Once in a Generation Opportunity in Commodities

“Since the market tends to go in the opposite direction of what the majority of people think, I would say 95% of all these people you hear on TV shows are giving you their personal opinion. And personal opinions are almost always worthless … facts and markets are far more reliable.” - William J. O’Neal

The Dow has staged a miraculous 3 day rally this week, staving off a complete breakdown of technical resistance. The good news is, the Volatility Index (VIX) is starting to calm down. The VIX is an index calculated from the CBOE (Chicago Board Options Exchange) through a combination of calls and puts. Essentially, using call and put activity on a broad range of S&P 500 index options, it measures the market’s expectation of 30-day volatility. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge”. If you look at the 6-month VIX Chart you will find it is in opposite correlation to the Dow’s severe drop. The VIX went from just under 20 in mid August to over 80 points as late as last week. It is currently sitting at about 61.

What does this mean for investors? Have we found a market bottom? Where does this leave commodities? We have started seeing a minor decoupling of gold and silver from general market movements. I believe we will see this happening more frequently, sooner than later. The global economic slump has caused the shutting down of mines around the world, impacting the supply chain; yet demand for gold, silver and various industrial metals is bound to pick up as China, India and the U.S. turn their attention toward job creation via badly needed infrastructure projects.

We track a wide swath of junior resource companies and have been noticing that as broader markets swing up and down (with less severity these days), most junior penny stocks have been settling at their bottom for several weeks now. While there may be more selling to come as we enter tax loss season, we believe the majority is out of the way. Further, we believe there are several large investors and institutions sitting on piles of cash, waiting to come back into the junior resource sector in a big way. Why? Quite simply, we are at a point in history where commodities - led by precious metals - are about to go ballistic as a result of a breakdown in the U.S. currency. We are in the eye of the perfect financial storm.

With the Obama government already putting together fiscal plans which make the Bush administrations “bailout package” seem miniscule in comparison, one can only imagine how this will affect inflation and the value of the dollar. Obama is already telling Americans “we will deal with the debt later; fixing the economy comes first.” Unfortunately, the two go hand in hand; and any sound economist will come to the same conclusion - we are witnessing fiscal suicide on a grand scale.

We wrote about a hot Uranium play last week, Hathor (HAT-TSX Venture), it has since gone up about 15% as the price of Uranium rallies along side gold. The market is telling us these commodities are cheap, and they are willing to bid them up.

We believe we are on the cusp of a major commodies boom, and by positioning yourselves accordingly you are likely to not only recover whatever losses were inflicted over the past 3 months, you will find yourself far ahead of the pack. A combination of strategically selected junior resource penny stocks and Exchange Traded Funds (ETFs)

Please peruse some of our earlier investment resource penny stock ideas, some of which have gotten cheaper since we wrote about them. These companies have solid projects, proven resources, loads of cash, and strong management - a knock out combination for when the market turns.

• Hathor Exploration (HAT-TSXV) : Uranium
• Sancon Resource Recovery (SRRY-OTC BB) : Recycling in China
• General Moly (GMO-Amex) : Hot Molybdenum Bottom Fish
• Probe Resource (PBC-TSXV) : Rapidly growin Oil and Gas Penny Stock
• Endeavor Financial (EDV-TSXV) : Resource deal maker set to capitalize on M&A activity
• Commerce Resources (CCE-TSXV) : Cash rich with a commodity you cannot live without.
• IMA Resources (IMR-TSXV) : Massive resource under development with $23 million in cash

http://www.rockbottomreport.com/2008...