Gold equities and related exchange traded funds listed on the TMX finally came alive on Friday after gold bullion prices rose sharply on news that China’s second quarter GDP recorded a healthy 7.6 per cent annual growth rate. Gold advanced to US$1,587.10 per ounce and briefly broke above its 20 and 50 day moving averages.

Seasonal influences for gold and gold stocks are starting slightly earlier than usual this year as they did last year. Thackray’s 2012 Investor’s Guide notes that the period of seasonal strength for the gold equity sector is from July 27^th to September 25^th. The equity sector trade has been profitable in 17 of the past 25 periods including 11 of the past 14 periods. Average gain per period for the past 25 periods was 7.2 per cent.

On the charts, the S&P/TSX Global Gold Index at 289.06 has a negative, but improving technical profile. The Index bottomed in mid-May at 265.59, rose strongly to 340.71 in early June followed by a recent test of its low. The Index remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are deeply oversold and showing early signs of bottoming. Strength relative to the TSX Composite Index has been positive since mid-May. A move above 340.71 completes a modified reverse head and shoulders pattern. Preferred strategy is to accumulate gold equities and related ETFs at current or lower prices between now and July 27^th for a seasonal trade lasting until the end of September.

Canadian investors can choose between five ETFs when interested in entering the sector. Each ETF has unique characteristics;

The most actively traded gold equity ETF in Canada is iShares on the S&P/TSX Global Gold Index Fund (XGD $18.01) The fund tracks the performance of 59 precious metal stocks that make up the S&P/TSX Global Gold Index. The Index is capitalization- weighted. Largest holding are Barrick Gold, Goldcorp, Newmont Mining, Kinross Gold, Anglogold Ashanti and Agnico Eagle. Management expense ratio is 0.55 percent.

Horizons offers the BetaPro S&P/TSX Global Gold Bull + ETF (HGU $7.08) and the BetaPro S&P Global Gold Bear + ETF (HGD $12.59). Both are leveraged ETFs that track the S&P/TSX Global Gold Index. The Bull ETF is designed to generate twice the daily upside performance of the Index. The Bear ETF is designed to generate twice the daily downside performance of the Index. Management expense ratio is 1.15 percent.

Horizons also offers the AlphaPro Enhanced Income Gold Producers ETF (HEP $5.88). The ETF tracks the performance of a portfolio holding 15 equally weighted senior global gold and silver producers. At or near the money listed call options are written against security positions. Option premiums and dividends earned by the fund are distributed to unit holders on a monthly basis. The strategy is enhanced by high implied volatilities on the call options of senior gold producer stocks. Management Expense Ratio is 0.65 percent.

Bank of Montreal offers the BMO Junior Gold Index ETF (ZJG$13.28). The ETF tracks a diversified portfolio of 35 junior gold stocks that make up the Dow Jones North American Select Junior Gold Index. The Index is capitalization weighted. Largest holdings are Allied Nevada Gold, Coeur D’Alene Mines, Alamos Gold, AuRico Gold and Nova Gold Resources. Management Expense Ratio is 0.55 percent).

Below: The Nine year seasonality chart on the S&P/TSX Global Gold Index

Don Vialoux is the author of free daily reports on equity markets, sectors, commodities and Exchange Traded Funds. He is also a research analyst at Horizons Investment Management, offering research on Horizons Seasonal Rotation ETF (HAC-T). All of the views expressed herein are his personal views although they may be reflected in positions or transactions in the various client portfolios managed by Horizons Investment. Horizons Investment is the investment manager for the Horizons family of ETFs. Daily reports are available at http://www.timingthemarket.ca/ & http://www.equityclock.com/

Jim Rogers says the investing game is simple these days. Rogers said this week, “I do believe I could count on one hand the number of times I’ve been presented with an investment opportunity that guarantees success no matter what direction the economy takes.”  Rogers adds, “If the world economy gets better, I earn my money on commodities. If the global economy gets worse, then they will print more money and I will make money in commodities.”

Although we have featured comments by Rogers many times on the site, Jim Rogers, who ran money with Mr. George Soros way back when, is one of the few investors with an investment record that substantiates his expertise and provides answers supported by both the fundamentals as well as detailed research.

Put simply, according to Jim Rogers, CEO and Chairman of Rogers Holdings, we should invest in commodities.

….read more HERE

The next real gold rush won’t be on a far flung asteroid. It will be under the sea.

In fact, The Wall Street Journal said earlier this month that underwater mining could be a $500 trillion business someday.

That means underwater mining stocks, which are cheap now, could be headed for monster gains.

Scientists now project there are over 10 million tons of gold to be found by sifting through the seas – but don’t go out with your shovel and sifter. Most of the gold is buried under a mile of water.

And that is just the gold.

Underwater mining companies also hope to extract copper, nickel, ore, silver, zinc, and even rare earth metals.

So for those of you who are worried that the earth will run out of these minerals, underwater mining should calm your fears.

“It’s unimaginable to think we’ll need to rely on asteroids from space to supply the Earth with metals,” Scott McLean, chief executive of Ontario-based mining company HTX Minerals Corp., told The Journal. He said the idea is “interesting, it is visionary to think about these things,” but he concludes: “The Earth’s mineral bounty is immense, and it will continue to provide for millennia.”

Underwater Mining: Tapping the Unknown

There is very little that is known about what exactly lies at the bottom of the ocean and how much of it there is. Yet engineers and scientists are coming up with newer ways to find out what is hidden below and how to extract those resources.

Last year scientists from the University of Tokyo discovered an estimated 80 billion to 100 billion metric tons of rare-earth deposits in the Pacific Ocean, or almost a thousand times more than current proven recoverable onshore rare-earth reserves, as estimated by the U.S. Geological Survey.

And the interest in underwater mining is booming on a global scale.

Over the last year, the International Seabed Authority, an independent body set up by the United Nations to control mining in international waters, signed four new contracts with groups interested in exploring the ocean floor, says Adam Cook, an ISA marine biologist.

That is a jump from the eight contracts previously, six of which were signed over 12 years ago, Cook said. The new contracts include agreements with state and private organizations from Japan, Korea, Russia and China.

Previously, underwater mining was too expensive and beyond our technologies to see to fruition. But recent advances in robotics, underwater drilling, computer mapping, and record high commodity prices now make underwater mining an attractive possibility.

And there are some Canadian companies already testing the waters.

The Top Underwater Mining Stocks

Nautilus Minerals Inc. (TSE: NUS): Thought to be the first to mine, Nautilus suffered a setback Friday, June 1 when the company announced that funding issues would delay its scheduled projects. This highlights the fact that the initial costs for underwater mining are still a major risk for investors, especially in the short term.

However, the Toronto-based Nautilus dealt with financing issues after the 2008 crash and this year signed its first customer for high-grade copper and gold that it expects to mine almost a mile below the South Pacific, in several sites off the coast of Papua New Guinea. Nautilus reported that one of its prospective undersea deposits in the Pacific Ocean has the capacity to yield ore with an average 7.5% to 8% of copper, compared with 0.6% at an average onshore mine.

Nautilus stock took a hit following the funding announcement and tumbled more than 60% to $0.94 over the next few days before rallying to its current price of $1.27. This might be the time to buy the dip as it traded above $3.00 just less than a year ago and has an average target price of $3.80.

Diamond Fields International Ltd. (TSE: DFI): Based in Vancouver, British Columbia, Diamond Fields plans to use a ship or platform fitted with an almost mile-long hose to vacuum up fine silt suspended near the bottom of the Red Sea by 2014. The company says the silt contains copper, silver, zinc and trace amounts of gold.

The stock is currently a penny stock trading at $0.06. Yet, it traded at $0.40 not more than a year ago and over $0.75 prior to the recession.

DeepGreen Resources: Also based in Vancouver, DeepGreen announced that Swiss-based Glencore International PLC ( LON: GLEN), a commodities trader, agreed to buy half of the nickel and copper it plans to process from tennis-ball-sized nodules sitting nearly three miles below the water’s surface between Hawaii and Mexico. The nodules contain about 30% manganese, a metal used in the manufacturing of steel, along with cobalt, nickel and copper. DeepGreen hopes to begin production by 2020.

….read more HERE]

I’d love to tell you that all is well in the world. That Europe has solved its sovereign-debt and currency problems. That the U.S. economy is looking better than most believe. And that Asia is about to soar again.

But the fact of the matter is that none of that is true.

Europe’s in deep doo-doo. Spanish and Italian debt yields are soaring again. Moody’s has now downgraded Italy. Finland is threatening to pull out of the euro. The euro is tanking; it’s at a fresh multi-year low and threatening to plunge even more.

Here in the United States, corporate earnings are starting to disappoint. The U.S. budget deficit hit $904 billion in June and is on track to hit $1.17 trillion by the end of the year.

Our national debt is approaching $16 TRILLION, more than $51,000 for every man, woman and child.

Plus, our country is quickly heading toward a fiscal cliff of gigantic proportions ― uncertainty in just about everything, from tax policy … to fiscal policy … to monetary policy and more.

Also thrown into the mix: Underlying tones of class warfare, rising social unrest, stubbornly high unemployment, and more.

In Asia, China’s economy has slowed more than I expected. Though the region can bounce back quite quickly, there’s no doubt the added worries about Asia are also weighing on the global economy.

Bottom line: The short- and intermediate-term fundamental forces driving the markets are looking ugly.

That’s also precisely why the technical picture for most markets is also looking bad.

Consider this chart of gold: Many see some sort of bullish formation forming, all because gold has managed to hold the $1,522 to $1,545 level on at least five occasions.

But anyone who has truly studied the market knows that the more times a market tests a particular level, the greater the odds are that it will eventually break that level and plummet right through.

All my system signals remain bearish gold in the short to intermediate term. Once $1,545 is taken out, look for support levels at $1,495.50 … $1,446.80 … $1,400.80, followed by $1,373.10 and $1,346.80.

ONLY a close above $1,723 in gold would reverse the downtrend. Short of that, I strongly believe gold is headed lower.

Also consider this chart of Silver. Similiar to Gold, Silver has repeatedly tested — and worn down — the support level at the $26 area. The next time through it, and silver should plummet.

Look for support at $23.61 followed by $20.27 and $16.89.

Only a weekly close above $31.49 would reverse silver’s short- to intermediate-term downtrend.

Hard to believe silver could fall to $20 or lower. I know. But that’s what my systems are telling me. And the rout could come soon. So stay alert.

Also consider this chart of crude oil. It’s one of the ugliest charts I’ve seen in a while.

While oil is trying hard to hold the $80 level, it will soon fail to do so. Instead, a shocking decline lies ahead for oil, one that will see it plunge to below $60 a barrel.

Keep your eyes on the $77.33 level. Once that gives way, oil will spin a lot of heads as it tumbles hard. Only a weekly closing above $92.87 would turn the immediate trend around for oil.

As for U.S. stocks, don’t expect much upside there either. While the broader U.S. stock markets are in a new long-term bull market, they remain vulnerable to the downside in the short term.

There’s simply too much global uncertainty right now, and I see the Dow falling to at least 11,500 and possibly 10,500 — before any sustainable rally develops.

My view:

1. Continue to keep most of your liquid funds in cash, ready to be deployed on a moment’s notice, but as safe as can be right now. The best way: A short-term Treasury-only fund in the U.S., or equivalent.
2. Despite gold’s weakness, hold on to all long-term gold holdings. You do not want to let go of those. Long term, gold is heading to well over $5,000 an ounce. Short term, gold is heading lower. Consider inverse gold ETFs, such as the ProShares UltraShort Gold (GLL), to hedge your long-term holdings. 
3. Consider prudent speculative positions to grow your wealth. Like those I have recommended in myReal Wealth Report, which are doing great right now as silver falls, as the euro struggles, and more.

Most of all, don’t let the pundits on Wall Street kid you. The Fed will not prop up the markets for the elections … Europe will not be able to solve its sovereign-debt crisis … corporate earnings have seen their best for the current cycle … and there are more dangers to your wealth right now than there have been in the recent past, since at least 2008.

So stay cautious, but ready to pounce on new opportunities as they unfold.

Best wishes,

Larry

P.S. My Real Wealth Report subscribers have side-stepped the crash in gold and silver mining shares … have hedged up most of their gold holdings from much-higher levels … and they are also enjoying pretty nifty gains in their speculative positions, including inverse ETFs on silver and the euro.

Wouldn’t you like to join them? All you have to do is click here to start your risk-free Real Wealth Report trial today!

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via Bull Market Thinking: For those who don’t know, over the last 25 years Peter is one of a few people in the world to have correctly called major market tops and bottoms—warning investors of the 1987 top, the 2007 top, and the 2009 bottom—within days of their actual nominal peaks and bottoms. During the interview, when asked about the most impactful item in the marketplace for investors to be aware of right now, Peter said, “The onoing crisis in Europe grips the markets on a day to day and almost on an hour to hour basis…there’s still somewhat of an expectation…that there will be a QE3 in earnest…We’re seeing just a dramatic slowdown in all areas of the world now, places like China that was once seemingly insulated from the world slowdown, is no longer the case.”

When asked about his thoughts on the mining share market, Peter said, “The further you go down into the food chain of the resource market, the uglier it’s been…it’s hard to imagine it, because unlike other declines…the metal prices are pretty much where they’ve been on average the last year, the general equity markets have not sold off in a big way—there’s nothing unusual happening in the metals and mining industry…yet as we go down that food chain from major producers to explorers, we see the damage acute.”

In regards to his extensive background and experience in the junior resource market, and whether or not this is just another “typical” down cycle he’s become accustomed too, Peter responded that, “The lack of sleep and the aggravation that has come with the territory, as someone who makes a livelihood in working with the juniors—it’s not fun to almost every day read hate-mail—I like to joke and say that’s from my family, let alone my readers! But the bottom line is…since the venture exchange was created about ten years ago, it’s gone through something like 7 or 8, or 9 boom and bust cycles. One thing that is familiar is when we’re at this bust side of it, we have a feeling or a sense of hopelessness, that’s [it’s]never going to reboundagain, and ‘How are these $.20 cent stocks ever going back to a dollar?’ [type of attitude]. But during the last ones [cycles] it did—[but] it took several years.”

He further added that, “This one is a little bit different, because it really came out of left field. It really wasn’t part of something that we can point to in the past as I noted earlier and said, ‘Ah-ha, now you can see why the market has come off in the way that it did’, and I think the shock of it has left people dazed.”

On the concept of the coming American debt crisis, and the idea of shorting 10 year US government bonds ahead of rising interest rates, Peter said,“Europe has been a few years ahead of us in the debt crisis. No matter what anybody wants to think, America is no better off from a debt level [perspective], than most of the European countries that are going through the crisis…Once the European position looks like it’s past it’s worse, the focus I believe will come to the United States, and the realization will be, ‘We’re as every bit as bad as Greece, Italy, and the others’,  and then the bond market no matter how slow the economy is, no matter how much the fed is printing, will get hit, and get hit very hard and interest rates will actually rise dramatically—something that people just can’t see happening with such a slow economy.”