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May 6, 2006
Volume VII, Issue 36
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To OTC Journal Members:

Trading Alert: Golden Peaks Resources LTD (TSX: GL; OTC PK: GDPEF)

Here's a chart of GLD- the EFT which trades on the NYSE and mirrors the price of gold in a 1 for 10 ratio. If the price of gold happens to be $680 per ounce, the price of GLD will be $68. 

If you're wondering why small stocks seem to be out of favor today, gold is one of the culprits along with anything commodity related. Small stocks in telecom, internet, and biotech are falling back as money flows from those issues into the red hot commodity sector. Many believe if gold breaks the $700 barrier, look out above.

While I love the contrarian mentality of buying groups out of favor and waiting for the market to turn, I am also sensitive to the idea of finding what people want in any market environment, and delivering ideas in those sectors. 

The OTC Journal's most recent commodity related idea- US Energy (OTC BB: HYFS) has already been a big win. On April 20th I published on the stock at $.27. In the April 26th newsletter covering the contract with NY, I stated "I would be very surprised if we don't see the stock trade to the $.40 mark tomorrow. I just don't know if it will hold". I was wrong- on April 27th we made a high of $.43. Kaching if you traded- 60% in two weeks. Of course, that is a bit misleading in the real world. It is almost impossible to buy at the absolute bottom and sell at the absolute top- however, you could have easily scalped 40% out of this one. 

In keeping with the OTC Journal's theme of uncovering microcap stocks that you might not hear about on your own, today's trading idea is in the gold sector. A quick glance at a gold chart leaves no doubt about why small gold stocks are red hot right now. I came across this idea from one of my wide ranging contacts in the microcap world who happens to be a fund manager with the "Midas" touch in this sector. Hence, I have loaded up my own personal account (no guarantee- I'm am wrong about plenty of stocks), and will share the idea with you.

Golden Peaks Resources LTD (TSX: GL; OTC PK: GDPEF)

Golden Peaks may have uncovered the motherlode in the Patagonia Region of Argentina. 

The company currently has 25 million shares I&O, and $20 million cash in the bank. The first round of drilling results in the Chubut Province in Argentina indicates a possible major gold discovery. 

The stock currently trades on the TSX- Toronto Venture Exchange, but has been approved for a more senior listing. It is called a Tier 1 listing, and is the equivalent of a US listing on the NYSE. In the next several weeks the stock will make the move up to the Tier 1 listing.

Gold investors and analysts are buzzing about the Fortuna Project. It's in a very mining friendly place- there are few inhabitants, and the terrain is easily accessible. There are no trees- it is primarily rolling hills and barren scrub land.

Golden Peaks has a joint venture in place with Minera Hochschild- one of South America's oldest and most respected mining companies.

Early estimates have the find in the 10 million plus ounces of gold range. More drilling will need to be done to prove this out. Within the project there are six major structures, all of which appear to have extensive high grade gold outcrops. They all appear to originate from a convergent area called the "Amphitheater". 

With the current gold prices, every million ounces they prove up should be worth about $4 per share to the shareholders. Early estimates of 10 million plus ounces could therefore put the eventual value at $40 per share- which would be extraordinary.

Here's a chart of the last few months. As you can see, the stock has already had a great year. Ideally, I'd like to see the stock trade down to about $2.60 Canadian for the best entry level.

The stock broke out in late March as it extended out into an "ascending wedge". The same type of pattern is building now, and I'd like to have everyone in before the next breakout.

If gold continues to trade well, drilling results will drive this stock the way clinical results drive biotech stocks. More drilling results are due soon.

The company's primary listing is in Canada where it trades on a second tier exchange known as the "TSX" or Toronto Venture Exchange. A Tier 1 listing to the Toronto Stock Exchange has been approved, and it is expected to begin trading there in the near future.

Buying the stock from the US is a little tricky. You can trade it under the symbol GDPEF on the pink sheets- I have been able to buy it online. You don't get a live quote if it doesn't come from the TSX- GDPEF only shows the last price from the day before. You have to look at the live quote on the TSX, and guess the exchange rate. Alternatively, you can simply call your brokerage firm and say you want to trade in GL on the TSX in Canada.

If you want to track it on Yahoo!- the symbol is GL.V and/or GDPEF.PK. GL.V is the Canadian quote- GDPEF is US adjusted for the currency exchange. 

I have accumulated 25,000 shares at an average cost of about $2.60 US or $2.90 Canadian. You should be able to trade it online in the US using a limit order- it would be wise to place the limit order a few cents above the market.

I'm looking for $4 to $5 in the next 30 days. Drilling results should fuel the next leg up. 

I've been accumulating this one in my own account, but it's no guarantee you won't lose money- I've been wrong plenty of times. Most recently, if you followed my trading strategy on DXCM you made a killing. If you followed me on HDY you left some money on the table. I was wrong about the Mets in '69.

However, if you are looking for a red hot gold stock, this one is for you. I will set up a BLOG on this stock next week so you can track my trading strategies.

Comments in the BLOG

Recently there have been a lot of questions on Teleplus (OTC BB: TLPE). The company is delivering good numbers, but the stock is going nowhere. Aside from not being an oil and gas or commodity stock which means it is out of favor, there are some technical issues which I believe could hold this stock back for quite some time. If you are still holding the stock, the current posting is a must read. Check the current BLOG posting for the update.

To use the BLOG, simply go to the home page at - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels in volatile markets.


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