Vol. 76 - WHAT TO WATCH

Dear member,

The growing weariness surrounding the economy is reaching a boiling point. Oil broke yet another record and will likely cross $150 per barrel in days. Israel is threatening Iran with military action and the US economy is down and out. Stocks across the board are no longer fairly valued because of panic stricken investors. These issues, coupled with the fact that major funds are coping with huge losses, is creating plenty of stress.

Let's make it clear that 80-90% of people selling in the past 6 months are losing money. If you are selling now, there is a good chance you are losing money. A diminishing share price should not be a reason to sell your stock in a company. We continuously preach this. If the fundamentals and reasons which moved you to purchase the stock have not been compromised, neither should your confidence in the deal.

Every company is unique with its own set of circumstances AND its own set of positives and negatives.

Questions you should ask before you buy or sell:

• Management: Are they capable of achieving the company goals?
• Treasury: Does the company have at least a year of operating capital, or the means to quickly raise enough money to sustain itself?
• Properties: Will the market react positively if the resource is defined successfully and optimal results are achieved? If the answer is no, the company's exposure may be weak or the commodity may be out of favor. These aspects can change very quickly.

Small Cap Investing

Capital has left the markets, especially amidst the juniors. Mining stocks have been horribly depressed by the lack of capital being moved into the market. Even with metals trading at or near record highs we are seeing companies struggle to sustain themselves as many are down huge percentage points in the past 52 weeks.

It's human nature to focus on the negatives of a situation and act upon those feelings. The markets are cyclical and when they recover there will be an influx of capital flooding into equities; the likes of which we have not seen in years. We will be waiting for this to happen and at the same time looking for companies continuing to strive in these volatile and merciless markets.

The expression "time flies when you're having fun" is applicable to the markets. Everything has slowed down as we search for gains and wait for development and a turnaround. When confidence and cash comes back so will