Gold, Mining Stocks Confirm Positive Trend Reversal

January 23, 2009

We recently suggested that precious metals and mining stocks prices would climb higher after reaching new lows last week and we were accurate (See January 12, 2009 commentary). Over the past week RBY and gold jumped roughly 33% and 8% respectively.

On Monday,Rubicon Minerals executives released more promising results from its Red Lake, Ontario mining operations. After having intersected several bonanza grade gold zones in 2008, the latest discovery was in a "broad zone" over a "wide vertical range." You'll certainly want to pay close attention to the technical report to be filed on January 23 on www.sedar.com in which all results from its mineral-rich F2 zone will be given.

Today, we witnessed RBY jump over 10% in the early trading hours to a high of $1.27. Meanwhile, gold leapt past the $ 900 mark and set record highs in both euros and pounds. Most importantly, both RBY and gold breached previous resistance levels, sending us clear signals (See chart below). We'd like to reiterate our expectation that a major long-term trend reversal should occur near January 26th. It's rather interesting that Rubicon has chosen to release results on Jan. 23--the last trading day before the 26th. After such time, we expect a much shorter price correction than in our previous cycle.

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