buying FRP

This week we'll buy FRP, Frontier Pacific Mining Corp. on the Canadian Venture Exchange.

The Frontier chart clearly shows a long-term up-trend and an immunity to the recent sell-off in gold and uranium stocks. In our experience such a chart with a plateau as seen the past month or two is very bullish. Soon it will have a big move either up or down, and the trend suggests that move will be up. If not, we'll likely post a sell on closings below $0.70 thus making for only 10% risk or less given the recent closing price of $0.75 If it rises, we'll hold awhile.

Keep in mind that Canadian markets are closed this Monday May 21 for the Victoria Day holiday. Trading resumes Tuesday.

We're often asked for more US picks, and we maintain some open positions that trade in the US to which we'll add in time (see past entries), however the hot sector is resource and the hot market for resources is Canada. Factor also the exchange rate gains evident in being out of the US Dollar as seen below in this 5-year chart of the Canadian Dollar vs. the US Dollar.



In our opinion, all US investors need to be hedged against the continuing US Dollar collapse. That said, we feel the US Dollar is due for a positive bounce over the next 6 months as the overall sentiment is too bearish on the US Dollar and economy currently. Hence during that time we are neutral gold, and suggest those who are not invested in gold or silver seek their positions in the coming months on weakness in the prices of those metals. Please see our April 12 posting for more on gold and our view of it in light of the general markets.

Uranium is up to $120/lb and we remain long-term bullish uranium shares however the resource is due for some consolidation. Hopefully it'll hold over $100. More likely than a slide in price, it may simply not appreciate as quickly as we've recently enjoyed. That's just a guess based on too many new uranium bulls and positive news the past couple of months, which is also how we account for the slide in prices of most uranium stocks during that time beyond simple prudent profit-taking.

We'd expected that for some time, as evidenced in past blog entries, which is why we sold the bulk of our uranium holdings on March 1st, before the recent sell-offs. Those we have kept have generally held fast. Such good luck comes to those who are prudent and proactive.

Making examples of a pair of our best gainers, we sold Crosshair (CXX) for 66% gains and 100% gains on our respective positions (closed January 16), and it has not gone up since then while many of our subsequent entries have. Santoy (SAN) returned 251% for us upon selling March 1st just shy of its top so far and has since then gone down almost 50%

Others have stayed relatively flat after some sharp dips, or even appreciated without dipping, but overall our subsequent buys have outperformed those and have generally been safer holdings. Keep in mind that most speculative stocks will in 5-10 years be worth nothing. They all must be sold at some point. When the charts say "sell" we will post our sells, and while everyone must make their own decisions we respectfully suggest investors do not put too much on the line based merely on hopes of eternal share price increases and hype. Check the stock listings from 10 years ago and notice that many - most in fact, if small caps - of those companies are now long gone along with the funds of those who held the shares too long. If we're talking speculative "penny" stocks, then make that figure perhaps 95% that are long gone. Clearly those are not good odds and by the time that crash happens - and it surely will - we plan to be on the sidelines or sold short.

Until then, we carry on.

Here is the 1-year chart for Mega Uranium. We posted our buy here on March 6 of this year at $5.58 We believe it to be easily one of the best junior uranium companies, and in early May wrote that we'd be adding to our personal long-term holdings between $6-$7 and have been doing so the past few days. We still feel this range presents a good entry point for new buyers and those wishing to add to their existing positions. Mega's ticker in the US is MGAFF.

In closing, a reminder to read The Prudent Bear site daily, and we refer you particularly to this recent sobering and surely prophetic article.


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