Month: July 2013

By Profit Confidential

Mark my words—gold bullion has a great future ahead.

As the prices for gold bullion face severe headwinds in the short term, the fundamentals are getting stronger. The most important sign that makes me believe it is that central banks continue to buy more in spite of a sharp decline.

It’s not mentioned in the mainstream media very often, but central banks from countries like Russia, Turkey, and others have been continuously adding gold bullion to their reserves.

I wouldn’t be surprised to see these countries continue to buy even more as their currencies—their primary holdings—continue to become prone to wild swings. Have you seen the charts of the U.S. dollar, Japanese yen, Canadian dollar, and euro lately?

Consider this: From January 2011 to May 2013, the Russian central bank purchased gold in 22 of 25 months. Altogether, the Russian central bank has purchased 207.4 tons of gold bullion. (Source: World Gold Council web site, July 2013.)

The central bank of Turkey, which became a buyer in October 2011, has added 329.2 tons of gold bullion to its balance sheet for 16 of the 20 months since then. The central bank of Turkey has started to use gold as collateral. (Source: Ibid.)

Dear reader, you must keep in mind that central banks are very conservative investors and try to preserve their wealth. If they continue to buy gold bullion as the prices come down, it only tells me one thing—they like the precious metal’s future prospects.

As I always say, and it is very well documented in these pages, the central banks will never say when they are going to buy, but their actions are speaking louder than their words. Central banks have turned into net buyers as a whole—and have been buying large amounts quarter after quarter.

This shouldn’t go unnoticed because it’s significant—those who wanted to get rid of gold bullion will soon be running back to it.

It is unprecedented for a commodity to have a bull run like gold bullion has experienced over the last 12 years. I see the current decline as just another buying opportunity—a predictable and very normal part of the economy’s nature.

We are seeing many irrational sellers and speculators putting pressures on gold bullion prices, but what I do notice is that selling has calmed, and the remarks from the Federal Reserve have caused shorts some pain.

Article by profitconfidential.com

By Profit Confidential

The equity market continues to trade while hanging on the Federal Reserve’s every word. There continues to be buoyancy in investor sentiment, and it’s flying in the face of what can only be described as modest earnings results so far. And the fervor that institutional investors have to be buyers in this market remains unabated, thanks to the Fed’s policies.

There’s been a positive take on economic news lately, even if the data is below consensus. There has also been some decent news from individual companies that can be thought of as Main-Street gauges on the U.S. economy.

Costco Wholesale Corporation (COST) reported a solid eight-percent gain in total sales—six percent on a comparable sales basis—for the five weeks ended July 7, including fuel and foreign exchange.

Investor sentiment is strong enough among large investors to continue buying in this equity market, so long as there is stability from the Federal Reserve and earnings results meet consensus.

It is a peculiar environment not to have had a meaningful retrenchment in the equity market. While the Street (and I) totally expected a healthy correction in share prices after the January breakout, it didn’t happen.

The market did have a small pullback on wavering investor sentiment, but I think the equity market overreacted and misinterpreted the Federal Reserve’s statement regarding quantitative easing. Recent minutes from the central bank meeting made note of this.

Investor sentiment among individual investors still seems very reluctant. There have been new cash inflows dedicated to stocks, but a lot of investors are wary of buying in an equity market that is trading right around its all-time high.

Of course, that is how the stock market has performed historically: long periods of consolidation are met with a breakout and subsequent bull market in anticipation of economic acceleration.

The equity market continues to be very much a leading system of speculation regarding earnings and general economic growth.

Investor sentiment is very different than investment risk, and it is worthwhile separating those two factors in terms of shaping your market view.

In an environment of extreme monetary assistance to capital markets, investor sentiment is emboldened. The result is a substantially rising stock market in the face of only modest revenue and earnings growth.

With the certainty from the Federal Reserve regarding continued quantitative easing, it is very possible that the equity market could keep right on ticking higher until the end of the year for a major double-digit gain.

Investor sentiment among institutional investors is so influenced by monetary policy, that we even have days when the equity market goes up substantially on bad economic news. The idea is that bad data increases the likelihood of continued quantitative easing and artificially low interest rates, which boosts investor sentiment. It really is an outrageous set of circumstances. (See “The Few Sectors That Will Continue to Gain in This Unpredictable Market.”)

Article by profitconfidential.com

By MoneyMorning.com.au

Question: which commodity has had more false starts than a cane toad race?

Here’s another one: Which part of the mining sector has broken even more hearts than gold?

And a last one to round it up: What investment is possibly the toughest sell of 2013?

You’ve guessed it…the answer is the same for all three. But despite all these things, it could still be the biggest winner on the market over the next 24 months…

The answer is: uranium.

That’s right. Uranium is coming back.

No one will see it coming…but all the pieces are now in place for uranium to stage a big comeback – and soon.

Don’t believe me?

I know. Like I said, it’s a tough sell.

But before you disregard what I’m saying, know that Australia’s two biggest uranium stocks: Paladin (ASX: PDN) and Energy Resources of Australia (ASX: ERA) have both quietly crept up by more than 40% over the last three months.

For context, the metals and mining index (XMM) has gone nowhere in the same period.

Mining stocks have a habit of predicting the coming move for its underlying commodity. So when uranium stocks start picking up, it can be a good signal that uranium is getting ready to move.

But if you look at the uranium chart, that’s about the last thing you would expect to happen. The price has fallen for two and half years, with no bottom in sight just yet. It has broken under $40 to hit $38.25 this week.

Uranium – Now Down to $38 Per Pound

Source: Cameco

Of course, the uranium spot price is just one side of the coin. Most deals are done at long-term prices, many at prices from $72 just a few years ago to $57 where they had stayed for most of the year.

But are Things About to Change for Uranium?

Well, I think it’s quite possible, because of three things happening now that could transform the shape of the uranium market in the next twelve months.

Any of them alone could send uranium back up. But if they all come together then uranium stocks could be a simply fantastic trade over the next year or two.

Not least because uranium stocks are incredibly cheap today, and if history is our guide, they can put in enormous returns from these levels.

For example, back in 2002, ERA traded at the same price as it is today…then as uranium gained in price, the ERA share price gained 1,900% over the next five years.

Now I’m not saying it’s about to gain 1,900% again. But I am saying the possibility of uranium stocks being a good trade from here makes the sector worth watching.

The first potential trigger in the uranium market is the end of the ‘megatons to megawatts’ program. This catchy name describes the process whereby, for twenty years, old soviet warheads have been recycled to make reactor grade uranium.

At the end of this year, the program is due to expire. This will remove about 15% of global supply from the market quite suddenly. A deficit of 1% or 2% is enough to cause prices to rise in any commodity market. So a 15% deficit should see prices soar.

But this isn’t news. We have been on track to hit this iceberg for years, but like uranium itself, the collision just seems to have fallen off investors’ radars.

It now seems as though savvy investors have just been biding their time, and are only now buying stocks in preparation for the chaos ahead.

There is a second reason to expect a step-change in uranium demand that could cause a shift in the market dynamic.

Japan.

It’s been coming up to two and a half years since Japan’s nuclear reactors were switched off in the wake of the Fukushima accident.

As a major uranium user, Japan’s absence from the uranium market has been noticed.

There has been a lot of talk going back and forth about whether Japan is coming back into the market. If they do ever start buying again, the uranium price will find a new gear.

We may not have long to wait. The operators of ten Japanese reactors have just put in requests to flick the switch back on.

This is pretty big news. Assuming the process is successful, this will create a resurgent demand in the uranium market.

Why Uranium Should Be On Your Radar

There’s also a third reason unfolding right as you read this that could hit the uranium market.

Now, you may have heard that China is building a fleet of nuclear reactors. They have 15 reactors in action already and have another 30 coming on line in the next three or four years. This will add huge demand, but is not news in itself.

What’s just gone down in China, which could change the market much sooner, is the cancellation of a processing plant in Guangdong Province. Environmental protesters against its construction got their way, which is quite unusual in China, and the construction has been shelved.

So without this plant, China will have to get processed uranium from other suppliers in the future, which will have to scale up production and source more uranium to do that. This will in turn increase demand on the uranium market.

That’s unless China can divert the raw uranium to foreign plants cheaply, which is doubtful as they are not close; Areva’s Tricastin plant is halfway round the world in France for example.

Nothing stays the same in markets for long, and after being in the dog house for long enough, it looks like the situation could change for uranium before too long. Verdict: keep it on your radar.

Dr Alex Cowie+
Editor, Diggers & Drillers

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From the Port Phillip Publishing Library

Special Report: The Sixth Revolution

Daily Reckoning: A Credible Threat to Gold?

Money Morning: Why Resources and Mining Stocks Could Be Your Trade of a Lifetime

Pursuit of Happiness: Freedom of Thought: Don’t Take it for Granted

By MoneyMorning.com.au

During a recent interview, we couldn’t let Jim Rickards (author of Currency Wars) go without asking him about our ‘Zero Hour’ scenario.

As you’ll recall, Zero Hour is the moment the price of physical gold starts to run away from the ‘paper price’ you see on CNBC’s ticker

The most likely catalyst is a chain of events that goes like this…

• Western central banks have leased their gold to commercial banks like JPMorgan Chase at an interest rate of less than 1%
• The commercial banks have sold that metal and ploughed the proceeds into assets that earn more than 1%
• The chain of custody on gold bars has become so cloudy that a major exchange like the Comex in New York is liable to ‘default’ on a gold contract – settling in cash, instead of metal
• A rush for real metal would then be underway, with its price far outstripping the paper price.

It’s a scenario Jim Rickards finds entirely plausible.

‘How many people in the gold market – whether it’s LBMA standard contracts, forward gold, allocated, unallocated, Comex – think of all the players who would raise their hand and if you say to them do you own gold, they say yes I do, and then when you press them you find out they don’t own physical gold – at all. Not even close. They own some claim of some kind. People don’t read contracts, they don’t read the exchange rulebooks – I actually have.

‘People don’t understand leasing,’ he adds. ‘They somehow think that if the federal government leases gold to JPMorgan, that JPMorgan backs up a truck and drives away. That is not what happens. The gold stays where it is. The gold doesn’t go anywhere. The gold’s in Fort Knox, the gold’s at West Point, the gold’s at the Federal Reserve.

‘When you look at all this, it’s very clear that the losers are not going to be the banks and the government. The losers are going to be the institutions and the individuals who think they own gold and don’t.’

Even the banks aren’t totally safe.

‘If I’m a contract holder and I have read the fine print, and I have allocated gold, and I insist on physical delivery and I won’t take anything else and I come in with my pickup truck and back up the truck and say give me my gold, the banks are going to be the ones that are embarrassed. Because it’s likely the government will be calling back its gold at the same time in this kind of super-spike high-stress atmosphere.

‘And the banks are going to find they don’t have it. So the banks are going to be the ones that come up short. Because remember, it never left the vaults. If I’m the Fed, or I’m the Treasury, and I’ve leased my gold to you, and I call it back, and you can’t deliver to me, you can’t honor the contract, I’ll just terminate the contract, keep the gold, reconvert title to my name and send you a bill.

‘Everybody’s going to default on everybody else. The banks will default on their obligations to their customers…and to the government. The people who had the paper gold, who thought they were protected, are going to find out they participated in part of the price increase – but not the whole thing. They’ll get a nice run-up, they’ll get a nice check, but in this environment, gold will continue to surge way beyond their contract price. They’ll get closed out at a lower level and miss the top.’

Three More Experts Weigh In…as Comex Inventories Plunge

Several other distinguished experts shed additional light on the Zero Hour scenario as new developments unfold.

‘There has been considerable throughput of gold in Western capital markets, with substantial buying from all round the world following the April price crash,’ says Alasdair Macleod from GoldMoney. ‘The supply can only have come from two sources: the general public, or one or more governments.’

That is, for all the metal that’s exited exchange-traded funds like GLD this year – it’s nowhere near enough to meet the staggering demand for physical metal in China and India. ‘Physical demand cannot have been entirely satisfied by ETF liquidations,’ Macleod says, ‘confirming governments are involved.’

Tocqueville Gold Fund manager John Hathaway agrees. ‘Since the beginning of 2013,’ he writes in his latest shareholder letter, ‘physical gold held by ETFs such as GLD has dropped by 586 tonnes.

Click to enlarge

‘Where does the liquidated gold go? The final destination is impossible to know, but the first stop is into the accounts of ‘authorized participants,’ aka, bullion dealers such as JPMorgan and Goldman Sachs.

‘There are quite a few dots to connect here,’ Hathaway concedes, ‘but in our opinion (and it is admittedly our speculation), a historic short squeeze is looming, and the insiders (bullion dealers) see it coming. By using the paper market to crush the price of gold, they have attempted to shake loose physical gold to reduce their short exposure in order to minimize the damage from what lies ahead.’

‘I suspect that the Western central banks have surreptitiously been supplying the market,’ concurs Sprott Asset Management’s Eric Sprott – who did much to help us flesh out the Zero Hour scenario earlier this year.

He points to a telling figure: Gold inventories at the Comex in New York have plunged from 11 million ounces to 7.6 million in recent months. ‘It seems to me that people are finally taking their gold out of the system’.

‘I’m a huge believer that you should own physical,’ Mr. Sprott reiterates. ‘I don’t like the fact that someone with a lot of money can affect the price in the short term when I see the fundamentals for physical gold as very positive.’

In other words, when Zero Hour arrives, you don’t want to be one of the people Jim Rickards says will ‘get a nice cheque’ owning a vehicle like GLD. You want the real thing.

Addison Wiggin
Contributing Editor, Money Morning

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From the Archives…

Quantam Computers – Why It’s Time to Believe the Unbelievable
12-07-2013 – Sam Volkering

Red Alert: Why This Stock Market Rally is a Trap
11-07-2013 – Murray Dawes

Why Oil Could be the One Commodity to Defy the Doom…
10-07-2013 – Dr Alex Cowie

Gold Breaks A Record
9-07-2013 – Dr Alex Cowie

Time to Plan for the Year-End Stock Rally?
8-07-2013 – Kris Sayce

USDCAD stays in a trading range between 1.0326 and 1.0442. As long as 1.0442 resistance holds, the price action in the range could be treated as consolidation of the downtrend from 1.0608, another fall towards 1.0150 is still possible after consolidation. On the upside, a break above 1.0442 resistance will indicate that lengthier correction of the downtrend from 1.0608 is underway, then further rally to 1.0480 – 1.0500 area could be seen.

Provide by ForexCycle.com

Source: Brian Sylvester of The Metals Report (7/16/13)

http://www.theaureport.com/pub/na/15442

Western rare earth companies are in a conditioning period, optimizing on every front to get the leanest capital costs possible. In the next six months, Geologist Alex Knox expects a big shakeout across the rare earth space as companies release amended PEAs and feasibility studies. “That,” says Knox in this interview with The Metals Report, “is when smart investors will be able to look at the numbers and pick out the winners.” Knox helps us jump the gun by identifying companies with lean, mean stats.

The Metals Report: Alex, what is your overview of the rare earth element (REE) space?

Alex Knox: The highlight is that two large deposits of light rare earth elements (LREEs) are coming into production: Molycorp Inc.’s (MCP:NYSE) Mountain Pass and Lynas Corp.’s (LYC:ASX) Mt. Weld deposit. The considerable increase in LREE production has eliminated the need for any market niche for these types of deposits, at least for the short-term.

I see a dramatic need for development of heavy rare earth element (HREE) deposits in the western world, now that China’s crackdown on illegal mining has presumably cut into its production of HREEs. A number of companies have reached prefeasibility or preliminary economic assessment (PEA), and one already has a feasibility study. Overall, I believe this space offers the most potential growth and the most potential to add new deposits.

TMR: Can investors make money in REEs?

AK: Certainly. On the HREE side, the deposits coming on stream will be profitable. At the present prices of the companies that own these deposits, there is substantial upside. I think the market will pick two or three of these companies and make them the winners in the HREE space.

TMR: Rare earth expert Jack Lifton has written that, “non-Chinese sources of heavy rare earths must now be brought into production under all circumstances. Non-Chinese manufacturing centers and regions need to attain self-sufficiency as soon as possible.” What’s your view?

AK: I totally agree. The Chinese will protect their low-cost resources, the South China ionic clays. End users operating outside of China will need to secure supplies elsewhere. There is a good market opportunity for companies that can get these deposits to market in a profitable state.

TMR: Yet in 2012, half of China’s export quota on REEs wasn’t used. The 2013 quota is 5 tons higher than 2012. Doesn’t that suggest there is less demand?

AK: Again, there is a distinction between LREEs and HREEs. Given China’s crackdown on illegal mining and illegal export of HREEs, those exports are volumetrically small compared to the LREEs. There is not a lot of tonnage, but there is high value. The tonnage mainly comes from the LREEs.

The fact that the overall quota has risen doesn’t mean that the output of HREEs will increase. I believe the supply of HREEs from China may actually decrease, while the overall quota for all REEs increases.

TMR: Can illegal Chinese exports meet the world’s supply needs for HREEs?

AK: The South China clays are a finite resource. They lack vertical extent. Some are only 10 meters thick and are often fairly low grade. To extract significant quantities requires immense surface disturbance because you have to strip off a lot of land to take out the top 10 or so meters. This surface destruction is unsustainable. The Chinese recognize that and are trying to eliminate illegal mining to save these resources for themselves.

TMR: Lifton noted that, even if non-Chinese HREE costs become level or lower than prices in China, the cost of building new separation and alloy-making facilities would be in the billions. He argues that the problem can be solved by “central, regionally deployed tolling facilities for separation.” How likely is that?

AK: These facilities are expensive to build. Also, the expertise to design and run them is very thin on the ground. The facilities largely depend on Chinese technology or Chinese expertise. For a western company to build its own rare earth separation plant seems to me inefficient.

One would hope that companies could agree to reduce their individual capital costs by creating a central, large-volume, efficient and well-managed separation plant as Lifton suggests. However, these companies are competitors. One wonders whether they could collaborate to bring this vision into reality.

TMR: Could a company with deep pockets and expertise take that on?

AK: It’s a bit of a chicken-and-egg situation. A company would have to have secure sources of supply for a proposed processing plant before it had the economic justification to build it.

TMR: If there were steady supplies of REEs, especially HREEs, would manufacturers start changing the way they build high-tech devices, such as cars and lighting systems?

AK: This is another chicken-and-egg situation. Lack of reliable supplies of, say, dysprosium, terbium or lutetium inhibits research into their uses. As deposits come on stream and the supply becomes stable and predictable, people will do more research and find uses for these elements.

There are certain HREEs—holmium and lutetium, to name a couple—for which there are almost no known uses because the supply is virtually zero. If supplies could be found, people would research how to use them and they would gain in value.

TMR: Could governments get involved in building regional facilities or backing loans for their construction?

AK: The U.S. government might do it, because it takes a more strategic view of things. Some of these HREEs have military applications, and a secure source might be desirable. This might be an advantage to a company like Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) whose HREE deposit is in the U.S. There are a number of HREE deposits in Québec, so the Québec government might fund something or offer tax advantages to the Québec producers to secure a supply.

TMR: The Tech Metals Research Advanced Rare-Earth Projects Index identifies 56 advanced-stage REE projects and almost that many companies. How many of these companies do you reckon will develop their projects into mines in the next 6 to 10 years?

AK: The REE space is microscopic compared to other metals markets. Market capacity can be satisfied by a handful of REE deposits coming into production. On the LREE side, many would argue that demand has already been more than met by the Mt. Weld and Mountain Pass deposits. There may be room for one or two more if they’re very cost effective. On the HREE side, four or five deposits might saturate the market. Out of that list of 56, I suspect no more than 10 would find the market share to get into production. Anybody who enters the market after that will have to compete on price and knock out existing producers.

TMR: What’s the name of the game now in this space? Part of the game has to be financing, but what else?

AK: Metallurgy. In many cases, the metallurgy is based on assumptions that may no longer be valid. Some of these companies have been working on the metallurgy of their deposits since 2009.

Looking at the HREE space, only Avalon Rare Metals Inc. (AVL:TSX; AVL:NYSE; AVARF:OTCQX) has done a feasibility study. That’s on its Nechalacho deposit up in the Northwest Territories.

Another half dozen or so companies have released a PEA or are close to it and are working toward a feasibility study. Of note would be Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.MKT; TASXF:OTCPK; T61:FSE) and Ucore. Matamec Explorations Inc. (MAT:TSX.V; MRHEF:OTCQX) plans to release a feasability study this month. Search Minerals Inc. (SMY:TSX.V) has a PEA out on its Fox River deposit in Labrador.

Since 2009, some companies have changed their processes to take advantage of advances in filtration technology. For example, Ucore has apparently completed successful trials on using X-ray technology to concentrate its ore and reject 50% of the material with virtually no loss of rare earths.

It’s important to use the metallurgy to extract as much of the REES as you can and coproduce the byproducts that will add value to the bottom line. The more money you’ve got coming out of your process the better. For example, Quest Rare Minerals Ltd. (QRM:TSX; QRM:NYSE.MKT) recently announced a preliminary understanding with a ceramics company to buy Quest’s zirconium offtake at the Strange Lake deposit.

TMR: Does that materially add to the economics for Strange Lake?

AK: I think it does. We don’t yet know what price Quest is getting. The supply of high-purity zirconium that can be used in ceramics is limited. Most zirconium is produced as zircon concentrate and is made into paint. This is another example of uses being found for elements as the supply increase and becomes reliable.

TMR: Will other companies follow Quest’s lead regarding byproducts?

AK: I would hope so. Granite-based HREE deposits can be quite treasure troves of other minerals: niobium, tantalum, uranium, even thorium. There are lots of little cash registers in these deposits. If they can be extracted and marketed profitably, they could add substantially to the revenue from the same amount of ore. That is nothing but great for the bottom line.

The idea of thorium reactors is getting a lot of play in the nuclear industry. To date, byproduct thorium has been a detriment. If it could be sold for use in a thorium reactor, it would be a real benefit.

TMR: If you were an investor with $100 million ($100M) to invest in the REE space, how would you deploy it among those equities and what company characteristics would you look for?

AK: I would certainly go toward the HREEs or look for an LREE producer with significant byproduct credits to ensure another revenue source.

Looking at the five principal deposits, Avalon and Quest are high-grade, but rather remote. Tasman is bigger than Ucore and Matamec. Ucore is right on tide water. Matamec has an ideal location and the metallurgy is good, but to fund the feasibility study, the company gave away half of the deposit in an offtake agreement.

There are substantial opportunities in the sector once you we see who has the upper hand in terms of metallurgy and who can keep costs down and revenues up. The prices of the HREE producers are so depressed now that the companies—maybe as many as three of them—that get into production will be profitable investments in the long run.

TMR: You plan to do some work in Québec this summer. Tell us about that.

AK: Commerce Resources Corp. (CCE:TSX.V; D7H:FSE; CMRZF:OTCQX) has a large carbonatite-hosted deposit in the Labrador Trough in northern Québec. The company is doing a low-cost drilling program this summer to upgrade its resources.

This carbonatite deposit contains substantial, separate showings of high-grade niobium and tantalum. The property could produce both elements from the same carbonatite, thus getting byproduct credits in through the back door. Even though this is an LREE deposit, it has zones enriched in the mediums and heavies. The potential production of niobium, tantalum and even other minerals makes this an attractive carbonatite deposit. My role this summer will be to help Commerce Resources explore and to work on the niobium and tantalum zones.

TMR: Orbite Aluminae Inc. (ORT:TSX; EORBF:OTXQX) is another Québec-based company you have worked with, yes?

AK: I helped Orbite with the REE part of its PEA last year. As I became familiar with the Orbite process, I realized it would have great potential for the metallurgical extraction of non-carbonatite-type, REE-bearing ores.

Most of the ore minerals in REE deposits are silicate minerals. Presently, producers bake the silicates with sulfuric acid to fix the silica, which affects the recoveries. The sulfuric acid bake also can consume large amounts of reagent.

Orbite developed a process to break down the silicate minerals and filter off the silica more effectively, making it possible to extract many or all of the byproducts, not just the REEs. Plus, the acid can be recycled.

Orbite is using its process to extract alumina, scandium and gallium from its deposit. If Orbite has actually solved the silicate mineral problem, its process could be used to extract REES in a very purified form that would be imminently suitable for separation technology. It would dramatically reduce the operating costs for all granite-based HREE deposits.

TMR: The Orbite process is used primarily to recover alumina from bauxite. Does that make Orbite a technology play or an aluminum play?

AK: In the short term, Orbite intends to make money from extracting aluminum from any aluminum-bearing rock, not just bauxite. That includes shale, red mud or fly ash, anything that doesn’t have high carbonate content.

The potential for crossover into extracting REEs and other elements is a satellite to the main aluminum play. Orbite’s ore contains 500 parts per million rare earth oxides, which the company has proved on a bench scale can be concentrated and extracted even at low levels as a byproduct of aluminum extraction. The technology seems to be applicable outside of the aluminum space and could, in the future, provide another source of revenue for Orbite.

TMR: Of the top-tier, advanced-stage rare earth projects, which deposits would be most amenable to Orbite’s processing technology?

AK: Tasman and Matamec’s deposits both have eudialyte, which is extremely acid soluble. It dissolves in vinegar at room temperature. These would be the ideal. The process also would be useful to Quest and Ucore. In fact, all of the granite-type, non-carbonate REE deposits could potentially benefit.

TMR: Are other companies developing similar recovery technologies?

AK: Yes, but not many details have been made public. Matamec intends to finish its feasibility study this month; it should give us a good look at what that company has accomplished. Tasman, with a similar metallurgy, has obtained decent recoveries from its processes.

Quest must be able to extract zirconium from its deposit or the ceramics company wouldn’t be involved there. Ucore has an ore-sorting technology that appears to be applicable and successful in reducing the throughput to the mill with little or no loss of rare earth potential.

TMR: Let’s look at Tasman. The company recently got a mining lease for its Norra Kärr project. Is that meaningful for investors?

AK: To me it is. It means that the Swedish government believes the company can operate safely and control emissions, in a relatively populated area. That is a major hurdle to get over.

TMR: What are the most dramatic changes investors should expect in this space over the next 6 to 10 years?

AK: It is a given that you will start to see major western REE producers. If a consistent supply of rare earths causes a rise in demand, there will be space in the market for additional producers. That may spur exploration.

Exploration for rare earth deposits has been in the doldrums for the last couple of years. Many of the deposits we’ve been talking about are 30–40% HREEs. That leaves a substantial quantity of LREEs that will have to be gotten rid of. Neodymium is easy to sell because there’s a demand. But the deposits will also produce substantial quantities of lanthanum and cerium, which are not in short supply at all.

A couple of recently announced deposits contain ore that more than 90% HREEs. If these get to production, they will be producing exactly what the marketplace wants and none of the stuff that’s in oversupply.

For example, Namibia Rare Earths Inc. (NRE:TSX, NMREF:OTCQX) has a small NI-43-101-compliant resource in Namibia: Measured and Indicated and Inferred of about 2 million tons of a nice, HREE-rich deposit. The company is well financed, with something like $20M in the bank.

TMR: What did you make of Namibia’s recent metallurgical tests?

AK: Namibia’s mineral is called xenotime, a fairly heavy mineral that has the potential to be concentrated by gravity methods. Namibia also has some carbonate in its ore that can be removed by acid dissolution.

TMR: Could the fact that it’s in Namibia be its biggest advantage?

AK: I would suspect the company won’t have as many environmental hoops to jump through and that labor could be less expensive. Compared to the long lead times and permitting processes in North America, that can’t hurt.

TMR: What do you know about Pro-Or Inc.’s (POI:TSX.V) chlorinator recovery technology?

AK: Right now, Pro-Or is targeting the platinum group elements. There is nothing to suggest the company is looking at the rare earth side, but certainly any new recovery technique is worth looking into.

TMR: Do you have a parting thought or two for our readers?

AK: There is very little news in the REE sector now because everybody’s doing their metallurgical testing, their optimization. It’s not a very exciting time in the rare earth space because there’s not much exploration. Companies are hunkered down to boost the value of their products and lower their capital costs.

In the next six months, I expect to see a real shakeout as companies release amended PEAs, prefeasibility studies and feasibility studies across the REE space. That is when smart investors will be able to look at the numbers and pick out the winners. At these depressed prices, there will be substantial profit potential when the winners and losers emerge. This is a good time to keep your eyes open and sharpen your pencil to crunch some numbers.

TMR: Alex, thank you for your time and your insights.

Geologist Alex Knox has been involved in the mineral exploration industry since 1970. He served in the mineral exploration division at Unocal Canada Ltd., the exploration arm of Molycorp, where he was involved in the discovery of the Kipawa deposit in western Quebec. Knox has explored for uranium, gold, rare earths, niobium, diamonds, slate and limestone in Canada, the U.S., Mongolia, Bolivia, Peru and Argentina. Highlights include Matamec’s Kipawa deposit, Commerce Resources’ Eldor and Blue River properties and Quantum Rare Metal’s Elk Creek deposit. Knox is on the REE Advisory Board of three publicly traded Canadian junior mineral exploration companies.

Want to read more Metals Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Metals Report <href=”#interviews” target=”_blank”>homepage.

DISCLOSURE:

1) Brian Sylvester conducted this interview for The Metals Report and provides services to The Metals Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Metals Report: Commerce Resources Corp., Pro-Or Inc., Namibia Rare Earths Inc., Tasman Metals Inc. and Orbite Aluminae Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Alex Knox: I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise – The Gold Report is Copyright © 2013 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8999

Fax: (707) 981-8998

Email: [email protected]

Our last piece in this educational series excerpted from Visual Guide to Elliott Wave Trading

By Elliott Wave International

Would you like to improve your ability to trade — not only with a clear understanding of the Elliott Wave Principle, but also by learning how and when to act on your wave count?
According to Senior Analyst Jeffrey Kennedy, there are the three key components of a successful trade.

In this final lesson — adapted from the Visual Guide to Elliott Wave Trading, a No.1 Bestseller on Amazon — Kennedy explains his third step for a high-confidence trade setup in Caterpillar: Manage the Trade (You can read Parts 1 and 2 by clicking below):

1. Analyze the price charts >>.
2. Formulate a trading plan >>.
3. Manage the trade.

————————-

The day following our analysis and entry, CAT fell sharply (see Figure 2.3). As a result, the value of the position increased substantially. In retrospect, it would have been prudent to exit the trade entirely or at least partially the day after the swift decline. However, since the original analysis called for a move below 108.39, I decided to hold the position.

During the next few days, CAT continued lower. On Friday, May 13, 2011, I exited the position for a 336.05 percent return (see Figure 2.4), selling the options that were originally purchased at 86 cents for $3.75 apiece.

The Ultimate Wave Trading Crash CoursePut yourself on the fast track to applying the Elliott Wave Principle successfully with a FREE one-week primer: The Ultimate Wave Trading Crash Course. Learn the basics with 5 FREE trading lessons from EWI Trading Instructor and Senior Analyst Jeffrey Kennedy — including insightful excerpts from his Amazon No. 1 Bestseller, Visual Guide to Elliott Wave Trading. Learn more and start your crash course now >>

By OilPrice.com

Shunichi Tanaka, the head of the Nuclear Regulation Authority in Japan, and the country’s chief nuclear regulator announced on Wednesday, that the nuclear power plant at Fukushima, has been leaking contaminated water into the ocean for the two years since the accident that saw three of the plants six reactors suffer a meltdown.

The problem stems from the fact that ground water is leaking into the basement of the damaged reactors, and becoming contaminated, and whilst that water is being pumped out and stored in huge tanks on site, the inflow has not yet been stopped, meaning that ever more ground water enters the basement and becomes contaminated.

Tanaka explains that neither his staff, nor those working for the plant’s operator have discovered where the leaks are coming from, and therefore have not been able to stop them.

Tokyo Electric Power (Tepco), the power plants operator, has constantly denied that any of that water heas been leaking into the Ocean, but in the last few days it has switched its position and finally admitted that it can’t actually say for sure that the water is not leaking into the sea.

Tepco has also admitted that the amounts of radioactive cesium, tritium, and strontium detected in groundwater around the plant has been growing, making the job of sealing the leaks even more urgent. Cesium and Strontium are especially dangerous to humans.

Tanaka claims that the evidence that the water is reaching the sea is overwhelming. “We’ve seen for a fact that levels of radioactivity in the seawater remain high, and contamination continues — I don’t think anyone can deny that. We must take action as soon as possible.

That said, considering the state of the plant, it’s difficult to find a solution today or tomorrow. That’s probably not satisfactory to many of you. But that’s the reality we face after an accident like this.”

For some time now experts have worried that the plant has been constantly continuing to leak radiated material into the ocean, and these latest announcements have only helped to confirm those suspicions.

By. Joao Peixe of Oilprice.com

Source: http://oilprice.com/Latest-Energy-News/World-News/Contaminated-Water-has-been-Leaking-into-Ocean-for-Two-Years-at-Fukushima.html

Source: Tom Armistead of The Energy Report (7/16/13)

http://www.theenergyreport.com/pub/na/15435

“Regulation” is a dirty word among most investors, but for speculators like Rodney Stevens, portfolio manager at Wolverton Securities Ltd. and author of The Disciplined Speculator newsletter, state-mandated emissions caps and renewable energy goals present an extraordinary opportunity for growth. In this interview with The Energy Report, Stevens makes a bullish case for solar stocks and offers several names for traders playing offense or defense. But whatever your strategy, Stevens says get the heck out of bonds and into equities.
The Energy Report: What can retail investors learn from the speculator’s perspective and methods?

Rodney Stevens: “Investing” is one of the most misused terms in finance. When you’re an investor, the typical strategy would be to buy cash-cow businesses at low prices and hold them forever, like the Warren Buffett strategy. Most of us don’t have that time horizon. Very few companies actually fit that particular definition of an investment. Our main strategy is to buy speculative companies, but if you apply the Warren Buffett strategy to speculative stocks, that scenario is fraught with danger. But you can speculate with a process that puts the odds in your favor. The first thing to determine is whether you are indeed speculating.

Another approach to stock speculation is to integrate short selling into your strategy. A lot of people view short selling as more risky, but when you combine a long and short portfolio, it actually serves to reduce the overall portfolio risk.

TER: Why do you advise getting out of bonds and into equities?

RS: The U.S. bond market—the treasuries—has recently turned bearish. The cause is the perception of growth in the U.S. economy combined with the potential for Federal Reserve Chairman Ben Bernanke to begin reducing his stimulus. If he does reduce his stimulus, interest rates should rise. A rising interest rate is going to negatively impact bonds. We certainly view those as underperformers going forward.

TER: What conditions would justify a Fed decision to reduce stimulus?

RS: Ben Bernanke has always said that he would reduce stimulus if the economic growth in the U.S. could support that. His key metrics are the unemployment rate and, more important, the inflation rate. So long as Bernanke is supporting U.S. growth, U.S. stocks are the most favorable place to be right now.

TER: Why do you think “offensive” stocks and sectors that include energy will outperform utilities and other “defensive” stocks?

RS: Defensive stocks refer to the bond-like stocks, such as utilities, which might have consistent dividends and marginal growth, but essentially trade like bonds. In the face of rising interest rates, these assets should underperform. The more offensive stocks, which are more impacted by growth in the U.S. economy, can support low rates or small increases in rates, but also have the growth potential to outperform.

TER: How will President Obama’s climate change program affect the solar energy industry?

RS: The key takeaway is that Obama would like to double renewable electricity generation by 2020. This could be beneficial for nuclear energy, which doesn’t have carbon emissions, but I think the prime beneficiary would be the solar space, because right now solar is the cheapest form of green energy to install and maintain. Solar energy, with its lower upfront cost and low energy rates, is positioned to be one of the prime beneficiaries.

TER: You say it has lower costs. Is that in the materials? The construction?

RS: That’s the upfront cost for materials and installation, and those costs are much lower compared to wind power or geothermal. In terms of upfront costs and ongoing costs, solar is in the position to benefit most for political incentives towards clean energy or renewable energy.

TER: Is the solar industry threatened by the low price of natural gas?

RS: Typically, in the past, solar companies’ equities would trade inversely to natural gas, but it’s becoming less of an impact now because the technology in the solar space has improved so significantly that it’s almost economic without government subsidies. The natural gas price, if it declines, can of course result in lower utility costs assuming the utility companies transfer that reduction to the customers.

TER: Can solar thrive if it’s not installed for utility-scale generation?

RS: Yes, it already is thriving. Right now they’re actually competing with the utilities, whereas previously there was no real competition for these companies. Yes, it can and it is happening in a large way now.

TER: What solar companies could thrive in this environment?

RS: The main companies that we’re interested in are SunPower Corp. (SPWR:NASDAQ), SolarCity Corp. (SCTY:NASDAQ) and Real Goods Solar Inc. (RSOL:NASDAQ). SunPower we like because not only does it manufacture the solar panels, but it also has a leasing program for the retail space, similar to SolarCity. SunPower has one of the best products available on the market and it should benefit from the incentives utility companies have to add renewable sources of energy to their business. SunPower could play a big role in the utility space, but also grab the retail markets. It should benefit from the growth in solar and also it has an international base, although its operations are primarily in the U.S.

SolarCity, for example, leases electricity to both retail and institutional customers, but it is focusing on the more profitable retail segment. Its strategy is to provide solar panels at no upfront costs to the customer. It’s a business proposal of, “let us save you money right now at no cost.” The company has put together a maximum market-penetration strategy. It is definitely the most aggressive strategy in the industry and the company is positioned to capture a large market share. Of course, its leasing strategy is fraught with default risk and interest rate risk as it is financing sales, but so far, the company’s business plan has been working and the company is set to grow considerably.

Real Goods Solar simply installs the panels, but it doesn’t finance, as SolarCity does. However, it recently hired new management and has a very competitive product as well. It has been around for a long time and is now on the cusp of turning to profitability and growing sales considerably. I think these three companies are well positioned to benefit from the growth in the solar space, which is probably one of the largest growing sectors in the energy sector.

TER: Why has Real Goods Solar’s stock been so volatile recently?

RS: It’s been volatile recently because it has good liquidity, but not a very large float. The recent move to $7/share was basically due to a positive article on the company. Right now the price has settled down into a more reasonable range of 0.9 times sales and we expect profitability and sales to grow over the next 12 months, which should result in fairly decent performance of the share price.

TER: And SunPower Corp. has rallied from $5/share to $20/share since the beginning of this year. What’s driving that?

RS: I think decent quarterly results drove the stock. Its revenues beat expectations and its losses have narrowed. Going forward, SunPower is staged for further growth and profitability. I think that’s been the main catalyst driving the share price. We expect that revenue growth to continue.

TER: I understand you like the energy service industry. What are some examples of good service plays?

RS: I’m looking at businesses peripheral to the E&Ps (exploration and production companies) and less related to the commodity price. The midstream segment—services, storage and transportation—should benefit from low interest rates. These companies don’t have the same growth potential, but the ones I look for are those that have support, a sustained dividend and the potential to grow those dividends. They’re not quite like bond companies, although they do provide a good balance in a portfolio with less risk, but still have that growth aspect to them. Some of the companies that I like in the sector are Canadian Pacific Railway Ltd. (CP:NYSE), Martin Midstream Partners L.P. (MMLP:NASDAQ) and Targa Resources Partners L.P. (NGLS:NYSE). They’ve all got good growth potential. Targa and Martin Midstream Partners have great dividend-growth potential.

TER: Canadian Pacific Rail’s stock has tripled in four years. What part has the energy industry played in that growth?

RS: Canadian Pacific Rail and the rails in general are great, very simple business models. They are like toll bridges. They have the position where, if you don’t use their services, you potentially have to pay a higher price for the alternative. They can raise prices and people will still pay them. That supports a good long-term growing business. They’re cash cows.

Canadian Pacific Rail more recently brought on a new CEO, E. Hunter Harrison. He came from Canadian National Railway Co. (CNR:TSX; CNI:NYSE), CP’s larger peer. His mission has been to grow the company’s earnings significantly. His first initiative was to grow by 40% this year and then another 20% growth in the next few years. He’s primarily achieving this through cost cutting. That’s been driving CP’s share price, and we want to benefit from that program. It is a great business and has one of the best growth profiles in the space.

TER: Is Targa’s midstream service to the unconventional gas and oil industry risky in the long-term?

RS: There’s always a lot of risk with these companies. The primary risks are they have large capex for their growth initiatives and that capex is subject to cost overruns and delays. There’s permitting risk. They could set up their terminals in a location where the market demand dissipates. They acquire companies that may or may not end up being good investments. They risk credit rating reductions if they make poor investments. And it’s a highly regulated industry. But these risks are offset by Targa’s strong, solid cash flow and growth potential.

TER: Martin Midstream Partners’ stock plateaued in the $30–40/share range throughout the last two years. Soon after the general election in 2012, it began a surge and seems now to have reached a new high. What’s behind that?

RS: There are probably two primary drivers behind that. One might be the Obama administration’s decision on tax status of the master limited partnership structures. There’s more clarity now that the tax status is determined. The second reason is its yield. It does have a high yield and an expected growing dividend distribution. Investors are still hungry for yield and yield growth. I still think Martin Midstream Partners is going to benefit from the low interest rates that we’re seeing in the U.S., but the market’s going to appreciate the growth potential that it has in its dividend payouts.

TER: You have also expressed interest in Cheniere Energy Partners L.P. (CQP:NYSE.MKT). That company has two gas liquefaction trains under construction right now at its Sabine Pass liquefaction and just began construction of two more trains. The first liquefied natural gas is not expected before 2016. Why are you interested now?

RS: It’s not necessarily my top pick, but what I do like about it is that it does have that stable dividend and a good yield. There is a price discrepancy between U.S. local and overseas natural gas prices. The bottleneck for that has been in the liquefaction plants that they’re building right now. They stand to benefit from premium prices when these trains are built. That could be a positive near-term catalyst for the stock. This company has a good track record of building its projects on time and on budget as well. I’m happy to hold onto it so long as the company continues achieving its project development targets.

TER: Are there any other companies that you would recommend?

RS: There are a few others in the space as well that we’re interested in. Another midstream company we like is Energy Transfer Partners L.P. (ETP:NYSE). In the solar space, First Solar Inc. (FSLR:NYSE) andCanadian Solar Inc. (CSIQ:NASDAQ) look appealing to us as well. I think the combination of the midstreams and solar makes a good portfolio balance when you’re weighing dividend growth and corporate growth.

TER: Do you have any final words of advice for investors in the energy space?

RS: We like to invest on strength and sell on weakness and not tolerate any losses or losing positions. The other key would be to have a disciplined approach so that you reduce your losses and maximize your gains. We do that by using our progressive stop-losses to monitor portfolio operational risk. We also have a balance of long and short positions, which makes for a more conservative portfolio. The most important things to look for are stocks that should benefit from the current economic conditions. Just make sure to have effective risk control.

TER: You’ve given us a lot of good stuff to think about. I appreciate your time.

Rodney Stevens, CFA, is a registered representative and portfolio manager at Wolverton Securities Ltd. Since 2001, Stevens has worked in the mining securities industry, initially as an investment analyst with Salman Partners Inc. Stevens became a top-rated analyst by StarMine on July 17, 2007, for the metals and mining industry based on the profitability of stock recommendations and the accuracy of earnings estimates, generating an excess return of 7.9% over the corresponding industry benchmark.

Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

DISCLOSURE:

1) Tom Armistead conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Energy Report: Energy Transfer Partners L.P. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Rodney Stevens: I or my family own shares of the following companies mentioned in this interview: Canadian Pacific Railway Ltd. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. 4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise – The Energy Report is Copyright © 2013 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8204

Fax: (707) 981-8998

Email: [email protected]

Article by Investazor.com

Chart: XAUUSD, Daily

After hitting a low under 1180$ per ounce the price of Gold bounced back to 1290$ per ounce. The most interesting thing about this throwback is that the commercials are still net short on this instrument, but the open interest is on the up move. This might mean that the precious metal is being bought by private investors more, and less by Central Banks and Hedge Funds.

Tomorrow Ben Bernanke is expected to have another speech. Investors will look for signals regarding the Quantitative Easing. If the Fed will start tapering it later than September, we might see another rally in the price of gold, while if this date will be maintained there is a possibility for the price to drop suddenly.

Looking at the technical analysis of gold’s price chart using a system based on Ichimoku Kinko Hyo, we observed that the price is now in the layer between the Tenkan-sen and Kijun-sen averages. Adding a Fibonacci retrace we can conclude that 1300$ per ounce is a very good resistance level. If the price will break and close above this level we can expect for it to rally to 1350$ per ounce, where it will find itself in the Kumo.

Even though the signals are bullish, keep an eye on the 1270$ support. A break under this level could mean another drop for the price of gold. The target levels for a down move are 1210$ and 1180$ per ounce.

The post Gold (XAUUSD) might Bottom around Current Levels appeared first on investazor.com.