THE ELLIOTT WAVE FINANCIAL FORECAST
P.O. Box 1618, Gainesville, GA 30503.
Monthly, 1 year, $228. www.elliottwave.com.

Both precious metals should
rollover into a protracted decline

        Steven Hochberg: "Silver sports a very clear wave structure. While we initially did not expect prices to exceed the March 23 high ($13.94 basis spot), EWT on May 19 conceded, "Gold is lagging, but silver seems geared up to take out its February high." The second rally has developed in five waves starting at the April 17 low ($11.79). We label it Intermediate wave (C) of Primary wave (B). Silver tends to spike into a top or bottom, which makes targeting the final high difficult. But wave relationships in conjunction with retracement levels suggest that a final high may be occurring as early as today, as the active daily continuation contract has pushed to wave four-of-three resistance. Higher resistance is in the $15.91-$16.45 area, also basis the active daily continuation contract. Regardless, a close beneath $14.00 will be a strong signal that Primary wave (C) is underway, which should draw silver significantly beneath the wave (A) low of $8.43.
        Gold, as noted, is lagging; it is still a full $40 below its February high. This three-month, inter-market divergence between gold and silver is bearish and fits our expectations for a reversal in silver. A move beyond $1007.20 (basis spot), confirming the rise in silver, would cancel our bearish argument. We had listed $967.95 last month as a critical level, but the technicals are too weak, indicating that we need to allow for a little more leeway in the near-term wave structure. A close under $914.20, a previous first wave closing high, would confirm the bearish case. Our longer-term target for gold remains a decline beneath $680.75, the October low.
        The U.S. Dollar Index is forming a low in conjunction with a level of pessimism that was last seen at the March 2008 bottom. The next major move should be higher."

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INVESTOR'S DIGEST of Canada
133 Richmond St W., Toronto, ON M5H 3M8.
1 year, 24 issues, $137.

With new mine now a go,
Barrick gets thumbs-up

        Michael Popovich: "For Anita Soni at Credit Suisse in Toronto, Pascua-Lama is worth $1.
        That's the amount by which she's raising her $40 target price for Barrick Gold Corp. (TSX: ABX, $41.53), now that Barrick is going ahead with Pascua-lama, an open pit mine straddling the Argentina-Chile border.
        The project, located in the Andes, has long been controversial in Chile because of the mine's proximity to glaciers.
        Indeed, if Pascua-Lama generated anything over the past 10 years, it was probably mounds of legal briefs.
        But the project is now rolling ahead, given that ABX has received construction permits, as well as environmental approvals, from both Chile and Argentina.
        The company has also inked a deal between the two countries to ensure there will be no double taxation, Ms. Soni reports.
        Barrick plans to spend $2.8 billion to $3 billion bringing Pascua-Lama into production - a milestone it has set for 2013.
       And Ms. Soni, who's continuing to rate Barrick as "outperform," now pegs the company's capital expenditures for 2009-'12 at $2.9 billion, and not $2.5 billion.
        Our market mavens this month were largely onside with Ms. Soni regarding Barrick.
        Of the 11 other analysts we surveyed, four rate the company a buy; three, a buy/hold and four, a hold, lofting the gold miner into eight spot in our list of must-have stocks.
       The world's biggest gold producer - ahead of both Newmont Mining and AngloGold Ashanti - Barrick turns out close to eight million ounces of the yellow every year.
        With 140 million ounces in proved and probable reserves, Barrick gets a third of its production from North America.
        Outside North America, the company has operations in Tanzania, Australia, Peru and, now of course, in Chile and Argentina.
        For the three months, ended March 31, Barrick's net income tumbled to US$371 million, or $0.42 a share, from $514 million, or $0.58 a share, for the similar period in 2008.
       Sales were also lower, sliding 10 per cent to $1.8 billion, while operating cash flow fell 51.4 per cent to $349 million.
       Meanwhile, net cash by financing activities fell to US$807 million from $1.1 billion, while cash and cash equivalents inched up to $2.1 billion from $1.9 billion."
       Editor's Note: Four times Investor's Digest of Canada has been named "The World's Best Investment Advisory" by the Newsletter Publishers Association of Washington, D.C. In each issue, you receive specific "buy", "sell", "hold" advice from top investment analysts in Canada. Also, earnings estimates, Key Ratios on over 1,100 Canadian companies. Plus digest of leading investment advisories around the world. For a Special Subscription offer visit www.DailyBuySellAdviser.com.

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CROSSCURRENTS
3280 Sunrise Highway #125, Wantagh, NY 11793
Monthly, 1 year, $189. www.crosscurrents.net.

Is GLD getting too big

        Alan Newman: "A subscriber recently voiced his concern that GLD (SPDR Gold Shares ETF) might be 'getting too big' and asked if folks might be better off owning physical gold, rather than a security that purports to own the bullion. GLD's assets have grown to $31.5 billion since its creation in November 2004 as an all-purpose vehicle for those who wished to own gold, without the need to store the physical metal. Despite its size, GLD can only be "too big" if demand for gold decreases from this point. Given our long range view that gold is in the midst of a supper bull market which should carry prices far higher, any security backed by physical ownership of gold should perform relative to bullion.
        As for personal considerations for ownership of GLD, if one believes the physical metal will continue to rise in price, exchange traded funds like GLD still make sense, but then again, shares of gold stocks make sense too. And so does the physical metal itself, either in the form of bullion or coins. Thus, in our view, the proper question is not if GLD is "too big," but the reasoning for owning gold. If the primary reason for owning gold is concern for a very worst case scenario in the future, where even survival might be at stake, then coins like Krugerrands and Maple Leafs make the most sense. That said, we are most definitely not in the camp of a worst case scenario. If the rationale is simply higher gold prices, then gold in any form, including an ETF, makes sense.
        Ironically, the reader's question brought another question to mind, involving our quest to uncover systemic problems in the U.S. stock market. While examining the statistics for GLD, we noted a short position a bit under 3% of the outstanding shares.

More ETF Thoughts

        Curious, we then entered SPY, the SPDR S&P 500 ETF, and found a short interest equal to 53% of outstanding shares. Bear in mind, the trust's shares are backed by ownership of the S&P 500 constituents. Thus, the portfolio is designed and enabled to mimic the price action of the S&P 500 index. However, the huge short position changes the equation dramatically. Remember, every share of the trust that is shorted has to find a buyer. Thus, not only are there 528 million shares of the trust outstanding and owned, there are also the shares "owned" on the flip side of the 280 million share short position. The 528 million shares outstanding are backed by real shares owned by the trust, but what are the other 280 million "share entitlements" backed by? Anything at all? The ultimate irony is that since the supply of trust "shares" has been dramatically and artificially inflated by short sales, we can easily make the case that the S&P 500 index is undervalued, constrained by a system that completely undermines the economic concept of share capitalization. This is an important reason why we believe the March bottom may either have been all the bears wrote or their next chapter can only mirror and not exceed what we have already experienced. The real threat is that the broken short sale mechanism ensures still more supply down the road and will tend to keep a lid on prices for years to come."

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EMERGING GROWTH STOCKS
102 - 2020 Comox St., Vancouver, BC V6G 1R9.
1 year, 8-10 issues, $159. www.EmergingGrowthStocks.ca.

Western Potash commences
$5.4 million drilling program

        Louis Paquette: 'In terms of junior Potash situations, I rank Western Potash (TSX.V: WPX) a close second behind Potash One (TSX.V: KCL) a stock EGS readers did very well on by riding it from the very beginning of its formation and before anyone was even talking about Potash. WPX's Milestone property, comprising 500 square km, is located approximately 30 km southeast of Regina, and to the southeast of Mosaic Company's Bell Plaine KL-106-R mining lease, which hosts one of the largest producing potash solution mines in the world. The property is immediately adjacent to potash permits held by BHP Billiton, Vale (through a recent sale by Kennecott Canada Exploration) and Potash One.
        Seismic data has confirmed the presence of potash prospective salt beds on the eastern portion of the Milestone property, within 15 km of the potash wells drilled by Kennecott during 2008 (subsequently sold to Vale), and covering an area of over 185 square kilometers highlighting a sizeable and attractive new exploration target area.
        Construction of the first well-site is imminent and the drill is planned to mobilize to the first site on May 14, 2009. The Company plans to drill three wells within the Milestone property using a drill rig supplied by Red Dog Drilling Inc. The purpose of the three well drill program is to define the extent, grade, thickness and type of potash mineralization present on the property. WPX has budgeted approximately $5.4 million CAD for this drill program, and will be well positioned to prepare a NI 43-101 compliant resource calculation on the Milestone property during 2009 should drilling results be positive.
        I believe there is a very decent chance WPX could intersect mineable widths and grades, and doing so might make it a potential takeover target."

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The VR GOLD TRADER
P.O. Box 1451, Sedona, AZ 86339.
Weekly E-mail, $1350. Special Offer, 1 month, $62.50. www.VRTrader.com.

Sees explosive upside action for gold

       Mark Leibovit previously warned that "Gold and Silver metals and shares may be forming a short-term top here, so new purchases should be awaiting a retracement."
       "On June 5th, GLD and SLV formed negative Volume Reversals, confirming my warning. I am now out of all our metal stocks, but continue to hold physical gold and silver as long-term positions.
       Recent history suggests we should expect weakness into the summer and with the current short-term technical pattern turning negative, we will likely see further weakness.
       Overall, I believe surprises are to the upside and if we're mirroring the '1979' pattern, we could be looking at 12-18 months of explosive upside action ahead. Bearish sentiment, let's call it disbelief, still runs high for Gold. The fact the Gold shares have been leading the metal higher is a very bullish sign. Gold is volatile and has been manipulated by the US government for decades.
       My intermediate target for Gold is 1200 and my big picture target (possibly within the next two years) is for 3000. We could go even higher, but if we think in terms of a 20-year up cycle, i.e., into 2020 there is plenty of time to see this unfold and I'm sure we're going to have to trade it (both long and short) along the way. My view is that 1000 will become the new floor for Gold just as 1000 became the new floor for the Dow Industrials when it broke through to the upside back in 1982."
       Editor's Note: Mark Leibovit's THE VR GOLD LETTER provides investors, portfolio managers and traders his unique insights, opinions and recommendations for the Gold, Silver and Platinum markets utilizing his proprietary VOLUME REVERSAL(tm) and Cyclical (Annual Forecast Model) Strategies.

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THE ADEN FORECAST
P.O. BOX 790260, St. Louis, MO 63179.
Monthly, 1 year, $250. www.adenforecast.com.

Gold: A solid bull market...

        Mary Anne and Pamela Aden: "Gold's rise is solid as it's had a consecutive year on year gain since 2001. It was one of the few investments that ended 2008 with a gain and if it ends 2009 above $880, this will be the ninth consecutive yearly gain. That's impressive!
Gold has not been as volatile as silver, platinum and the base metals. They rose more, but they also fell more. For example, gold is up over 11% this year while silver is up 37%. But last year gold gained 5-1/2% while silver lost 27%.
        Over the years, gold outperformed silver during the 1970s and 1980s, but this mega trend changed in 1990. Gold was much weaker than silver from 1990-97, as shown by the steep decline in the gold-silver ratio on Chart 1. This basically continued until last year when gold strongly outperformed silver due to the crisis.
        Interestingly, gold is now starting to weaken again against silver. In other words, silver is no longer being held down by the crisis. It's behaving more like a commodity and that too is a good economic sign.

...And It's a leader

        Gold is a leader. It also leads the oil price as Chart 2 shows. Since 1985 you can see that gold led oil at every turn. There was one exception in 1999 when oil led. But this past year was not an exception...gold peaked in March 2008 while oil peaked four months later in July. Gold then bottomed in November and began to rise while oil followed a month later, but it wasn't until last March when oil really started to rise. This is a good sign for the whole commodity sector, including gold.
        What's good for commodities is good for the U.S. and global stock markets, because oil is clearly getting a boost from signs of a better economy. And it'll continue to rise as global consumption keeps growing.
        Gold, on the other hand, will head higher due to the massive measures central banks have taken to revive the economy. Their actions are inflationary and, therefore, an ongoing demand for gold will continue.
        Interestingly, even though world demand is down for commodities, China is keeping demand up and actively buying commodities, including gold, to hedge their foreign exchange reserves against inflation.
        China is concerned that the excessive monetary stimulus by Western governments will lead to global inflation, undermining its dollar assets. So it's balancing their risk for the future.
        Compare this strategy to what the United Kingdom did 10 years ago when they sold a large portion of their gold at the bottom. The FT figures that a decade of gold sales at lower prices cost the central bank around $40 billion.
        We've often felt that 2009 would be a bargain year to buy gold. Plus, the summer months tend to be the best seasonal low time to buy gold.
        The month of June has had the most lows in gold, followed by August. We've been saying that the low could've already occurred last November, or it could happen this Summer. Gold's rise this month is saying that last November was likely the low...but it's certainly not too late to buy. Gold is still a bargain in the $950 range, so if you haven't bought yet, buy now.

Silver & Gold Shares: Strongest!

        Silver and gold, and their shares are jumping up to near 10 month highs. But silver and the shares are rising more than gold in this rebound rise. They're both rising sharply from a low area and they're now breaking above their 65-week moving averages for the first time since last year.
        This indicates solid strength. Signs of an upcoming economic recovery is also raising inflation concerns. Silver's advantage as an industrial metal helps give it an extra boost as well.
        On a bigger basis, the lading indicator for gold shares shows that they're in a great buying area, the best since 2001, and they have plenty of room to rise further. Likewise for silver. On an intermediate basis, silver also shows that its rise last November is still solid.
       Gold, silver and their shares are currently the best investments and we urge you to buy new positions and keep the positions you have."

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Ian McAvity's DELIBERATIONS on World Markets
P.O. Box 182, Adelaide St. Station, Toronto, ON M5C 2J1.
1 year, 18 issues, $225. Introductory trial: 4 issues, $49.

The World of Gold

        Ian McAvity: "Gold is above its rising 50 Day MA that is also above its rising 200 Day MA to define an uptrend. I've previously noted the "Golden Crossing" in February when the 50-Day MA crossed the 200 Day MA, a strong, but lagging trend confirmation tool giving only its fifth such 'signal' since the cycle began back in 2001.
        Last issue I flagged the four prior peaks that would have to be taken out on the upside, $918, $968, $1008 and $1034 to resolve what I consider a huge consolidation pattern dating back to the March 2008 peak. One down, three to go...$968 and $1008 on Comex near active are the immediate challenge.
        The major gold mining shares finally showing some life.
        New filings revealed that billionaire John Paulson's hedge funds made substantial commitments to gold & gold shares, including ownership of 8.7% of GLD, and 15% of GDX the two major ETFs! In addition he owns or added to large holdings in GFI and KGC. He previously reported owning 11.3% of AU... I'm not as enthused about those hefty stakes in GFI and AU, but was surprised at the size of his ETF holdings.
       A rush of new gold related fund structures in Canada is a tad worrisome in a contrarian sense, as is a proposal to sell small gold pieces via an ATM-like machine in Germany. But let's see how well they actually do. Gold vs. US$ is key and gold is becoming a currency of choice.
       If I'm correct that gold can and will break through to new highs sooner rather than later, virtually all of the miners should get a good run with it. But don't get carried away with the mythology about the implicit profit leverage the miners should have. History demonstrates via the shares to metal ratio I've tracked back to the 1930's that the industry has rarely delivered it.
       The best money made in miners tends to be the much higher risk arena of smaller companies that are making discoveries the majors must take over at premiums to replace their mined out reserves. The pre-occupation with size amongst the majors backed them into a corner of needing to do a lot of dilutive M&A activity to sustain the appearance of growth in reserve replacement.
       One concern that I do share with skeptics is that gold often is seasonally weaker over the summer months. The reason I am less concerned about that this summer is the flood of US borrowing and it's likely weight on the US Dollar. I haven't forgotten that August 1971 was the great crisis that forced Nixon to close the gold window."

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STREET SMART REPORT
505 East New York Ave., Ste. 9, DeLand, FL 32724.
Monthly, 1 year, $275. www.StreetSmartReport.com.

Gold now at an
important juncture technically

        Sy Harding: "Our Seasonal Timing Strategy(tm) is now in its unfavorable season (exit date April 21). Our non-seasonal Market-Timing Strategy remains on its sell signal of May 13. We remain neutral on bonds, with no positions either way on bonds. The consensus of our intermediate-term technical indicators remains on the April 27 buy signal for gold bullion.
Gold is now at an important juncture technically, falling back from its level recently near $1,000 where its last three rallies failed.
        But also in the picture is the approximate appearance of a potential extended inverse head and shoulders bottom. So either another downturn, or a possible big upside breakout."
       Editor's Note: Bull & Bear readers are invited to read Sy Harding's Morning Market blog, free of charge, at www.SyHardingblog.com.

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LIBERTY'S OUTLOOK
300 Frandor Ave., Lansing, MI 48912.
1 year, 12 issues, $129.

Huge US Gold Exports uncovered

       Patrick Heller: "The United States Geological Survey (USGS) publishes monthly Mineral Industry Surveys with one series that focuses on gold production, imports, and exports. These reports pick up information provided by the US Census Bureau.
       The latest report is dated February 2009, which includes annual 2008 data. The February 2008 report is also available from the website, which covers 2007 data. Prior year information is contained in annual reports which are in a different format that kept me from extracting comparable data.
       In quick summary, here is the reported information on 2007 and 2008 domestic gold production, imports, and exports of gold:

	Millions of ounces
Activity	2007	2008	Total
Mine production	7.8	7.4	15.2
Exports less imports of refined gold	11.2	10.8	22.0
Exports less imports of compound gold	63.9	90.6	154.5
Net change in domestic gold inventories	(67.3)	(94.0)	(161.3)

       The data about compound gold exports came from the Census Bureau. The figures were so unusual that the USGS contacted the Census Bureau to confirm that there were no typographical or reporting errors.
       Rob Kirby of Kirbyanalytics in Toronto contacted a USGS employee who was knowledgeable in the preparation of these reports. The USGS employee told Kirby that the figures had been verified with the Census Bureau.
       Kirby mentioned to the USGS employee that the increase in exports from 2007 to 2008 did not make sense given the global economic downturn. The employee explained that this was one of the reasons the data had been double-checked with the Census Bureau.
       The definition of compound gold supposedly is industrial gold in low purity or small quantity forms.
       Kirby then observed that the high value of the exports did not make sense if it only included industrial goods, especially with the decline in commercial activity. When Kirby speculated that the amount of gold exported was more likely to be gold bullion or equivalent forms, the USGS employee said, "That would be correct."
       If gold coin melt bars were exported, they would be reported in this survey under compound gold, not refined gold.
       If the US exported over 175 million ounces of gold in 2007 and 2008, which is more than 11 times domestic mine production, and actually more than global mine production, where did all this gold come from?
       This amount of gold exceeds what is being held by all private parties in the US combined.
       When the US government forced the public to sell their gold to the government for full face value in 1933, the government then melted down the gold without refining it. As a result, most of these bars are about 90% pure, which is the purity of US gold coins struck before then.
       In the past few years, several gold traders have commented on the surprising number of coin melt gold bars being delivered in London and Zurich, bars which almost certainly came from US Treasury vaults.
       There are really only two places where this much gold could have come from. It could represent the repatriation of foreign gold holdings that were stored at the New York Federal Reserve. If such transfers occurred, they would be counted as exports for purposes of the USGS reports.
       The other possibility is that the gold could have come from the only central bank with enough gold reserves to cover this level of exports - the United States.
       Wherever this gold came from, it is bad news for the US government. There would be no reason for foreign central banks to pull their holdings out of the US unless they were more than a little concerned about the stability of the US government and the dollar.
       If the US government was exporting its own gold while pretending that it is still in the vaults, this revelation will cripple the credibility of the US government, hurting the strength of the US dollar.
       The US government has not had a genuine audit of its gold holdings in decades. In recent years, it has changed the description of gold holdings from gold reserves to "custodial gold."
       Besides missing the data on the Chinese gold transactions, the World Gold Council, GFMS, and CPM Group also missed this huge movement in gold, making their analyses of supply and demand grossly inaccurate.
       The US government has a huge interest in hoping that the general public will not notice or care where all this gold came from. But it is just this kind of information that the public needs to take steps to protect their wealth.
       As news of Kirby's report spreads, I expect that there will be a growing clamor for the US government to come clean about the source of these exports. No matter which path that government takes - refusal to answer, to lie, or to tell the truth - I anticipate that this news will spark even stronger interest in owning precious metals in the coming months."
       Editor's Note: Liberty's Outlook, is published by Liberty Coin Service, a dealer in rare coins and precious metals since 1971. www.libertycoinservice.com.

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THE TURNAROUND LETTER
225 Friend St., Ste. 801, Boston, MA 02114.
Monthly, 1 year, $195.

Williams Companies: A leading
player in all aspects of natural gas

        George Putnam, III: "Wiliams Companies (NYSE: WMB) began in 1908 as a pipeline construction company, the company is now a major, integrated natural gas company. It produces, gathers, processes and transports natural gas throughout the United States.
        In the 1990's, Williams branched out into new businesses, including telecommunications (initially by running fiber optic cable through decommissioned natural gas pipelines), electric power generation and energy trading. Much of this expansion was funded by debt, and by the end of 2002, the company's debt burden had brought it close to bankruptcy. Williams sold of assets, reduced debt and refocused on natural gas. The company prospered again for several years until natural gas prices fell sharply in 2008, driving Williams' stock down from above 40 last June to below 10 in March of this year.
        Analysis: Williams has some of the premier assets in each of its business segments: exploration & production, mid-stream (gas gathering and processing) and pipelines. When natural gas prices recover, the company's profits should increase significantly across all of its lines of business.
        In exploration & production, Williams is one of the lowest cost producers in the U.S. Moreover, the company has been steadily adding to its reserves. In the mid-stream sector, Williams' large scale generates industry leading margins. The pipeline business is steady but still has attractive growth prospects.
        While the price of natural gas is suffering from a temporary imbalance of supply and demand, its longer-term fundamentals look attractive. On the supply side, the drop in prices has driven some of the weaker players out of the market. On the demand side, natural gas is viewed as a preferred energy source for the future because of its lower environmental impact and its domestic availability. As the economy improves, natural gas prices should rebound, particularly as other energy sources such as coal and nuclear face increasing regulatory issues.
        Williams has the financial strength not only to survive the current downturn but to grow and prosper. Although the company does have a fair amount of debt, it has strong cash flows with which to service that debt. Moreover, it does not have any significant debt maturities until 2011. And its processing and pipeline businesses provide a steady stream of revenue and cash flow even if natural gas prices stay low.
        Williams is one of the leading players in all aspects of the natural gas markets. While those markets have been depressed recently, we expect them to rebound which should drive Williams' stock significantly higher. We recommend buying Williams up to 25."

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PEARSON INVESTMENT LETTER
P.O. Box 3739, Apollo Beach, FL 33572.
Monthly, 1 year, $150. www.pearsoncapital.com.

China Natural Gas:
Impressive sales and profit growth

        Donald Pearson: "China Natural Gas, Inc. (OTC BB: CANL; $8.60), (formerly CHNG) is the first China-based natural gas retailing company publicly traded in the U.S.
        CANL is principally engaged in the distribution and sale of natural gas to commercial, industrial and residential customers of the Xian area (population 8.5 million and "gateway" to China's vast Western regions) including Lantian County and Republic of China through a network of approximately 120 kilometers of high-pressure pipelines. The Company also distributes and sells compressed natural gas (CNG) as a vehicular fuel through a network of CNG fueling stations in Shaanxi and Henan Provinces. As of December 31, 2008, CHNG owned and operated 23 CNG fueling stations in Shaanxi Province and 12 CNG fueling stations in Henan Province. In October 2008, the Company acquired Lingbao Yuxi Natural Gas, Co., Ltd. through Xi'an Xilan Natural Gas Co., Ltd. In December 2008, CHNG acquired Henan Lingbao Yuxi Natural Gas Limited.
        CANL announced that its project with Xi'an International Business Port ("the Port") has been awarded an exclusive "green card," which qualifies the Port project or various preferential policies. The green card's advantages include favorable pricing on land purchases, discounted bank loans, preferred financing rights, and substantial logistical support from Xi'an's Transportation, Telecommunication and Utility Departments. The Port is intended to become one of the largest logistic and business hubs connecting Western and Eastern China, as well as transiting and distributing inland products. We have added this to almost every portfolio believing their future potential to be superior. We continue to monitor their ongoing sales growth, continuous margin and profit growth, and company expansion. It has been impressive."

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THE CONTRARY INVESTOR
309 South Willard St., Burlington, VT 05401.
Monthly, 1 year, $125.

North America is next big
market for solar power

        Alex Seagle: "German solar company Schott recently cut the ribbon on a $100 million factory in Albuquerque, NM., that will produce solar panels as well as receivers for solar through power plants. Meanwhile, Chinese solar giant Suntech said that it will build a solar cell manufacturing plant in the United States.
        The move to North America comes as the European market softens as governments subsidies ebb and solar panel prices fall. Despite the severe U.S. recession, Schott and Suntech are betting that the solar market will boom when the economy recovers and they'll gain a competitive edge by manufacturing near customers.
        "We think North America in general is the next big market for solar power," said Gerald Fine, CEO of Schott Solar's North American operations. "Especially in the case of concentrated solar receivers you want to be close to your customers and provide great customer service and low shipping costs."
        And it doesn't hurt to be generating green jobs as well. The 200,000-square foot New Mexico factory employs 350 people. The plant was built too late to take advantage of the Obama stimulus package's 30 percent tax credit for renewable energy manufacturing. But Fine said the tax credit will encourage Schott's plans to eventually expand the facility to 800,000 square feet with a workforce of 1,500.
        Fine declined to discuss specific customers for the receivers but there are numerous solar trough power plants being planned for the Southwest, including Abengoa Solar's Solana project in Arizona and utility FPL's (NYSE: FPL) Beacon 250-megawatt solar in California.
        "We feel pretty comfortable with our order books in both product lines for the foreseeable future," said Fine. "If you look at the publicly announced plans to try to put a reasonable probability of them being completed, there's in excess of two gigawatts of power plants out there."
        Schott will have the North American receiver market to itself but will face some stiff competition when it comes to making photovoltaic modules. Thin-film solar cell maker First Solar (Nasdaq: FSLR) is headquartered in neighboring Arizona and claims the lowest cost of manufacturing. Last year, German solar cell maker SolarWood opened a factory outside Portland, OR., while Silicon Valley's SunPower (Nasdaq: SPWRA) makes some of the most efficient solar cells - albeit overseas.
        And now China's Suntech (NYSE: STP) is moving into the U.S. manufacturing market. The company recently said it is looking at several states as potential sites for a factory and will make a decision on where to locate the facility within six months.
        "We believe in the outstanding long-term prospects of the solar energy market in the United States, and we will continue to invest in our ability to meet a substantial portion of that potential growth through in-market manufacturing," Suntech CEO Zhengrong Shi said in a statement.

Solar Pure Plays:

SunPower Corporation (Nasdaq: SPWR)
First Solar Inc. (Nasdaq; FSLR)
Evergreen Solar (Nasdaq: ESLR)
SunTech Power Holdings (NYSE: STP)
Trina Solar (NYSE: TSL)
Solarfun Power Holdings (Nasdaq: SOLF)
Canadian Solar Inc. (Nadaq: CSIQ)
JA Solar Holdings (Nasdaq: JASO)
China Sunenergy (Nasdaq: CSUN)
LDK Solar (NYSE: LDK)
ReneSola Ltd. (NYSE: SOL).

        Solar company stocks have been absolutely crushed over the past year or so. Last August, Suntech was trading around $50 per share, and is now in the $15 range. It is difficult to predict when photovoltaic technology (photovoltaic, or "PV" is the technical term for turning light into power) will become a viable alternative in power generation, but the pace seems to be ever-quickening. Today's solar cells are simply not efficient enough and are currently too expensive to manufacture for large-scale electricity generation. However, the cost of these cells is likely to decrease in the future by using thinner wafers and devices with higher conversion efficiency. It is here where an exciting development known as nanotechnology is expected to play an important role in the longer run in order to further lower the PV cost.
       Nanotechnologies are regarded as key technologies for innovations and technological progress in almost all sectors of the economy. Nanotechnologies exhibit the unique potential for technological breakthroughs in the energy sector, thus making substantial contributions to sustainable energy supply. In recent years, nanotechnology researchers have been achieving astonishing results in many fields of medicine and electronics; from microscopic sensors to transistors constantly decreasing in size, industry is pushing to innovate and find always new, cost-effective solutions. One of the most promising and exciting areas of progress has been seen in the field of solar cell development.
       The range of possible nanoapplications in the energy sector ranges from gradual short and medium-term improvements for a more efficient use of conventional and renewable energy sources, as well as ground-breaking long-term approaches for energy recovery and utilization.
       Presently, the climate of economic difficulty facing the world is resulting in a rising demand for going green. An attempt is being made to stimulate economies by an expansion of government spending in the areas of sustainability, energy conservation and renewable energy. However the credit crunch and wild swings in the price of oil could get in the way of these nanotech solutions being aggressively pursued over the short term.
       The foregoing describes the investment scenario the Contrary Investor favors: a powerful trend that will last for many, many years; companies participating in the trend that have solid earnings in many cases; and an excellent entry point for long term investors. The sun could begin to shine on solar stocks!"

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THE DINES LETTER
P.O. Box 22, Belvedere, CA 94920.
1 year, 14 issues, $295. www.DinesLetters.com.

Rare Earths on the bargain counter,
a brand new Super Major Bull Market

       James Dines: "We pondered over the challenge of how to play the future growth in electric cars, windmills, solar, without trying to find the winners in each Sector, and we came up with "Rare Earth Elements." They are made up of the 17 chemical elements listed in the Periodic Table of Elements: namely, scandium, yttrium, and the 15 lanthanoids, rare in commercial concentration and exotic, but possessing crucially essential attributes. Rare Earths are used in computers, TVs, DVD players, cameras, cell phones, nickel-metal hydride batteries, fluorescent lighting, medical magnetic resonance imaging equipment, automotive catalytic converters, super magnets, on and on. Rare Earths represent a unique way to hitch a ride on the world's shift to microminiaturization, especially in electronics. Rare Earths are vital for example in tiny cell-phone batteries so, instead of trying to figure out which cell-phone stock to buy, why not recommend what all their manufacturers would be needing to buy! Motors and generators in each Prius use approximately 26 kilograms of Rare Earths. The Rare Earth neodymium is necessary for the lightweight permanent magnets used in Prius' motors, in generators and wind turbines. Even Tamiflu, the antiviral drug to combat swine flu, depends on a Rare Earth in shikimic acid, mostly supplied by China.
        The market for Rare Earths in America alone is still only around $1 billion so its growth should be hyperbolic, depending on availability of product. But there is only one producing mine in North America now, and it operates entirely from old tailings.
        If Rare Earth Elements are so vital, why have they not attracted more attention? Rare Earth Elements are at the forefront of many brand-new technologies, so it ostensibly has not yet "registered: that these are a separate group, answering to its own bull market. Furthermore, REEs are usually byproducts of mining other metals, gold for example. It's not as if there were a few huge, dedicated producers of Rare Earths that we could recommend to attract attention, which is a drawback, yet it also gives us the advantage of getting in early by retarding the entry of other investors and advisors. Finally, and most important, China happens to control over 90% of the world's REE production! In fact, former leader of the Communist Party of China, Deng Xiaoping, once quietly stated, "The Middle East has oil, China has Rare Earths," to us a compelling geopolitical clue of a sprint America doesn't even seem to know it's in yet! The Chinese government has been purchasing Rare Earth mines internationally for its own future manufacturing, taking them off the market permanently rather than looking to resell the product worldwide. Last year we discussed "Malthusian investing," what we baptized "commodity chauvinism" and "commodity imperialism". If China decides to use all the Rare Earths it owns for its own manufacturing, the so called "green" movement would be in real trouble, once again pointing to uranium as an energy savior, patiently waiting in the wings.
        Our guess is, sooner or later, the world is going to awaken in shock at the unavailability of Rare Earths, suddenly placing for example Japan's growth industries at China's financial mercy. America, with its typical dismaying lack of foresight, dumped its so-called "strategic holdings" of Rare Earths long ago, and we understand that it now has none left. That figures.
        Many are tiny, newly-emerging companies, some with only a sideline in Rare Earths that we hope will get more developed once they get more capital. With small companies, after the horrific 2008 bear market, there is not a lot of stock for sale so they are likely to be volatile and we recommend against just charging in and buying a lot of them. Personally, we recommend deciding on the portion of your portfolio you want to put into REEs, perhaps 5% or 10% (depending on portfolio size), setting aside one-third or one-half of that amount to buy now, and then waiting for any possible buying rush to die down so that you could hopefully buy the remainder at lower prices, at least having gotten a foothold.
       Rare Earths are on the bargain counter if we've correctly discovered a brand-new Super Major bull market.
        We've never seen a Super Major bullish prediction on the Rare Earth group in the world's financial press. Nor are we aware of any leading advisor publicly risking his/her reputation on calling Rare Earths an all-out, Super Major bull market and buying the stocks themselves. Sometimes some have recommended one Rare Earth stock or another, but never the whole group as a package about to embark toward great prominence. Therefore, we feel it fair for us to hereby lay claim to the title of "The Original Rare Earth Bug (DIREEBUG)" and are prepared to buy and hold for a period of some years, if necessary."

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THE GOLD REPORT
A free publication of Streetwise, Inc., P.O. Box 1099, Kenwood, CA 95452.
www.theaureport.com.

The Race to Rare Earths

       In an interview with The Gold Report John Kaiser, editor Kaiser Bottom-Fishing Report, stated that three years ago, the Rare Earth market was worth a piddling $1 billion. Now this market has the potential to become $5 to $10 billion due to demand growth arising precisely because end-users are guaranteed an unending supply at these prices. He went on further to say:
       "There are deposits out there where they could be profitable. They have rock values of $300 to $1,000 a ton, but nobody had dreamed of developing them during the last 30 years because the size of the market wasn't large enough to absorb the supply of this raw material.
       "In fact, eight years ago, the Chinese did glut the market with rare earth oxides before all this hybrid stuff really started taking off. And it's only recently that they realized they were depleting their own internal resources and decided to put export quotas in place. And now that we have these application scenarios where you can scale the demand 10, 100, 1,000 times bigger and you suddenly say, "uh-oh, where are we going to get this raw material?" Well, this is where, again, I see the strategic logic come into play - where the end users, who can make a lot of money selling hybrid cars if they have these raw materials in place, will actually pay a premium to control these pounds in the ground and see them developed (even if it is at a break-even basis after it's in production).
       "There are very few companies that have any sort of meaningful resources that you can buy in the market. One that I follow is Avalon Rare Metals, Inc. (TSX: AVL), which has the Thor Lake deposit in the Northwest Territories.
       "They don't mine anything yet. They're doing all the pre-feasibility work to establish where the highest-grade zones of these rare earth oxides are in the system, and then they'll start a mining scenario where they'll initially produce enough to feed expected demand in the market. But the total resources are large enough so that this thing could operate for 50 years. So these types of projects with the very large resources are of enormous interest to the end users because, once these things get going, they'll operate forever.
       "Another company, Rare Element Resources Ltd. (TSX.V: RES) has its Bear Lodge deposit in Wyoming. The deposit, on the one hand, is farmed out to Newmont Mining Corp. (NYSE: NEM) for its gold potential and Newmont has been waiting for two years to get a full-blown environmental assessment done so that when it starts drilling, the 5 million-plus ounce target that it's seeking doesn't get stalled by having to reapply for permits. At the same time, the company has just published a 43-101 resource estimate outlining the rare earth resources that they have on the project.
       "So it's a nice company in that you get two completely unrelated stories for the price of one, and it doesn't have a lot of stock outstanding either; so while it would net only 20% of any multi-million ounce gold deposit that Newmont finds, it has 100% of the rare earth deposits there.
       "Tantalum is another metal where it's a key input in cell phone capacitors. The supply has come only from a few mines, all of which are now shut down as part of the strategy to get the processors to allow a price increase. A company like Commerce Resources Corp. (TSX.V: CCE) (PK SHEETS: CMRZF) has tied up deposits in British Columbia that are lower grade than some of the ones that have traditionally supplied this market, but their angle is that the end users need to know that their tantalum for their capacitors is assured for the next 20 years. So they will probably end up forming a consortium of end users that fund these mines and puts them into production.
       "And one other one that I recently discovered because it was disguised as a uranium company is Quest Uranium Corporation (TSX.V: QUC). It turns out that they own part of the Strange Lake deposit that straddles the border between Quebec and Labrador. This was found during the '80s and it's lower grade than some of these other deposits. They did the pre-feasibility work and then shelved it and eventually abandoned it. Then Quest staked it and they found other showings suggesting similar grade.
       "The interesting thing about that deposit is it seems to have an unusual percentage of the heavier rare earth elements, which there was no market for back in the '80s. So these metals may have had a high price, but it was simply high because the stuff was rare and scientists would pay whatever it took to get these metals. Well, here you have an interesting situation where Quest may have an unusual abundance of the heavier rare earth elements that could become commercialized thanks to new applications that were not around during the '80s."
        Editor's Note: John Kaiser has an investment position with Quest Uranium. Mr. Kaiser, a mining analyst with over 25 years experience, is editor of the Kaiser Bottom-Fishing Report online, www.kaiserbottomfish.com. He specializes in high risk speculative Canadian securities and the resource sector is the primary focus for an investment approach he developed that combines his "bottom-fishing strategy" with his "rational speculation model."
        The Gold Report, on online publication, features investment coverage on precious metals and base metals. Bull & Bear readers can receive a free e-newsletter by signing up at www.theaureport.com.

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FREEMARKET GOLD & MONEY REPORT
P.O. Box 5002, North Conway, NH 03860.
1 year, 20 issues, $220. www.fgmr.com.

Breaking $1,000

       James Turk: "I want to emphasize my forecast repeated in the last two letters because I cannot stress enough the importance of gold breaking through $1,000. When gold breaks through $1,000 it is 'game over' for the gold cartel. The cartel will of course still be there fighting - trying to control and maintain an organized retreat to keep gold from soaring. But once $1,000 is cleared, the cartel's retreat will be hastier and less organized. In other words, look for gold to climb rapidly.
       Therefore, to repeat my forecast from the last two letters, now that $915 has been hurdled, "we can expect gold to rally to the neckline at $1,000, completing this H&S pattern." Gold is now doing exactly that.
       The other important part of my forecast so far is still pending and yet to be achieved: "H&S patterns can be used to project near-term price objectives. The depth of the H&S pattern represented approximately a 30% correction (gold fell from $1000 to $700). Therefore, it would be normal for gold to exceed the neckline by 30%, which projects a $1,300 gold price when the neckline [$1,000] is eventually hurdled."
       My conclusion has been that "...we should be focusing on $1,300 gold as a near-term price objective." That remains my near-term price target - i.e., it is a level that I expect will be reached sometime this year, which is consistent with my annual forecast for 2009 made back in early December. Here's that forecast and how it looks so far:
       "Gold will climb into 4-digits in the first quarter [gold reached $1,002 on February 20th] and this time will remain in 4-digits for the rest of the year [obviously wrong because gold was smacked yet again by the gold cartel]. The potential high is $1800 per ounce ($57.87 per goldgram). I expect the low to be $850, which will be reached early in the first quarter [my price estimate was too high because gold actually fell to $807, but the timing was spot-on. Gold made that low on January 15th]."
       So the question now is whether gold is ready to finally break above $1,000. I think so because everything is lining up nicely for gold."

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