Optimism abounds after bond auctions

The chase by Marty Cej:

European stocks are higher, U.S. stock index futures are pointing to early gains and most industrial commodities are advancing after bond auctions in Spain and Italy garnered greater demand than expected and borrowing costs fell. The auctions not only raised billions of much-needed euros but also optimism that demand for European debt may be robust enough to help keep borrowing costs low for the countries that need the help most.

It's important to note, however, that the demand for Italian and Spanish debt is not so much a vote in the countries' plans for fiscal austerity but a no-brainer bet for the euro-zone's banks who can borrow money from the European Central Bank for next to nothing and buy short-term paper that yields almost three times as much. Still, it seems that everyone is getting the money they need, so what's the harm? The ECB and Bank of England left their benchmark interest rates unchanged this morning. The ECB's decision comes after two straight cuts and could help underpin optimism that Europe might be righting the ship.

Market sentiment was also helped by a drop in China's inflation to a 15-month low, raising expectations that monetary authorities will ease policy to spur growth. Risk on, risk off? Today, Mr. Miyagi says, "Risk on."

One commodity that is not benefiting from improving economic data out of the U.S., expectations for lower rates in China and better-than-expected European bond auctions is natural gas. The hard-luck case of the commodity world is down another 2 percent today and sitting at a two-year low. It seems as if any hillbilly out shootin' for some food can bust a hole in the ground with a shotgun blast and find a few billion cubic feet of natural gas. I must also note that it is January 12 and I walked to work in the rain. In Canada. I'm in Canada. Two weeks ago, Vero Energy sold its natural gas assets because the company could no longer bear up under the pressure of tumbling gas prices. Vero got a great price for the assets but that was two weeks ago. How many more small oil and gas companies are in the same boat? What kind of asset sales can we expect to see out of Alberta and Saskatchewan? Who are the potential buyers? Are we poised for a surge of M&A?

Also, let's talk about the drillers. Are they switching from gas to oil? Is the case for exploration companies as strong now as it was a few weeks ago?
Shaw Communications reported fiscal first-quarter earnings that fell short of analysts' average expectations. Paul Bagnell will pick the report apart for the details that matter most to investors.

Chevron warned after the close last night that fourth-quarter earnings will fall "significantly" below the third-quarter's numbers. While operating earnings will be broadly in-line with the preceding quarter, currencies played havoc with the company's bottom line. Chevron said that while it generated a foreign exchange gain of $450 million in the third quarter, it will take a loss in the fourth. The Chevron story sharpens our focus on one of the most important emerging themes this earnings season: the impact of the stronger U.S. dollar on earnings from abroad. We need to do more on this front.

In economics, we're watching retail sales and first time claims for unemployment benefits out of the U.S. and the new housing price index out of Canada.
And we're waiting to hear from Prime Minister Harper who is slated to speak from Halifax in a few moments before jetting off to Vancouver for more of the same. He is taking part in ceremonies related to the massive $33-billion shipbuilding contracts doled out in Nova Scotia and BC.

Gold Getting Ready To Run Again?

Some companies that you should take a closer look at...

Edgewater Explorations (EDW:TSXV)

dgewater Exploration is a Canadian-based mineral exploration and mine development company with gold assets in prolific gold regions Ghana West Africa and La Coruña, Spain.

Together with FeatherStone Capital Advisors, Edgewater successfully secured two mid-stage gold projects from Red Back Mining and Lundin Mining. Red Back Mining, now Kinross Gold Corp. optioned to Edgewater the Enchi Gold Project in West Africa, Ghana, located 70 km southwest of Kinross’ 5 million oz Chirano Gold Mine. The Enchi Gold Project covers a 40 Km strike length of the Bibiani Shear Zone that hosts a number of major gold mines and deposits including the Chirano Gold Mine and the 5 million oz Bibiani gold deposit. Ghana is the second largest gold producer in Africa with 2009 production totalling 2.9 million ozs.

In Addition, the Company owns a 100% interest in the Corcoesto Gold Deposit (”Corecoesto”) in northwest Spain as well as an additional 7 gold and gold-copper projects totalling 50,013 ha in southwest Spain. An updated Technical Report was recently filed for Corcoesto by Alan Noble, P.E. of Ore Reserves Engineering. The Report estimates a Measured and Indicated resource of 5,722,000 tonnes grading 1.74 g/t gold and containting 325,000 ozs of gold (0.65g/t gold cut-off) with Inferred Resources of 20,265,000 grading 1.76 g/t gold containing 1,149,000 ozs of gold. Open in many directions Edgewater believes the under-explored asset has the potential to expand beyond the current Resource Estimate. Edgewater has begun a scoping study on the Corcoesto Gold Project and has a 35,000m diamond drilling program underway in Ghana.

Corvus Gold (KOR:TSX)

Corvus Gold Inc. is engaged in the acquisition and exploration of gold-related mineral properties located in Alaska and Nevada. As a spin off of International Tower Hill Mines, the company currently holds four prospective projects in Alaska and one project in Nevada ranging from early stage to advanced exploration. Three of these projects have current National Instrument 43-101 compliant estimated Indicated and Inferred resources.

Corvus’s mandate is to become a non-operating gold producer with significant carried interest and royalty exposure. To meet this objective, the Company has joint ventures on each of its Alaskan projects and anticipates that these projects will have significant partner funded work taking place in 2011 with the potential for additional partner funded work for 2 – 4 years afterwards. In Nevada , Corvus controls a 100% interest in the North Bullfrog Project which has a number of high priority, bulk tonnage and high-grade vein targets which was explored by a Phase I 17,820-metre drill program completed in June 2011 that resulted in an updated resource report in October 2011. With a current size of 1.6M oz gold indicated and inferred resources, a preliminary economic assessment of the project is currently underway and is expected in Q1 of 2012.

Tasman Metals TSX.V : TSM (TAS:NYSE)

Tasman Metals Ltd (TSX.V : TSM; Frankfurt : T61; NYSE-AMEX: TAS) is a Canadian mineral exploration and development company focused on Strategic Metals in the European region.

Strategic metal demand is increasing, due to their unique properties that make them essential for high technology and environmentally-beneficial applications. Strategic metals include the 15 rare earth elements (“REE”), and also zirconium, yttrium and niobium. Since over 95% of REE supply is currently sourced from China, the EU is actively supporting policy to promote the domestic supply of strategic metals to secure high-tech industry. Wind turbines and hybrid vehicles like the Toyota Prius simply cannot be built without rare earth minerals.

Tasman’s exploration portfolio is uniquely placed, with the capacity to deliver “high-tech” metals from politically stable, mining friendly jurisdictions with developed infrastructure.

Ucore Rare Earths (UCU:TSXV or UURAF:OTC)

Ucore Rare Metals Inc. is a well-funded junior exploration company focused on establishing REE, uranium and other rare metal resources through exploration and property acquisition. With multiple projects across North America, Ucore’s primary focus is the 100% owned Bokan – Dotson ridge REE property in Alaska. The Bokan – Dotson ridge REE project is located 60 km southwest of Ketchikan, Alaska and 140 km northwest of Prince Rupert, British Columbia and has direct ocean access to the western seaboard and the Pacific Rim, a significant advantage in expediting mine production and limiting the capital costs associated with mine construction.Ucore Rare Metals Inc. is a well-funded junior exploration company focused on establishing REE, uranium and other rare metal resources through exploration and property acquisition. With multiple projects across North America, Ucore’s primary focus is the 100% owned Bokan – Dotson ridge REE property in Alaska.

The Bokan – Dotson ridge REE project is located 60 km southwest of Ketchikan, Alaska and 140 km northwest of Prince Rupert, British Columbia and has direct ocean access to the western seaboard and the Pacific Rim, a significant advantage in expediting mine production and limiting the capital costs associated with mine construction.The Bokan properties are located in an area reserved for sustainable resource development with an existing road network providing access to the main target areas. REE mineralization at the Bokan-Dotson ridge project occurs in a well-demarcated vein system related to a Mesozoic Bokan peralkaline granitic complex. However, a number of other occurrences of REE mineralization are also located within, or at the margins of the complex. Viewed in a geological and geophysical context, the Bokan complex is a distinctive circular structure and is highly prospective for rare earths deposits.