The BarkerLetter

November 12. 2007

Greetings investors!

I’m making some money on a drilling story, only it’s not mineral based … or is it?

I got into Western Geopower Corp (WGP.TSX-V) last summer when I learned the Vancouver, Canada company had signed a jv with a powerful California power company. The price tripped over $0.42 Cdn per share today, becoming the latest in a series of thermal energy exploration stocks to ‘take a stroll’.

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November 8, 2007

Greetings investors!

 A few days ago I warned investors not to fall for these near-term price targets on gold stocks being set by Canadian financial institutions. I have been consistently burned on these over the past year.

The latest one is a $22 Cdn target set by CIBC on Canadian mid-tier gold producer Kinross Gold Corp (KRC.AMEX). Gee, thanks guys! The stock is now trading down $0.72 on the day,  well below its recent all-time high.

I always see the banks doing this: They wait till the stock is trading at its high, then pick a price target that is just a little higher. The stock then falls back on heavy volume.

Kinross is one of my picks from last winter. It was at $11 then. I liked its large annual unhedged gold production, and believed its earnings would thrive in a climate of high gold prices. That has come to pass. I’m not a buyer at current prices though, no matter what CIBC says.  In fact, I take their endorsement as a sell signal.

I don’t get these stock ratings anyway. CIBC, which is one of Canada’s five chartered banks, had Kinross as a ’sector outperform’, and a target of $20 Cdn per share. Today it revised Kinross down to a ’sector perform’, but raised the price target on the stock by $2.

Even stranger is that Kinross, which is interlisted on the Canadian and US exchanges, trades over US$1 higher on the American Exchange than on Toronto. Shouldn’t it be the other way around, given the currency differential?

Go figure!

The company’s estimated production for this year is 1.6 million ounces gold equivalent.

Be careful out there!

Kb

November 7, 2007

Greetings investors!

Here’s a stock I’ve been following since last winter:  Pediment Exploration Ltd. (PEZ:TSX-V, PEZFF:OTC).

I got involved at about $0.60 Cdn per share (it’s over $3 now), when the company signed a jv with Inmet Mining to explore the copper/gold Caborca project in northcentral Mexico. The companies are now engaged in drill testing the targets there.

The targets within the 14,000-hectare project were located from extensive surveying and sampling last year and this. The company believes the project may host one or more substantial copper-gold porphyry bodies.   Inmet Mining seems to agree.  They’re spending $5,000,000 on exploration over four years to earn a 70% interest.

I rather like this deal because it frees Pediment to continue acquiring properties for its portfolio. Pediment continues to hold a 100% interest in the adjacent Lista Blanca zone which it drilled last year, and announced another acquistion this month.

More recently, PEZ acquired the La Colorada Mine, formerly owned and operated by Eldorado Gold Inc. La Colorada was once the largest gold producer in Mexico’s Sonora State, located 40 kilometers south of the mining capital of Hermosillo.

Pediment remains aggressive and seems to be picking up some speed going forward. It has a market capitalization of approximately $110  million Cdn.

Kb

November 6, 2007

Greetings investors!

I’ve been analysing the daily chart for Canada’s junior venture exchange. 

The last time I checked it looked as if we were headed for higher ground, and perhaps even a retest of the highs of last spring.

So far this fall we’ve got the MACD behaving appropriately, nearing but not piercing the shorter moving average. The Relative Strength Index, or RSI, which is one of my favourite technical indicators, continues to criss-cross the overbought line but with less and less vigour, and now seems to be merely tracking it. This is a largely neutral position. 

Volume is still peaking, and the market is still under accumulation. The MACD forest is flattening out, even as the moving averages rise.

What does all this mean? Merely that we’re in a bullish holding pattern.  I’ve been doing some selling in recent sessions, but I’m holding most of my  portfolio. I think we’ll take a quick dip in the coming weeks and resume the rise to that 3300 level.

Careful out there!

Kb

November 5, 2007

Greetings investors! 

We’re going to see lots of targets being set on gold stocks by financial institutions in the weeks to come.

Investors need to be careful here.

Institutions which have large positions often issue a target on a stock which is just slightly above the market price. But chances are the price will never arrive, or at least not in the short term.

Why? Because the institution itself is practicing a little risk management. In other words, they’re ’shorting’.   The recommendation will bring the retail volume in, they’ll sell, and when the price drops, they’ll short.  They’ll make it coming and going.

I’ve been observing this pattern for at least a year. They all do it …  the big Canadian chartered banks …  everybody.

Not that there’s anything wrong with doing that. It just prudent. Institutions have entire departments which do nothing but map out risk strategies just like it.

Just don’t get sucked in .. don’t let these price targets set by Canadian financial instutitions guide your investment strategies. Buy on fundamentals, buy on weakness. Sell on strength.

Careful out there!

Kb

November 1. 2007

Greetings investors!

Here’s a story that is destined to grow legs: TiRex Resources Ltd. (TXX.TSX-V. Recent trading range: $1.80/$1.90 Cdn). They’re active in an emerging copper/gold district of Eastern Europe, in Albania, located between Greece and Turkey on the Adriatic Sea.

I like this story for a couple of reasons: First, nobody ever heard of Albania. That’s a good thing because juniors with good projects in Canada, Chile, Argentina, Mexico, the U.S., and Russia are all overpriced. Second, Albania appears to be the last market economy ‘domino’ to fall in Eastern Europe. Unlike the ’stan’ countries, the former satellite states of the old Soviet Union - Kazakhstan, Tajikisan, Uzbekistan, Krygystan, etc. - it isn’t overun with multinationals seeking the world’s last available untapped mineral and/or petroleum resources. The world is running out of former Soviet bloc conversions to capitalism. (i.e. ‘bargains’). This is the last one!

TiRex commenced trading on Canada’s venture exchange a couple of weeks ago. In fact I attended their celebratory wine and cheese party that day and I wish I’d bought them. TXX shares listed at a buck and almost doubled very quickly on good sustained daily volume.

What have they got in Albania? That’s the billion dollar question nobody can answer yet. The company has staked over 300 square kilometers of copper/gold/zinc ground, the so-called Mirdita, which is known to host mines and advanced exploration targets developed by the Russians. However, the historical data in not currently available in a form which meets the regulatory standards at Canada’s Toronto Stock Exchange.

For that reason, TiRex plans to immediately twin four of the best previously-drilled holes and announce the NI43-101 compliant results early in the new year.

TiRex became the first Western company to use modern methods on the Mirdita when they conducted aeromag surveys over the property this year. That turned up the first NI43-101 compliant exploration results there to date, including over 100 primary and secondary exploration targets.

Looking good!

Moreover, the property hosts an undetermined amount of zinc, which was deemed a byproduct of the historic workings there and ended up in the tailings.  Of course Zinc is now heavily in demand, and priced accordingly.

My strategy here is merely the usual: Buy the stock now, and take profits on the buying which preceeds the release of the drill results in 2008. That’s a 90-day investment horizon with a potential ROI and the chance to make a lot more if the news is good.

Kb