a 1M ounce inferred resource at Jerome at the west end of the gold belt and Trelawney announced a 4.2M oz maiden resource at their Cote Lake discovery. These two multi-million ounce resources at either end of the gold belt demonstrate the blueksy potential of the area to host several multimillion ounce gold deposits.



Trelawney Bid Grossly Undervalues Timmins like Potential

Trelawney’s discovery at Cote Lake has pushed the share price from $0.80 to over $5 and a lofty $700M valuation. The huge rise in share price has allowed them to announce an all share deal that takes advantage of the recent gains made by Trelawney and severely undervalue Augen’s assets. The bid is opportunistic and predatory as Augen’s land position is 4 times the size of TRR and they have already identified 3 bonafide mulit-million ounce gold targets on their massive project.

Their gold project contains…

1. A former producer with a NI43-101 resource of 1 million ounces at the Jerome Mine
2. A promising high grade gold discovery just east of the Jerome Mine at North Shore
3. Claims surrounding one of the hottest gold discoveries of the past year at Cote Lake coming within 200 meters of 520 meters @ 1.44 g/t of gold.

Each of GLD’s projects could justify a $30M - $40M market cap gold company with multi-million ounce discovery potential at all three sites. GLD valued on its inferred resource alone trades at $40 per ounce where Trelawney trades at $166 per ounce of gold. Four times the value!!!This just starts to demonstrate the extreme discount that GLD trades at compared to TRR. Augen has four times the land position in an area that has seen little exploration and is projected to be the next hot gold camp in Ontario. If Augen was valued similarly to Trelawney on just an ounce to ounce basis, GLD should trade closer to $1.20 than $0.32. Trelawney has jumped at the chance to consolidate this very valuable land package that has the potential to support several operating gold mines and produce over a million ounces a year.

The Swayze Greenstone Belt has all the characteristics of another Timmins or Kirkland Lake gold camp. If Trelawney consolidates a gold camp that produces over 50M oz’s of gold over its lifetime, then TRR is truly committing grand theft larceny against Augen Gold shareholders.

The two reasons why TRR can’t pass up GLD at the current prices…

1. W. COTE LAKE
2. Long term TIMMINS camp potential

Cote Lake, Cote Lake, Cote Lake!!

From all indications the Cote Lake deposit dips towards Augen’s lands and in certain sections the border comes within 200 meters of open mineralization. The deposit dips to the north at depth which leaves a good chance that the source of the gold deposit lies on the border at depth or even run entirely onto the GLD property. The richest zone of Cote Lake comes within 200 meters of the border with Trelawney’s best hole on the project intersecting 520.28 meters grading 1.44 g/t au. Chances are very good that GLD hits this summer. When GLD announced plans to drill the border fall of last year, the share price shot up from $0.20 to $0.65.



Unfortunately relations between the two companies have soured to the point where both companies stopped drilling in that area so not to lose a negotiating position to the other party. These claims have been the subject of bitter fighting between Augen and Trelawney ever since. Augen stopped drilling because they needed to implement a shareholder rights plan to protect shareholders from a takeover bid by Trelawney when they hit at the border. In TRR’s case, they stopped drilling because every stepout hole brought Cote Lake mineralization closer to the GLD/TRR border and made GLD’s claims about the source running onto W Cote Lake that much more credible.

GLD is extremely undervalued and TRR needs the West Cote Lake claims irrespective of mineralization or not. Every second TRR delays, means that Augen Gold moves closer to a discovery on their side of the border.

TRR announces new outcrop 500 meters south of Cote Lake

Recent developments from Trelawney should actually convince GLD shareholders not tender their shares and for newcomers to buy as much as they can at current prices.

TRR announced a mineralized outcrop 500 meters south of Cote Lake on the same lines where all the speculation at the border is. This gives added credence to the theory that there may be a secondary north south relationship to mineralization at Cote Lake extending from the main zone on either side. There is a very good chance that GLD will drill long intervals of gold at the border this summer sending Augen Gold’s share price through the roof on a discovery similar to that of TRR.

That is… if Augen can hold out long enough to get the results back.



Any discovery made at Cote Lake on GLD lands strengthens GLD’s bargaining position exponentially. To the point where TRR will be forced to pay 3 or 4 times the current bid as speculators will run to the discovery forcing the share price much higher. It could also induce a new bid from another buyer. When you consider they are already extremely undervalued based on their Jerome project alone, most shareholders outside of the group with TRR will not tender their bids at the current price. If GLD can resist the first takeover bid by TRR then things will look much different 3 months from now. It is why TRR is acting to move fast in a hostile takeover ignoring the shareholders rights plan.

David Mason is on the verge of several multi-million ounce discoveries over the next couple years.

If GLD shareholders give in to TRR now… they lose their leverage to what was going to be very big drivers of this stock. Yes they will gain a quality development play at Cote Lake which will eventually be a $20 stock on its own, but they lose the four digit type leverage that comes with a small cap developer in what is going to be a very hot gold camp. The hostile takeover makes GLD a very compelling buy. It is a play on TRR in the very least with a free option. If TRR fails in the current bid, they will be forced to sweeten the deal fast as they have tipped their intentions regarding GLD and more investors will come to the play driving up the stock. Especially since Greg Gibson is trying his best to head off a Cote Lake discovery on Augen lands. With 2 major drill programs at either end of GLD's massive property, things are just heating up at Augen Gold.

How often do you get that kind of deal?

You buy GLD to get a top 5 development play and a blue sky lottery ticket!



Big time high grade discovery in the making at North Shore

The latest round of results at North Shore indicate a very large and extensive high grade gold system covering 1.8km of strike with at least 8-10 identified structures. Recent drilling has hit 5 holes above 20g/t that cover more than a kilometer of strike length between the high grade intersections. The 3 highlighted holes below cover over 600 meters of strike length outlining an extensive shallow high grade zone.

• 10.6 g/t au over 10.50 meters including 66.8 g/t au over 1.5 meters
• 6.72 g/t au over 11.19 meters including 24 g/t over 1.5 meters
• 6.58 g/t au over 4.12 meters including 23.2 g/t over 1.12 meters

The North Shore is starting to show an very high grade nature to the mineralization on the West side of the South Swayze Greenstone Belt. TRR is not matching these results in exploration at their medium grade Chester Mine. If Greg Gibson of TRR doesn’t act now, he may never get a better opportunity to run away with GLD at such discounted prices. Investors will eventually realize the importance of the high grade discovery at North Shore that extends mineralization at the million ounce Jerome Mine several kilometers to the east where the North Shore discovery is. 5 of 11 holes above 20 g/t is well above average, if not spectacular.



As GLD continues to produce high grade results and better define the zones to depth at North Shore, it will quickly develop into a very rich deposit capable of supporting a mine at much lower gold prices. Cote Lake may have difficulty making money much below a $1000 gold price as the mineralization is low grade. Chasing 20g/t rock over decent widths will always be profitable, no matter what the price. With a core high grade zone covering over 1000 meter strike length within an 1800 meter long zone... it makes North Shore a large and very exciting high grade project to develop with consistent high grade hits.

“It appears we are well into defining what could be the largest gold occurrence in the entire South Swayze gold belt form Jerome to through to and including Chester Township.”

David Mason, CEO of Augen Gold

Forget about the Cote Lake battle for a minute. Mason doesn’t even care about Cote Lake and is a secondary focus to Augen Gold. Mason thinks he has hooked a much bigger fish at North Shore. Results are backing up the theory of the Jerome Extension covering several kilometers of strike. Jerome and North Shore have the potential to have high grade from surface to depths of well over 1000 meters typical of Timmins and Kirkland Lake…. the Jerome Extension, particularly the North Shore could easily grow into a project greater than 10 million ounces of gold.

The Last Stand… GLD’s Shareholder Rights Plan

There is a huge opportunity for investment in GLD as TRR most likely won’t gain a permitted bid under the shareholder rights plan the first time around. It grossly misvalues Augen’s projects and is opportunistic in nature and most GLD shareholders know it. The investors who locked up their shares to Trelawney have a bias in ownership towards TRR so they benefit even at a discounted price with the transaction essentially being a transfer of title for guys like Sprott and Pinetree. The shareholder rights plan requires an additional 50% of the shares other than the group that is trying to takeover. TRR’s original lock down was 42% which means TRR needs another 24% of the outstanding shares for a total of 66% to be a permitted bid according to the rights plan. Currently TRR has locked up another 5% and has 3% ownership which means TRR needs 16% more of the shares to qualify as a permited bid.

Neither party at present knows if TRR will gain the shares to allow a permitted bid so at the moment it is nail biting time, but it does look likely Augen will survive this first round. It will buy GLD a bit of time to come out with some market moving results from Cote Lake or the North Shore... if they survive the initial bid. It also gives them time to look for a white knight or even let TRR sweeten the bid. The big hope for Augen Gold’s David Mason is to try and hold out long enough to prove that the Cote Lake deposit does extend on their land which will force TRR into making a much bigger bid. With drilling resumed at W. Cote Lake and a major discovery at north shore in progress, GLD is just starting to unlock their true value which is well over $1. The longer GLD shareholders can hold out and resist the TRR bid… the more Augen Gold can capitalize on the short term wealth drivers and ultimately force a much higher bid for the company.

TRR’s Bid Grossly Undervalues Augen Gold’s Assets

People just don’t go to these lengths to fight over a property if there wasn’t something there. With control over the Swayze Greenstone belt being fought over twice in the past 18 months, this has been a highly contested property. GLD has 3 drivers of growth coming from the value of a million ounce resource, extending Cote Lake onto GLD land and an exciting high grade discovery at North Shore… the time to buy GLD is now.

The takeover battle makes this story that much more exciting and puts a floor in the share price with little risk. TRR sees the extreme value opportunity that GLD represents or wouldn’t be offering $0.32 in an initial opportunistic hostile bid. They wouldn’t have tipped their hand this soon if they didn’t think GLD has the goods. The shrewd investor should read between the lines here and see the big league potential of this hot story and a takeover battle brewing. GLD is a company that is on the extreme buy list when you add the takeover factor and possibility TRR will be forced to make a higher bid.

Buying GLD is the same as putting in a bid for Trelawney, with the added bonus' of a sweetened offer and a major discovery at Cote Lake on GLD lands.

How often do you get that kind of deal? Buy GLD to get a top 5 development play and a free option on several triple digit drivers. If GLD can hold out long enough and hit on the border… then TRR may have to pay in excess of $1 for GLD.

4 times the current value!!!

As an investment... GLD is a win-win situation

The downside… a top 5 development play in TRR in a consolidated Timmins style gold camp

The upside... a blue sky multi dollar stock in the middle of takeover battle

Augen Gold is on the conviction buy list anywhere under $0.50.


Christopher Skidmore

Beat the Market Stock Picks