Month: August 2013

By HY Markets Forex Blog

European shares was seen trading mixed as it started the trading session after the second-quarter German growth data was released and beat estimates, expanding by 0.7%.

The European Euro Stoxx 50 edged 0.15% higher to 2,811.05 as the market opened, while the German DAX rose 0.03% to 8,402.99 at the same time. The French CAC 40 fell 0.15% lower at 4,053.48 and the UK’s FTSE 100 declined 0.23% to 6,433.50.

Germany’s economy expanded by 0.7% in the second quarter, the reports from the German Federal Statistical Office (Destatis) confirmed.

Germany’s GDP edged 0.5% higher year-on-year in the quarter, according to Destatis.

European Shares – Fed Tapering

The minutes from the Federal Reserve’s (Fed) July meeting released on Wednesday, revealed that the central bank will begin to scale back on its asset-purchasing program by the end of the year if the world’s largest economy continues to improve, however investors are still waiting for more clues as to when the tapering would commence.

Investors are still focusing on economic data’s coming from the US, to get hints on when the US Central bank would begin to taper its bond-buying program.

Earlier during the week economic data released showed that jobless claims were at 336,000 in the week ending August 16, reports from the US Department of Labour confirmed.

The US flash Manufacturing Purchasing Managers’ Index reported by Markit Economics advanced to its highest in over five months. The indicator reached 53.9 points and recommended a moderate expansion in the manufacturing sector, while employment grew for the second month.

In the Asian Markets, the stocks were mostly in green while the weaker yen raised exporters stocks in Japan.

Hong Kong’s benchmark Hang Seng dropped 0.11% to 21,871.04 at the time of writing, while the Chinese mainland Shanghai Composite declined 0.43% to 2,058.34.

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The post European Shares Start Mixed After German Economy Growth appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

Written by www.ew-forecast.com

On Gold we are tracking a bullish continuation from 1272 that should be in five waves, because we are tracking wave C/3 which are both motive waves. Right now we can see only three completed legs, but current sideways price action seems like a fourth wave, so be aware of another rise in the near future, up to 1390-1400 zone.

Only a decisive fall through 1344 support and towards 1318 level will suggest that bearish reversal is unfolding. In such case we would focus on daily alternate count.
GOLD 4h – Elliott Wave Analysis

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About Bull Power (green histogram)

The Bull and Bear Power indicators identify whether the buyers or sellers in the market have the power, and as such lead to price breakout in the respective directions.

If buyers in the market are trying to raise the price of the currency, and the price at the end of the period is above the EMA (Exponential Moving Average) for the same period, then they are succeeding in raising the price.

Bull Power = Highest Price (13 period) – EMA (13 period)

About Bear Power (red histogram)

If sellers in the market are trying to lower the price of the currency, and the price at the end of the period is below the EMA for the same period, then they are succeeding in lowering the price.

Bear Power = Lowest price (13 period) – EMA (13 period)

 Trading the Divergence Reversal

A powerful method to trade the Bull Bear Power, is to observe divergences between prices and the Bull/Bear power indicators. In a downtrend, look for divergence between prices and the bear power, and in uptrends, look for divergence between prices and the bull power.

Referring to the MT4 chart above, note to the left side where the red vertical line is, we identify the divergence with purple arrows. With prices making lower lows, you would expect to see the bear power indicator heading lower in tandem. However, the Bear power was heading upwards with prices heading downwards. This is an indication of a potential bullish reversal. The blue line right at the bottom across the chart is the RSI, which we put in place for added confirmation. Since the RSI was below 30, it signalled an oversold condition. The two indicators confirm each other and we see a beautiful bullish reversal.

Now on to the right of the chart where the green vertical line is, we identify the divergence with brown arrows. With prices making higher highs, you would expect to see the bull power indicator heading higher in tandem. However, the Bull power was heading downwards with prices heading upwards. This is an indication of a potential bearish reversal. Since the RSI was above 70, it signalled an overbought condition. The two indicators confirm each other and we see a bearish reversal.

Article courtesy of StreetPips.com

Source: George S. Mack of The Life Sciences Report (8/22/13)

http://www.thelifesciencesreport.com/pub/na/three-new-picks-from-the-hot-biotech-ipo-market-ran-nussbaum

Ran Nussbaum, co-founder and managing partner of The Pontifax Group, is a venture capitalist seeking game-changing products that will create real value for patients, pharmas and investors. In this interview with The Life Sciences Report, Nussbaum addresses three public companies in different stages of development—from a penny stock with a preclinical value driver to a revenue-generating “larger” small-cap company developing novel products for critical orphan indications. As a bonus, Nussbaum drops two European biotech names that he believes are suffering from anonymity in U.S. markets.

The Life Sciences Report: Can you describe your business model for me?

Ran Nussbaum: We are a simple venture capital (VC) operation based out of Herzelia, which is very near Tel Aviv, Israel. We run three funds and manage more than $200 million ($200M) in assets. We invest in private companies that have the potential to become public. When these companies do go public in the U.S., in Israel or in other places, we hold publicly tradable shares. All in all, it’s a very simple model.

TLSR: You support these companies after they are public, right?

RN: Yes, but we are not buying shares at the market, or trading shares. We are trying to inject money into the companies, not take money out. These companies always need cash, so we look for private investment, for secondary offerings and for fundraising to support our investments.

TLSR: It strikes me that even after these companies go public, you still look at them as having an ultimate exit strategy, either by acquisition, with a big partnership or by licensing out a molecule. Is that right?

RN: Yes. Most of these companies are not going public as an exit strategy. The initial public offering (IPO) is a fundraising strategy, not the ultimate exit. As you know, it is very trendy to go public, and a lot of companies have gone that route recently. The IPO market is really hot right now in life sciences. But the biggest exits—the real value creation events—are to be bought out by a big pharma, to license out a drug, or to do a co-development project with a big pharma. That’s when you see share price appreciation.

TLSR: Hearing you talk, I’m thinking that you are still very active and involved in these companies on an intimate basis even after they are public. Is that, in fact, the case?

RN: It’s more than that. I don’t see any difference between a public company and a private company as far as our involvement in them. Our involvement in public entities and private should be the same. The companies are still headquartered nearby, and they have missions. They need to generate clinical data and evidence to meet goals and continue business development. This is all execution, and it doesn’t matter if it’s done in a public or a private entity.

TLSR: Ran, do you think your view of these companies is different from that of VCs in the U.S., and maybe even in Europe? You said you see no difference between companies when they are public versus when they are still private. Do you think that American and European VCs look at the IPO as the exit strategy, versus the way you look at it?

RN: I hope there’s a difference, because I want our model to be unique. Since a lot of our companies are going public on the Tel Aviv Stock Exchange, I don’t think the valuation we’re getting can constitute a real exit. It is a very different proposition than going public at a $250 million ($250M) fair market valuation on the NASDAQ.

On the other hand, from a regulatory point of view, it’s very difficult to be proactive in a publicly traded company in the U.S., whereas it is much easier with a public company trading on the Tel Aviv Stock Exchange. We are trying to structure our business model to add value to our companies, and we think we can do that by helping management and boards of directors structure that ultimate exit. The answer to your question in one word: Yes. We do see the exit strategy differently.

TLSR: Are your positions focused mostly in Israel?

RN: Yes. We have several American portfolio companies, but mostly we are in Israeli companies. Our biggest asset is to evaluate companies here at home because we can monitor them and control the process much more easily. We do work with a lot of American VCs and international pharma companies, but our biggest strength is to monitor Israel and find those diamonds in the rough right here.

TLSR: Ran, I’m noting that there were close to 1,000 life sciences companies in Israel. Considering the country’s size, this is extraordinary. Are there incentives for science, medicine and technology companies to locate there?

RN: The ecosystem is right. The entire Israeli life sciences industry is located within a radius of 20 kilometers. It’s all close. There is also a tradition of very good basic science at the institutions of higher learning in Israel. There are real advantages here in the local market.

TLSR: Ran, I know there is a lot of emigration to Israel, and many of these emigrants are people who are educated, and are professionals already, in many cases. That has to be part of the equation that produces so many life science businesses.

RN: About 1M people came here from Russia over the last decade, and many are very smart people. We have also seen good people come to Israel from very strong universities in the U.S. and England. We have seen many come from the U.S. with degrees from Ivy League institutions like Harvard, and others from Stanford University, the University of Pennsylvania and UCLA. Many emigrants completed their degrees in the States and have gotten nice jobs at pharmas and small biotech companies with great track records—and they are coming back to Israel. Many have brought in good ideas. These professionals are the strength of the entire industry.

TLSR: I was looking at a press release from a few years ago that said Roche Holding AG (RHHBY:OTCQX) was going to collaborate with your firm to fund development. It’s certainly impressive to have a giant European drug developer involved with your company, but what was Roche’s purpose? Was it to start a corporate VC program in Israel?

RN: It is not a corporate venture capital program. Our partnership with Roche is still very much alive and kicking. What we did was to try to find assets that might suit its pipeline for the future. Roche is a product player and we’re an equity player, and there are a lot of companies with breakthrough technologies here in Israel. We took very early-stage compounds and ideas, and we built companies and got Roche some rights in the compounds. We are now advancing these programs.

TLSR: This is, in essence, a project development program, would that be right?

RN: Exactly. As a matter of fact, we have seen several successes so far. I think Roche has duplicated this model and is taking it to universities, CEOs and to other countries. I think it enjoys what we have provided as a local partner. I know that we enjoy Roche’s professional skills.

TLSR: I’m certain the collaboration has probably been very beneficial for both sides.

RN: Yes, I think you are right. Roche is very smart, and as you know it fully owns Genentech, which is the biggest biotech company in the world. Now Roche is the biggest oncology franchise in the world.

But our deal with the company is only one of several. We work with the entire pharma industry. We’ve signed deals with Pfizer Inc. (PFE:NYSE), Novartis AG (NVS:NYSE) and with GlaxoSmithKline (GSK:NYSE). There is also Teva Pharmaceutical Industries Ltd. (TEVA:NASDAQ), which is headquartered just 15 km from us and is one of our limited partners. But our relationship with Roche is unique. The company did something really smart. Roche is not thinking one quarter ahead; it thinks about the next decade.

TLSR: You have just said that your project development program with Roche was successful. Does that mean some compounds have moved into the clinic by this time?

RN: I can’t disclose that because it falls under a confidentiality agreement. But I can say that at least two programs are looking very promising and might, in the near future, produce first-in-class drugs.

TLSR: As a venture capitalist, what do you look for in a life sciences company? Not all of your holdings are actual companies when you find them—you could find investigators in a university or other institution—but what do you look for when you are trying to develop a brand new company?

RN: I can tell you what I’m not looking for. I’m not looking for “me-too” or a “nice-to-have” or a “next-generation” product. We try to find something that can change the world. We are trying to find something that will have a huge impact; that offers a huge advantage over existing drugs. It could be about new targets or a new mode of action. If the therapy works, we want it to be a game changer in the current disease management paradigm.

TLSR: Ran, I’m looking at a Tel Aviv-based company called Alcobra Ltd. (ADHD:NASDAQ). It’s not one of your companies, but you know this company very well. Could you address it? Also, tell me how you know the company.

RN: Alcobra is an Israeli company that just went public. We track it, and it is very close to us because its founder, CEO and CFO are doing business with us. We know its compound, MG01CI (metadoxine) for attention deficit hyperactivity disorder (ADHD), extremely well—and we also know the arena quite well. We think highly of this program. The jury is still out, but Alcobra’s MG01CI, a non-stimulant agent, if approved, will be a game changer because the entire ADHD space is now becoming generic. I sent Alcobra to the central nervous system (CNS) companies—to Eli Lilly and Co. (LLY:NYSE), to Shire Plc (SHPGY:NASDAQ; SHP:LSE). If Alcobra presents good data from a nice pivotal trial of MG01CI, somebody will buy it.

TLSR: Psychiatrists, pediatricians and other physicians are using everything from stimulants to non-stimulants to antidepressants to antihypertensive agents to treat ADHD. I’m just wondering how difficult it is going to be to get clinicians to change their treatment plans for patients. They tend not to change their patterns easily, especially when all the generics on the market are so much easier on the pocketbooks of patients. Do the patients have to be nonresponsive to existing products before clinicians will switch meds?

RN: I would argue that over the past 50 years, every single ADHD drug has been rapidly adopted by patients and physicians, regardless of generic competition. In fact, new ADHD treatments have been penetrating rapidly and reaching blockbuster sales regardless of generic alternatives, and we don’t expect this to be any different with MG01CI. I also think that physicians are fearful of giving Strattera (atomoxetine, an FDA-approved non-stimulant for children and adults; Eli Lilly & Co.) or stimulants like Adderall (amphetamine + dextroamphetamine; Shire Plc) to young people.

TLSR: Right now there is a growing adult market for ADHD management. I understand wanting to use a non-stimulant for children. Is Alcobra going for the child and student market, or is it looking at the adult market?

RN: It is looking at both as potential markets. In fact, Alcobra has done a couple of phase 2 trials (NCT01685281 and NCT01243242) testing MG01CI in adults. I think that a big pharma partner will have to design the right trial for the student market. As I see it, I think Alcobra is doing all the right things to capture interest from Eli Lilly and Shire.

TLSR: Could I hear another name you find interesting?

RN: Several nice ideas right now seem like hot trends, and we’re trying to track the trends. Protalix Biotherapeutics Inc. (PLX:NYSE) is a company that we took public in the past. Today it has a market cap of about $476M. We’ve been with this company since it had only preclinical assets, but after some period of time venture capitalists normally exit the companies they’ve brought public, and we exited Protalix. Now the company is following a hot trend into the orphan disease market. It has a most appealing biosimilar technology, an advanced recombinant protein plant cell-expressed technology using carrot and tobacco cells.

The company’s enzyme replacement product, Elelyso (taliglucerase alfa), is approved by the FDA for Gaucher disease, a rare genetic lysosomal storage disorder. It is being marketed by Pfizer. Protalix is also trying to develop antibodies and fusion proteins, like a biosimilar of Enbrel (etanercept, Amgen Inc. [AMGN:NASDAQ] and Pfizer), which is an anti-tumor necrosis factor (TNF) product used in rheumatoid arthritis.

TLSR: Ran, what is Protalix doing to change the way medicine is practiced? What is the sweeping value driver?

RN: I think that the Holy Grail is to develop large proteins that can be consumed orally. Administration of life-saving drugs can be performed with ease if those drugs can be taken by mouth. Protalix is trying to approach this delivery system, and I’m crossing my fingers because it would help a lot of patients. It will ease up pressures on hospitals and payers, such as Medicare in the U.S. Protalix has a really nice platform.

TLSR: Of course, the problem with this route of administration is that proteins are normally digested in the gastrointestinal tract, and that’s why they cannot be assimilated as an active protein into the blood stream. If Protalix can develop enzyme replacement products for lysosomal storage disorders like Gaucher and Fabry diseases, I understand your assertion that this is the Holy Grail of drug development. It would make complex protein drug administration much easier.

RN: This is precisely my point. The future of this kind of drug development is about enhancing the lives of these very young patients and their families, and easing the burden on the pockets of the payers.

TLSR: Genzyme (a unit of Sanofi SA [SNY:NYSE]) has developed enzyme replacement therapies for lysosomal storage disorders, and has done quite well. Could these products from Protalix be anywhere near as large as the Genzyme drugs were?

RN: If you look at Protalix’s pipeline, you will see that it is tracking Genzyme’s pipeline and product portfolio. It’s very close. I know that Genzyme is developing an oral therapy for several disease indications, but it is generating a lot of cash with its great cluster of orphan drugs. It is expanding and, with Sanofi’s help, moving into growing markets like Brazil, Russia, China and India. There is no real competition in this arena because Genzyme is the 500-pound gorilla in this space. I think that Protalix has learned that fact by now, and is trying to compete by coming up with a new technology with a new route of administration. Then the competition will be with a differentiated product line.

TLSR: You have a micro-cap company called Arno Therapeutics Inc. (ARNI:OTC.MKTS) in your portfolio. I’d love to hear about this one.

RN: Yes, George—it’s a very small-cap company, with an $11M market cap. Arno has licensed a very cool drug called onapristone from Bayer (BAYN:XETRA). Arno is attempting to develop this drug for two indications, prostate cancer and breast cancer, by defining the right population, a population that will fit an activated progesterone receptor (APR) profile. The team is looking to develop the product for APR+ cancer patients. Arno should be one of the stars at the American Society of Clinical Oncology (ASCO) annual meeting in June 2014.

TLSR: Ran, I’m thinking that the trend in breast cancer now is to develop products for triple-negative disease—for those patients who do not express HER2/neu, the estrogen receptor or the progesterone receptor. Currently, most breast cancer drugs target tumors that are either estrogen- or progesterone-positive. Isn’t this market a little more crowded than the triple-negative market? Also, why could onapristone be a superior product?

RN: The breast cancer market is very crowded. I have to say that, when you’re looking at this market, everybody is trying to develop PARP (poly[ADP-ribose] polymerase) inhibitors for triple-negative breast cancer. Having said that, it is not the case in the prostate cancer market, and I think that Arno will have a real nice chance at this one.

TLSR: Why is onapristone the value driver here? I see that the company has AR-42 in two clinical trials, AR-12 in a clinical trial and AR-67 progressed to a phase 2 trial. Why are we talking about a preclinical product?

RN: It’s not about what the most advanced asset is. I’m looking at what the biggest asset is and why.

You’ll see situations like this with a lot of companies. ArQule Inc. (ARQL:NASDAQ) is in phase 3 with the c-Met inhibitor tivantinib for cancer treatment, but I think the phase 1 trial of its AKT inhibitor, ARQ 092, in solid tumors, is more promising. We are talking about the market potential and how the product is differentiated from other agents.

Arno’s onapristone is going into a trial first in men with APR+ prostate cancer, and we will have real proof of concept within one year for a new drug, a new entity. It might be something very big.

TLSR: Ran, with this tiny market valuation you could buy this company back for nothing, couldn’t you?

RN: I don’t think so. There are a lot of strong shareholders in Arno who will not sell their shares.

TLSR: Is there anything else you wanted to mention?

RN: I did want to tell you that we are looking at European companies that are not getting attention from American investors. I am talking about Genmab A/S (GEN:CO) from Copenhagen and MorphoSys (MPSYF:OTCPK) in Germany. These companies are developing exciting clusters of antibody therapies and have mid-cap market valuations. Both have great and very deep science. We appreciate both of these companies. We believe the lack of attention from American investors has caused a lot of opportunity to build up in these names. We really like Genmab and MorphoSys.

TLSR: It sounds to me like you want to move into monoclonal antibodies in a big way. Do you see this already successful drug class as a continuing huge market?

RN: Yes. Absolutely, especially in immunotherapeutics.

TLSR: I’ve enjoyed being with you very much, Ran. Thank you for taking the time.

RN: My pleasure. Thank you for talking with me.

Ran Nussbaum is a managing partner and co-founder of The Pontifax Group, which has established three funds with more $200M under management and more than 30 portfolio companies. Over the past nine years, Nussbaum has managed the group’s activity alongside Tomer Kariv. He also served as CEO of Biomedix and was NasVax Ltd.’s chairman of the board. Nussbaum’s work revolves around constant and active involvement in companies, providing them with strategic and business development oversight. Nussbaum serves as a board member of many of the Pontifax Group’s portfolio companies, including cCam Biotherapuetics, TheraCoat, CollPlant Ltd., Quiet Therapeutics, Fusimab Ltd. and OCON Medical Ltd., where he is currently chairman of the board.

Want to read more Life Sciences 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 Streetwise Interviews page.

DISCLOSURE:

1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences 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 Life Sciences Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Ran Nussbaum: I or my family own shares of the following companies mentioned in this interview: Arno Therapeutics Inc., Genmab A/S, MorphoSys, ArQule Inc. 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.

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GBPUSD stays within a upward price channel on 4-hour chart, and remains in uptrend from 1.5102. Support is located at the lower line of the channel, as long as the channel support holds, the uptrend could be expected to resume, and one more rise towards 1.6000 is still possible. On the downside, a clear break below the channel support will indicate that the upward movement from 1.5102 had completed at 1.5717 already, then the following downward move could bring price back to 1.5400 zone.

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By MoneyMorning.com.au

If you’re like most investors you probably think it has been a terrible period for Chinese stocks.

That’s a fair assumption.

You’ve seen news about commodity prices crashing. And everyone knows that’s because Chinese economic growth is slowing.

But what if we told you a certain type of Chinese stock is killing another type of Chinese stock by more than 20 percentage points?

And what if we told you a similar story is playing out in the Australian market? Well here’s the good news: it is…

But first, back to China and the Chinese markets.

Yesterday the Financial Times reported:

‘Following the recent rout in global emerging markets, the Shenzen composite – home to China’s small-caps index – is up 13.8 per cent this year, outpacing gains in the next best Asian market, the Philippines.

‘The move is not a reflection of new-found confidence in China. The Shanghai Composite remains Asia’s most unloved index, having fallen 8.6 per cent this year, partly due to the perception that it is a proxy for China’s old economy.‘

That’s not what most people would expect. Think about it. Name a high risk and volatile market – China.

Now name one of the most high risk and volatile stock sectors – small-caps.

Put them together in a market that’s taking a beating, and what do you get? A 13.8% capital gain apparently.

That’s the beauty of small-cap stocks, and it’s why so many speculators view them as the punting stock of choice…

Small-Cap Stocks Beat Blue-Chips More than 2-to-1

To novice investors it seems counter-intuitive to punt on the riskiest stocks when the market is so volatile.

But when you stop and think about it, it’s completely logical.

When they’re certain about the market and things look great, investors tend to take their money out of the bank to invest it in safe and reliable blue-chip income and growth stocks.

But when they’re not certain about the market and things don’t look great, investors tend to keep their money in the bank. But they still want some exposure to stocks just in case the market takes off.

That’s why small-cap stocks are so popular. You can keep most of your money ‘under the mattress’ and just invest a small stake in small-cap stocks.

And because small-caps can move so quickly in either direction, investors can make big gains without having a lot of cash on the line.

But it’s not just in China that this happens. A similar game has played out on the Australian market. You can see that in the chart below. We’ve compared the S&P/ASX 200 index (blue line) to the S&P/ASX Emerging Companies index (red line) over the past two months:

Source: Google Finance

Over the past two months Aussie small-caps have gained 25.2% compared to just 9.1% for Aussie blue-chips. This confirms our call two months ago to recommend you buy the market (especially small-caps) when most other folks were running scared.

Use Your Big Picture Knowledge to Your Advantage

This is why we tell you to keep things in perspective when you look at big picture events.

It’s OK to read about an impending Chinese economic crash. It’s fine to understand what the markets think about the latest US Federal Reserve meeting and whether the Fed will stop or continue printing money.

In fact, it’s better than ‘OK’ and ‘fine’. You should know what’s happening to the broader economy. That way you can plan for the worst before it happens.

That said, you’ve got to make sure you don’t suffer investment paralysis by becoming so worried about things that you do nothing.

Understanding the big picture point of view should be an advantage. Knowing that the world economy could go pear-shaped any day puts you in better standing than the mainstream investors who just won’t see it coming.

So, now you’ve got that advantage, it’s up to you to do something about it. Our fear is that over the past month you probably missed out on the small-cap gains. And worse, that you probably missed out on the smaller blue-chip gains too.

As we’ve said for some time, the market is as risky as heck. Don’t fool yourself into thinking it’s anything but that. But if you take the time and the effort to look, you’ll soon see there is still a lot of good value in Australian stocks today.

Just don’t let investment paralysis get the better of you.

Cheers,
Kris+

From the Port Phillip Publishing Library

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Special Report: Panic of 2013
 

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Money Morning:  Why Al Gore Won’t Like Big Data

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Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

By MoneyMorning.com.au

The recent market uncertainty is no doubt causing investors some angst. That’s especially true for those in or nearing retirement.  The ‘professionals’ keep reassuring us the global economy is slowly recovering and that this will underpin future market performance.

But this ignores the fact that the economy and markets have the twin props of money printing (QE) and zero interest rate policies (ZIRP) supporting this so-called ‘recovery’.

So when or if central banks remove these props what are the consequences?

The unprecedented levels of central banker intervention are a result of The Great Credit Contraction (GCC). The GCC isn’t your ‘run of the mill’ recession. It’s a result of the collapse of a credit bubble the likes of which the world has never seen before.

And so a genuine recovery can only take place after slowly and painfully removing the massive build-up of debt from the system.

Therefore, it’s dangerous to have an investment strategy that presumes the worst is over and that you’ll shortly see a return to ‘normal service’.

My guess is those who believe in the ‘share market always goes up’ mantra will run out of money and patience long before this market delivers on that Secular Bull Market promise.

Central Banks Can’t Deny This Major Trend  

Recent data from Europe and the US show these economies are, at best, limping along. The inclusion of vast amounts of stimulus money has inflated the anemic growth numbers. Take out the government giveaways and you’ll see their real economies are well and truly in reverse gear.

That means in this new world of credit contraction, an investment strategy based on how things worked in recent decades is destined to make you much poorer. And as this loss of wealth effect slowly embeds in society’s psyche, you can expect to see more direct intervention by policy makers.

Forget taper, they’ll continue to tamper.

The central bankers are trying (in vain) to alter the market’s destiny with economic reality. Based on previous interventions, any success will be fleeting. The fact is markets respond to the stimulus steroid until they don’t. But for the central bankers, withdrawal isn’t an option so the market will likely ‘die’ from a stimulus overdose.

Having a big picture strategy and a good deal of patience lets you view these market movements as part of the longer-term trend. It’s a trend in which the market goes much lower.

Holding cash while markets fall is the first half of the strategy. The other part is deciding when to begin investing in markets again. One of the indicators to watch is the Dow/Gold ratio.

History has shown that gold is ‘the ultimate store of wealth’.

In the good times investors chase markets (paper money) and in the bad times they go back to gold (real money). The Dow/Gold ratio tracks this ‘greed and fear’ relationship.

The following chart of the Dow/Gold ratio shows how investors fall in and out of love with each asset class:

Note: Prior to 1896 a surrogate index is used for the DJIA Index.
Source: www.bullmarketthinking.com

It’s interesting to note the level of volatility before and after the creation of the US Federal Reserve. After the Panic of 1907, the creation of the US Fed was supposed to be the great stabiliser – at least according to the Act. The following is an extract from www.investopedia.com :

Definition of ’1913 Federal Reserve Act’
The 1913 U.S. legislation that created the current Federal Reserve System. The Federal Reserve Act intended to establish a form of economic stability through the introduction of the Central Bank, which would be in charge of monetary policy, into the United States. The Federal Reserve Act is perhaps one of the most influential laws concerning the U.S. financial system.

The graph confirms what we already know – that when authorities and bankers meddle, the markets go haywire. Bernanke and co are continuing a long tradition of central bankers who think they are smarter than the collective.

(The fact we don’t need central bankers at all is a discussion for another day.)

But let’s go back to focusing on what history may tell us about the near term destiny of these two asset classes.

Your Best Bet May Be to Take a View From Here

At the peak of the ‘tech boom’ in 2000, the Dow Jones Index was 11,700 points and the gold price was at a low of $280 per ounce. That means the ratio was 42 (11,700/280).  In a two-century period, the 2000 Dow/Gold ratio peak has been the pinnacle of greed and over-optimism.

The Dow Jones index is currently around 14,900 points and gold is $1,365 per ounce, giving a ratio of 10.9. Previous secular bear markets show the Dow/Gold ratio reaches a low of 1 to 2 before a market collapse is complete (the depth of fear and pessimism).

How do we get to a ratio of 1 or 2? There are four main equations (and a number of variations on them):

1. The Dow stays around current levels and gold rises to $7500/oz or higher – these were the dynamics that caused the Dow/Gold ratio to bottom out in 1980.
2. Gold stays around currently levels and the Dow falls to 2700 points or lower – these were the dynamics that caused the low in the Dow/Gold ratio during The Great Depression.
3. The Dow falls in value (say to 7000 points) and gold increases to $3500/oz or higher.
4. Both gold and the Dow fall to much lower levels – say gold at $500/oz and the Dow at 1000 points – this is the deflationary scenario The Great Credit Contraction may deliver to us.

The previous lows in the Dow/Gold ratio have come about by differing dynamics. This tends to add credence to the saying, ‘History does not always repeat itself, but it does rhyme.’

If the long-term cycle of a lower Dow/Gold is in our future, it’s unlikely the Dow will increase from current levels. Best case is the Dow remains stagnant. The higher probability is that it falls – possibly 50% or more.

A fall of this size is also reflective of the pattern of past Secular BearMarkets. There are times to be brave and times to be cautious. For me caution is the better option.

In short, my position is to remain on the sidelines in cash and be an interested spectator.

Vern Gowdie+
Editor, Gowdie Family Wealth

Join Money Morning on Google+

From the Archives…

How Many Warren Buffett’s in a Bar of Gold?
16-08-2013 –  Kris Sayce

Two Points to Consider from the Commonwealth Bank…
15-08-2013 –  Kris Sayce

Take Control of Your Superannuation, but Know the Limits
14-08-2013 – Vern Gowdie

Why I’m Glad I Missed a Dividend Stock That Doubled…
13-08-2013 – Kris Sayce

No Profit in the Federal Reserve Divination
12-08-2013 – Dan Denning

Source: George S. Mack of The Life Sciences Report (8/22/13)

http://www.thelifesciencesreport.com/pub/na/spot-tenbagger-discovery-potential-in-biotech-michael-berry

How do the best investors detect life science companies with the potential to generate significant wealth? Michael Berry, publisher of Morning Notes, found that traditional growth and value models didn’t measure up, so he developed his own “discovery” strategy. He looks at companies that haven’t gone public yet. He’s not afraid of the penny stock. Find out more about Berry’s technique, and about five companies that fit his profit-generating profile, in this interview with The Life Sciences Report.

The Life Sciences Report: Mike, you and I have talked about life sciences investing before. Investing in any sector is difficult, but the life sciences, and particularly biotechnology, are complex. What general advice can you give a growth investor who wants to speculate in micro-cap biotech? Particularly, how does the retail investor intelligently understand his or her investment in a company engaged in molecular biology?

Michael Berry: My style of investing in the life sciences is not really growth investing, George. It’s a technique quite different, called “Discovery Investing.” I’ve developed it through the last decade because neither the growth nor value styles really fit the mold in picking winners in the life sciences segment.

But some of the advice is generic. If you want to play in the life sciences space, you must diversify. With FDA hurdles and the expensive nature of preclinical and clinical trials, micro caps tend to burn money quickly. Focus on two or three applications in the life sciences space, and understand that you cannot possibly know everything about those applications. Diversification will dilute those risks.

Another piece of advice is to know the space. If you are interested in stem cells, for instance, find the literature and the top scientists, and get to know them. Many are university professors and really easy to reach out to. If cancer interests you, read the literature. From personal experience, I know that tremendous strides have been made in treatment of skin cancer. Roche Holding AG (RHHBY:OTCQX) has a pill (Zelboraf/vemurafenib) that shrinks melanoma tumors with a high degree of success. This was a Genentech development.

You must be invested in themes that interest you, and that you naturally are attracted to. That makes decision-making so much easier.

Finally, zero in on public—and especially nonpublic—companies in your space of interest. I like to track companies that are not yet public and get to know the management. You reduce your risk of being diluted into outer space, as so often happens. Then use our 10-point grid and the Discovery Scoreboard to grade and rank your companies of interest.

The Internet greatly facilitates all these tasks. It is an interactive research tool investors should take advantage of. There are no excuses!

A word of warning: In this space, investors must be prepared to take profits to manage risk intelligently. That, perhaps, is the more important aspect of wealth creation in the discovery space.

TLSR: Do you look for growth where you can find it? Or do you try to find specific themes in biotech?

MB: In the life sciences discovery space, the broad topics are thematic. Great wealth is created at the beginning of the cycle. Inovio Pharmaceuticals Inc. (INO:NYSE.MKT), which has a cancer vaccine platform, soared 400% earlier this summer based on the broad realization that new cancer therapy discoveries may be possible. Neuralstem Inc. (CUR:NYSE.MKT) has its stem cell therapy approach. I have owned Neuralstem for years; sometimes it takes that long in discovery to see value grow. It now looks like this company, with stem cell therapy having matured, is ready to reward investors. Neuralstem is just another example of great wealth creation and the theme investment approach we have in the life sciences.

TLSR: You are not afraid to invest in penny stocks—I mean very, very low market cap stories. Do you have to be an active investor in a company to be involved with a name with a market cap under $5–10 million ($5–10M)?

MB: Interestingly enough, most of these stocks go from penny status to dollar status and back several times in their life cycles. You really have to trade.

We are not afraid of penny stocks. However one of the 10 discovery factors is sustainability. So we look carefully at a company’s balance sheet, and its sources and use of funds through clinical trials, to ascertain how well the company can survive. We also look for positive catalysts, and how near and likely they might be. And if management is composed of scientists—so often this is the case and scientists are usually such poor managers—we want to know if they understand the more general management issues involved in taking a product to the market, or generating a monetizing event?

In some markets you must weight your portfolio toward mature life sciences discovery companies, versus less well-known incubator companies that could possibly generate greater wealth. Incubator companies are the most risky because their intellectual property (IP) is not yet as well developed. But such companies often do pay off in great wealth creation.

TLSR: A penny-stock story will most certainly require some dilution. Is that just the price of doing business?

MB: Not necessarily. For example, good general management may be able to take advantage of a market and/or a world-class discovery to effectively dilute, rather than by using the stock market. Too many management teams use the penny market—they could utilize callable convertible preferred securities, which would limit dilution or at least place it under the company’s control.

I have written extensively on the strategic use of dilution by management, and the way investors must anticipate dilution, hedging against value destruction from percent (control) dilution. Such dilution tactics, judiciously used, often result in value accretion. Neuralstem is a good example. We hope that Senesco Technologies Inc.’s (SNTI:OTCQB) massive shareholder dilution will result in the same level of value creation. Senesco, a company developing a cancer-fighting platform, has been trading several million shares each day recently, anticipating the vote on the 100-to-1 share reversal.

TLSR: Senesco’s SNS01-T is in a phase 1/2 trial, with just 15 people, in multiple myeloma (MM), relapsed MM, refractory MM, mantle cell lymphoma (relapsed) and diffuse large B-cell lymphoma (relapsed). This trial is not a controlled study; it’s a dose and safety trial. What will we know when we get data in January 2014? Could it be any sort of catalyst? Can give me your theory here, as well as a general update?

MB: I have been a faithful shareholder of Senesco for many years. The company’s gene therapy is clearly world-class, but I think Senesco misconnected on monetizing its agricultural opportunities—its technology can bolster the productivity of plants—early on.

However, the trials on multiple myeloma (and the two other blood cancers) have gone quite well, with the exception that it has been difficult to recruit patients. Cohorts 1 and 2 were very low dose, and were really safety trials. To participate, the patients had to have failed two standard therapies, and were considered terminal. This is quite a high hurdle to jump. You have to wonder about the rules the FDA puts in place—high barriers and very costly hurdles.

Currently, the company is enrolling for cohort 3, which will be a 4x increase in dosage. I am hopeful we will see a significant therapeutic effect, as we have seen in animal studies. If this new megadose of the company’s Factor 5A therapy works in the third cohort, as I expect it will, the stock dilution won’t really matter. Enrolling participants is the critical issue. I will be attending the company’s annual meeting in New York City, where I anticipate the trial status will be updated.

TLSR: Are you still in Neuralstem? This company now has a $113M market cap and could actually be owned by some small mutual funds now. Again, its stem cell therapy is in a phase 1 safety study with chronic spinal cord injury. The study has only eight patients. The company’s phase 2 study for amyotrophic lateral sclerosis (ALS; also known as Lou Gehrig’s disease) has enrolled 18 patients. We will get data in April 2014. What do we know now, and what will we know then?

MB: George, we will know a great deal very soon.

Neuralstem now has tenbagger discovery potential. The company is advancing on several stem cell fronts. There seem to be indications of efficacy and safety of the company’s therapies in several applications, including ALS, ischemic and chronic stroke, and possibly major depressive disorder. These quality-of-life markets are huge, multibillion-dollar and global, and Neuralstem has little or no competition in these markets at present. The company has clinical research studies underway in China and Korea, and may move aggressively into Mexico.

Neuralstem has two stem cell therapies, NSI-189 (in a phase 1 trial for major depressive disorder) and NSI 566. It has patented NSI-566 for regenerative treatment of ALS. The original research base has spawned such a powerful array of therapeutic approaches that larger pharmas will certainly begin to take the company seriously once its clinical trials advance further.

My only concern is that Neuralstem should maintain strict focus on one or two of the major targets—ALS, depressive disorders and/or ischemic stroke, perhaps. There are surely more spinoffs in this very rich stem cell pipeline. If management can carry off the huge clinical trial load, then Neuralstem is a much more valuable wealth creator.

The company is clearly a mature discovery investment. We own it. It ranked highly on all 10 factors in our Discovery software. The company is well underway to derisking its stem cell technologies and we would be buyers on any market weakness. Finally, there are lots of catalysts in the near future for Neuralstem investors.

TLSR: Mike, when we last spoke, it was clear you have high regard for OPKO Health Inc. (OPK:NYSE) chairman and CEO Phillip Frost. This company has a new molecule, rolapitant, in a large-scale, international, phase 3 trial for nausea associated with cancer chemotherapy. The acquisition of PROLOR Biotech Inc. will add phase 3 candidates to the pipeline, and the company is preparing to launch the 4Kscore prostate cancer test, which will prevent unnecessary prostate biopsy or confirm the need for it. The company has a net cash position of $181M as of March 31, 2013. I understand that this is a growth story, but when will it become an earnings story? And will that question become a stumbling block for investors?

MB: George, how can I say more? I have great respect for Dr. Frost. Having just gone through a prostate biopsy procedure myself, I believe that he innately understands the needs and economics of the prostate cancer space, and has assembled a powerful pipeline of therapies. The 4Kscore test alone has major discovery potential, as I can personally attest, and is being readied for commercial launch. Monetizing it will take some thinking.

OPKO is well diversified into diagnostics, pharmaceuticals and opportunistic healthcare products, including vitamins and human growth hormone. Perhaps more important is the strong share price action, with shares currently selling at $8.58 and in terrific volume. The shares have almost doubled in the past year. They are up 17% year-to-date. What’s not to like? Earnings are not far in the future, but wealth creation in this story is about monetizing many of these assets as well.

TLSR: Are there any new ideas you want to share?

MB: Yes. I have one name that is classic discovery play— PLC Medical Systems Inc. (PLCSF:OTCQB).

The company’s therapy addresses the aging boomer generation and a problem that current dialysis procedures tend to cause, contrast-induced nephropathy (CIN). Dialysis procedures will explode in the next decade, as the world’s population ages and Type 2 diabetes takes a grim hold on seniors. CIN will explode too, and with it the need for less toxic examination procedures. CIN impairs renal function and is one of the leading causes of renal failure, and 10–20% of dialysis patients are impacted by CIN—a huge proportion.

PLC’s RenalGuard is a therapy that reduces toxicity in the kidney by removing the toxic contrast dyes used in dialysis procedures. It is commercialized in Europe now, and European patients have experienced a 70% lower incidence of CIN problems.

We estimate this market to be worth $500M today, and it is sure to grow. There are more interesting applications here as well. This is one company to keep an eye on.

TLSR: Thanks for your time, Mike.

MB: My pleasure, George.

Michael Berry will be speaking at the upcoming the Mines and Money Australia 2013 convention in Melbourne Australia, as well as at the Australia Biotech Invest 2013 conference.

From 1982–1990, Michael Berry served as a professor of investments at the Colgate Darden Graduate School of Business Administration at the University of Virginia, during which time he published a book, Managing Investments: A Case Approach. He was the Wheat First Professor of Investments at James Madison University. He has managed small- and mid-cap value portfolios for Heartland Advisors and Kemper Scudder. His publication, Morning Notes, analyzes emerging geopolitical, technological and economic trends. He travels the world with his son, Chris, looking for discovery opportunities for his readers.

Want to read more Life Sciences 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 Streetwise Interviews page.

DISCLOSURE:

1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an employee or 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 Streetwise Reports: Neuralstem Inc., OPKO Health Inc. Streetwise Reports does not accept stock in exchange for its services.

3) Michael Berry: I own or my family owns shares of the following companies mentioned in this interview: Senesco Technologies Inc., Neuralstem Inc. 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 Life Sciences 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 Life Sciences 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

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Source: Tom Armistead of The Energy Report (8/22/13)

http://www.theenergyreport.com/pub/na/two-ways-to-capitalize-on-accelerating-lithium-demand-luisa-moreno

The sleekest, most efficient electronic product is nothing without the battery that powers it. Enter lithium, the raw material battery manufacturers depend on. With electric/hybrid vehicle use on the rise and demand for consumer electronics steadily climbing, lithium producers with quality product should have no shortage of potential buyers. In this interview with The Energy Report, Luisa Moreno, mining and metals analyst with Euro Pacific Canada, names her top lithium picks with both the goods and the customers.

The Energy Report: Luisa, tell me: What is exciting about lithium?

Luisa Moreno: Lithium has many unique and important characteristics. It is the least dense solid element and the lightest metal. It forms alloys with some of the highest strength-to-weight ratios. Lithium has the highest specific heat of any solid element, and is used in heat-transfer applications. It has neurological effects in humans, and so is used in pharmaceutical applications, such as mood stabilizers. Lithium chloride and bromide are two of the most hygroscopic, or water-absorbing, known materials and are used in air conditioning, industrial drying systems and dehumidifiers.

In the recent years, lithium has gained increasing attention as it has become an essential component in ultralight electronic devices. It is also increasingly the preferred medium for electric vehicle batteries, and that makes lithium important for the development of a greener, cleaner world.

TER: What are the principal industrial applications of lithium?

LM: The major application traditionally has been in the glass and ceramics industry and is used in the manufacturing of grease lubricants. Lately, we have seen an increased demand for lithium in the battery sector. Batteries, glass and ceramics combined account for more than 55% of the world demand. Lubricants and metallurgical applications are also important and account for about 20% of world demand.

TER: Which applications are growing the fastest?

LM: Battery applications are growing significantly faster. We expect to see that sector increasing about 12.6% per year going forward to 2020. The others will continue growing, but more on pace with the global GDP, closer to 3%.

TER: Does lithium have any competitors in these applications among commodities?

LM: There are substitutes for lithium in most of its applications, but it seems that lithium has been consistently the preferred element material because it likely offers the best performance/cost ratio compared to other materials.

TER: How fast has demand for lithium grown in the last decade?

LM: It has grown 7–8% per year. That has been driven significantly by demand in the battery sector, which is related to the adoption of electric vehicles and smart devices like iPhones, iPads and lighter laptop computers.

TER: What companies in lithium are your favorites, and why?

LM: We’ve been following the progress of Nemaska Lithium Inc. (NMX:TSX.V; NMKEF:OTCQX). We like how the Whabouchi project has progressed. The Whabouchi deposit grades are among the highest in the world. While most lithium junior companies are targeting the lithium carbonate market, Nemaska is focusing on lithium hydroxide, which is a higher value product. It can be sold at a price of more than $8,000 per tonne ($8K/tonne) compared to $6K/tonne for carbonate, depending on grade. And lithium hydroxide is an increasingly interesting lithium compound for batteries because it also offers better performance.

Nemaska has also managed to secure strategic partnerships. One of them is with Sichuan Tianqi Lithium Industries Inc., a subsidiary of Chengdu Tianqi Industry Group Co. In addition, Nemaska has a secure partnership with Phostech Lithium (a subsidiary of Clariant Canada Inc. a member of Clariant AG Group [SWL:CLN]), and is fairly close to production now. It wants to develop a modular plant to start producing lithium hydroxide.

So, to sum it up, we like its high-quality deposit, its unique business plan, its new process targeting a not-so-competitive part of the market and the partnerships that it has been able to secure. We have a Speculative Buy recommendation for the stock and a $0.57 target price.

TER: Nemaska has a 100% offtake with Phostech scheduled for 2014. Will the modular construction enable Nemaska to complete a 500 tonnes-per-annum (500 tpa) plant by then?

LM: Yes, contingent on its ability to finance that first plant. Its target is even higher—20,000 tonnes—so that will be the first modular plant of many other ones to follow. The idea is for Nemaska to work together with Phostech Lithium to tailor the lithium hydroxide product to the specifications of Phostech Lithium and other potential customers.

TER: Nemaska Lithium Inc.’s share price dropped very quickly starting in March 2013. What happened then to cause it to drop?

LM: I’m not completely sure why the stock had such a hit. The market for resources has been very volatile and weak. The company has been trying to raise funds for the first plant and, given the markets, the fundraising period was extended. It is possible the market was nervous about that and there was some pressure on the stock as a result.

TER: Is the Cree Nation committed to Nemaska Lithium Inc.’s business plan to exploit the resources up there?

LM: It seems to me that they are committed to the development of the project. I visited the Nemaska Lithium site, and when we were there we had the privilege to meet the chief of the Cree Nation and some of the other members of the community. They own 2.6% interest in Nemaska Lithium. They showed a lot of interest in the mine’s development and believe it could bolster economic development for the region.

TER: Are there any other companies that interest you?

LM: Yes, we launched coverage of Canada Lithium Corp. (CLQ:TSX; CLQMF:OTCQX). We have a Speculative Buy recommendation and $0.90/share target for the company. We like that name, first of all because it’s one of the most advanced, if not the most advanced lithium project right now. The company has completed most of the construction and is starting to produce on a continuous basis. The target production for this year is roughly 3,000 tonnes. It expects to reach its 20,000-tpa target by next year.

Canada Lithium has secured offtake agreements with two different parties. The company has a business plan to diversify its suite of products. The main product is lithium carbonate but it plans to also produce lithium hydroxide and sodium sulfate products. It got a $6.5-million ($6.5M) grant from Sustainable Development Technology Canada (SDTC) to develop a lithium metal plant, so that’s another project under development. The company is really one of the frontrunners. It’s very well positioned, has offtake agreements and a strong management and technical team.

TER: Canada Lithium Corp.’s mine and plant are only in the startup phase, but you expressed confidence that it will be able to produce other lithium products by 2015 and build a sodium sulfate plant. That’s a pretty full plate. What’s the basis for your confidence?

LM: The company is very much interested in developing these other businesses. We did not include these other products in our model and they’re not part of the target price, either. From my perspective, this is potential blue sky for the company. As I said, the company has a grant of up to $6.5M to develop the plant for the metal, so it already has that funded for development of a pilot plant. And it has done extensive work for the production of lithium hydroxide. It worked with SGS Minerals Services, and concluded it would be economic to develop a facility for lithium hydroxide.

TER: What is the term for Canada Lithium Corp.’s offtake contracts?

LM: The contract with Tewoo Group is a five-year agreement to sell a minimum of 12,000 tonnes of battery-grade lithium carbonate, which accounts for 60% of Canada Lithium’s production target of 20,000 tonnes of lithium carbonate. The agreement has a provision that allows the offtake to increase to 14,000 tonnes, which would account for about 72% of the total target for production. The other contract with Marubeni Corp. (MARUY:OTC; TYO:JP-8002) is a three-year distribution agreement. It will start at a minimum of 2,000 tonnes of lithium carbonate this year, and that could potentially increase to about 5,000 tonnes going forward. These are very nice agreements considering Canada Lithium is not at full production yet.

Canada Lithium was likely able to secure a good share of the supply market as it is planning to sell a carbonate product with higher purity and higher value than products sold from existing South American brine producers. South American “commercial” grade lithium carbonate sold for about $4K/tonne in 2012, and Canada lithium expects to sell its lithium carbonate product for $6K/tonne, 50% higher. North American high-purity lithium producers, including Nemaska, benefit from relatively lower energy and reagent costs.

TER: Do you have any other lithium companies under coverage?

LM: We have featured a number of other names that we are watching very closely. We like Orocobre Ltd.’s (ORL:TSX; ORE:ASX) Salar de Olaroz project in Argentina. According to recent announcements, the company is now lining the evaporation ponds and will start the evaporation process very soon. That process usually takes 18–24 months, so we expect the company to start producing some brine concentrate probably by 2015 or 2016. We also appreciate that the company has a partnership with Toyota Tsusho Corp. (JP-8015:TYO) and seems to be well funded.

Back into the hard rock space, we like the names that have the potential for byproducts. We are watching two companies very closely. One is Critical Elements Corp. (CRE:TSX.V), which has a project in Quebec as well. The company has potential to produce a tantalum byproduct out of its spodumene deposit.

Houston Lake Mining Inc. (HLM:TSX.V) is a smaller but very interesting company in the early stage of development. It has shown very high grades from drill results, with byproducts as well of tantalum, and potentially cesium and rubidium.

We have featured a number of companies at different stages of development and with different types of lithium deposits, including those with lithium clay deposits and jadarite-rich deposits with lithium and boron mineralization. We expect some of these companies to become part of a diversified lithium supply market.

TER: I appreciate your time, Luisa. It’s a very interesting field.

LM: Absolutely.

Luisa Moreno is a mining and metals analyst with Euro Pacific Canada. She covers industry metals with a major focus on electric and energy metal companies. She has been a guest speaker on television and at international conferences. Luisa has published reports on rare earths and other critical metals and has been quoted in newspapers and industry blogs. She holds bachelor’s and master’s degrees in physics engineering from Nova University of Lisbon and a PhD in materials and mechanics from Imperial College London.

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 owns shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Luisa Moreno: I own or my family owns shares of the following companies mentioned in this interview: None. 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

This scalping system uses two types of Bollinger Bands and an Exponential Moving Average. It can be used on any currency pair and the time frame could be set from 1 minute to 15 minutes, but it seems to be working best on the 5 minutes chart.

Bollinger Bands is a technical indicator discovered by John Bollinger., its default settings are a moving average of 20 periods and a standard deviation of 2. This system uses one Bollinger Bands with a moving average of 21 and a standard deviation of 2 and one Bollinger Bands with the same moving average but with a standard deviation of 3.

The idea of the system is to look for the moments when the price touches the upper or the lower layer between the standard deviation of 2 and standard deviation of 3. Using 200 EMA will help the trader follow the important trend. If the price it is above the EMA the trader will look only for long entries. If the price is under the EMA then the trader will look for short positions.

The signal would be a candle which touches (or better closes) inside the layer between the two deviations and the confirmation would be a candle of the opposite color signaling the reversal.

If the conditions are fulfilled a trade should be opened on the opening of the third candle. The Stop Loss should be set under/above the previous two candles, on the low/high (depending if the price is under or above the 200 EMA). The first target can be set at the 21 moving average of the Bollinger Bands and the second target could be set on the upper/lower line of the Bollinger Bands with a standard deviation of 2. Look over the example bellow for better understanding. The same system can be applied also if the price is under the 200 EMA.

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