The Cold Hard Truth

Anyone who is looking for 10, 20, even 30 per cent gains will stick with the big boys. But we are all attracted to the juniors because of their ability to show us serious multiples. You can bet that we will be looking for these plays throughout the summer.

We’re heading into the doldrums. Volume in the markets is extremely light and the world is taking an early vacation. Next week, we’re heading into double holidays, with both the 4th of July and Canada Day*. Luckily for all of us still in the markets, the less people are watching the economic numbers, the better.

That’s because the numbers still aren’t good. Despite record-low mortgage rates, home sales in the US are once again hitting rock bottom and Canadian home sales are showing strong signs of fatigue.

We think the Canadian housing market is on its way to a 5-10% drop over the next year, and further downward thereafter. For all of those who believe there’s no bubble in the Canadian housing market, think again. Just because a bubble isn’t big, doesn’t mean it doesn’t exist.

The hard truth is, all of the positive data we have been seeing are no match for the underlying tones of a sombre economic recovery. And even when things begin to truly turn around, out will come inflation to rear its ugly head.

The market is no longer an entity of reason. In fact, even if the numbers continue to slump, we may still see green arrows. We may even see a slightly bullish market after this summer – especially for the Canadians.

According to a recent Reuters poll amongst 25 analysts and fund managers, Canada’s main stock index will likely tick higher throughout the second half of the year and climb even further into the middle of 2011, supported by its heavy resource make-up as the global economy slowly heals. It showed a median forecast of the Toronto Stock Exchange’s S&P/TSX composite index ending the year at 12,250 – it currently sits at 11, 707.

If the resource players continue to climb, it could possibly be the first major trigger for the big funds and institutions to once again participate in the junior markets. This will mean strong gains for anyone who participates now (see The Retail Advantage).

Gold and silver both continue to climb and we still forecast silver to outperform and shoot past $20. As both of these metals move higher and form new record prices, the junior market may finally reap the rewards.

But until all of this becomes reality, juniors will continue to face a tough market amidst a continued credit crunch. Although lenders and financiers are willing to lend to juniors, they will only do it at low valuations.

The Cold Hard Truth

Unless a junior is directly next in line for a takeover, buyout, or getting ready for production, their market will be based on how well they keep current shareholders happy, while attracting new ones.

If a junior does not have a strong IR (investor relations) program, it’s highly unlikely that share prices are going anywhere. That’s why there are so many juniors out there with unfair valuations based on what they have in the ground (see The Retail Advantage.) It’s not fair, but it’s the truth.

When you’ve got a company that’s burning money in this market, you’re basically on the clock. You’ve got to produce.

One of our featured companies is another step closer to achieving this goal. This past week, Minco Silver (TSX: MSV) (OTCPK: MISVF) announced that they were one step closer to possibly becoming one of the largest pure silver plays in China (see news release here.)

If you have been following Minco Silver’s progress since our first report on June 13, 2010 (see Special Report Edition: The Brink of Milestone), you would know that we are currently awaiting the approval of their EIA (Environmental Impact Assessment) permit. The receipt of this permit could lead to Minco Silver becoming one of the strongest silver producers in China.

At that time, Minco Silver was trading at $2.56. Since then, Minco Silver’s share price has performed strongly, closing this past Friday at $3.12 on the anticipation of their EIA permit.

Minco Silver’s Geological Hazard Assessment for their Fuwan project was approved by the Department of Land and Resources of Guangdong Province. The regulatory EIA has been completed and submitted to the Department of Environmental Protection of Guangdong Province.

From there, a technical panel consisting of eight experts appointed by the Department was established. After detailed review and examination of the EIA, the technical panel concluded that the Fuwan Silver Project is environmentally valid, and approved the EIA submission from technical point of view. The Company then received comments on the EIA from the technical panel and has revised the EIA accordingly. The revised EIA has been submitted to the Department for the administrative approval. Thus, the EIA has now been advanced to the final stage.

The Mine Development Plan (“MDP”) has been prepared by NERIN on behalf of the Company and has also been approved by a technical panel of experts appointed by the Ministry of Land and Resources (“MOLAR”) of China. The Plan is currently being registered with MOLAR.

If you have not read the report on Minco Silver, you can find it here: Special Report Edition: The Brink of Milestone

So while the rest of the market goes to sleep during the summer, we’re hoping to see Minco Silver nearing the final stages of approval in developing a mine for one of China’s greatest silver assets.

In last week’s edition (see the Retail Advantage), we talked about why the juniors have underperformed the rest of the commodities sector. That’s why finding good junior stocks in this type of market is difficult. There are a lot of junk stocks out there which makes quality research and due diligence even more valuable.

But there are a lot of quality juniors with some of the world’s best deposits out there. That’s why we should never forget that the juniors are vital constituents of the mining and resource sector. They are the building blocks of the overall resource market.

Anyone who is looking for 10, 20, even 30 per cent gains will stick with the big boys. But we are all attracted to the juniors because of their ability to show us serious multiples. You can bet that we will be looking for these plays throughout the summer.

Remember, summer is a great time to seek out bargains in the market. When the rest of the world is sleeping, being awake will give you a serious advantage.

Until next time*,

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*We’ll be taking a short break next week in celebrating both the 4th of July and Canada Day. As such, Equedia Weekly will not be published next Sunday on July 4th, 2010. We will return to our regular weekly schedule on July 11, 2010. Thank you, have fun, and be safe!

 

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Disclaimer and Disclosure Equedia.com & Equedia Network Corporation bears no liability for losses and/or damages arising from the use of this newsletter or any third party content provided herein. Equedia.com is an online financial newsletter owned by Equedia Network Corporation. We are focused on researching small-cap and large-cap public companies.Our past performance does not guarantee future results. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. This material is not an offer to sell or a solicitation of an offer to buy any securities or commodities.

Equedia.com has been compensated to perform research on specific companies and therefore information should not be construed as unbiased. Each contract varies in duration, services performed and compensation received. Equedia.com is not responsible for any claims made by any of the mentioned companies or third party content providers. You should independently investigate and fully understand all risks before investing. We are not a registered broker-dealer or financial advisor. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report OR ON Equedia.com will be the full responsibility of the person authorizing such transaction.

Please view our privacy policy and disclaimer to view our full disclosure at http://equedia.com/cms.php/terms. Our views and opinions regarding the companies within Equedia.com are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. Equedia.com is paid editorial fees for its writing and the dissemination of material and the companies featured do not have to meet any specific financial criteria. The companies represented by Equedia.com are typically development-stage companies that pose a much higher risk to investors. When investing in speculative stocks of this nature, it is possible to lose your entire investment over time. Statements included in this newsletter may contain forward looking statements, including the Company’s intentions, forecasts, plans or other matters that haven’t yet occurred. Such statements involve a number of risks and uncertainties. Further information on potential factors that may affect, delay or prevent such forward looking statements from coming to fruition can be found in their specific Financial reports. Equedia Network Corporation., owner of Equedia.com has been paid six thousand four hundred and thirty Canadian dollars plus gst/hst per month for 7 months which totals forty five thousand dollars plus gst/hst of advertisement coverage on Minco Silver Corporation. The company (Minco Silver Corporation) has paid for this service. Equedia.com currently owns shares of Minco Silver Corporation and may purchase shares without notice. We intend to sell every share we own for our own profit. We may sell shares in Minco Silver Corporation without notice to our subscribers. Equedia Network Corporation is a distributor (and not a publisher) of content supplied by third parties and Subscribers. Accordingly, Equedia Network Corporation has no more editorial control over such content than does a public library, bookstore, or newsstand. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by third parties, including information providers, Subscribers or any other user of the Equedia Network Corporation Network of Sites, are those of the respective author(s) or distributor(s) and not of Equedia Network Corporation. Neither Equedia Network Corporation nor any third-party provider of information guarantees the accuracy, completeness, or usefulness of any content, nor its merchantability or fitness for any particular purpose.

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