“With precious metals prices taking a breather after hitting near-record highs in 2010, one newsletter author at the conference suggested the easy money has already been made in the junior mining space.

Stock picker John Kaiser said junior mining stocks with the potential for five- and ten-fold gains are getting harder to find, and he’s rebranding his Kaiser Bottom-Fishing Report to Kaiser Research Online.

“I think we’re still in the secular bull market for raw materials,” he said. “Has the bottom-fishing window closed? I would say yes.”

Fund manager sounds bearish note at Vancouver investment conference

By James Kwantes, Vancouver Sun January 24, 2011 Be the first to post a comment

Photograph by: Glenn Baglo, Vancouver Sun

VANCOUVER - Precious metals ‘bulls’ were everywhere at the Cambridge House Resource Investment Conference, Vancouver’s annual junior mining showcase, but Toronto portfolio manager Danielle Park sounded a bearish note.

Park told investors Monday that quantitative easing in the U.S. has artificially stimulated global demand, inflating stock and commodity markets. That’s created an “artificial wealth” bubble that is a playground for speculators, rather than an economic recovery that will reverse the continuing losses that average Americans are experiencing in income and housing.

So if your investments have roared up in the last year-and-a-half, they are likely over-priced and now could be a good time to take profits, she advised.

“The demand isn’t real, it’s substantially less than it appears,” said Park, a partner with Venable Park Investment Counsel and author of Juggling Dynamite. “The world over-built for false demand fuelled by the credit bubble. Today we have too much of everything: too many cars, houses and malls.”

That bubble extends to China, Park said, where the government has financed the construction of empty cities and massive vacant shopping malls. Meanwhile, food prices have spiked and now devour more than half of household incomes in China.

“This is why China must stop their economy from expanding quickly this year,” Park said. “This is why they’re going to intervene again and again and again.”

Much of the rising demand for commodities has come from ETFs and funds, not from Asian economies, she explained.

“Today what people are doing is not investing, it’s speculating,” Park said. “In terms of physical demand for commodities, we are back to the hyperbole that led to the problems in 2007.”

The junior mining universe was the focus of the investment conference, held at Vancouver Convention Centre West. Hundreds of junior exploration companies searching for everything from gold and silver to uranium and vanadium had booths at the show. Keynote speakers included fund manager Eric Sprott and newsletter authors such as John Kaiser and David and Eric Coffin.

With precious metals prices taking a breather after hitting near-record highs in 2010, one newsletter author at the conference suggested the easy money has already been made in the junior mining space.

Stock picker John Kaiser said junior mining stocks with the potential for five- and ten-fold gains are getting harder to find, and he’s rebranding his Kaiser Bottom-Fishing Report to Kaiser Research Online.

“I think we’re still in the secular bull market for raw materials,” he said. “Has the bottom-fishing window closed? I would say yes.”

The bottom-fishing heyday was at the end of 2008, when the financial crisis sent virtually all stocks off a cliff, he said. At the end of 2008, Kaiser picked about 110 penny mining stocks he thought had potential for large gains. The entire group is up several hundred per cent, he said.

“These were the companies that had assets in them that just got cremated in the meltdown,” he said. “This was shooting fish in the barrel.”

Kaiser is shifting his focus to undervalued companies with a compelling story and cash in the bank. One of his picks is First Point Minerals, a Vancouver-based company that has discovered a nickel-iron alloy at its Decar property in northern B.C.

First Point has the backing of U.S. miner Cliffs Natural Resources and is now on a worldwide hunt for the alloy, touted as a naturally occurring stainless steel.

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