Endeavour Mining Share Discussion Threads

[energyi] 06/1/2005 18:50

CURRENCY EXPOSURE...

01/06/05: C$3.17 C$4.09E -22.5% 200.46, 49.00 Est.... 1.58%
12/31/04: C$3.30 C$4.35E -24.1% 215.33, 49.50 Est.... 1.53%
12/21/04: C$3.30 C$4.37E -24.5% 216.22, 49.50 Est.... 1.53%
11/30/04: C$3.65 C$4.79A -23.8% 236.94, 49.47 Actual. 1.54%
10/29/04: C$3.05 C$4.70A -35.1% 233.60, 49.70 Actual. 1.31%
09/30/04: C$3.00 C$4.75A -36.8% 231.38, 48.71 Actual. 1.30%
08/31/04: C$2.85 C$4.17A -31.7% 207.39, 49.73 Actual. 1.37%
07/30/04: C$2.56 C$4.13A -38.0% 186.31, 45.11 Actual. 1.37%
06/30/04: C$2.59 C$4.40A -41.1% 188.94, 42.94 Actual. 1.37%
05/31/04: C$2.90 C$4.60A -37.0% 199.93, 43.46 Actual. 1.45%
04/30/04: C$3.14 C$4.43A -29.1% 178.78, 40.35 Actual. 1.75%
03/26/04: C$4.00 C$5.05A -20.8% 230.58, 45.66 Actual. 1.74%

HUI is in US$, EDV reports in C$.
The stronger C$ exchange rate, has pulled the Ratio UP,
from 40., to near 50.

I LIKE EDV's CHART, and added yesterday at C$3.07

[energyi] 12/11/2004 16:05

SUBJECT: market call monday night Posted By: shortUSA
Post Time: 11/9/04 01:48

EDV got a nice plug on Market Call ...
...advising investor's to simply buy EDV instead of a basket of juniors. Don't know who the guest was, but he refered to EDV as a closed fund, which reveals a little about how the market views EDV, ie. a mutual fund for junior precious metals. The reaction to the latest earnings has been rather disappointing. EDV continues to trade like a junior explorer despite great earnings and a dividend. For now, I'm content to collect the dividends until the market gets a clue.

2/
Yep, it was Frank Holmes, CEO, Global Investors fund. Also, the smaller version of EDV is AUG. The provide a good commbination of mercantile banking, while reaping the benefits of the PM bull market.

[energyi] 12/11/2004 15:57

NICE POP!
Hit C$3.98 today ... News below has helped

Endeavour Mining Capital announces 2004 year-end results
10/29/04


Earnings of US$14.7 million Return on Equity of 26%

GEORGE TOWN, GRAND CAYMAN, Oct 29, 2004 (Canada NewsWire via COMTEX) --
Endeavour Mining Capital Corp. ("Endeavour" or "Corporation") recorded net income of US$14.7 million or US$0.68 per share (or approximately CDN$0.89 per share) for the year ended August 31, 2004. This compares with net income of US$17.4 million or US$1.12 per share (or approximately CDN$1.55 per share) recorded for the year ended August 31, 2003.

The Corporation's performance during fiscal 2004, building on 2003 and 2002's results, continues to demonstrate our ability to generate strong earnings and growth. During fiscal 2004, total investment income was US$19.1 million which compares to US$22.2 million during fiscal 2003. Despite soft mining equity markets in both the Third and Fourth Quarters of fiscal 2004, our mining merchant banking business plan was highly profitable and generated a return on equity of 26% for the year, which compares to 71% during fiscal 2003. The continued high return on equity performance in 2004 reflects solid performance of our core merchant banking positions and our increased emphasis on originating loans and convertible debentures. Our portfolio allocation to debt-related investments was 14.6% as of August 31, 2004, which compares to 3.6% as of August 31, 2003. The Corporation maintains a flexible investment approach which allows it to prosper in changing market conditions.

As of August 31, 2004, the Corporation's investment capital base was US$73.5 million or US$3.18 per share (or approximately CDN$4.17 per share) which compares to US$41.7 million or US$2.68 per share (or approximately CDN$3.71 per share) as of August 31, 2003. Several of the corporation's relatively new merchant banking investments are showing strong return potential and the Corporation is well positioned to continue achieving strong earnings. As of September 30, 2004, the Corporation's net asset value was US$3.75 per share (or approximately CDN$4.75 per share).

[energyi] 03/11/2004 01:10

Revised - Endeavour Mining Capital - Listing of share purchase warrants
GEORGE TOWN, BC, March 19 /CNW/ - Endeavour Mining Capital Corp.
(the "Corporation") announces that it has obtained the Toronto Stock Exchange
approval for the listing of 3,625,000 share purchase warrants of the
Corporation issued in a private placement which closed on November 10, 2003.
The warrants will commence trading on the Toronto Stock Exchange under the
symbol EDV.WT on Tuesday, March 23, 2004, not Monday, March 22 as stated in a
release earlier today. Each whole warrant entitles the holder, upon exercise,
to purchase one share of the Corporation at an exercise price of CDN$5.50 at
any time prior to 5:00 p.m. (Toronto time) on November 10, 2008.
Endeavour Mining Capital Corp. is a publicly traded mining merchant
banking company. We provide finance to mining companies to fund their project
development, strategic initiatives, and growth and we offer investors a unique
and profitable way to invest in metals and mining operations.
For additional information, please visit our corporate website,
www.endeavourminingcapital.com.

[energyi] 29/9/2004 06:48

moderated? why?

--DATE--: Price- --NAV-- -Disc. -HUI--, Ratio:HUI/NAV EDV/HUI
10/29/04: C$3.05 C$4.77E -36.1% 233.60, 49.00 Est.... 1.31%
09/30/04: C$3.00 C$4.75A -36.8% 231.38, 48.71 Actual. 1.30%
08/31/04: C$2.85 C$4.17A -31.7% 207.39, 49.73 Actual. 1.37%
07/30/04: C$2.56 C$4.13A -38.0% 186.31, 45.11 Actual. 1.37%
06/30/04: C$2.59 C$4.40A -41.1% 188.94, 42.94 Actual. 1.37%
05/31/04: C$2.90 C$4.60A -37.0% 199.93, 43.46 Actual. 1.45%
04/30/04: C$3.14 C$4.43A -29.1% 178.78, 40.35 Actual. 1.75%
03/26/04: C$4.00 C$5.05A -20.8% 230.58, 45.66 Actual. 1.74%

[energyi] 13/8/2004 17:00

motoring today... why?

[energyi] 13/8/2004 08:38

EDV-nav performance has SLIPPED a bit, relative to HUI...

Update:
--DATE--: Price- --NAV-- -Disc. -HUI--, Ratio:HUI/NAV EDV/HUI
08/12/04: C$2.58 C$4.11E -37.2% 185.13, 45.00 Est.... 1.39%
07/30/04: C$2.56 C$4.13A -38.0% 186.31, 45.11 Actual. 1.37%
06/30/04: C$2.59 C$4.40A -41.1% 188.94, 42.94 Actual. 1.37%
05/31/04: C$2.90 C$4.60A -37.0% 199.93, 43.46 Actual. 1.45%
04/30/04: C$3.14 C$4.43A -29.1% 178.78, 40.35 Actual. 1.75%
03/26/04: C$4.00 C$5.05A -20.8% 230.58, 45.66 Actual. 1.74%
11/28/03: C$4.28 C$4.90A -12.7% 248.43, 50.70 Actual. 1.72%
10/11/03: C$3.40 C$3.45F ------ 197.57, Financing:C$25Mn/C$5.5wt08
08/31/03: c$2.67 C$2.68A - 0.4% 193.79, 72.31 NAV, actual
08/31/02: c$2.50 C$2.13A +17.4%

[energyi] 28/7/2004 17:37

WITH THE GOLD CYCLE seeming to turn up here,
I have grabbed some more EDV at C$2.60

[energyi] 20/7/2004 13:37

Endeavour Flow Through (2004) Limited Partnership - News Release


TORONTO, Jul 19, 2004 (Canada NewsWire via COMTEX) --
Endeavour Flow Through (2004) Limited Partnership ("Endeavour FT 2004") reports that it has acquired ownership of 4,100,000 common shares of Dunsmuir Ventures Ltd. (TSX Venture: DVV) (the "Company") at a price of $0.20 per share pursuant to a
private placement. The common shares acquired by Endeavour FT 2004 represent approximately 13.1% of the issued and outstanding common shares of the Company.

The common shares were acquired for investment purposes. Endeavour FT 2004 does not own any other securities of the Company but may in the future acquire or dispose of securities of the Company, through the market or otherwise, as circumstances or market conditions warrant. Endeavour FT 2004 is not acting jointly or in concert with any other person in connection with any of the securities of the Company held by it.

On behalf of ENDEAVOUR FLOW THROUGH (2004) LIMITED PARTNERSHIP

"Gordon Keep"

[energyi] 10/7/2004 06:17

As of May 31, 2004, the net asset value per share was US$3.38 (or approximately CDN$4.60). At the request of investors and as announced on May 14, 2004, the Corporation has commenced providing monthly updates of the net asset value per share on a dedicated page of the Corporation's website - www.endeavourminingcapital.com. These updates are generally available within 7 to 14 days of month-end.

During the third quarter, the Corporation realized gains on investments of US$2.9 million and generated interest, dividend and fee income of US$0.4 million, however, these gains were offset by unrealized losses on investments held of US$10.1 million.

@:

[energyi] 10/7/2004 06:09

Weekly chart, Semi-log scale, High C$4.88, Low C$1.53, Last Trade C$2.56 (June 18 close)
Our initial report on Endeavour was issued May 8, 2004 just as the price of gold re-tested the US$378 "support area". Endeavour had suffered a dramatic falling-over-the-cliff sell-off as many junior-sector resource stocks experienced lower liquidity, sporadic panic selling and apparent capitulation of late-comer investors suffering rapid and severe losses. Endeavour's share price was $2.53 then, and is there again now ($2.56) after having worked its way back to the $3.00 area where significant technical resistance was encountered.

So what are the prospects going forward for the sector, and Endeavour particularly?

Endeavour has an aggressive business strategy which, combined with the nature of the mining equity market, results in short-term earnings volatility. Because of the diversified nature of its portfolio of merchant banking investments, which includes a mix of resource commodities and a combination of debt and equity instruments, it provides a useful proxy for the junior resource market.

Also, it should be noted that Endeavour's investment strategy is focused on high quality assets with strong management teams, and with clear potential for high returns through their structured investments. When Endeavour finances mining companies to fund their project development, strategic initiatives and growth, we can benefit from a management team that has done their homework and structured its investment exposure appropriately. This generally means a compelling and timely entry price (downside protection), and better than average upside potential.

Given we accept the premise that Endeavour offers us the built-in advantages of diversification, cream-of-the-crop selection, sophisticated professional management, exceptional deal-flow and access to global institutional and industry contacts, we really need only concern ourselves with the timeliness of such specific exposure to the resource and precious metals sectors. Likely, it would be hard to match Endeavour's ability to select winners and realize on their potential.

@:

[energyi] 01/6/2004 15:26

W,
Chart and the volume will tell me when to exit.
But I would be aiming to see at least 90% of NAV

[energyi] 01/6/2004 15:26

Axiom Gold... product of IAG & WHT
Merger: 1 WHT share ($3.00)= 0.55 IAG ($5.00 x 0.55= $3.08)
Note: Wheaton shareholders get 68% of combined shares, 74% f.d.

SUMMARIES
Iamgold: MktCap: $812Mn : 145Mn shs x $5.60
- Sadiola Gold Mine, Mali (38-40% Indirect interest)
- Tarkwa Gold concession, Ghana (18.9% interest)
- Damang Gold concession, Ghana (18.9%)
- Diavik diamond property (1% royalty)
- Williams Mine, Ontario Can. (0.72% Net Smelter royalty)
- Various exploration properties (W.Africa, So.Am, Can.)

Wheaton: MktCap: $1,704Mn : 568Mn shs x $3.00
- Alumbrera Gold-Cu Mine, Argentina (37.5% Indirect interest)
- San Dimas, San Martin & Nukay Gold-Ag Mines Mexico (100%)
- Peak Gold Mine, Australia (100%)
- Los Filos Gold project, Mexico (100%)
- Amapari Gold project, Brazil (100%)

New Warrant exercise prices:
2002 warrants, exp.May 30, 2007: C$1.65 becomes C$3.00 (0.55 AX.shs)
Series A wts., exp.May 30,2007: C$1.65 becomes C$3.00 (0.55 AX.shs)
Series B wts., exp.Aug.25,2008: C$3.10 becomes C$5.64 (0.55 AX.shs)
Axiom Gold
Pro-forma-- 12/2003
Revenues... $ 423.3Mn
Net Income. $. 78.6Mn
Basic NI/sh $ 0.17
Diluted.... $ 0.15
B/S
Cash $eqv.. $ 175.6Mn
Net Wk.Cap. $ 221.0Mn
Tot.Assets. $1942.7Mn
LTD........ $ 148.9Mn
Equity..... $1463.7Mn
MktCap.est. $2561.4Mn (145+312mn)x$5.60

(Note: according to the Prospectus,
EDV wil own 2.42mn IAG shares & wts. on 804K shs)

[wobblechops] 19/5/2004 18:31

e, agreed,I was'nt being sarky, honest.

at what price do you plan to exit edv?

Wobble

[energyi] 18/5/2004 21:27

W.,
If loads of people jump in, they may find the price running away.
My own strategy is to buy dips when they occur.

[energyi] 18/5/2004 20:32

This is an illiquid share.
Buy carefully, and do not chase it

[energyi] 18/5/2004 16:16

How many,
no as many as Id like to. Will buy more on dips,
as cash becomes available

[wobblechops] 18/5/2004 16:06

Exceptional Growth, Sector Volatility
Endeavour Mining Capital (EDV-TSX)
Weekly chart, Semi-log scale, High C$4.88, Low C$1.53, Last Trade C$2.53 (May 7 close)

(CHART)

Ø Managed by some of the industry's most powerful & experienced mining professionals

Ø Operates as a highly entrepreneurial merchant banker

Ø Extensive network of contacts and vast industry experience generates prime deal flow

Ø Creates synergistic opportunities by pulling together companies, projects and people

Ø Originates and invests in formative stage deals, prior to retail access/knowledge

Ø Under-estimated by analysts as a mutual fund of small and mid-sized gold companies

Ø Shareholders gain the advantage of investing side-by-side at the ground-floor level

Ø Share price offers excellent near term value and exceptional growth potential over time

Ø Rising resource-price environment offers tremendous bonus upside to shareholders

Ø Technical analysis suggests price becoming oversold, with likely nearby strong support

__________________________________________________________________________________________________

Please see important disclaimers at the end of this report.

Technicals (Also see Technical Analysis in the Supplementary section at the end of this report on some basics of "TA" use).

The weekly chart shown on page one highlights the dramatic falling-over-the-cliff sell-off occurring as the price of gold re-tests the US$378 support area and junior-sector resource stocks get trounced amidst lower liquidity, sporadic panic selling and apparent capitulation by late-comer investors suffering rapid and severe losses.

While never prudent to attempt catching a "falling knife", the backdrop of what we see as a correction within a long term gold "bull market" offers a compelling, timely opportunity to accumulate particularly well-positioned, solid-value deals.

The green On-Balance-Volume (OBV) indicator in the upper chart window supports the fact that there is no "distribution" of any size taking place - only some general low-volume selling. MACD is currently bearish, and has been for the last 11 weeks since it crossed its signal line. Relative Strength (RSI) is now at the 14-week value of 30, an extreme only seen twice before, coinciding with market lows and past buying opportunities.

(CHART)

Daily chart, Semi-log scale, High C$4.83, Low C$0.35, Last Trade C$2.53 (May 7 close)

The daily chart above shows the current value of the RSI is 19.00. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought /oversold area. The MACD crossed below its signal line 18 days ago and remains bearish, but is in an oversold range. Wait for prices to move higher before considering any long positions. There have been no divergence signals within the last 5 days. On 5/7/2004, Endeavour closed below the lower band by 2.6%. This combined with the steep downtrend suggests that the downward trend in prices has a good chance of continuing. However, a short-term pull-back inside the bands is likely. Making the picture somewhat unclear is the fact that Bollinger Bands are 101% wider than normal. The large width of the bands suggest high volatility as compared to Endeavour's normal range. Therefore, the probability of volatility decreasing and prices entering (or remaining in) a trading range has increased for the near-term.

Fundamentals

Endeavour Mining Capital Corporation (EDV-TSX): Endeavour Mining Capital Corp. is a publicly traded mining merchant banking company. The Corporation, established in the Cayman Islands, provides finance to mining companies to fund their project development, strategic initiatives and growth. An international team of experienced professionals with a demonstrated performance history manages the Corporation. Endeavour Financial, a leading investment banking firm focused on the global mining industry, acts as the Investment Advisor. The management team at Endeavour Mining Capital uses their experience, market intelligence and proprietary deal flow to originate and invest in a series of potentially high-return transactions.

As of February 29, 2004, Endeavour had an investment capital base of US$$88.3 million. Their capital is invested in a series of transactions, such as private placements, convertible debentures, bridge loans and other forms of mine finance. The Corporation seeks to generate superior earnings through interest earned, fees charged and capital appreciation.

Currently, the Corporation is highly leveraged to Gold with additional investments in other minerals including Diamonds, PGM's and Base Metals. The scope of investment is limited only to management's area of specialist expertise - mining. Oil & Gas and other strategic opportunities may figure more prominently going forward as the necessary talent and connections are attracted to the Endeavour Group's critical mass and growing reputation.

Second quarter highlights

• Net loss of $2.4 million or $0.10 per share for the quarter

• Net income of $24.5 million or $1.21 per share for the six month period

• First regular semi-annual cash dividend of CDN$0.035 paid

Corporate data (as of January 12, 2004)

Exchange Listing: The Toronto Stock Exchange Symbol: EDV

CUSIP: G3040R109

Issued Shares: 23,120,578

Fully-Diluted Shares: 27,683,078

Investment Objectives of Endeavour

Endeavour's primary investment objective is to achieve superior earnings by investing in transactions having potentially high returns in the mining sector. Endeavour's investments are carried out according to an opportunistic and disciplined process that has been developed to maximize returns while minimizing risk, taking advantage of investment opportunities identified from the industry contacts of its Board of Directors and the Investment Advisor. To achieve these objectives and to limit overall portfolio risk, Endeavour employs, when appropriate, the following strategies:

• Investments are focused on the mining and mining related industries. Endeavour invests in early stage exploration and development companies, as well as intermediate and senior companies.

• Endeavour obtains in-depth knowledge of the target company and a working relationship with existing and/or proposed management.

• Transactions generally take the form of equity or debt with equity rights attached. Endeavour may employ a wide range of investment instruments, including equity, bridge loans, secured loans, unsecured loans, convertible debentures, warrants and options, royalties, net profit interests and other hybrid instruments.

• Investment can be made in both public and private companies.

• Endeavour seeks to obtain a 30% or better internal rate of return on transactions, based on reasonable projections.

• Endeavour seeks to maintain limits of 20% of the investment capital base (at the time of the investment) in any one transaction.

• Endeavour seeks investments where it has the ability to monitor the investment until it is realized.

• Endeavour seeks multiple exit strategies for optimal realization of value of structured transactions.

• Endeavour is prepared to take short positions in securities that trade on recognized securities exchanges or quotation services, provided that the short sales meet minimum regulatory margin requirements.

• Endeavour will generally not acquire greater than 10% of the issued and outstanding shares in any one company

From time to time, the Board of Directors of Endeavour may authorize any particular investment or series of investments which may not comply with these strategies. While management does not view Endeavour's business as cyclical, the value of its assets in the mining sector may fluctuate with the market for securities in that sector and the demand for precious and base metals.

Recent Results

March 26, 2004 - Endeavour announced a net loss of US$2.4 million or US$0.11 per share (or approximately CDN$0.15 per share) for the second quarter ended February 29, 2004. This compares with net income of US$7.9 million or US$0.51 per share (or approximately CDN$0.76 per share) reported for the quarter ended February 28, 2003. As of February 29, 2004, the net asset value per share was US$3.63 (or approximately CDN$4.85). The Corporation realized gains on investments of US$2.9 million during the second-quarter, however, these gains were offset by unrealized losses on investments held of US$5.6 million.

The Corporation remains highly leveraged to its core merchant banking positions and management accounts indicate that during March 2004 the Corporation generated investment gains of approximately US$6 million to bring the net asset value per share to approximately CDN$5.05, as of the market close on March 26, 2004.

For the six-month period ended February 29, 2004, the Corporation recorded net income of US$24.5 million or US$1.21 per share (or approximately CDN$1.61 per share). This compares with net income of US$3.8 million or US$0.25 per share (or approximately CDN$0.37) reported for the six-month period ended February 28, 2003.

March 19, 2004 - Endeavour announces that it has obtained the Toronto Stock Exchange approval for the listing of 3,625,000 share purchase warrants of the Corporation issued in a private placement which closed on November 10, 2003. The warrants commenced trading on the Toronto Stock Exchange under the symbol EDV.WT on Tuesday, March 23, 2004. Each whole warrant entitles the holder, upon exercise, to purchase one share of the Corporation at an exercise price of CDN$5.50. The warrants expire at 5:00 p.m. (Toronto time) on November 10, 2008.

Liquidity and Capital Resources

At February 29, 2004 the Corporation held assets totaling $88.3 million comprised mainly of investments (89%) and cash and cash equivalents (10%) compared to assets held at August 31, 2003 of $46.5 million comprised mainly of investments (87%) and cash and cash equivalents (13%).

The liabilities of the Corporation totalled $4.3 million as of February 29, 2004 of which $4.1 million was the performance fee accrual, $0.1 million was payable to the investment advisor, and $0.1 million was for other accrued expenses.

The increase of $42.3 million in Shareholders' Equity in the Corporation to $84.0 million at February 29, 2004 from $41.7 million as at August 31, 2003 is attributable to operations that generated $24.5 million of net income or 58% of the increase, and net financing activities that generated $17.8 million in Shareholders' Equity or 42% of the increase.

During the six month period ended February 29, 2004 the Corporation received net proceeds of CDN$23.5 million ($18.1 million) from a private placement of 7.25 million units at CDN$3.45 per unit. Each unit consisted of one common share and one-half of a common share purchase warrant. Each whole common share purchase warrant entitles its holder to acquire one common share of Endeavour at a price of CDN$5.50 per common share on or before November 10, 2008.

On February 27, 2004, the Corporation paid its first regular semi-annual cash dividend of CDN$0.035 per share.

Outlook

The Corporation will continue with its strategy of originating and investing in potentially high-return merchant banking and investment transactions focused on the resource industry. As shown by the Corporation's fiscal 2002, fiscal 2003 and six-months to February 29, 2004 financial performance, Endeavour has produced strong results. While earnings volatility should be anticipated, management believes that the long-term upwards trends in the metal and commodity markets remain favorable and that its superior deal flow and access to potentially high return transactions will result in the continued growth of the Corporation's investment capital base.

Endeavour's Investments

(CHART)

The Continuing Bull Market in Gold

Fundamentally, core positions in gold shares, from the seniors to exploration companies, should be maintained. Considerable amounts of money have been raised for exploration, and the management and geological skills of many companies are outstanding. This will result in some discoveries which, even in a dull gold market, can result in a market play. Even in the 20-year bear market in gold, we have seen many discoveries and many exciting times in the gold markets. Of course if the gold markets turn out to be dull, we will have a much harder time making the kind of money we made in the past couple of years. These last few weeks have been the toughest in quite some time for gold bulls. When we take a good look at the longer-term picture, what this decline seems to be suggesting is that we are in a serious correction, but the long-term bull market for gold likely remains very much in place.

Gold tumbled on Friday due to the sharp advance in the dollar, dropping to its lowest close in 6 months. The effect of this drop and the sharp fall in the general stock market combined to cause a steep decline in precious metal stocks. Both gold and the US$, which have an inverse relationship with each other, are at a critical juncture.

The 3-year gold chart shows we are on an important support level and very close to the lower boundary of the long-term uptrend in force since the start of the bull market. In addition, although now below the 200-day moving average, this indicator is still rising steadily and the RSI and MACD lines are showing an oversold condition.

Although normally an opportune time to buy, there are a couple of factors that give grounds for caution. The first is the "double top" formed by gold when it made twin peaks in January and April. Such a formation is frequently indicative of an intermediate trend change. The second cause for concern is the $US, which is very close to breaking out of its long-term down trend.

(CHART)

The $US's long-term downtrend is obvious on the 3-year dollar index chart, where we can see that the 91 – 93 area is a critically important resistance zone. The long-term downtrend line is currently at about 91. A move above about 93 signals a breakout from the downtrend, and also indicates that resistance from past trading at around this level is being overcome. Also, there would be a significant break above the 200-day moving average, now also at about 91. What are the chances of the $US breaking out upside? We need to look at the 6-month chart for the dollar (next page).

A few days ago the $US rolled over and looked like it was turning back by the strong combination of the falling 200-day moving average, long-term trendline resistance and resistance from past trading, which may yet happen. However Friday's rise was substantial and puts it in position to break higher. It is noteworthy that it coincided with a bond and REIT cave-in.

There are both technical and fundamental considerations lending support to a $US break higher at this juncture. Technically, we have had a 5-wave sequence down in the $US since its bear market started, which means that even if the $US bear market continues, we could have a significant 3-wave countertrend rally.

Fundamentally, an argument supporting a rising $US at this time is a potential scramble for dollars by debtors across the board seeking to pay down debts and de-leverage ahead of the impending interest rate rises. Even if the rate rises are not that great, the enormity of the debts and the magnitude of the carry trade in bonds and the extent of leveraging virtually guarantee a crisis – hence the risk of a $US spike, however unsustainable.

(CHART)

There is considerable risk to precious metals prices if the $US succeeds in breaking out of its downtrend. The impact on precious metals stocks could be amplified by a plunge in the broad markets.

So, although we would appear to be at a "buy spot" now in precious metals and the stocks, there is also very considerable danger and caution is the watchword. We will want to see the $US back off below about 88.50 before it will look safe to move back in. That would mean missing by a goodly percentage the lows that are likely for various opportunities, like Endeavour, Northern Orion, Entrée Gold, Knight, Grandcru and others we follow. Tight stop-losses could be used in the liquid traders under these technical support levels to protect against wrong-headed positions.

China's Growing Demands

China is now the number-one consumer in the world of copper, platinum, zinc, steel and iron. They produce more steel than Japan and the United States combined. There are now more cell phone users in China than in the U.S. Almost every Chinese organization owns businesses and deploys investment capital. Capitalism is at the forefront of their daily focus – almost an obsession. The Chinese are also not shy of taking risks and speculating in commodities and the stock market.

The U.S. and Europe consume about 1/3 of an ounce of gold per capita annually, mostly for jewelry. When China catches up on a per capita basis that demand alone would be equal to 5 times the global mine production of gold annually. Even a 5 or 10% demand increase over annual mine supply is huge in terms of the relatively small gold market, and this will be 50 times that. And that is just jewelry demand. Because the Chinese currency was destroyed back in the late 40's this generation knows the value of gold as a currency and store of wealth. Self-sufficiency and a healthy innate mistrust of government financial policies would also serve well the complacent North American investor.

The investment demand from China alone will change the gold supply/demand equation for decades to come. Every year mining companies have to replace about 85 million ozs of production from reserves or risk mining themselves out of existence. That's the equivalent of finding 12 seven million-oz deposits every year. There's maybe been one such discovery over the last 2 years, so from a longer-term supply viewpoint a severe squeeze is developing.

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Growth Stocks Weekly is an independent electronic publication committed to providing our subscribers with factual information on selected publicly traded companies, business, and economics. All companies are chosen on the basis of certain financial analysis, and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible with the added aid of technical analysis.

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[wobblechops] 18/5/2004 09:09

how many are you holding energyi?

[energyi] 18/5/2004 06:31

Yes. Better than expected.
I have been buying back in below C$2.70

[wobblechops] 17/5/2004 23:13

Nav C$4.48 as of their new monthly update.