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Pescos Talks Stock And Gartman!

FORTUNA SILVER
(V-FVI)
MINERA ANDES
(T-MAI)
It kinds of looks like we’ve been in the gold market does-
n’t it folks? But as we’ve pointed out, there is still a huge
number of gold stocks out there with too many shares out-
standing with very little leverage left, so there is a long list
of those that haven’t moved. Frankly, there is a long list of
those that don’t have projects worth moving anyway, this is
typical of most times.
With gold hitting $1200, even some of those with way too
many shares out like Barrick Gold and Kinross have been
moving of late, but it is time to go visit two of the better gold
stock pickers out there with our favourite question: “If you
could only buy one gold stock today, what would it be?”
We have to start with Nicholas Campbell because at least
at the moment, he is the glowing star in the stable of ana-
lysts with Canaccord Financial. Campbell has come up with
some absolutely enormous wins such as Ventana Gold
(VEN), Colossus Minerals (CSI) and a couple of others.
While the gold stock index is up some of his picks have
been doubles, triples and better.
But it is always the old question...what have you done for
us lately? And more importantly, what are you going to do
for us next?
So while he is on a tour talking about some of his favour-
ite stories to institutions, when we caught up with him and
that question he comes up with a new name as frankly,
Keegan has had a huge run (although he expects it to go a
lot higher) and Ventana, of the stories of the day has met a
temporary bit of a road block. So for today, he comes up
with Fortuna Silver Mines. Unlike some of his other gold
picks which hope to be producers down the road and in
some cases way down the road, Fortuna Silver is actually a
silver producer and it holds interest in the Caylloma silver-
lead-zinc mine in Peru and the San Jose silver-gold project
in Mexico.
For their San Jose project Campbell suggests, “silver
production of 1.7 million ounces of silver in 2010, growing
to 5.5 million ounces of silver-equivalent by 2012.”
He points to organic growth profile, a solid balance sheet
and consistent cash flows and attractive valuations. Nicho-
las just started coverage of this story and gives it a $4.75
target. We hope it performs as well as some of his previous
picks.
Meanwhile, Wendell Zerb is in charge of putting out an
awful lot of the research Canaccord does, particularly the
“Junior Mining Weekly” which entails an awful lot of re-
search, so between putting out that publication, continuing
his own research plus with an eye on the markets, Zerb is
one busy guy.

HORIZONS ALPHAPRO FUND (T-HAG)
$9.16 +0.06
COXE COMMODITY STRATEGY (T-COX.UN) $8.06 +0.18
It’s not nice to say tough things about other commenta-
tors because let’s say if you are an analyst or writer look-
ing at a story that does deserve negative comments, if you
actually use them, you can be assured that source will
probably never talk to you again.
You write something negative about a company Presi-
dent or the guy running the financing and I suspect that
phone won’t be answered again by him, will it?
So it’s a tough role to play asking those hard ques-
tions. Or even more importantly, writing a negative arti-
cle...but hat’s off to Fabrice Taylor on his Monday article
for the Globe and Mail when he writes about the Gartman
Fund in an article headed, “Gartman fund needs less talk,
more action.”
You have probably seen Mr. Gartman making commen-
tary on BNN or several other news networks and it is
amazing to see the information and commentary that he
puts out on a daily basis—almost five pages of it every
day! Up until now though, it has been hard to know
whether he ever made any money for his subscribers or
not. Always interesting, but one wondered about that.
What Taylor did was look at the Gartman Fund and find
out by one quick look at the chart to the left that there has
been a lot of talk and no money made.
In the interesting article, Taylor writes, “Vox rarely de-
clares a bubble, but we make an exception today: The
bubble is in Dennis Gartman. When you start calling War-
ren Buffett an "idiot" while you lose money for your own
investors, you're way too big for your britches. Mr. Gart-
man is, of course, author of the eponymous newsletter on
all things investable. “What's troubling about Mr. Gart-
man as a money manager is that while he gives good
quotes and speaks with conviction, he doesn't invest with
quite the same resolve.” The author is very opinionated
and speaks with great conviction, which is a rare and at-
tractive quality. Most money managers are guarded, cir-
cumspect bores on the record. Mr. Gartman is fun to read
and listen to. That's probably why he gets so much media
attention and, in turn, is able to raise money.”
Taylor continues, “Whether you're just vaguely ac-
quainted with his work or an avid reader, you must have
asked yourself at one point if Mr. Gartman actually makes
any money for himself or for his readers by trading.

Until recently, there's never been a reliable way to gauge. Now there is, and it's not particularly impressive.”
Gartman’s fund the Horizons AlphaPro Gartman ETF is down at a time that the markets in general are up almost 30%
or better.
So much for the way Gartman does this buy this and hedge short against it idea which seems to make brokers money,
but maybe not their clients.
Meanwhile, there is another fund out there that also has a very high profile commentator behind it and that’s Don
Coxe’s Commodity Fund. It shows that it is also way, way down from where it was at its inception, although lately it has
been doing like almost everything else, somewhat better.

Gold stocks support TSX, energy a drag, oil levels surge; N.Y lower on jobs data

Gold stocks support TSX, energy a drag, oil levels surge; N.Y lower on jobs data
14:39 December 2, 2009, EDT.
(Canadian Press)


TORONTO - Technology and gold stocks helped keep the Toronto stock market on positive ground at mid-afternoon Wednesday amid disappointments surrounding jobs data and a slow start to the U.S. holiday shopping season.

The S&P/TSX composite index was up 44.5 points to 11,751.8 on top of Tuesday's 260-point surge which sent the market to its highest close this year.

The Canadian dollar was off 0.18 of a cent at 95.36 cents US.

Energy stocks were the major weight after data showed that U.S. crude stockpiles rose 2.1 million barrels last week, against a decline of 1.3 million barrels that had been forecast.

The energy sector was down almost one per cent and the January crude contract fell $1.67 to US$76.70 a barrel. EnCana Corp. (TSX:ECA) fell 1.36$ to $56.27.

The gold sector was the leading advancer, up 2.3 per cent. Bullion moved further into record territory partly because of inflation fears but "I think the whole gold thing really is in large measure totally related to the U.S. dollar," said Fred Ketchen, manager of equity trading at Scotia Capital.

The December contract on the Nymex gained $12.90 to US$1,212 an ounce. Barrick Gold Corp. (TSX:ABX) climbed $1.83 to $50.03 and Goldcorp Inc. (TSX:G) advanced $1.41 to $48.31.

Investors also took in dull news from the employment and retail fronts.

Ahead of Friday's release of November jobless figures, the U.S. ADP National Employment Report said that 169,000 private sector jobs were lost in November. While showing another month of declining job losses, investors had been looking for a drop of 148,000.

"It all falls apart if you don't get jobs to come around," said Bill Stone, chief investment strategist at PNC Wealth Management in New York.

The ADP jobs report is often used as a gauge for Friday's monthly unemployment report from the U.S. Labour Department. Economists estimate that Friday's government non-farm payrolls report will show that 114,000 jobs were lost in the U.S. during November.

Meanwhile, new U.S. holiday shopping figures offered more evidence that confirms a modest start to the holiday shopping season. ShopperTrak says retail sales for the three-day holiday weekend rose 1.6 per cent. At the same time, customer traffic slipped 1.1 per cent compared with last year.

Elsewhere on the TSX, the December copper contract was ahead two cents at US$3.23 a pound after jumping 10 cents in the past two days and the base metals sector rose 0.66 per cent. Teck Resources (TSX:TCK.B) was ahead 86 cents to $37.87 while Equinox Minerals (TSX:EQN) gained 19 cents to $4.39.

The tech sector rose almost one per cent as Research In Motion Ltd. (TSX:RIM) climbed 86 cents to $63.47.

Financials were down slightly a day before earnings from National Bank (TSX:NA), TD Bank (TSX:TD), CIBC (TSX:CM). Royal Bank (TSX:RY) issues earnings on Friday and Scotiabank (TSX:BNS) next week.

It's expected that the markets will be generally pleased with results after Bank of Montreal (TSX:BMO) delivered a solid report last week that beat expectations and featured lower loan-loss provisions.

"BMO set a good tone because it was stronger, considerably stronger I think than what most analysts were forecasting," added Ketchen.

"We have dealt with the risk in the industry pretty well."

The TSX Venture Exchange moved 9.19 points ahead to 1,459.68.

New York markets turned mainly lower with the Dow Jones industrial average down 24.7 points to 10,446.9.

The Nasdaq composite index moved 8.1 points higher to 2,183.91 and the S&P 500 was off 0.6 of a point to 1,108.25.

In corporate news, Agrium Inc. (TSX:AGU) is taking steps to remove directors at CF Industries Holdings' (NYSE:CF) who have been blocking the Canadian fertilizer company's hostile takeover bid for the Illinois-based company. Agrium says it will nominate a slate of directors for election at CF's 2010 annual meeting and has challenged CF's current board to allow shareholders to decide whether they want to accept the takeover offer worth about $4.95 billion. Agrium shares rose $2.35 to $62.05.

Potash Corp. of Saskatchewan Inc. (TSX:POT) will be restarting operations at its Sussex-area mine Sunday following a temporary shutdown, but there is no certainty how long the work will last. Demand for potash is still weak globally and little product has moved out of the province, mine general manager Mark Fracchia said in an interview Tuesday. Potash shares ran ahead $5.34 to $127.

Canadian National Railway Co. (TSX:CNR) is offering to send just the issue of wages and benefits to binding arbitration in an effort to settle a strike by the railway's locomotive engineers. Ottawa has introduced back-to-work legislation to end a second CN strike in as many years. CN shares dipped 81 cents to $55.50.

Enbridge Inc. (TSX:ENB) shares were off 38 cents to $46.14 even as it announced it will increase its quarterly dividend by 15 per cent to 42.5 cents per common share, payable on March 1, 2010. The Calgary-based pipeline operator and natural gas distributor also says its adjusted operating earnings are expected to be 12 per cent higher in 2010 than in 2009.

EAST ASIA MINERALS and BRETT RESOURCES

With so many thousands of gold exploration companies
out there and so many of them with way too many shares
outstanding, it’s hard to stand out in the sector. One key is
coverage by newsletter writers and more importantly, ana-
lysts.
East Asia Minerals for instance had been a big favourite of
the Coffin Brothers and to start with, their pick did quite well.
Lately however, it’s done next to sweet nothing. Despite the
fact they once again, announced more of the same—huge
widths of low grade gold on their Miwah project in Northern
Sumatra, Indonesia.
Now that is changing for East Asia Minerals as Wendell
Zerb of Canaccord starts publishing on the company and
writes, “Miwah represents a high-sulphidation epithermal
gold environment with characteristic vuggy silica alteration
that spans more than 1 km2.” Got that?
Zerb continues, “We believe the Miwah area represents a
large epithermal mineralized system that has potential to
host multi-million ounces of gold. The South Miwah and ad-
ditional feeder structures could expand the scope of miner-
alization to include a higher bonanza-grade compo-
nent.” (Zerb tells us a sweet spot would definitely help the
project economics).
Zerb continues, “The company has initiated a 45-hole
infill program at Miwah with the intention of outlining a NI 43-
101 mineral resource by mid-2010.” Zerb has a target of
$4.00.
Meanwhile, Zerb also initiates coverage on another story
that hasn’t received a lot of attention in the markets...until
lately. Brett Resources was one of the favorites of John Kaiser
and Kaiser, editor of the Kaiser Bottom Fishing Report which
is always interesting reading, had suggested Brett was one
of the stories that he thought down the road could see $5.00
to $10.00. Zerb has a more modest target of $3.25.
Zerb writes, “Brett’s Hammond Reef is being advanced as
a potential large, low-grade open pit gold operation.” (In
northwestern Ontario near Atikokan). “The company re-
cently released a Preliminary Economic Assessment (PEA)
relating to the Hammond Reef project that estimates an af-
ter-tax net present value (NPV) of US$413 million for the
project using a 5% discount rate at a base case of $825 gold
over a 14-year mine life.”
“They suggest in the first six years production averages a
big chunk of 460,000 ounces per year at total cash cost of
$360/ounce…”

STERLING RESOURCES
(V-SLG)
$1.71 +0.02
XCITE ENERGY
(V-XEL)
$1.73 +0.08
Now that oil seems to be in that $70 to $80 range,
one area of the world is probably going to start attract a
lot more attention...the North Sea. This is an area of the
world which involves pretty steep upfront costs for all
those expensive offshore platforms and for all those
expensive British tradesmen.
Once you’ve got production on stream, the British
government has some pretty tasty royalties that are
actually encouraging oil production...unlike Alberta,
where they seem to be encouraging oil and gas compa-
nies to move to BC or Saskatchewan.
Some analysts such as Warren Verbonac of Octagon
Capital suggest a basket of plays in the North Sea such
as Sterling Resources, Xcite Energy, Antrim Energy (AEN)
and Ithaca Energy (IAE), but not everyone has got all
that much money to have a piece of everyone and
heck—there are other areas of the world to explore.
Our preferred way is simply hoping Sterling (the top
pick of Kevin Shaw of Wellington West) and Xcite En-
ergy is the way to go. As we get closer to work actually
starting on the Xcite Energy play in the North Sea, we
expect more analysts to start publishing on it and more
people to discover the play.
On November 27th, Arbuthnot Securities out of Brit-
ain publishes a report on Xcite Energy and frankly folks,
Xcite will be one of the more exciting stories in the next
few months as we have written up that they’ve got an
awful lot of balls in the air as far as financings, when to
get started, joint ventures with service companies, you-
name-it. Management here might actually earn their pay
in a big way (and today, management makes us an even
bigger fan as they set options that are at current
prices...instead of what you usually see in the markets
with directors giving them scads of stock at huge dis-
counts and usually much more than they deserve).
The most intriguing thing about the Arbuthnot report
is they are suggesting this stock will be a three-bagger
if not better.
Analyst Dr. Dougie Youngson writes, “XEL is ex-
tremely undervalued. The company is currently valued
at c.$0.40/bbl, which in our view is derisory. Given the
current oil price of c$80/bbl and XEL’s asset base
status, we would expect the market to value the com-
pany today in the region of $2-3/bbl.”
Youngson continues, “Bentley is one of the largest
undeveloped oil fields in the UKCS. If it can success-
fully covert the resource base into reserves, XEL will
become the third largest (in terms of asset size) inde-
pendent oil company active in the UK North Sea.