The BarkerLetter

March 27, 2008

Greetings investors!

The U.S. government revealed its gross domestic product figures for the 4th Qtr today … growth was pegged at 0.06 %.

That follows previous rates of 4.9% and 3.8% for the third and second quarters of this year, respectively.  

Plus, we’ve been told that the economic growth going forward will be an identical 0.06% for the next three quarters.

So — where’s this much feared recession? The customary pair of negative growth quarters? Where’s the beef?

Do you suppose all the dire predictions were just a clever ruse by Bear Stearns to get some cheap money, help it close a few difficult positions, handle some excess redemptions? If so, then it worked like a charm! With the Fed’s discount window open to broker dealers, we may see the entire stock market become monetized.  Say, that’s not a bad idea, and I’m sure it would even work for awhile.

Or maybe it’s a cyber recession. I think in America it’s possible to have such a thing, plus the subsequent ‘recovery’ of course, without actually having to endure it in real time. Perhaps we’ll just pole vault directly to the next period of untrammeled growth.

Actually I’m beginning to sense a political motive. I think the Republicans would rather have a recession now, when they can do something about it, than several months down the road when they’re out hustling votes. It’s why they’ve been pushing the economy onto the agenda in recent months.

I suppose it’s possible that the subject of the economy — and the prospect of a recession actually peaking during the upcoming presidential campaign – just hasn’t come up during the conversation in their little smoke-filled backroom. But I kind of doubt it. I think it’s more likely that the subject has come up repeatedly and there has been concensus in favour of conducting a preemptive strike.

Hey, if we don’t have a recession at all then so much the better — they’ll say quick action by the Fed prevented it.

I think there must be some softer, gentler people in the U.S. government these days. After all, they’ve manufactured a way to save the country without creating massive, collateral damage, like the last time.

Careful out there!

Kb

Greetings investors!

I love the financial news networks!

They spent all last week predicting a recession in the U.S., and now they’re predicting its end. In fact some are saying we’ve turned the corner, even though we haven’t even seen any data to suggest a recession has occured in the first place.

Oh, and would somebody please explain this Bear Stearns bailout to me, because I just don’t get it at all!

**

People want to know where metals prices are headed. I don’t know.

Lately we’ve been channelling Britney Spears for investment advice, since she seems to know about as much as anybody else these days. Here’s what she said about minerals: ”….oh … well, like, see, a long, long time ago … like way back when you were probly … oh I don’t know… about 40? Yeah, like waaaaaaaaaaaaaaay back before they even made iPods? In those days copper and zinc and nickel prices went down …ummmmm….at the start of a recession as order books emptied and inventories built up. Then when like that whole recession … thing …. just kinda  reached the max well then prices would rebound as demand picked up…‘

Interesting. So according to Britney the supply and demand cycle for minerals runs well ahead of the economic numbers.

So if we’re in a recession, shouldn’t commodities pricing be heading into the tank? Or rather, shouldn’t they already have done so? Well sure but here’s the thing — there are so many speculators in the works that pricing may no long reflect the relative position of the business cycle.

I think we could conceivably have a ‘manufactured’ recession, predicated solely on the unwinding of a prominent hedge fund or two. That sort of event is like the wheel coming off the cart. It’s impossible to predict which way the cart is going to careen or swerve. Actually at that point, the game plan is just staying out of its way.

But let’s talk about something more jolly –  like where and when the next major gold discovery is going to occur. More about that in subsequent editions.

Careful out there.

Kb

March 17, 2008

Greetings investors.

Call me an old fuddy duddy, but I was taught to wait for two consecutive quarters of negative growth before raising the recession flag, We haven’t even had one.

Nor have unemployment levels come close to the peak reached during the last recession in 2001.

And hey, what’s with the bookies over in Chicago betting the farm on a 1-point interest rate reduction by the Fed?  If money gets too cheap in the U.S. they’ll just end up creating a carry trade like they had over in Japan last year, and I don’t think anybody wants that.

And I don’t get how the Bear Stearns bailout relates to interest rate policy. The bailout was a move by Bear’s cronies on the Board of Governors of the Fed, not the Federal Open Market Committee which determines rates.

Oh, and are the financial markets really collapsing like the media tells us?

I haven’t lost my shirt yet, have you?

While we were all wringing our hands over the terrible misfortunes of Bear Stearns and Lehman Brothers, both companies reported earnings this morning that were above projections.  Lehman reportedly has $34 billion in liquid assets.

I think the FOMC is going to leave a few bullets in the gun. Anyway they already took action over the weekend, which I interpreted as a deliberate move to separate monetary policy from the alleged ‘tumoil’ over in the capital markets.

The smart money is on a 50 basis point cut … if that!

Ya know I think Federal Reserve Chairman Ben Bernanke is  a real nice guy – a bit aggressive, but nice.  Of course a bit of zeal is to be expected. It’s his first year in the job after all.

Anyway, to answer the most pressing question about the stock market I went to my friend Britney. You know, Britney Spears?

She said,”…well, like, I’m not really sure? But I s’pose the stock market kinda goes up and down ya know? Like a yo yo. And, well jeeze, if it goes up it goes down too.  I know ’cause I took an economics class in high school, riiiight? And like … well, ok .. it’s like this. The stock market goes up, right? It goes way, way up. And then people start to get panicky and take profits and it goes waaaaaaaaaaay down. So like if the index goes down by like 10%? That’s called like ….um, wait, I know this …ummm a correction.”

Well whaddya know. Britney, you’re right. The Dow Jones Industrial average is down just over 10% since last year. Then what happens?

“Well then it goes back up — silly!”

Oh. Really? Wow, this new knowledge astounds me. Thanks Britney.

Be careful out there.

Kb

March 4, 2008

Greetings investors.

We got news yesterday from a popular BarkerLetter pick, TiRex Resources Ltd. (TXX.TSX-V), which has an active precious and base metals project in southeastern Europe (Albania to be precise).

I’ve said it before, and I’ll say it again - ‘ … ay caramba!’

The results of the first round of drilling at the Mirdita project are among the best set of polymetallic assays I have ever seen. They intersected one, almost continuous 65 metre (213 ft) mineralized section including:

0.9% Copper,

11.6% Zinc,

1.0% Lead,

141.6 grams per tonne silver

5.5 grams per tonne gold ………………………over 14.1 meters.

and …….

2.3% Copper,

34.8% Zinc,

2.4% Lead,

376.1 grams per tonne Silver,

14.6 grams per tonne Gold ………………………over 3.1 meters.

and ……….

0.8% Copper,

12.5% Zinc,

13.0 g/t Silver

2.2 g/t Gold ………………………………………….over 27.5 meters.

That’s not bad for just one hole!

Of special note is the very high grade mineralization (53.8% Zinc was encountered in one intercept of 0.8m) and significant gold values (such as the 14.6g/t Gold over 3.1 meters). Tirex hasn’t made a determination of true width but quotes an estimation from historic drill data of about 30 meters.

Tirex owns an entire district of projects there, comprising 17 known but only partially drilled deposits on the property. The company believes it has great potential for a zinc-rich deposit which was not mined because of a lack of facilities.

TiRex says the first hole at Koshaj was drilled vertically and was designed to verify the drill data from the 1970’s. Two additional vertical holes are being drilled nearby to verify the previous drill hole locations and the deposit, and report the results to NI43-101 standards.

The company is angle drilling the Mirdita District (the previous holes were vertical) to develop an updated interpretation of the geometry, orientation and potential size of known deposits and exploration targets, including Koshaj.

Tirex is a company purpose-built to explore and develop the large 344 square kilometer Mirdita Property in Albania. The property is readily accessible by paved and gravel roads and is located 70 km north of the capital city of Tirana.

The stock has zoomed from under $2 to pushing $4 per share in the past 30 days. I started following the company back in October at $1 per share. Now I’m developing a missionary type zeal for this project over there on the border with Greece and Turkey. TiRex is one of my prime candidates for a $20 stock, medium term.

Careful out there!

Kb

March 3

Greetings investors!

Last spring we wrote up Aussie zinc producer Zinifex Ltd. , based on the long term pricing fundamentals and the company’s immediate prospects for enhancing its reserves.

We’re advising investors to sell on the heels of a successful takeover offer by rival base metals producer Oxiana Ltd. The company is buying Zinifex at a 14% premium (all stock) to last Friday’s closing price. That’s a better than 30% gain over the past 9 months. 

Buying Zinifex will more than double Oxiana’s sales and give the copper and gold mining company zinc, lead and silver projects in Australia and Canada.

Zinifex has A$2.2 billion of cash to fund new projects and acquisitions.

Oxiana is trading at 19 times estimated earnings, or A$3.93 per share on the Australian Stock Exchange today. Zinifex, which trades at 11 times earnings, rose A$1.15, or 10 percent, to A$12.28 - but still below the A$12.68 Oxiana offer price.

The combined company has A$2.8 billion in revenue and posted net profits of A$918 million in 2007.

Be careful out there.

Kb