Is a Year-End Rally Possible?

November 6, 2008


In our last two commentaries we suggested that we'd reach cyclical highs at the end of October and we were right on target. The markets saw the biggest gains exactly during the new moon on Tuesday, October 28. Our stock pick RBY (Rubicon Minerals) advanced from a cyclical low of $0.70 to 1.07, well over 50% in under 2 weeks.

In that time frame, Rubicon Minerals released more promising news:

- On October 21 it reported intercepting high-grade gold at its Red Lake, Ontario mine.

- 10 days later, it reported better news with its deepest gold intercept ever.

We expect the next cyclical high to occur near this month's new moon (Nov. 27).

Over the next week, precious metals and mining stock prices will revisit support levels after having already digested the following positive news:

- Central banks worldwide have lowered interest rates to unseen levels.

- Q3 Results indicate large mining companies Barrick Gold (ABX), Iamgold (IAG), amongst others, are still profitable. -Dubai Gold & Commodity Exchange YTD trading volume is up 40%.

In our last commentary we also called for a fall in the USD Index and it might have finally reversed into a negative trend. If this trend proves itself, then the markets will respond positively. Billionaire investor Warren Buffett, has already begun buying American stocks because "fear is widespread."

By the way, you might recall that in August, Warren Buffett predicted the major market correction. Could he be right this time?