Predictions for 2008

[designer]

If 2007 was a rocky road, then 2008 will be "off road". I was quite looking forward to November's arrival but have decided that to believe we are "back on track" is to be in denial about the dire position the global economies are facing. I have officially taken my dartboard down and after many stalled rallies decided that the engine may not turn over after all.
I do however believe that gold stocks (producers and promising juniors) will absolutely be the place to be over the next while.
Let's be real "A room full of monkeys are just as accurate as a room full of analysts and tech heads at this point. I am reluctantly nibbling on such companies and am mostly in cash and am about to do something intelligent...((( PAY OUT MY MORTGAGE))).
As usual, Good luck to all!

A Primary Bear Market  (The voice of experience)
article below
http://www.321gold.com/editorials/russell/russell112307.html

[designer]

...As for the Dines ((supervised)) list of investments (the fox guarding the hen house)
...Take out the gold and silver picks and discard the rest...jiggle the handle when you're done!
(I've just received a promotion at the laboratory of the utility muffin Research kitchen where common knowledge is all that is needed in times of crisis....roll up your sleeves and be prepared to make money the old fashioned way)

New Wave of Mortgage Failures Could Create a Nightmare Economic Scenario 

http://biz.yahoo.com/ap/071124/doomsday_scenario.html

[richmanch]

Judging by my portfolio, I have become bearish on the US stock market, but bullish on the uranium market.

I think we will see a run in the overall market in December, but then a somewhat grim 2008, especially the first half. It's not a slam dunk that we are going into recession--I just read an article about how great black friday was. It seems that everyone is predicting that the US consumer is going to fold, but they (we) keep buying.

If the fed keeps lowering rates, and if things are bad, they will, it will bring down the value of the US dollar, perhaps drawing international buyers into the worst housing markets (CA, FL) and lower mortgage rates, making new homes more affordable for everyone. In a bear US market, there will be a lot of money on the sidelines,  looking for a "home". That would effectively bail out some of the sub prime mess that will be lingering for years anyway.
Problem solved. Of course, all of that could take a while to play out.

I am holding tight on my uraniums, and will add on dips (if I have the guts). I think this market will continue to surprise us--and I predict it is going to be a great year for our uranium stocks.

I also think that gold and silver will so well, but hopefully not until I can pad my positions.

Good luck
-*


 

[davidslane]

I keep saying that the US Fed will lower rates on December 11 and no one believes me.


Well, today we saw that rate cut rally.
The Vice Chairman of the US Fed basically said there will be a rate cut in two weeks in a speech today.  Okay, he didn't say it directly, but it was a signal and the market took off.

Now the Fed has to cut (and they will) or else the market will collapse.


So, we have a rate cut in December and probably another at the end of January.


The US markets will rally into at least February.
Uranium stocks will start to recover (actually blast upwards) into early 2008.

We may see a little more weakness in the next week, but I expect we'll see doubles or triples in the next three months on all our mining stocks.  (One can hope.)


Normally, I would say that we'll see a May swoon again, but I think it may come earlier.  All our resource stocks have been following the general market, not seasonality (or else they wouldn't have collapsed in November, usually one of their strongest months of the year).  So, if the US markets trip on an upcoming recession next spring, uranium stocks will follow.


So, I expect a slight repeat of 2007, just shifted a couple of months earlier in 2008.

I expect a strong Jan. - Mar.  I then expect a swoon like last summer to come as early as April.


But I think rate cuts down to as low as 3% in the US by next summer plus the end of the worst of the US housing crunch by next summer will cause the stock market to hit rally mode big time by July into the 2008 US Presidential elections in November 2008.

I also think that the rate cuts will help bury the US dollar which will also help in getting the US markets to rally next summer (at least in US dollar terms, maybe not in euro terms).  This will be great for commodity investments.


So, my investment areas remain the same:
- Gold
- Silver
- Uranium
- Energy
- Infrastruture and Energy Exploration
- Foreign ETFs


And though I think the bullish case for uranium will explode in 2008 (as will it for gold and silver), I still think a spring swoon will put a big dent into all our companies.

So, enjoy the next three or four months and be ready to take cover come March or April for a few months.


That's my prediction!

[Sector_Y]

What kind of triggers do you think will push uranium stocks higher?

[davidslane]

1) A rebound in the US stock market for 3 months
2) Higher spot prices based on utilities buying more again
3) Russia creating havok by talking up cancelling uranium contracts or hoarding uranium
4) More deals where the Chinese (or other countries) buy uranium (like today with Areva)
5) Hedge funds getting back in
6) Talk of the US Fed saving the US economy pushing oil prices higher
7) Austalia loosening mining regulations on uranium now that Rudd is in power


These should last into March before #1, #5 and #6 fail us for a bit.

[richmanch]

consolidation

[Depleted]

So David, do you think this is our Aug16 retest has finally arrived?

[davidslane]

I honestly didn't think we would retest the full lows, may a fibonacci 68% correction so they stocks went down further than expected.


But yes.


I think we could see new highs in a panic buying into February and March.
But, just when we all start thinking we have found the holy grail and that the stocks will keep going up, they will have a 30% to 50% retreat into a June or July low.


At least, just my two cents.

[yellowmoney]

Our fearless leader agrees with you! When are you going to start a newsletter?
Regards,
Yellowmoney

[Depleted]

David, if you ever want to run for president, you will have my vote, but I would have to acquire a green card and immigrate into the U.S. first, mind you. You could write your own newsletter, everyone here knows you are probably the most read person (besides JDH) on this site...keep up the good work

[davidslane]

Being well read or presidential material doesn't make my stock picks right.


Anyone can make predictions.

Not many actually are right and I've been more wrong than right this year.

I just read a lot to get a better read on things.


Heck, I thought November would be great for uranium stocks...

[hermes404@gmail.com]

Nobody knows what the future will bring. That is one of the nice things about life.

Although in the stock market it would highly rewarding if we would know . Making a prediction is easy, but makeing a right prediction is almost imposable.  A lot can and will happen.  What do you think if a nuclear meltdown happens in a reactor. Our precious uranium stock wil skydive for 80% of their value .
Cannacord (the biggest Canadian resource exploration merchant bank) has also made a wish list for 2008:

 Ascendant Copper Corp., Blackstone Ventures Inc., Camplats Resources Corp., Condor Resources Inc., Crosshair Exploration & Mining Corp., Donner Metals Ltd., Exeter Resource Corp., Fortress Minerals Corp., Full Metal Minerals Ltd., GoldQuest Mining Corp., Grayd Resource Corp., International Tower Hill Mines Ltd., Lake Shore Gold Corp., Merrex Gold Inc., Pacific Rim Mining Corp., Panoro Minerals Ltd., Rainy River Resources Ltd., Rochester Resources Ltd., SilverCrest Mines Inc., Tournigan Gold Corp., Xemplar Energy Corp.

I got positions in Rainy River, Xemplar  and Crosshair. I lost this year quite a chunk of money in natural gas and oil plays (eternal enegery, Petro hunter and Bayou Bend). I'm still down big time this year. Going to liquidate 50% of my stocks in February so I can buy furniture for my new apartment. But I hear a lot of people talking about this so called really,  that the more I read about it the less I believe in it (contrarian).

[davidslane]

Trying to make short term market predictions is a fools errand --- so call me a fool.
 
 
I don't like the way the overall markets have acted during the Santa Claus rally week that just concluded on 12/31, and as we have seen in 2007, the markets trump uranium seasonality --- so if we think the overall markets may go down, we may want to step aside from our resource stock briefly --- or hold off buying for a few days.


I think we will see weakness in the overall markets for a couple of weeks into the start of January.


There's a tug-of-war going on now between when the market players will realize that the US economy is soft and when the market players will realize that the Fed will have to cut rates.


A soft US economy without lower Fed rates means a lower stock market (the first 2 to 3 weeks of January).  A soft US economy with lower Fed rates means a big stock market rally (the later half of January into mid/late March).


I think we will have a huge (I mean really, really, really, really huge) commodity rally and gold rally starting really soon.  And I think the next 1 to 2 weeks will give us one last time to buy in before the jets take off.

But although the trip will be straight up, it may only last 2 to 3 months and then come down hard and fast.  So take profits often and be ready to reallocate and diversify come mid March!


I believe by spring, the soft US economy (and on coming recession will stop the Fed induced stock market rally, at least for a few months).


The best we can hope for is that the overall markets rally during the usual strong seasonality period for commodity stocks (gold and uranium).  Meaning, the overall market won't trump commodity seasonality until at least April, giving our stocks a chance to really run for 3 months.  And then hopefully, the overall markets will swoon just when our resource stocks would have swooned anyways in May and June.


By summer, the US Fed cuts and extra money printing will kick in helping our resources stocks ride back up into the fall in an inflation induced commodities rally.




What about the January 2 seasonal rally?
 
 
I still expect a big market rally to start the day on Wednesday, January 2 as new 401(k) and pension money, etc hits the market.

But I'd be worried with the minutes from the last US Fed meeting coming out at 2:00pm EST on Wednesday, Jan. 2.
 
 
I think the markets will be looking for a reason to sell off into that morning Jan. 2 rally (and then sell off big) and I think the overall markets correct in the afternoon after the US Fed minutes come out.  Investors will worry that another rate cut won't come due to inflation (a view which should change over the first two weeks of January). I also think this will cause a short term dollar spike which takes down gold/silver for a few days giving one last great buying opportunity.

 
This means, if you want to sell any short term uranium or gold positions on Wednesday, Jan. 2, I would do so by around 1:00pm or 1:30pm EST.
 
 
I also think the first two weeks of January will be weak until the markets start realizing that the Fed will cut rates to stop a recession.
 
 
So, if you want to do anymore buying (especially in gold or uranium ---- or energy), you should have the chance to do so at the end of this first trading week of January (or possibly into the following week too at better pricing than we're seeing right now).


One last note: Xmas retail sales numbers will hit this week along with the US December job numbers on Friday morning, pre-market.  If both are very weak, then market participants may start pricing in the potential for more rate cuts as early as Jan. 4, and start the winter rally right then on Friday, Jan. 4.  So the window to buy back into commodities (gold, uranium) may be small (meaning the day of Thursday, Jan 3 only).  But I think you'll have a week or two to stalk for the best prices --- but buying some on Jan. 3 (esepcially if you take some money off the table by mid-day Jan 2, might be worth it).
 
 
 
That's my fool's prediction.
 
 

 
Lastly, click this link to look at the price of gold since 2001 (it's actually the major gold stocks HUI index).

http://finance.yahoo.com/charts#chart6:symbol=^hui;range=20001016,20071228;indicator=ema(50,200,13)+volumema;charttype=candlestick;crosshair=on;logscale=on;source=undefined


(For this example, it is better to look at a chart of the price of gold --- but I couldn't find one so I had to use the major gold stocks instead)
 
 
The point is, gold has been doing this thing where it has a huge rally for 6 months and then consolidates sideways for 18 months. It has repeated this process about 3 times since 2001.
 
Following this pattern, gold has about 2 to 3 months left in this latest 6 month rally period.

And if it rallies at the same percentages as in the past, we should see gold at $1,000 by late February or late March, including a huge (I mean super huge) run in our gold stocks into March.
 
 
If history repeats, enjoy the ride and be ready to lock in gold stock gains (and commodity gains) by March and then hide away until August.
 
 
D

[sunseeker]

David,
A very good post.
Sums up my feelings to a tee. I hope things run pretty much to that script. I have been building my portfolio up in anticipation of such a scenario. So I hope you’re right.

Is time to get worried if we are both in agreement? (Ha Ha)

Wishing you a very happy, and prosperous New Year.