Casey's Daily Resource Plus                    July 10, 2009

In Today's Edition:

• "Summer inertia" hits gold - But it won't last too long.
• Dollar falls - Expectations of improved risk appetite to blame.
• Crude oil gains - Jobs report helps its cause?
• Base metals listless -  Market awaits new data from China

To view today's edition, please click here

Post from: Gold News from Gold Editor

Casey’s Daily;But it won’t last too long.

By Jeff Clark, Editor, BIG GOLD

• If inflation returns, or even hyperinflation...
• If the economic crisis persists and gets worse...
• If uncertainty and fear continue, and chaos and rioting begin...
• If stock markets languish or suffer another meltdown...
• If the recovery spending of the world’s governments proves futile...
• If government interference in the economy continues to increase...
• If the value of the U.S. dollar takes a major fall...
• If world recovery from the current recession/depression takes years...
• If you’re still wondering whether you have enough “safe” money...

...would you feel you own enough gold?

If all those things come to pass, I suspect many of us, including myself, would wish we had a few extra gold coins or bars stashed away.

So let’s assume you answered “No” to my question and need to add some ounces to your collection... is now a good time to buy?

The Best Time to Buy Gold?

Before glancing at the chart below, if you had to pick the month with the weakest average gold price, which would you select?

In our current 8-year bull market, June has seen the lowest return for gold. In other words, it’s been, on average, one of the best times to buy.

How does this compare to the bull market of the 1970s?

In the last great bull market, summer also was a good time to buy gold (although April was even better.)

What about gold stocks?

Since 2001, July and October have been the weakest months for gold stocks, as measured by the AMEX Gold Bugs Index, and the best times to buy.

However, keep in mind that these are price tendencies and not certainties. There were Junes when gold was up, and some Julys when gold stocks were up. Meaning, avoid using this chart for trading purposes or in anticipation of an immediate gain. Instead, use it to prepare for possible gold price weakness ahead. And if the weakness shows up, treat it as a buying opportunity and add to your holdings to position yourself for the next leg up in the bull market. Consider that this summer could be the last chance to buy gold for three figures.

Don’t lose sight of where we are at this point in the recession – in an intermission in the bad economic news. When it becomes apparent that the good ole days aren’t coming back, sentiment – and markets – could move rapidly. And gold is one of the best forms of capital that can protect you in a financial Armageddon. That gold was up in 2008 is a reminder of its protective power.

How much gold should you have? Continue to accumulate physical gold until you can honestly say you don’t care how many dollars Ben Bernanke prints.

Having physical gold in your possession is always a good idea in times of economic turmoil – there is no “uncertainty hedge” like it. But to actually make money, you should also look at premium gold stocks. Our current favorite has been so consistently successful that we call it “48 Karat Gold.” Click here to learn more.

Post from: Gold News from Gold Editor

When is the Best Time to Buy Gold?

Dave Forest Explains Why Trillion-Dollar Infusion May Not Produce Inflation-or Drive Gold Up - The Gold Report - (7/7/09) - Where is the aggressive inflation that was supposed to follow the government's tremendous expansion of the money supply? Why hasn't the new money propelled the price of gold higher? Pierce Points author Dave Forest shares his answers, which counter traditional theories, in this exclusive Gold Report interview. He also talks about some of the companies he likes no matter which way the pendulum swings. Juniors with plenty of project options to choose from are among the equities Dave favors. In his view, those with a strategy for discovery and the cash to do it are good protectors of investment that will do well regardless of what happens on Wall Street-in either an inflationary or deflationary environment.

Please click on gold and inflation.

Post from: Gold News from Gold Editor

Dave Forest Explains Why Trillion-Dollar Infusion May Not Produce Inflation-or Drive Gold Up – The Gold Report

CENTRAL BANKS TO ADD TO RESERVES
Choppy times ahead for gold in near term - BMO's Melek

While gold may be vulnerable to a near-term pullback, BMO's Bart Melek believes there are long-term motivations to hold the precious metal.

Author: Dorothy Kosich
Posted:  Wednesday , 24 Jun 2009

RENO, NV -

Choppy times are ahead for gold in the near-term, BMO Capital Markets Global Commodity Strategist Bart Melek warned Tuesday.

Click here to read Choppy Times for Gold

Post from: Gold News from Gold Editor

Dorothy Kosich; Choppy times ahead for gold in near term – BMO’s Melek

David Morgan: We Could See Silver Outperform Gold 2:1 -The Gold Report - (6/23/09) - David Morgan, whose interest in silver dates to the tender age of 11, returns to The Gold Report today to discuss the latest buzz about his favorite subject. One of the world's leading authorities on silver as a commodity, an investment, a safe haven and an increasingly important manufacturing metal, he expects this year's stronger-than-anticipated late spring climb to lose momentum before the end of the month. Longer term, though, the founder of the respected monthly, The Morgan Report, sees silver appreciating at a faster pace than gold. And while he also likes the idea of monetizing silver-rather than gold, because silver is far more liquid-that's one wish he does not expect to see granted.

Click here to see Silver Outperforming Gold

Post from: Gold News from Gold Editor

David Morgan: We Could See Silver Outperform Gold

A glance at 100 or so of the world's most demanded mining stocks, and the more powerful dominating prevailing themes.

Author: Barry Sergeant
Posted:  Tuesday , 09 Jun 2009

JOHANNESBURG  -

Despite the fierce selling down of listed gold stocks since 3 June, when hundreds of gold names traded at multi month highs, this global subsector remains one of the firm favourites among most highly demanded across all mining sectors.

Click to read article on gold stocks.

Related Blogs

• Related Blogs on MineWeb; What a difference a week, or two, makes but gold still a firm favourite

Post from: Gold News from Gold Editor

MineWeb; What a difference a week, or two, makes but gold still a firm favourite

John Kaiser: Knocking on the $1,000 Door
Source: The Gold Report 05/29/2009

http://www.theaureport.com/pub/na/2646

Gold investors know all too well the psychological importance of $1,000 gold. The yellow metal's been hovering frustratingly near that level for weeks after briefly surpassing it in February. According to John Kaiser, editor of the Kaiser Bottom-Fishing Report, "we're getting very close." In this exclusive interview with The Gold Report, John shares his "modest" price forecast of $1,300 - $1,400 within the next six months and presents strategies for gold companies looking to create value.

The Gold Report: John, you have said that you believe gold may go up to $1,300 to $1,400, but probably not higher. Can you give our readers an overview of how you achieved those targets?

John Kaiser: I think we're ready for a real increase in the price of gold, which is why I am looking at more modest targets, such as $1,300 to $1,400, happening fairly quickly, probably bouncing plus or minus $200 or $300, around that level, but it's a real price increase without a corresponding catastrophic collapse in the U.S. dollar or hyperinflation descending upon us.

TGR: What time frame are you looking at?

JK: I think we're getting very close. We're knocking on the door of $1,000, which is a very important psychological level. I would say in the next six months, as people realize that the banking system is still troubled and will be for a long time because an uptrend in real estate prices is not in the cards for a very long time. And, in order to make the banks solvent, the underlying collateral needs to have liquidity and a stable price.

Full Article

Post from: Gold News from Gold Editor

John Kaiser: Knocking on the $1,000 Door

Posted on September 7, 2004

KENNETH J. GERBINO & COMPANY
INVESTMENT MANAGEMENT

9595 Wilshire Boulevard, Suite 303
Beverly Hills, California 90212
Telephone (310) 550-6304 · Fax (310) 550-0814
E-Mail: kjgco@att.net

There are three main aspects to consider when one is investing today.

Let's start with the latest monthly trade deficit of $58 billion, the largest monthly deficit in history, and negative for the dollar. This also means we are now on track to break $600 billion in trade deficits for the year. The dollar cannot stay strong in this environment. Here is exactly how this works. When a $10 million locomotive comes over from Japan, $10 million is sent over to pay for it. The local manufacturer who most likely makes a 5% profit will need 95% of that money to pay all his employees and suppliers. He will need Yen. He will send his $10 million check to his bank and his bank will sell those dollars to someone somewhere in the world who will pay for the dollars with Yen. Notice that the dollars are being sold. This is why trade deficits are bad for the dollar. With $600 billion more goods coming into the U.S. a year than going out, a lot of dollar selling takes place. The U.S. economy is an "importing" economy and excessive imports weaken the dollar. When the dollar goes down gold goes up.

Next, our economy is at the end of a major economic cycle that has been extended by artificially low interest rates made possible by massive amounts of paper money pumped into the economy out of thin air. In the last five years the money supply has increased by 39%. This is excessive and always eventually creates inflation. Gold related investments are an alternative that protects one from currency depreciation.

The next building block to our rationale for where to allocate assets is budget deficits. Just released by the White House is a projected $445 billion budget deficit for 2004. This is on the heels of the $375 billion in red ink from 2003. This means that money will have to come from somewhere to make up for this. Plenty will be just printed to make ends meet. Some will be borrowed from foreigners. We are running such high deficits that it almost demands continued excessive money creation. Other governments are also operating with budget deficits and they are printing money also. All this new money and paper floating around means it is worth less.

Gold will not be weak when printing presses are going so strong.

To sum up on a broad front: The trade deficits are the highest in history, the budget deficit for 2004 will be the highest in history, the recent money supply increases are the highest in history. Total public and private debt levels are also the highest in history and as a per-cent of GDP are much higher than 1929. This alone is why one should own some gold mining stocks and be cautious with other investments.

Interestingly, the stock market actually can benefit from budget deficits for long periods of time, but it always ends. The largest customer to corporate America is Uncle Sam. The more the U.S. government spends the more companies make. Unfortunately, when the market gets overvalued and interest rates get too low (as they are now) from excessive money creation, the artificial boom comes to an end and at best a sideways economy takes place. When interest rates are very low, it is not the time to expect too much from the stock market, as rates are most likely ready to go up which is usually bad for stocks and bonds.

Red Gold

I like owning precious metal mining companies with some base metal exposure especially copper. The commodity boom that has started could last a decade according to some experts. Currently there is a low level of inventory in the big three metal trading centers for copper. The stats in London, New York and Shanghai are the lowest I have ever seen. Warehouse stocks of copper in these trading centers were 795,000 tonnes six months ago. Today they are 225,000 tonnes. China alone consumes 258,000 tonnes per month. With the U.S and European economies stronger than last year, copper demand should continue to be healthy. Even a slow down in China may not curtail this very strong demand for this basic metal.

China ten years ago consumed 3 million barrels of oil per day and 750,000 tonnes of copper per year. Today China consumes 6 million barrels of oil a day and 3.1 million tonnes of copper per year. After my recent trip to Beijing, I am convinced the Chinese are just getting started. Gold consumption in China should also be strong, even with mild economic progress.

We recommend being over weighted in the gold and silver mining sector, where we believe strong value and growth opportunities exist. If gold stays in a $350-$400 range for many years, many mining companies should do well by opening new mines. Developmental mining companies with large, rich and well-defined billion dollar projects offer good potential. This sector is selling at a discount to underlying Adjusted Net Asset Values. Adjusted Net Asset Value is an important mining valuation tool; this is basically a company's balance sheet items added to the future value of the company's expected after tax cash flow. When these values are below historical averages and ranges (like right now), it usually signals excellent value.

Exposure to larger companies is also recommended. Best values look to me like Freeport Copper & Gold (FCX: NYSE) at 6.2x next years expected cash flow and Placer Dome (PDG: NYSE) at 10.8x. If Cortez Hills develops the way some think, then PDG could have some extra zip in its stock price.

Wheaton River (WHT: AMEX) also at 6.2x next year's cash flow looks good. We own all these stocks in our managed accounts.

Latest Gold Supply & Demand stats look good. Jewelry demand alone has outstripped all net mine supply by 150 tonnes, a $1.9 billion shortfall for Q2 2004. One indicator I like to calculate is scrap supply as a per-cent of jewelry demand. If this is trending down then gold should go up. It means a lot less gold is being melted down and sold into the market from bullion jewelry owners. In 2003 this was 37% and in the last quarter it was 27%, a sign that people are keeping more gold under the mattress.

Conclusion

The bottom line is that we are entering a period when almost every economic stat you can review is bullish for gold and commodities. It is for this reason that I believe we could have a substantial bull market in all the metals. The gold and silver mining sector currently presents a strong valuation premise. Trade and budget deficits and excessive money creation will have to continue to bail out the debt ridden U.S. economy. Inflation will return and all the above-mentioned factors will underpin the basic economic rationale to own some gold and the mining shares. These factors will also create a difficult environment for the stock market and long-term bonds. Please visit our website for more articles on gold and the economy.

Ken Gerbino
August 2004

Post from: Gold News from Gold Editor

Why Ken Gerbino is Overweight Gold

Endeavour Mining Capital
(EDV.TSXV) (866-801-0779)
www.endeavourminingcapital.com

When I updated you on Endeavour a couple of months ago, I noted that the company "offered excellent value in the near-term and exceptional growth potential over time." The stock is up 24% since then, but still appears dramatically undervalued.

How undervalued? Consider its latest earnings report, for the quarter ended November 30. The company reported net income of US$26.9 million, or US$1.54 per share (which is approximately C$2.00 per share). Yes, that's for one quarter.

This stunning result compares with a net loss of US$0.26 per share (or approximately C$0.34 per share) for the same quarter in 2002. The latest results reflect total investment income of US$32.5 million for the quarter, with operating expenses of US$5.6 million, leading to an operating margin of 83% during the period. The earnings are comprised of US$5.9 million of realized gains, and unrealized gains of US$26.6 million during the quarter.

Given the success of its investments, and a recent C$25 million equity financing, Endeavour's CEO, Neil Woodyer, notes that the company's investment capital base now stands at US$87.0 million, or approximately C$4.90 per share, "expanding our ability to make additional investments and commitments."

As I've said before, the beauty of Endeavour is that it allows individual investors to stand alongside some of the industry's most accomplished and powerful institutional investors - to "get in the room" where many of today's biggest resource deals are being put together.

The primary roadblock for Endeavour has been the fact that its earnings come primarily from appreciation in its shareholdings, which result from the mergers, acquisitions and early-stage financings it participates in. While this "deal flow" is a business that the company's principals are well versed in, some analysts are hesitant to project current results far into the future.

In short, the market tends to treat each quarter's numbers, as remarkable as they may be, as extraordinary results, insisting that Endeavour prove it can do it again.

The good news: Endeavour has proven it can do it again...and again...and again. In fact, the company's trailing 12-month earnings stand at C$3.81 per share.

With a P/E of 1.12, it may not seem like the market is catching on to Endeavour's potential. But believe me, it is. And, with the deals this powerhouse has in the pipeline right now, your chance to get on board could soon pass by.

Endeavour Mining Capital
Recent Share Price: ...........................................................C$4.40
Stop Loss: ..........................................................................C$3.65
Shares Outstanding: ..................................................23.1 million
Market Cap:........................................................C$101.6 million
Shares Outstanding
Fully Diluted: ............................................................27.7 million
Market Cap
Fully Diluted: .....................................................C$121.9 million

Post from: Gold News from Gold Editor

Lundin says Endeavour will not trade at 1.2X earnings for long