The below article excerpt confirms why TRE is not performing and why it is scoring lower highs. In a nutshell it is all about profits and TRE will underperform until gold hits 1500 and above. Until then it will be bupkus! When the players are convinced that TRE is not a lot of hot air, the stock will underperform. This means that Sinclair will have to show a solid profit. 'Fraid so! This is why TRE is not breaking out.

" Because of the rising cost of gold mining over the past 20 years the companies involved are currently making, in a relative sense, little money considering the rising price of gold. Sure there are the larger producers and the low cost special producers and they have been the stellar performers so far. There have also been some decent sized discoveries and a great deal of organic growth in the better stocks that we have covered. They have been the early movers and have so much further to go.

In comparison gold and the ETF’s have done really well and are currently recognized as a major limitation to the cash flowing into gold stocks. Physical gold and silver have also outpaced many gold stocks. This new phase should change this situation.

In my view many of the gold stocks have not been that attractive in this early stage of the gold bull precisely due to the high cost of modern gold production. Royalties, energy, rehabilitation, sterilization drilling, the cost of exploration, deeper mining and all sorts of environmental considerations have rightly pushed up the cost to an average of over $900 per ounce for newer mines of modest scale. The problem is that large discoveries are getting few and far between. This pushes up that average cost of production with a larger and larger majority of production coming from smaller and smaller deposits. After administration costs and debt repayment are removed this has not left a huge amount of profit for most of the gold miners.

In this next phase shoots up significantly above average current cash cost levels. The costs might continue to rise for energy however the exposure of gold miners as a component of overall cash cost is nowhere as severe as the long term cost rises we have seen since 1980. I expect the bond crisis to escalate at this point in time as the debt implosion starts to accelerate. This will increase currency debasement and uncertainty. The rising interest rates will gradually increase the pressure on bonds as they have in parts of Europe.

If I am right on my timing, selected Australian gold stocks will begin a new phase of accelerated price rises just as gold did in September 2005. That is when gold cleared US$455 per ounce. The lag caused by cost pressures on the miners will soon be over once gold clears the $1500 - $1600 range. At $2000 per ounce these miners will be making massive profits. The marginal higher cost un-hedged miners will benefit greatly as they are the most leveraged to gold. Take advantage of our current special on Gold Membership if you are interested in our leading research and education."

Here is the link from kitco.com for the full article.

http://www.kitco.com/ind/charnock/apr132011.html