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Good Morning Readers.
For the last few posts I have focused on the
uncertainty in the world. (Japan, The Middle East, the devaluation of the
dollar, the European debt crisis, etc.) The news today is that as of today
nothing has changed except to say that the U.S. markets continue to confound.
Yesterday the S&P spiked above 1300 and closed above the 50 day moving
average. As I write this the S&P is set to open higher. As regular
readers know, last week I called for a retest of the 1250 lows of the
S&P. I will stick to this call. There is just too much bad news
“baked into the cake” for me to change my opinion.
I thought today I would focus on bets that I
have made.
As I have stated in previous posts, I see
this as a time to “play defense”. I have two pots of holdings.
One part I call my “Grandpa Portfolio”. It consists of Altria
(MO), Exxon Mobile (XOM), Verizon (VZ), Con Ed (ED), Johnson & Johnson
(JNJ), and Lockheed Martin (LMT). I picked these stocks because they yield at
least 4% or more, they have been around for years, they have strong
management and they trade with high volume. I see these stocks as cash that
pay a dividend. My other pot is more speculative. This pot consists of junior
miners and two ETF’s. My ETF’s are GLD which I put as a buy at
$128.00 or below with a target of $160.00 and SLV which I put as a buy at
$26.00 or below with a target of $45.00 - $50.00. I bought these in January.
As I have said previously, after a study of my charts, for the last five
years these stocks have gone on sale every 6 months or so. If you want to buy
these ETF’s wait until June or July when there will be profit taking
and a pullback giving my readers a chance to get in. Some more of my
speculative holdings are junior miners. I will list them in order of my
preference. They are Avalon (AVL) which I put as a buy at $7.00. My dollar
cost average is $6.65. It closed at $7.43 yesterday. I expect it
to be acquired by China because, as I have previously reported, China has
gone from being an exporter of 98% of the worlds Rare Earth Elements (REE’s)
to become an importer of REE’s. The devastation that has occurred in
Japan only adds to the world scrambling for more REE’s. Another stock I
am very bullish on is Ucore (UURAF) which owns the Bokan Mountain Project in
Alaska. The Bokan Mountain project is located at the southern most part of
the Alaskan panhandle, on the southern end of the Prince of Wales Island.
They are near term production potential and are located in an area
specifically set aside for natural resource development, with no residential
or indigenous populations in proximity. Best of all they are three miles from
a harbor with direct access to the Pacific Ocean. I have put a buy for this
stock at $1.00 or below. My Dollar cost average on this stock is $.90 and I
expect them to be bought out by a major or a Chinese company soon. I closed
at $1.03 yesterday. If it pulls back to the $.90 level I will by more. When a
stock is about to be acquired it is not unusual for a stock to pull back to
shake out the “faint of heart” investors. If it does I will look
to add to my already overweight position. Another stock I am very bullish on
is US Gold (UXG). I put a buy on this stock at $7.75 or below. My dollar cost
average is $7.27. I closed yesterday at $8.54. The reason this stock has
performed so well is because of the new CEO Rob McEwen. Rob
McEwen is the founder and former Chairman and CEO of Goldcorp, which is the
world's lowest cost million ounce gold producer. Rob followed his father into
the investment industry and developed a passion for gold. In 1990 Rob jumped
into the mining industry, where he transformed Goldcorp from a collection of
small companies into a mining powerhouse. Since 1993, when Rob started
restructuring Goldcorp, its market capitalization has grown from US$50
million to over $10 Billion and Goldcorp's share price has increased at a 28%
compound annual growth rate. Mr. McEwen has put $20 million dollars of his
own money and stated that he will buy all shares of UXG at $6.50. He has put
in a floor at that level. Mr. McEwen has stated that he is not interested in
being acquired by a major and is intent on seeing this stock become a major
on the NYSE. Given his proven successful track record I will not bet against
him. When he realizes his dream this will be a $30.00 stock. It will take
patience but I’m willing to wait. Other holdings I am bullish on are
Lynas Corp (LYSCF) which I have a buy at $2.25 or below. It closed yesterday
at $2.17. I am bullish on General Moly. General Moly is a
subsidiary of MolyCorp (MCP). I put a buy on this at $6.25 and it closed
yesterday at $5.40. There have been permitting problems with GMO but they are
sure to be resolved. If you have the stomach to wait this stock is selling at
a discount price. I will wait for it to pull back to the $5.00 support level
and add to my position. If you chose to buy this holding remember you will
have to wait a year before you hear any good news. Finally, despite the
terrible news from Japan regarding the Fukishma Reactor disaster Uranium is
not dead. The world is starved for clean energy and there is no alternative
to cheap energy with no carbon footprint. I am looking at three junior
miners, Uranium Energy (URG) @ $1.50, Dennison Mines (DNN) @ $2.75 and
Uranerz Energy (URZ ) @ $3.50. I have no holdings in uranium but I continue
to monitor the sector because when we look at the big picture Nuclear energy
has been the safest form of energy for the last 40 years. With the advent of
new technology in building reactors this is sector will certainly be a
profitable one.
Well, I have given you a picture of how I am
positioned. I want to warn my readers that as I have been saying every day I
think now is a time to “play defense.” If you choose to speculate
on any mining stocks be sure to know everything you can about these companies
and proceed with caution.
Good Luck!
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