StockBullz.com

A full-page ad for gold coins is often featured in The National Post these days with the headline “GOLD BLASTS PAST $644/oz! BUY NOW - EXPERTS NOW PREDICT $2,000 - $3,000 per oz”.

That is one of the factors I used to make my prediction of a short term correction.

When everybody thinks they know everything that's when the market does the complete opposite of what they expected it to do.

If people are expecting gold to go straight up to $2,000 or more, then it will through them a curve ball and drop faster than they thought possible. All things have a tendency to drop faster than they rose so we keep an eye out for that.  

I bet there are tons of people buying gold right now around the $700's (possibly because of this ad). And I might not be surprised to see them selling at $600 at the bottom of our short term correction.

I don't know what kind of budget these people have but as soon as they stop running this ad because gold has dropped to around $600, then that will be the sign that the market is going to turn around soon.

Looking at the Venture Exchange's chart for the past 6 months, it really has been a good ride.

I hate calling downturns because they are so hard to call but it seems to me like we might have a little one still for a week or two.

Just looking at the commodities themselves, Gold recently hit around $730, Silver over $15, and Copper over $4.

These are massive gains all around and we all know that everything doesn't go straight up. It goes up for a while then retreats a little, only to move past its previous high.

So there could be an ~10% correction in many markets over the coming week or two.

Of course I can't predict the future but that is just what the charts are showing me. They aren't always right but many times they are.

This doesn't mean to liquidate all your positions and hold cash. It simply means to keep your eyes open to new buying opportunities. Always keep in mind (during a bull market) these two phrases:

1. Buy on the Dips

2. Sell into Strength, Buy into Weakness

Warren Buffett used to be the King of Investing. Used to?

Well he hasn't been able to achieve his market beating returns for a while now so that's why I am using that terminology.

Anyways, he has an annual shareholder's meeting that is very popular. It was held over the past weekend. Here are some of his comments:

On the real estate bubble

Buffett: "What we see in our residential brokerage business [HomeServices of America, the nation's second-largest realtor] is a slowdown everyplace, most dramatically in the formerly hottest markets. [Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.] The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We've had a real bubble to some degree. I would be surprised if there aren't some significant downward adjustments, especially in the higher end of the housing market."

I read a great article today on Kitco's commentary section.

It is quite advanced and macro in its views.

However, the author clearly explains his views on the longterm shorting of precious metals by the "big boys" (as I like to call them) while accumulating more and more in physical storage.

The one paragraph that I loved most was one that I think applies most to a trading strategy:

The shorts realize that in any bull market there is bound to be periodic profit-taking. They don’t have to induce one. It will happen on its own accord. It is spontaneous and unpredictable. While it scares the daylight out of the longs; it is picnic for the shorts. It provides a reliable steady income for them, one that the longs sorely miss. Moreover, the shorts tend to sell into strength and buy into weakness. This is their strength. The longs typically buy into strength and sell into weakness. This is their weakness.

From http://www.theprofitprospectletter.blogspot.com


Coastport Capital - CPP-TSXV
Share outstanding: 14,434,750
Fully Diluted: 15,500,000
Last at $1.10

CPP is a gold and base metal exploration company focused on Ecuador. We like the stock right now because it is attracting strong sponsorship from Canaccord & other groups. As all my readers know, people and sponsorship is our most important criteria in selecting new companies.

In November 2005, they acquired the high grade polymetallic La Plata project in Ecuador from Cornerstone (CGP-TSXV). CPP is essentially the finance arm for CGP on these assets. Subsequent to that transaction Coastport solidified its relationship with Cornerstone by optioning their Shyri prospect in southern Ecuador. Also, since then Dave Patterson has become president after Laurie Sadler retired. Dave brings a wealth of resource company management to Coastport and is an important addition.

The Shyri prospect is a large (450 square kilometres) grass-roots prospect that has delivered some very impressive initial exploration results. The location is also significant. The Shyri prospect surrounds IAMgolds' (IMG:T) Quimsacocha property on the three sides and abuts the southern boundary of International Minerals ( IMZ:T) Rio Blanca deposit. Quimsacocha has a reported reserve of 2.8 million ounces of gold and Rio Blanca has a reported reserve of 800,000 ounces of gold and 4 million ounces of silver.

There has been little work done to date on the Shyri prospect area, the southern area has had the most work done with the Guabisay area returning 32 g/t Au over 4.4 metres in trench. Grab samples from narrow veins have returned samples as high as 600 g/t Au. In the central/western part of the prospect an area known as Vetas Grande ( Big Vein) has returned good gold and silver grades in an area 2x3 kilometres with multiple veins exposed on surface with strike lengths in excess of one kilometre.

In the northern area known as Gama-Lama a new discovery in December has outlined an impressive alteration zone of almost 40 square kilometres. Initial grab samples returned values as high as 12 g/t Au and 84 g/t Au.

There will be three drill programs this year – April at La Plata, June July at Shryi south and Oct-Nov at Shyri north. Lots of time to develop speculative premium. The current financing at 90 cents (which we’re taking some) is the first retail distribution. While La Plata does have some good drill holes, the Shyri is strictly a drill punt, and we must be wary of expensive drill punts in this very frothy market.

This story first came to us at 55 cents on the recommendation of a geologist I really like. I never jumped in until this finaning was announced at $0.90. The stock has performed well and I believe it is about to hit critical mass as research gets published and the story gets told. This company is attracting top level sponsorship. But caveat emptor, while La Plata does have some good drill holes, the Shyri is strictly a drill punt, and we must be wary of expensive drill punts in this very frothy market.

Remember, do your own due diligence.

Coastport Capital Inc.
3rd Floor, 157 Alexander St.
Vancouver, BC V6A 1B8Phone:
604 684 0561
Fax: 604 602 9311
Toll Free: 800 565 5336
Email:info@coastportcapital.com

Happy Prospecting,
If you wish to be emailed when I make a post, send an email to profitprospector@shaw.ca


Markus Day