Conference Report

On February 4, I attended the latest (Winter) of many conferences I have attended by the Astrology Fund. It is managed by Henry Weingarten, who is clearly a gold bug. This has been a lucrative posture for the past decade, and Mr. Weingarten was on the ground floor around the turn of the century.

Using proprietary techniques, the fund is managed based on its predictions of moves in gold, gold stocks, and the stock market in general.

For those who don't believe in astrology, consider Weingarten, a computer maven, the practitioner of a very sophisticated form of technical analysis. He can go wrong, of course, but he has made enough correct (or nearly correct) calls over the years to be worth listening to.

The Conference itself consists of speakers on the macroeconomic situation, and presentations by small cap companies. The latter are often among the most lucrative situations, because they are not well followed, which is to say that their prices often explode when they are discovered by the wider community.

The most recent conference followed the usual format. Six companies presented.

Alexco: Does both mining and environmental services (synergistic). Its Bel Quino mine is Canada's only (pure) silver mine. This is a restart, in Yukon Territory. Last push was given by Silver Wheaton's $50 million financing. Recommendation: look into much-larger, but entrepreneurial Silver Wheaton instead.

Sandspring: Located in Guyana. Alluvial (gold) mine "morphed" into bedrock mine. Lots of small operators, encouraging with regard to richness of deposits. Next to Venezuela, including geological formations, with less risk. Company likes the government. But company and country are too "prospective" for most investors.

Fronteer: Three major gold mines in Nevada. Early stage development company. Startups in 2012-2014. Too early stage for most investors.

Alexis: Located in Quebec and Manitoba. Gold and uranium. Just completed merger with Garson Gold to try to attain "critical mass." Still a
"grabbag" of businesses. Not a "bird in hand" but it may amount to something some day.

Aurizon: follows a more focused strategy than Alexis. It explores primarily along the Abitibi trend in Quebec, and is already in production. IRR of 30% or more on current projects at current prices. As such, it seems to be more advanced both operationally, and in terms of corporate development, than Alexis.

Silvermex. Silver mining in Mexico. Restart of past producer.
Infrastructure worth $27 million vs. market cap of $30 million. Some success in exploration. Fast track with environmental permits. But recent equity financings were dilutive. One needs to like both Mexico and silver to buy this one.

The outside speakers included Chris Ecclestone and Greg Weldon. Ecclestone pointed out that the interest in gold and gold stocks last year was due to the dollar carry trade, which probably earlier pushed the price of gold to $1200 an ounce, and is now being unwound. Gold company financings benefited from this effect. But not base metals; the IPO market was dead.

Greg Weldon was also a near term bear. No more ACCELERATION of monetary expansion. Deceleration now in progress (second derivative is negative). Ditto for bank lending. Credit spreads blowing out all over Europe; hugely negative. Emerging ok on a stand-alone basis, but will be hurt by slowdown in developed markets; you can't have the tail wagging the dog. Bad for financial markets, including gold near-term.

Henry Weingarten was also bearish, particularly on the stock markets (at least through March-April), less so on gold, for which he pegs fair value at $1011 an ounce.