Precious Metals

Michael Montgomery recently attended the Hard Assets Investment Conference in San Fransisco where he had a chance to listen to Global Resource Investments owner Rick Rule and investment guru James Dines speak about the current gold and uranium markets.

By Michael Montgomery—Exclusive to Gold Investing News

I recently had the pleasure of attending the Hard Assets Investment Conference in San Francisco that took place November 21 and 22. Attended by mining executives, market analysts, and both individual and institutional investors, the overall tone and atmosphere was upbeat following a good year for commodities markets and mining shares. With over 200 companies presenting to an innumerable audience, the exhibition hall was at times standing room only—good news for the many mining companies in attendance.

Two of the keynote speakers that packed the hall were Global Resource Investments owner Rick Rule and investment guru James Dines of The Dines Letter. Both commented on the rebound of uranium as a hot commodity once viewed as an unpopular investment. Investor interest has surged along with growing perception of the resource as an alternative to fossil fuels. Both speakers also saw the strength of gold continuing as governments around the world are using the printing press to churn out paper money in an effort stabilize their economies.

Rick Rule’s presentation, “Contrarian or Victim, The Choice is Yours” focused on the investment strategies of the individual investor. Buying commodities at their peak is all too common. Rick urged listeners to maximize profit potential by searching for commodities that are in their trough, and not to be swept up by popular movements in commodities.

James Dines shared much of the same tone as Rick Rule. He focused mainly on rare earth elements. Concerned with the power held by China over the market, he warned that Chinese interests will try to buy out rare earth mining firms, as they tried with Lynas Corporation (ASX:LYC) in September, 2009. One of the companies in the rare earth sector he recommended was Tasman Minerals (TSXV:TSM), which operates rare earth projects in Sweden and Finland.

He urged listeners to look for investments that are either, “brand new, unknown or hated, and that’s where the money is.”

The self proclaimed “mercenary geologist” Michael Fulp spoke about the growing demand for uranium, as the growth of nuclear power will dramatically increase the need for uranium. For example, the US needs 52 million pounds of uranium, but produces only 4 million pounds. The remaining supply comes from countries that are not necessarily friendly to the US. Uranium projects in more US-friendly regions will become more important going forward.

Of the mining companies profiled many had amazing projects in the works with substantial deposits and potential for great growth. One such company, Erdene Resource Development Corp. (TSX:ERD) was on my radar screen. The company owns various projects worldwide; one in particular, the Zuun Mod molybdenumcopper project in Mongolia has potential.

“Containing 215 million pounds of molybdenum in the Measured and Indicated category, grading 0.054% Mo and a further 208Mlbs in the Inferred category grading 0.051% Mo, making it one of the largest undeveloped molybdenum-copper deposits in the Asia region,” stated a recent press release.

The potential of this deposit lies with its proximity to China, the largest moly consumer in the world due to its robust steel industry. In addition to the demand from the steel industry, there are reports that China may classify molybdenum as a vital national resource. This classification could come with limits on production, and the creation of a stockpile, increasing the overall demand for the material. The Zuun Mod project is set to start production in 2014.

Overall, the increased turnout for the conference as well as the moods of those who attended showed great optimism for the future of metals commodities. There were concerns for the overall strength of the global economy due to many factors including debt problems and controversial economic strategies in western economies, and the impact such issues may have on investment capability; although this environment is helping anti-inflation commodities such as gold and silver.

MARKETS

Markets
TSX19078.64-144.10
TSXV626.34-18.57
DOW31029.31+82.32
S&P 5003818.83-2.72
NASD11177.89-3.65
ASX6700.20-63.40

COMMODITIES

Commodities
Gold1814.84-3.98
Silver20.70-0.05
Copper3.73-0.05
Palladium1970.11+8.11
Platinum914.50-4.50
Oil109.32-0.46
Heating Oil3.89-0.06
Natural Gas6.500.00

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