CHAPPY S PICKS Charts and commentary by David Chapman SEPTEMBER 3, 2009 26 Wellington Street East, Suite 900, Toronto, Ontario, M5E 1S2 phone (416) 604-0533 or (toll free) 1-866-269-7773, fax (416) 604-0557 david@davidchapman.com dchapman@mgisecurities.com www.davidchapman.com With a little over two weeks behind us we can report we are up on our three portfolios. The best performer to date is the junior exploration portfolio up 5.7%. The Gold portfolio is up 3.1% and the Conservative portfolio is up 1.7%. The latter two are of course before dividends. If the Golds are up the hedge using the Horizon BetaPro Inverse Gold ETF is of course down 12%. We will monitor this situation closely as the Gold stocks are showing bullish signs. We will not hesitate pulling the hedge if warranted. Please note: The Author of this report is an outside director of Bullion Management Group, the manager of the BMG Bullion Fund. Please note: The author may from time to time, be long and or short positions in the companies named within this technical market report. Please note: Horizon BetaPro products are securities of related issuers to MGI Securities. StockPicks August 19, 2009 page 1
The conservative portfolio contains only blue chip dividend paying stocks. We have picked them for some diversity and in areas we believe will weather the recession. We are avoiding financial stocks at this time. We base all our portfolios in bullion. Conservative Portfolio $100,000 Portfolio entered August 17, 2009 Current Value $101,655.52 Description Amount # Shares/Units Purchase Dividend Interest Current Sep 2 % Gain/Loss Stop (if required) Cash $24,398.50 BMG $25,000 2,892.18 $8.644 $8.82 2% BullionFund Metro Inc. $7,021 200 $35.10 $0.55 $35.77 2% $34 MRU.A/T Royal Gold $6,487.50 150 $43.25 $0.35 $47.05 9% $40 RGL Enbridge $6,154.50 150 $41.03 $1.48 $40.14-2% $37.50 ENB/T Shoppers Drug Mart SC/T $6,457.50 150 $43.05 $0.86 $42.95 0% $40 Franco Nevada FNV/T Crescent Point Energy CPG/T Horizons Beta Pro Inverse Gold ETF HIG/T Horizons Beta Pro Inverse S&P/TSX 60 HIX/T Total Income - $1,152.50 $7,857 300 $26.19 $0.29 $28.75 10% $23 $6,750 200 $33.75 $2.76 $35.67 6% $31 $5,079 300 $16.93 $14.97-12% $4,795 350 $13.70 $13.78 1% StockPicks August 19, 2009 page 2
Golds have been one of the best performing sectors over the past decade. We believe the best is yet to come and if the current bullish patterns are realized all of these stocks should perform well. Again we are holding back some cash and we base the portfolio in bullion. Senior/Intermediate Gold Portfolio $100,000 Portfolio entered August 17, 2009 Current Value $103,129.52 Description Amount # Shares/Units Purchase Dividend Interest Current % Gain/Loss Stop (if required) Cash $23,272 BMG $25,000 2,892.18 $8.644 $8.82 2% BullionFund Goldcorp $7.600 200 $38 $0.20 $43.86 15% $32 G/T Eldorado $6,930 600 $11.55 $11.87 3% $9.00 Gold ELD/T IamGold $6,405 500 $12.81 $0.07 $13.80 8% $10.50 IMG/T Franco $6,547.5 250 $26.19 $0.29 $28.75 10% $23 Nevada FNV/T Centerra $6,700 1000 $6.70 $6.73 0% $5 Gold CG/T Red Back $7,387.50 750 $9.85 $11.54 17% $8 Mining RBI/T Horizons Beta Pro Inverse Gold ETF HIG/T $10,158 600 $16.93 $14.97-12% Total Income $147.50 StockPicks August 19, 2009 page 3
All of these stocks are trading near or under $1. They are all in either the gold/silver sector or other mining sector (primarily base metals). Some of these companies we know and follow closely and others we don t know as well but were intrigued by their charts. Junior Exploration Mining Stock Portfolio Entered August 17, 2009 Current Value $105,725 Description Amount # Shares/Units Purchase Current % Gain/Loss Cash $26,300 St. Andrews $4,200 10,000 $0.42 $0.41-2% Gold SAS/T Timmins $7,300 10,000 $0.73 $0.71-3% Gold TMN/V Explor $6,750 25,000 $0.27 $0.40 46% Resources EXS/V Animas $8,400 10,000 $0.84 $0.83-1% Resources ANI/V ECU Silver $5,000 10,000 $0.50 $0.49-2% ECU/T Creston $5,000 25,000 $0.20 $0.26 30% Moly CMS/V Bravo $5,500 10,000 $0.55 $0.60 9% Ventures BVG/V Fortuna Silver Mines FVI/V Ontex resources ONT/V Soltoro SOL/V Titanium Corp. TIC/V $10,500 10,000 $1.05 $1.20 14% $5,250 15,000 $0.35 $0.33 65% $6700 20,000 $0.335 $0.37 10% $9,100 10,000 $0.91 $0.83-9% Stop (if required) StockPicks August 19, 2009 page 4
Chappy s Picks Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. Metro Inc. (MRU.A-TSX) is the big retailing and food distributor. Metro also distributes pharmaceutical products. Metro operates in both Quebec and Ontario through its network of supermarkets, discount stores and drugstores. Banners they operate under include Metro, Metro-Plus, A&P, Loeb, Super C, Food Basics and drugstores under Brunet, Clini Plus, Pharmacy and Drug Basics. Metro pays a dividend of $0.55 for a yield of 1.5%. Metro s dividend is considered one of the best around. Metro s chart right now could be construed as a mixed message. The highs came in Jan 2007 near $42. Metro seemed to precede the 2007-2008 financial collapse hitting its low in February 2008 near $21 for a roughly 50% loss. Since then the rise has been strong with ongoing rising volume. The positive chart interpretation is a cup and handle formation and for the past six months we have been forming the handle. A breakout to new highs above $42 could lead to targets as high as $63. Others might try and interpret this as a potential giant double top with the two highs in the $40/$42 zone. We doubt that but that also helps set up our stop at $34. StockPicks August 19, 2009 page 5
Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. Goldcorp (G-TSX) is one of Canada s preeminent gold mining companies with its operations in Red Lake Ontario. Goldcorp engages in the acquisition, exploration, development and operation of precious metals properties in Canada, the U.S.A., Mexico, and Central and South America. Its primary products are gold, silver, copper, lead and zinc. Goldcorp pays $0.20 for a yield of.5%. As with most of the PM (Precious Metals) stocks Goldcorp peaked in July 2008 at over $52. The financial collapse which also negatively impacted the gold stocks saw the company fall to just under $18 in October 2008 for a nasty collapse of 65%. Today at over $43 we are not only up 138% from the lows but closer to the highs then the lows. Since January 2009 we have stayed above the 200 day MA. The formation appears to a possible symmetrical triangle. Symmetrical triangles can be consolidation patterns and a firm break above $41 could target to $54. However, we have seen false breakouts as well and we would be more comfortable once we clear $45. A reversal and breakdown under $37 could target to $24 and a major test of the lows. StockPicks August 19, 2009 page 6
Charts created using Omega TradeStation 2000i. Chart data supplied by Dial Data. Fortuna Silver Mines (FVI-TSXV) is a junior exploration silver mining company operating the Caylloma zinc/lead/silver mine in Southern Peru and the San Josa silver/gold project in Mexico. Fortuna shows reserves proven and probable of 4023 tonnes of 156 g/t silver, 0.55 g/t gold and 2.58 g/t zinc. FVI topped near $4 back in November 2007. The financial collapse destroyed the junior mining market and by October 2008 FVI was under $0.40. Today we have recovered to over $1 and FVI is demonstrating a strengthening chart. We have now broken out of the recent consolidation pattern and technically we could rise to at least $1.50. Note the rising volume on the breakout. StockPicks August 19, 2009 page 7
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