first majestic silver

Patience has its rewards

September 16, 2003

On the weekly chart, Gold appears to be forming an ascending Right Angled Triangle, which is very bullish.

On the Weekly charts, Silver is also looking bullish, having broken up from a smaller ascending right angled triangle (although there are clear indications on the hourly chart that the shorts are sweating to keep a lid on the price explosion that will probably manifest if silver breaks above $5.50/0z). For the purists, the silver price has also broken up from what appears to be a bowl or saucer formation, but the volume pattern is not confirming this as a true bowl. Nothing in life is certain.

Enough theory! Its time for us PM bugs' patience to be rewarded. Here are two charts of Australian companies:

First: Giants Reef Mining Limited. (Its fundamentals can be researched on: www.asx.com.au/asx/research/CompanyInfoSearch.jsp Just type in GTM in the ASX codes and you will be led to a section which will give you an overview. Of significance is that GTM has recently been included in the S&P ASX 300 index. It has roughly a billion shares and options in issue and the company "controls" the sixth largest gold field in Australia - situated in the Northern Territory. One can also obtain more details from the company's web site at www.giantsreef.com.au . Its main mine has recently been recapitalised and reactivated and the first pour is scheduled to occur in October.

The chart below shows two consecutive On Balance Volume buy signals, and what could be a triangular consolidation pending the next move. Of course, the move is likely to be in the direction of gold's move, but the ascending right angled triangle in gold gives me some comfort that the move is likely to be upwards.

Macmin (MMN) is a company dedicated to silver exploration - although it does control a gold mine deposit in Papua New Guinea in an area near an extremely rich gold deposit being mined by Lihir Gold.

Macmin - at its Texas Silver Mine (See web site http://www.macmin.com.au) is sitting on what could turn out to be one of the world's richest silver deposits. Exploration continues and the mine is not yet in production, but indications are that the area could contain as much as 100 million ounces of silver and equivalent. The company has around 450 million shares and options in issue.

Its On Balance Volume chart below shows a series of three significant buy signals, and the price chart also seems to have a breakaway gap (at around 8 cents) and a couple of runaway gaps.

Caveat:

The above does not constitute a recommendation. It merely reflects my personal opinions.

Disclosure:

It is because of the confluence of all of the above fundamentals and technicals that I have taken a substantial position in both of the above companies, although GTM is still a bit iffy on the fundamentals because the mine has only 200,000 oz of "proven" resources. Nevertheless, it seems to me that the geographic area in which it is situated may yield strongly positive results from exploration. If the gold price starts to run it is my view that Institutions who are managing "Other Peoples Money" will need to take a position in this company given that it is now a component of the S&P ASX 300 Index. I regard both MMN and GTM as long term "buy and hold" opportunities.


Gold is perfect for use in coins and jewelry as it does not react with air or water like many other metals.
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