The BarkerLetter

January 18, 2008

Greetings investors.

There’s a wall of worry building south of the 49th parallel.

Nor is it without foundation. There really are tangible signs that the U.S. is running out of fingers to stick into the dyke.  Bush’s tax relief package could be the last pinky left.

Here’s the good news: I think that metals, energy and resource shares can and will weather a bear market in the U.S. due to brisk demand overseas.  In fact, just last week while I was lamenting the lack of rosy 2008 market forecasts by the major mining companies (like we had late in ‘06), I saw a report by Rio Tinto stating that metals demand will keep percolating along right through ‘08.

Credit Suisse quickly jumped on the bandwagon, citing its own numbers to prove the year will end with a severe shortfall of iron ore. (Note:  Have a look at near term iron ore producer Northland Resources trading as NAU.TSX-V).  So that bodes well for steel. 

Though I’m obviously not a doomsdayist, I don’t think we’ll see runaway stock prices for miners this year except - and this point cannot be understated - those that are currently undervalued and have really good projects in their portfolios.

By really good, I mean really high reserves or near reserves and really low projected operating costs!  

That means research is the key word going into ‘08. Be stingier with your investment dollars, more selective, more discerning, more patient, and more willing to do research.  (Subliminal message: continue to read this daily message and subscribe to The BarkerLetter).

In the meantime, hang onto your energy and precious metals shares.

Kb