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January 28, 2010

Mining Stocks May Be The Place To be

A 10% correction on the DOW 30 would mean 9,652.89

The markets have been quite strong with the DOW 30 reaching a new 52 week high (10,725.43) on 01/19/10, then took an about face and in just 7 trading days (01/28/10) this most popular index fell to a low on the day of 10,055.46, a loss of 669.97 points, or a correction of (- 6.24%), all in just 7 trading days.

The big question now is if this is the start of a much needed correction. If the markets do not fall more than 10% it won't be. A correction is much needed, but a slight one will not take the edge off of cautious investors. We are currently in the beginning of the season when we get to find out how well the final quarter faired. If anything we might expect a fall after we find out how the country finished the year, but not this early.

The recent quick drop started with President Obama messing around with his banker buddies. The right hand says to give them all they want and the other hand says it would like to have a little bit back.

It also had to do with China saying it would move to restrict lending in order to reduce economic risk. The country is trying to prevent speculative bubbles and rapid inflation as its economy continues to grow quickly. A slowdown in growth in China could add to the slowdown in the global economic recovery.

Neither the Obama mess, or China situation, is reason enough by itself to cause a longer correction, but if too many corporations miss estimates by too much, the combination would be enough.

One big problem is the weakness in the dollar. Over time it has caused commodities to reach for the stars, and in the case of gold, it just might make it there. This dollar problem is not going away very soon, if ever. The government is spending money faster than it can make it and the debt is growing at the speed of light.

The next problem we have has to do with the corporate earnings we will be receiving over the next couple of weeks. Most earnings and/or revenues, should be up from last year, since it was the worst of the worst, but just because they are hopefully higher does not mean they will be great. Most are just squeaking by, unless it is a bank or brokerage firm, and, if less than investors had hoped, they will pay the price dearly.

I am having trouble with finding reasons to chase the already moved stocks. If earnings are so so, and Americans keep losing their jobs and homes, why should the markets keep climbing as if every thing is great?

Since the problems are far and wide it means few industries will escape the claws of the bear, except the world of commodities, or better put, mining stocks. At current high prices it has become quite profitable to start digging again, and gold is leading the pack. It makes more sense to own shares in the mining company, than to own the actual metal at today's high prices.

Now we have another problem. Most mining stocks have climbed "through the roof" and we have to question if it will be a good move to jump in at these high levels. Since we want to go after the bigger profits, we might have to look to the start up mining stocks that have not yet taken off.

A small mining stock with strong management and experience might be the way to the big profits. I like the industry and owning some shares in a big mining company might be a great long term move, but it would also be a good idea to pick up some shares in a newer mining company that is trading at lower prices.

It truly may be the one area that can hold its own in a world filled with problems. The markets will correct and it should not be too far from now. I am looking for a bigger sell off late this first quarter and it would be a good thing. The higher the markets climb, without a decent pullback, the harder the fall when it happens.

Find a few mining companies and move some of the profits out of other holdings and into your choices in mining stocks.

What ever the choices we need to be extra cautious until the markets correct. Investors are setting on the edge of the fence waiting for any negative news to make them jump off.

Buy
- VALUE - PRODUCT - OPPORTUNITY!

Mineral Hill Industries Ltd. (MHI.V) (Canadian) (52 week range 0.03 - 0.20 (Pink Sheets MHIFF), now at $0.06. Mineral Hill Industries is our newest addition to the Stocks in the Spotlight. We are excited about a growing young company in the lithium mining business.

PRESS RELEASE

Mineral Hill Industries Ltd. - Non-Brokered Private PlacementCNW Group
(Fri, Jan 22)

VANCOUVER, Sept. 23 /CNW/ - Mineral Hill Industries Ltd. (TSXV: MHI) (FSE: N8Z) (the "Company" or "Mineral Hill") wishes to announce it will use its best efforts to sell by private placement of up to four million units at $0.05 per unit ("Unit") for total proceeds of up to $200,000. Alberta.

The above press release is important because it tells us the company is gearing up for a busy season and will have the money to move into the next phase of operations.

MHI's latest acquisition actually increases Mineral Hill's property holdings in one of the most popular lithium mining areas in Canada, the Val d'Or, Que. I am expecting a strong year for MHI and the time to get into the stock is now.

With the addition of the Chickadee Creek Lithium Brine Property alongside our three properties totaling approximately 2300 hectares of mineral spodumene located in the township of Figuery 32 kilometers northwest of Val-d'Or Quebec, Mineral Hill has a substantial presence in the lithium market.

Also, with the addition of the Chickadee Creek lithium brine property, MHI is now in a positive to work on both types of lithium, "hard rock" and "brine", better positioning itself in this fast growing industry.

Lithium comes from two major sources 1) hard rock mineral deposits and 2) lithium-rich brines (is water saturated or nearly saturated with a salt (usually sodium chloride)). Mineral deposits mainly provide lithium to the ceramics and glass industry in the form of spodumene (a pyroxene mineral consisting of lithium aluminum inosilicate - LiAl(SiO3)2 - and is a source of lithium). while the brines produce mainly lithium carbonate and other lithium compounds. Lithium carbonate (Li2CO3) is produced from spodumene when prices can support the extra processing costs.

MHI is one of my "top" stocks to own for the current market, with the only way to go is up. The industry will remain strong offering many reasons for the stock to climb. The demand for lithium will only grow, and "in-my-opinion" could very well out pace the demand for other minerals.

Click on the following link to read our full recommendation on MHI. Spotlight Stock!

Buy Here!

A "Buy Here, Buy Now" "Spotlight Stock"

Jet Gold Corp. (JAU.V) (Canadian)(Pink Sheets JAUGF) (52 week range 0.06 - 0.16), now at ¢0.06. Jet Gold is an exploration and development company with interest in natural gas, oil & precious metals.

I have liked Jet Gold for quite some time. I believe it has a strong management team and, although the venture into finding coal was a worthy attempt, I am very excited that Jet is returning to gold as it's main thrust moving into this year's mining season.

Jet is becoming more aggressive in the pursuit of it's increasing mining capabilities in the business of finding gold. A good move. Jet also has a history of acquiring percentage interest in gold producing companies and this will always remain as part of Jet's growth plans.

Gold is a "hot commodity" in the markets today. If the dollar remains weaker, as it probably will for awhile, gold should be able to hold recent price levels and even climb more. There is also the strong probability that the higher prices will remain all year, which makes funding and other situations easier to accomplish.

The price of the stock makes investing in Jet Gold a steal. As long as I have followed Jet Gold I have discovered that every time the share price has fallen to current levels it has climbed back quickly. This is possibly due to many loyal shareholders.

I don't see any reason to expect anything different this time around. Another strong point is recent volume has increased, a sign of a possible move higher soon.

Buy here & buy now!

Remember, if in the right stock, at the right price,
the market direction will mean little!

I am J.R. Budke and this is my opinion!

J.R. Budke became a stock broker in 1981, an options principle since 1982 and a branch office manager since 1987. He is currently inactive as a stockbroker as of 12/31/99. J.R. writes the articles and opinions for the Stocks in the Spotlight. The stories and stocks found on this site, or any "Stocks in the Spotlight" written material, are the opinions of J.R. Budke unless other wise stated, and should not be considered as advice. You should not purchase any stocks solely on the opinions found on the "Stocks in the Spotlight's" web site or in any of its written material. You should also be aware that options are not for everybody and carry a high degree of risk.

The "Stocks in the Spotlight" provides information only, this is not meant to be a recommendation to buy or sell the profiled security, nor is this an offer to buy or sell the security. The publishers of "Stocks in the Spotlight" are not investment advisors and are not acting in any way to influence the purchase or sale of the security. Before purchasing or selling any security profiled, it is encouraged and recommended that you consult a stockbroker or other registered financial advisor. The reader must understand that the companies we select may involve a high degree of investment risk. Potential investors must understand that they may lose all or a portion of their investment due to the risk involved.

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