Happy Holidays

Another year is quickly coming to an end and it is now time to hang out with our families, eat lots of good food, drink and be merry. I am sure there will also be some investment discussions during this reflective time and some moaning as we have ended the year on a bit of a downer in the investment world.

The problems in US related to the Sub Prime Fiasco are now mainstream as it is impacting just about every sector of the economy. The once mighty financial stocks of the world have fallen because of some poor choices caused by greed being made by some very highly paid analysts. Now the general public represented by the government will have to swoop in and pay for the mistakes of these individuals. Don't worry, they will still be able to drive their fancy cars and live in their big houses. The general public on the other hand will be faced with some real pressures in the 2008. Some of these pressures will include: a devalued US dollar, high commodity prices, an aging workforce, devalued homes, rising mortgage rates and increased competition from Asian manufacturers.

So the big question to discuss over the holidays is where is a safe place to keep your "hard earned" money? A place that will allow it to appreciate in value. Some people may want to think about sticking your cash in the stocking hanging by the fire. Cash is always safe unless there is a currency crisis. The way central banks are printing money and throwing it at the markets, there is beginning to be a stronger argument for this case. The other option is to look for investments that will continue to trend higher. Commodities have been on fire for the last 5 years and many believe that we are definitely entrenched in a commodity bull market that will last for years to come because of fuelling by growth in China, India, Brazil, Russia and other countries. I still believe that commodities will provide some big gains for wise investors for years to come. It won't be as easy as it has been and investors will have to choose the "best of the breed" for commodity stocks and avoid areas of the world where political decisions control the future of the company.

December was an extremely punishing month for stocks as tax savvy investors sold their losers for a tax loss and built up their liquidity for a rush back into stocks in the new year. As you are preparing to take advantage of the boxing week specials at the malls, you should also be taking advantage of some of the great companies that have been sold off unnecessarily. Here are a few companies that are in my bargain flyer.

1/ AUN-X (Aurcana)- A precious metal/base metal producer in Mexico that has a strong balance sheet, growth and no debt. Are producing 1000 tons a day now and will be up to 1800 tons a day by the end of 2008.

2/ BBP-X (Bayou Bend Petroleum)-Bayou Bend is an oil and gas exploration and production company with a focus in the Gulf of Mexico shallow water shelf area. The Company has lease interests in the State Waters of Louisiana near Marsh Island and owns interest in several Federal OCS blocks offshore Louisiana and Texas. The Company has an aggressive drilling program planned for 2007/2008. They have had some disappointing drilling results on their joint ventures but have not drilled the lucrative Marsh Island Play yet.

3/ CHX-X (Cash Minerals)-Cash Minerals (www.cashminerals.com) is a publicly listed emerging energy company focused on uranium, coal and alternative fuels (synfuels). Under an agreement with Mega Uranium Ltd., Cash Minerals has the option to earn a 75% interest in uranium prospects located in various parts of the Yukon. These highly prospective prospects include numerous iron-oxide copper-gold (IOCG), structurally-controlled hydrothermal uranium targets. Recent volume has indicated that people are already taking advantage of this bargain price.

4/ MTO-X (Metanor Resources)-A junior gold producer operating in the Val'dor region of Quebec. They have close to 300 000 ounces of gold. Lots of growth potential through acquisition and exploration around their current properties in a mining friendly region of the world.

5/FVI-X (Fortuna Silver)-Fortuna is a growth-oriented silver and base metal producer focused on mining opportunities in Latin America. The Company's primary assets are the Caylloma Silver-Base Metals Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. The Company is aggressively pursuing additional acquisition opportunities. For more information, please visit our website at http://www.fortunasilver.com/.


There are tons of bargains out there and I feel pretty confidant that many of the junior resource stocks that have been sold off will be higher by spring. Merry Christmas to all and Happy New Year!

GTIC Goes Nuclear

The November cold weather has reminded us that we need energy to heat us, move us and power everything that we do. With the price of oil touching a $100 a barrel, people have started looking for cheaper and cleaner energy alternatives. Uranium fits this description perfectly and this could be why the price has gone up over 1000% over the last 5 years. Doesn't this price rise mean that we have missed the boat? The big gains are over? Think again, Uranium has rocketed up as a commodity but will continue to rise due to simple fundamentals like supply and demand.

Lets start with some facts about Uranium. Currently there are 437 Nuclear Reactors around the world producing 16% of the world's electricity. These reactors demand 173 million pounds of Uranium per year. In 2006 there was 102 million pounds of Uranium produced. The shortfall of Uranium was made up by dismantling nuclear weapons. This will change soon as we are slowly running out of weapons to dismantle. This demand is set to increase substantially as there are currently 32 reactors under construction as we speak. There will be an additionally 288 reactors built by 2025. Lets just say that Uranium is not going away. The fears of three mile island and Chernobyl are still there but the technology and safety of reactors has improved considerably. In the end it will come down to keeping the lights on. Without nuclear energy, the world will not be able to meet the electrical demands of an increasingly "consumptious" society.

So to take advantage of this situation, what should an investor do? To begin, the producers are where it is at as they will be able to take advantage of the demand and rise in price immediately. Currently there are only a handful of producing companies out there. Cameco is the largest, followed by Areva, BHP/RIO, and some Russian producers. Next there are the new producers on the block. Uranium One has been aggressively building its portfolio of properties and will be bringing some of them into production next year. Unfortunately, they just announced that they will not be able to meet their production targets due to a lack of sulphuric acid which is used in the production process. This has been bad news for Uranium One shareholders but I think good news for other Uranium producers as it will just drive more demand for the commodity. That leaves two other companies to choose from, Paladin Resources or Denison Mines. I like both of these companies but Paladin appears to have a slight advantage over Denison. Here is why Paladin Resources is the place to play for Uranium for the next few years.

Paladin is not a small company as it has a market cap over 3 Billion dollars. They have 47% institutional ownership in the company. They have just started production at its Langer Heinrich mine in Namibia where they have just expanded there resources to 106 mlbs of Uranium. This expands the life of the mine to 12 years, producing 7 mlbs of uranium a year. Another mine is set to start producing in Kayelekera, Malawi in 2008. This mine will produce 3.3 mlbs of uranium a year for 11 years. They also have four properties in Australia that are very prospective development projects. They hold a 82% holding in Summit Resources which is in the pre-development phase of the Vahalla (resource of 71 mlbs of Uranium). Overall, Paladin has over 279 mlbs of Uranium as its resource base. They are doing everything at the right time and there will be demand for there resources for years to come. There average cost to produce Uranium is $20lb. That leaves a lot of room for profit. They should be producing 8 million pounds a year by 2009. If Uranium just stayed at its current price, they would be generating 720 million dollars of revenue a year. Not bad.

To conclude, Paladin is a great way to get some exposure to the "Hot" Uranium market. Although the price of Uranium has come down from its highs it hit this spring, it is starting to rebound which means this is the perfect time to buy. The hidden added bonus you get with this company is the fact that they are a very attractive takeover candidate. With two producing mines, big companies like Cameco and Areva will be looking at Paladin as a quick way to increase there own production profiles. Cameco has disappointed shareholders with their Cigar Lake Mine and may never get it into production. This has been one of the reasons for the rise in the price of uranium. More problems at Cigar Lake would virtually force them to look elsewhere for production. There is not too many choices out there and Paladin is probably the best one.

Stelmach Decision Unveiled

The day finally arrived on Thursday, October 24, where the new royalty regime in Albertavala, I mean Alberta was revealed. In a nutshell, new royalty rates (about 20% higher than currently) will take effect in January 2009. This will amount to an investment lost of approximately 1.4 billion dollars by Alberta's Oil Patch. If you couple that with the Trust Decision of last year, companies bottom lines will be hit. Add in low natural gas prices and high labor/material costs and you have a recipe for financial disaster in the so called "economic engine" of Canada.

It appears Premier Stelmach has chosen to take quite a different path than his predecessor by sticking it to Big Oil and instead has chosen to represent the little guy. This decision might get the government in trouble legally and from an investment standpoint. Legally, they have broken a binding agreement with Suncor and Syncrude by raising taxes. The investment community does not like uncertainty, and with the Trust Decision last Halloween and now the Royalty Decision, foreign investors have lost all faith in Canadian government.

So what does this all mean for us, the investors out there. I was a little surprised by the markets strength on Friday, especially in companies with big exposure to Alberta. I don't know if people are just taking a few minutes to take in the decision or if they believe that commodity prices will make up for any extra taxes. I wouldn't be surprised to see a sell off next week.

I have sold out of my last energy trust. Being double dinged is not my idea of "investor friendly" and I have a sneaky feeling that many are going to do just as I have. I have decided to reallocate my money into gas weighted plays outside of Alberta. The north sea has been rejuvenated by some very aggressive and ambitious juniors which will benefit from the slow down in Alberta. Two companies I really like out there are Antrim Energy and Ithaca Energy. Antrim has been hitting on every well drilled and has discovered what looks to be a huge reservoir of oil. Ithaca has been hot lately and recently hit a high of $4.00 a share. Their share prices will continue to rise with more drilling results and investor interest in the North Sea. I have also allocated some of my oil money to Argentina. With recent drilling success by Petrolifera and others, a junior has caught my eye by the name of Argenta Oil and Gas. They are brand new (just started trading in September) and have an aggressive drilling program set for the fall/winter. They are currently trading at $0.55 with a market cap of about 50 million. I have added links to both Antrim's and Argenta's websites on our watch list.

Overall, I am still quite bullish on commodities in general and gold/silver in particular. Gold has had an amazing run since September and is now ready for a little breather. It is tough to predict when gold might correct due to all the other factors occurring in the world right now. We have tensions in the middle east getting higher, mortgage defaults in the US, Bernake's rate decision, high oil prices, etc. etc. that just seems to keep gold powering ahead. No matter what happens in the short term, it is good knowing that we are definitely entrenched in a commodity bull market that has many more years to go.

New Look to the Blog

As we move into the heart of the fall/winter investing season, I have decided to update the GTIC Investment blog format and its content. My goal is to use the blog as a meeting spot to explore investments, keep up to date on companies activities and share our thoughts on what is happening in the investing world.

I have added some new elements to the page that will hopefully save club members time in finding the information they are after. Through these elements it will be easier to keep track of the companies we invest in and want to invest in. We can also strengthen our knowledge which will assist us in making better decisions as investors. Hopefully, the blog will act as a lighthouse guiding us all through the myriad of decisions required to be successful at investing.

The about the editor will serve as a place to introduce people to the blog, the club and myself (the editor). I am hoping that the blog will connect our group to other like minded investors where we can share our thoughts and hopefully make more informed decisions through this communication. I encourage visitors to either email me or leave a comment on the blog.

Below the Blog Archive, I have posted the names of all the companies we currently are invested in. Each name is linked to the company website, to assist us in keeping up to date on company news. The growth of the club and capital that we have to invest has made it harder to keep track of all our investments. The blog will help us with this. If we sell a company, I will remove that company from the list. I will add any new companies that we buy to the list as well.

I have decided to add a watch list below our portfolio. Hopefully this will facilitate more indepth research and discussion on potential investments. The one company on the list that I am personally sharing at the meeting on Saturday, November 3 is Tumi Resources. They recently had a private placement at $0.72. The money is being used to fund further drilling on their La Trini Deposit. This deposit returned some very high silver grades on their initial drilling. Tumi are now attempting to expand the resource. They are currently drilling and should have assay results out by the end of 2007.

Below the watch list, you will find a number of internet research resources. The links are very valuable and provide a ton of expert advice on various investments. The forum and blog links will allow you to see what other investors are thinking.

To add to the interactivity of the Blog, I have added a poll question. I will change this question from time to time to get feedback on different issues.

At the very bottom of the page, I have added a news link that will flash current events related to gold, silver, oil and natural gas. Hopefully, these changes will increase our traffic to the blog and knowledge that we have on investments. This will help us all succeed in adding more gravy to our own portfolios and net worth.

Portfolio Holdings

Bronco Energy- 16%
Ithaca-10%
Excellon Resources-9%
Northern Star Mining-8%
Cinch Energy-8%
Bandara Gold -4%
Claude Resources-4%
Baja Mining Warrants (Expire Apr 2009)-3.5%
Celtic Minerals-3%
Avalon Ventures-2%
Canadian Zinc-2%
Calvalley Petroleum-2%
Yukon Zinc-1%
Resverlogix-1%
Glencairn Warrants-Expire Nov. 2008-1%
Kinross Warrants- Expire Dec 2007-1%
IMA Warrants-Expire Sept 2009-1%

Portfolio Value is $60 000
Members Share Value is $3400 plus cash in the bank=$3500 (My guess)

Commodities start to explode

The recent cut in interest rates by a half point by the US Federal Reserve has fired up commodities after the summer sell off. Economically, things are looking worse and worse each day in the US. Although companies keep coming out with positive earnings mostly due to the abundance of liquidity that is floating around, the overall picture does not look good for the coming year. The Asset backed mortgage collapse has shaken the system and we still haven't felt the full effect of the poison that has entered every financial market on earth. So what does all this mean for the Gravy Train and its investors....

Well, to begin we have been predicting this collapse for about two years now. We have loaded up on junior mining companies that will provide us leverage to the coming frenzy in commodities. Gold and Silver have both had a consolidation year after there rise in 2005. Many members are wondering when the next wave will occur...I think that wave is upon us. I am predicting that we could see a short sell off in commodities in mid October after Gold runs to $750 an ounce. This sell off will be the last chance to get into commodities when they are cheap. We should be ready to put some serious money down both as a club and as individuals. The trick will be to find the best companies to entrust our hard earned money between now and then. I predict that we will see $800 an ounce by the end of the year and $1000 an ounce by May 2008. Can you imagine how many people will have noticed gold by then. We are still in the early stages and have the advantage of foreseeing the rise that is coming. I have personally moved most of the investments into areas that will take full advantage of this run. Most financial planners will tell you that this is crazy so don't copy my actions unless you are prepared to lose it all (ya right).


Gold is not the only commodity gaining in price. Oil has also had a very good run and has broken through $80 a barrel. This should help out some of our junior producers like Bronco and Calvalley Energy. Bronco continues to be our top holding. They have had a very successful year and have recently expanded their land holdings. They have changed there plans a little as they are now drilling 300 wells this year versus the 30 or so that the originally had planned. The news flowing out of these wells should help the share price. Keep in mind that the NAV is over $20.00 a share. They haven't even started looking at their oil sands yet. Natural gas has struggled along as a commodity and has not kept up with its cousin oil. The traditional ratio of 6 to 1 on price is way out of wack. Gas should be trading between 10 and 15 dollars but is still stuck at $6.00. A cold winter could change this. Delphi, Ithaca and Cinch are all good holds to see what happens with the price of natural gas over the winter.

Overall, the Gravy Train looks poised to take full advantage of a commodity explosion. I am currently trying to track down some speakers for our October Meeting. We might have the opportunity to have the CEO from Silver Eagle Mines in to talk to us. The editor of a website called the silverbullreport has asked if we would be the audience for this presentation. The video will be put on his website for subscribers to watch. A great idea that I jumped at. Hopefully we can coordinate things to make this experience occur.

Well until next meeting, keep your eyes and ears open for some great investments and I look forward to seeing all of you in October.

First Post

I thought the first step to establishing an online presence for the Gravy Train Investment Club would be to start our very own blog.

My main goal of setting up the blog is to expand the educational aspects of the investment club. I must admit that the real benefit of being involved in an investment club is the knowledge that you squeeze off others. You can then apply that new found knowledge to your own financial planning. There are many other benefits to being involved in an investment club like the big returns, forced saving plans, the beer and pizza, meeting new people, etc.

So without further adieu, lets get started. We can get started by focusing on our current holdings as a club. We can also begin a running commentary on the economic situation, market conditions and technical analysis. Finally, we can use the blog to inform members and potential new members of club activities, meetings, etc.