Bull & Bear's Resource Stocks

SAFE MONEY REPORT
15430 Endeavour Dr., Jupiter, FL 33478.
Monthly, 1 year, $189.

       Larry Edelson recommends buying Kinross Gold (KGC) at $8.10 or lower.
"Kinross is the seventh-largest gold producer in the world, the fourth-largest in North America. It owns nearly 13 million ounces of total gold resources in 11 operating mines.
Moreover, the company pulls gold out of the ground at just over $200 per ounce. With gold at $422 and rising, that gives the company a fat profit margin. Moreover, like most of my recommendations, Kinross does not hedge its gold resources. The company's cash flow and profits should grow rapidly in the months ahead.
       It also has an excellent balance sheet. No long-term debt, and over $2.40 of current assets to meet every dollar of current liabilities.
       I am convinced that 2004 will be another steller year for the gold market. The reasons remain the same: Massive budget and trade deficits in the US... a declining dollar... rising inflation... intense demand for gold, especially from China... limited gold supplies... overvalued stock markets... and more."

       Dr. Richard Appel: "My Top Stock Pick for 2004 is Athlone Minerals (TSX.V ATH C$1.30).
       Owning shares of Athlone Minerals is a play on its exceptional management. Among its directors is David Smith. Prior to 1982, he was Vice President of Exploration for Shell Canada where he was instrumental in the discovery and development of about 15 trillion feet of natural gas. Subsequently, and prior to its sale, Mr. Smith built Lasmo Canada into a 5,000 barrel a day oil producer.
       Athlone's objective is to become an important oil and natural gas producer by exploiting low risk projects that offer immediate payback or that are substantial in size. In the few months since entering the oil patch Athlone has acquired the right to earn into up to 140 sections (89,600 acres) in the Belle Fourche project in Saskatchewan. Athlone has since drilled five wells there and, using the preliminary results, have acquired an additional 35 sections (22,000 acres). They are in the process of completing and testing the wells and just closed a C$4.5 million financing to fund further drilling.
       Given Athlone's wealth of contacts in the industry, as well as $30+ oil and $5+ natural gas prices, I am confident that Athlone will bring similar important projects into the company. I first featured Athlone at C$0.84, and own shares of the company."
        Editor's Note: Financial Insights was ranked as the Top Stock Picker for the period 2001 - 2003 by Select Information Exchange.

        Thomas Henning: "The Bond Market has been consolidating the downleg from 123 to 103. The consolidation looks old. A close at 109 or lower by the Spot Bond contract would be very bearish and suggest the start of the next downleg. A close below 103 would confirm a move down to the 90 area, a move up in rates to the 7% level. That should be fun.
       The Stock Market is in terminal phase of an upleg that started in October, 2003. Given that the long-term count dating back to 1982 is correct, this move should be the final leg cycle.
       Near term, internal divergences have evolved and the Transport Average has not confirmed the new Dow high. Closes below Dow 10,400, Transports 2800 would constitute a sell signal. After that occurrence, the tape action will tell the story. If the Bonds crack downward in harmony with the stock market, this would be ugly.
       The Gold Complex has launched a cyclic bull market.
Near term, the complex is consolidating the gains taking a well-deserved breather. Clear closes by the Spot Gold above 430, confirmed by the XAU above 114, would suggest the start of the next upleg.
       A word to the players: Stay with the main uptrend. If one gets too cute trading this market, the danger arises of losing the position."

INTERINVEST REVIEW & OUTLOOK
P.O. Box 1585, Boston, MA 02104.
Monthly, 1 year, $125.

Dr. Hans Black: "Having hit a new multi-year high in early January just above $430, gold has since backed off and, as of this writing, finds itself near $400. Though we remain long-term bullish on gold, we feel price appreciation over recent months, as well as extreme bullish sentiment, stands as an impediment to further gains without a more meaningful pullback. We suspect this current price retracement can eventually see gold drift back toward $350/ounce sometime later this year.
Further, we continue to be light net sellers of gold stocks, which in our opinion continue to act sluggishly, and, for sometime now, have not confirmed the higher highs in the price of bullion. However, we believe 2004 will offer us the opportunity to reaccumulate some of our favorite names at better levels, as many have simply moved up too quickly and too far for our tastes. These names include the likes of Placer Dome and Newmont as core positions and Eldorado, Cambior and Orvana in the small/medium-cap universe."

ADDICTED TO PROFITS
119 Grant Blvd., Dundas, ON, Canada L9H 4L9.
Monthly, 1 year, $150.

        Dave Skarica: "We are neutral to bearish for the short and intermediate term but still bullish for the long term of gold. After reaching 400 we felt the next stop was the 420-430 dollar range for gold. This was because the 420-430 range represented the 1996 highs in gold. We feel that these highs will take a while to break as they are such an area of large resistance. In December 2003 we predicted a decline off these highs to be followed by a consolidation. We also noted that the Amex Gold Bugs Index (HUI - an index of unhedged gold stocks could pullback to 200 or even as low as 180 on any gold decline. This index stands at 212 as we write.
        We feel we are nearing a bottom for gold and gold stocks, but are not quite there yet. We want to see action close to what we saw at both the 2002 and 2003 bottoms in the gold market. Gold stocks saw very similar action during their bottoms during the summer of 2002 and spring 2003. This action is as follows:
       Very Heavy Volume - During the 2002 bottom you saw many gold stocks trade anywhere from 2 - 10 times their normal daily volume. This is a sign of panic. A washout. A few weeks ago we saw a day where stocks such as NEM, PDG and others traded at record or near record volume. This is a good sign as it tells us that some panic has entered the gold market.
       Reversal Days - These are days of mass panic that often occur near major bottoms. During reversal days you see stocks head lower on heavy volume then turn and finish the day higher or only slightly lower. These are washout days. All of the weak hands are washed out and the market bottoms.
        Gold Back to Uptrend Line - This one does not have to happen, but if you take a look at gold you can see that gold could still pull back to 360-370 dollars an ounce to bottom.

For the long-term we are still very bullish on gold. All the fundamentals are intact. Record deficits in the United States and all countries competing to print money indicate that currencies worldwide are involved in a mad race to the bottom.
We feel that the next phase of the gold bull market will not be so dependent on the U.S. dollar falling. During the next phase we see the U.S. dollar falling, but not as fiercely. Long term, however we still see gold rising dramatically against ALL currencies."

Franklin Sanders: "Gold is hesitating because the US dollar is hesitating, and presently the dollar is the biggest influence on gold's price. To be sure, the dropping dollar isn't the only influence, but since gold has not yet begun to rise against the Euro & Yen, the dollar is the major influence. Technically gold has just about finished its correction. Anyplace around $400 is a great place to buy. We have another upleg coming that will blast through 20 year resistance at $425 and carry to $450+. Long term I still expect to see $1,250.00 gold at least.
In physical gold the Mexican 50 pesos, Austrian 100 coronas, and Krugerrands still offer the lowest cost gold investment.

If you have problem-free US silver American eagles dated 1996, they are right now bringing $23.00 per coin, but they must pass individual visual inspection. This would be the time to swap those for some other form of silver, and turn the premium into silver. Also, 1986 American Eagles are bringing $12.75.
How do they develop such premiums? Television marketers sell sets, and the 1996 is the scarcest date. They need them right now. When the marketers move on to greener pastures, the premium on the 1996s will evaporate. At $23 each, for every 1996 silver Eagle we would swap you 3.45 ounces of silver in the form of 90% silver coin. If I owned them, I would swap them so fast it would make your head swim.

        Pause a moment and reflect. This month last year stood at 455¢; today at 653¢, a 43% rise. Not bad so far, but nothing to what you will see later.
       At this moment silver is correcting, but I will be surprised if it drops lower than 620-630. If it does break 620, 595 must hold or I'm wrong and silver has a longer correction in front of it.
        From this correction I expect silver to advance one more time above 700, perhaps as high as 780, probably before March ends. (860¢ is not impossible.) Somewhere up there we will sell our remaining December 2004 $6.00 strike silver call option. Once silver hits that top, it will enter into a correction that should bottom (if it follows the usual seasonal pattern) sometime from end-May to end-July). That bottom will also give us a trading opportunity, one.
       How are US 90% silver coin bags action? In this range they have been losing premium on the way up, and gaining on the way down. That hints to me that dealers have become convinced silver is strong. Since they're not scared, they won't sell into downdrafts. That's good. Bags remain your lowest cost way to buy silver.
       People have called to ask me what I think about rumors of a short squeeze in silver. (A "short squeeze" happens when those who have sold silver forward can't find enough to meet their obligations. That rapidly drives up the price of the nearby month futures.) The people I talk to haven't seen any serious or unusual shortage of physical silver. Anyway, I don't like to let rumors whipsaw me. Whatever the market knows is in the price, and that is already telling us we ought to get long silver, and stay long silver. If a short squeeze comes along, so much the better.
        It never pays to get too cute or too precise with investments. "Bulls get rich, bears get rich, and pigs get slaughtered." The best strategy for a bull market is get long and stay long. My final upside target for silver remains above 7800¢ (seventy-eight dollars an ounce), so there's no point in fussing about 10¢ or 20¢ an ounce right here. With physical silver, just get long and stay long."

        Patrick A. Heller: "At times, photographic use of silver has consumed more of the metal in a year than any other category. The success of APS and digital cameras displacing 35 MM cameras and the rising use of non-silver papers for printing photographs has led some to be concerned that total silver consumption will decline as photography technology moves away from silver film and paper.
       The First Quarter 2004 issue of Silver News published by the Silver Institute has an article by Dan Franz, Group Publisher of Photofinishing News discussing trends in photographic silver usage.
        He states that net worldwide silver usage for photographic purposes (gross usage less silver recovered in recycling) was 87.5 million ounces in 2000 and forecasts net usage of 85.4 million ounces in 2008.
        Areas where photographic silver usage has declined and will continue to fall include 1) the quantity of rolls of film sold, 2) graphic arts applications, and 3) the quantity of silver-paper prints made from silver films.
        However, these declines will be largely offset by other factors such as 1) the increase in the average number of pictures per roll of film, 2) the increased demand for silver paper used to print photographs taken by digital cameras, and 3) the continued increase in silver for X-ray films (despite the growing usage of digital X-ray technology).
       So, while the silver consumed in films will decline, Franz projects that photographic silver paper usage will increase about 1/3 from 2000 to 2008, and the net X-ray film demand will rise slightly!
        As the world's population grows wealthier, camera usage is spreading. And, because it costs less to print pictures from digital cameras onto silver paper than it does to print them on non silver paper in an inkjet printer, overall photographic silver usage will hold relatively steady.
       With the rising demand for silver in applications such as water purification, superconducting wires, anti-bacterial solutions and materials, and as possible non-toxic substitute for current wood preservatives, overall silver demand is, in my view, certain to increase in the coming years."

SILVER-INVESTOR.COM
21307 Buckeye Lake Ln., Colbert, WA 99005.
Monthly, 1 year, $99.

        David Morgan: "Here is how the shell game worked in the mining business in the '70s: A group would acquire a controlling interest in the stock of a publicly traded shell and then merge an exploration company into it. Presto: a quick and easy public offering. Then if the new company had an exciting story you could pump up the stock and then dump the shares. This activity still goes on, and some investors feel left out when they see a stock that they know little about other than the name move and perhaps move much faster than one they may presently own.
       This is raw speculation at best, gambling at worst and certainly there may be some place for it in the resource sector. Once in awhile a grassroots explorer hits the big time, but this is an extremely rare event. However, much safer gains are made by holding producing companies with a small percentage of juniors in the mix.
       Of all companies that we looked at the last several months we haven't seen any that are as good as any of the situations we have already recommended. There are two that we are watching and they are both briefly mentioned later in this report. We have gotten some feedback recently from the subscribers. Many seem to be of the opinion that we should be recommending more stocks or some stock in every letter. We generally do not like to recommend exploration companies. Although, we do have two exploration companies in the portfolio, both of these were chosen based on management, and "potential". These are high risk situations.
       What we have done is recommend what is called special situations. Special situations are for example what we did with Mines Management (OTCBB MNMM). This was not recommended stock until Noranda signed over the Montanore property to MNMM. Now we had something to work with, this then became a speculation that was worthwhile. Taking into account the amount of metals that are involved with Mines it makes it around the fifth largest potential holding in the world.
       The acquisition of the Montanore Project, containing 260 million ounces of silver and 2 billion pounds of copper, places Mines Management in the top tier of silver companies in the world alongside Apex Silver, Silver Standards (a shareholder of Mines Management), and Pan American Silver, but at a noticeably more attractive value.
        Again, another case recently was Sterling Mining. This is an example of a situation that was certainly not on our list initially. Once the company had secured the old Sunshine mine then we had special situation. This was a situation that we may have been one of the first to recognize as a sufficient enough to make a reasonable speculation.
        Most of the silver speculations at this time have already moved a great deal based on simply the fact that silver is in their name or they are exploring some silver properties. If we were to recommend any companies at this time that we do not feel met our strict criteria it might provide an opportunity for others to sell there high priced shares to you.
        We will continue to look for potential opportunities as they arise but caution is advised at this time.

        Sterling Mining is pleased to announce that it has signed a Memorandum of Understanding (MOU) for a 60-day option to acquire the Baroness Silver Tailings Project near Zacatecas, Mexico.
        The Baroness Project reportedly consists of up to 5 million tons of finely ground tailings with an average grade of 3.0 ounces per ton (oz/t) silver and 0.02 oz/t gold, yielding an in-situ total of up to 15 million ounces of silver and 100,000 ounces of gold. Estimated mineral recovery, using environmentally friendly leaching, is reportedly at least 60 percent, although the Company is confident that this figure can be improved significantly with additional metallurgical research. The project includes necessary processing infrastructure.
        Sterling Vice-President Jim Williams has previously undertaken mineral project due diligence in the Zacatecas area and will spearhead the Sterling due diligence efforts over the next month. These efforts will include a small auger drilling program to test the volume and representative grade of the tailings and to verify earlier professional reports. Mr. Williams commented, "Mexico is the world's largest silver-producing country and retains numerous untapped resources, several of which are currently under Company review as potential acquisitions."
        Sterling President Ray De Motte added, "Our primary mission at Sterling is to provide superior leverage to future silver price increases by adding to and enhancing our silver assets. The Baroness Tailings Project, should it meet our investment criteria, offers the exciting possibility of near-term silver production. Any Sterling profits realized from the Baroness operations would be reinvested in additional silver exploration efforts, principally at the Sunshine Mine."
       Mines Management during 2003, the company worked to raise working capital, assimilate all of the intellectual property resulting from the more than $100 million spent on the project by precious operators, and has been a regular participant in the conference circuit.
        In the first half of 2004, the company plans on completing an additional financing, qualifying for a stock exchange listing (most likely the Amex), complete a revised mine plan with substantial improvements, and to initiate the re-permitting process. Further, funding from the next round would be directed toward development drilling designed to both raise the category of the project's reserves and to further define a high grade zone estimated to possess a grade 20% higher than the rest of the deposit. Permitting and development drilling would be conducted over the next 24 months, and both activities would add significant value to the company's shares.
        Despite the shares having grown substantially since my original recommendation a year ago ($1.25 per share), they remain undervalued relative to the average of the other major silver companies. Each share represents ownership of 25 ounces of silver, more than any other company in the market, they still offer investors excellent value, growth and leverage to the price of silver. And unlike exploration companies, most of which have risen significantly over the past year, downside risk is moderated due to the immense size and advanced stage of development of the deposit. The market may recognize the risk of an all or nothing, one property situation. Due to this known, the market price may be factoring in this and therefore the stock price may maintain some discount."

       David Bond: "Whither the price of silver? Nowhere is that question being asked with greater intensity than here in the Silver Valley, the silver capital of the world, home of the genuinely Sleepless and the greatest pile of silver on the planet.
       Sitting on reserves that make Potosi and Comstock look like ma and pa operations - seriously, we've mined more than either and the old-timer geologists who really know this camp say there's at least as much still in the ground than we pulled out, another billion ounces or two - yeah, we're checking the price on an hourly basis.
       Silver's vindication at $6, should it hold through the summer, sets the next level of genuinely serious resistance at $10, not $7 or $8. Should it bust $10 some time this year or next, its next stop will be $20, with not even a by-your-leave-sir at $15.
       Being sleepless, we don't dare even dream of such great fortune, but that's how market psychologies seem to work. And the beauty is, we don't need it. At $6, all kinds of possibilities come alive. We've talked before about Sterling's aggressive exploration and acquisition activities in and around the Sunshine Mine. They just got a great write-up on Mineweb and when all this was in the planning stages a year ago, their quest was for $4.50 profitability. Anything above $4.50 is gravy. They've also added some great exploration and management people to their payroll.
       Hecla and Coeur, so impoverished four years ago they were in danger of being kicked off the NYSE and down to the Pink Sheets when their stock prices fell under a buck and stayed there, will spend a combined $20 million or thereabouts on exploration and development at, respectively, the Lucky Friday and the Galena-Coeur complex here. We ain't had that kinda news since Jimmy Carter was president.
       Let's start from the top down. Wallace Realtors Bob and Linda Davison report a mini land boom; houses that have stood vacant or at least unwanted for a decade are all of a sudden just flat gone. Commercial property in the historic districts of Wallace and Kellogg is trading at a huge premium, if you can find any of it. Why? Because folks have figured out that big things are about to happen underneath us, in these deep, rich mines.
       The same can be said of the Silver Valley's silver-mining stocks. But there are still a few kittens out there standing to benefit from Coeur's, Hecla's and Sterling's exploration and development programs.
       But hang with us a bit: The hard-rock mining industry in the Rocky Mountain West has had its ass kicked by a combination of depressed metal prices and aggressive social planning (the correct term for environmentalism) by the United Snakes Government. By some incredible miracle, and due to the tenacity and integrity of Western miners, a handful (actually, about three dozen) of the 130 companies that used to trade on the old Spokane Stock Exchange survived. Their properties remained permitted, legal. Many did reverse splits, some even went to Irish dividends, but they kept their noses clean. The other 100 simply died, or went into shell Never-Never Land. The rise from the ashes of the past two decades of these surviving companies is, and will continue to be, nothing short of a miracle. Many of them benefit from land positions and/or lease-exploration agreements with the majors. Let's go down the list.
       Silver Buckle (SBUM: you gotta love that symbol) is a favorite trader among the Sleepless, and has an excellent land position and long-term lease arrangements with Coeur. Last trade 44 cents; it's seen six bits before. Right beside 'em is Placer Creek (PRCK).
       Chester Mining (CHMN) is an old-timer, thin float (2.4 million shares) and historically a dividend payer. It's snuggled up against Sterling's Sunshine Mine. Sterling recently leased Chester's claims and picked up an option to buy up to 10 percent of Chester. Chester rode from a few pennies to $6 last year. Mineral Mountain (MMMM) and Merger Mines (MERG) also hold promise in a rising silver market.
       Timberline (TBLC and formerly Silver Crystal) just finalized a 4:1 reverse stock split and put a new management team together, and is out nosing around for exploration acquisitions.
       New Jersey Mining (NJMC) continues to dig at its four properties and is adding a new circuit to its mill near Kellogg to process ore from its mines this summer. They've not been the Silver Valley's most stellar price performer - they're only up 160 percent from a year ago - but their management is rock-solid.
       Shoshone Silver (SHSH) has undergone recent management changes and embarked upon some aggressive exploration and acquisition activities, both here and in Canada.
       The list goes on. To speculate in any of these stocks, you have to know their management and you have to have great faith in silver, which right now is trading at an inflation-adjusted 2,000-year low, up from its 5,000-year low a year ago. Helluva bull market, eh?
       Kodak can crank out press releases all it wants to, but the whole silver versus digital thing in photography, the way they spin it, is a red herring. Take an ounce of silver out of traditional silver-halide film's consumption stream, and you've just lost an ounce coming back from recycling. It's a zero-sum game that in the end may benefit silver as people demand quality halide prints, not perishable ink-jet treacle, for their digital photos. And here's a little trivia for you: it takes a gigabyte of computer space to respectably store the information on a 4''-by-6'' black-and-white silver halide negative.
       Will things change? Sure. Profits will be taken and the market periodically will be slammed. But what I like about this bull market in silver is that there's no panic, no hysteria, no visible upside manipulation, no insider stuff, and the central banks can't screw with it because they ain't got no silver no more. Neither does the United Snakes government. Plus, CNN doesn't know about it yet. It's a market driven by fundamentals and fundament correction that is 2,000 years overdue.
       If silver and silver stocks are not risky enough, and you really want to set your hair on fire, you can always buy US dollars or CDs paying negative interest rates. Now there's a truly scary thought.
       Editor's Note: David Bond covers gold and silver mining equities for a number of national and international publishers, including Platts Metals Week, a division of McGraw-Hill. He lives in Wallace, Idaho, heart of the planet's richest silver fields, the Coeur d'Alene Mining District. He is former editor of the Wallace Miner, and holds regional and national firsts in investigative journalism from the Atlantic City Press Club (National Headliner) and from the Society of Professional Journalists (SDX/SPJ) and has edited or written for newspapers on both coasts, Canada and Alaska.

THE COMPLETE INVESTOR
500 5th Ave., 57th Flr., New York, NY 10110.
Monthly, 1 year, $129.

        Stephen Leeb: "Income Portfolio denizen PetroChina (PTR) was one of the best performers not just among energy stocks but among all stocks in 2003, nearly tripling for the year and surging 70 percent in the fourth quarter. Wall Street responded with a slew of downgrades. And recently, British Petroleum announced its decision to sell its entire stake in the company. Given that BP is the largest public shareholder and the sale took place at a discount, it's no surprise the stock sold off.
       But as we advised in a Web alert, the weakness was a good opportunity to accumulate more shares. For one thing, we have no reason to doubt that BP's decision to sell stemmed from the need for money, not any changed assessment of PetroChina's prospects.
        More important, PetroChina continues to have a unique edge: it operates under the aegis of the Chinese government, a 90 percent owner. As China's largest oil company, PetroChina is critical to the country's quest to secure enough energy to ensure continued economic growth.
       The Chinese government's strategy is to make sure PetroChina is profitable enough to acquire energy assets outside the country. It's not surprising, therefore, that the government has let energy prices in China rise. A big chunk of PetroChina's fourth-quarter gain, for instance, came after the government decided in early December to raise the price of diesel fuel, which in effect put more money in PetroChina's coffers.
        PetroChina has responded by making various acquisitions. In the fourth quarter it reported it was close to concluding deals worth nearly half a billion dollars to buy foreign assets in assets in Kazakhstan and South America. Moreover, the inevitable reevalution of the yuan not only will automatically boost the value of PetroChina shares for U.S. shareholders, it will give the company a more valuable currency with which to scout for additional acquisitions.
        Despite its huge gains, the stock, by many metrics, is still one of the cheapest major oil companies in the world. While we don't expect gains in 2004 to be as sizzling as in 2003, we think PetroChina over the long haul will continue to outpace other energy stocks."

       Equity Research analysts Fadel Gheit and John Cusick: "Oil and gas stocks usually outperform the S&P 500 during rising oil and gas prices and lag during declining prices. The relative performance usually reflects the direction, not the level, of oil and gas prices. Although companies contend that their shares are undervalued, few have repurchased their shares.
       Relative Valuation: Improving industry fundamentals should result in higher P/E and P/CF multiples for oil and gas stocks, but well below those of the S&P 500, mainly due to earnings volatility and lack of growth and pricing power.
       Buys include: Andarko (APC $50.78), BP (BP $48.43), ChevronTexaco (CVX $83.27), ConocoPhillips (COP $63.43), ExxonMobil (XOM $39.60), Marathon (MRO $32.15), Royal Dutch (RD $50.83), and Shell Transport (SC $43.71).

THE RATIONAL INVESTOR
222 South Ninth St., Ste. 2880, Minneapolis, MN 55402.
Monthly, 1 year, $399.

James Dlugosch: "How long does oil need to trade for $30 a barrel or more before investors become convinced of the potential in oil companies? It sure seems like the price of oil has been well above the breakeven requirement of $20 for some time now. Investors have pushed Exxon Mobil Corp. (XOM) higher since our last update as the potential and prior under performance of the sector receive more and more attention, but the group as a whole has lagged behind the overall market. That seems to be the prevailing trade that is bringing more buyers and will hopefully attract future buyers as well. Analysts expect the company to make $2.22 in 2004, a decrease over 2003 earnings. XOM has done a poor job of meeting expectations, leading analysts to be more conservative. We think XOM will beat expectations as the world economy continues to grow. We will hold shares of XOM until they reach our target of $60."

ECONOMIC ADVICE
3910 NE 26th Ave., Lighthouse Point, FL 33064.
Monthly, 1 year, $99.

James Rapholz: "If you're looking for a good long term energy play that will double your money and put a big smile on you in 2006, think El Paso (NYSE EP $8.37), and jump all over it! EP has 625 million shares outstanding and a book value of $11.50 a share. It sold north of $60 back in 2001, with a dividend of $0.85. It now yields $0.16, which is just under 2%. This company is a mirror image of Williams Cos., which has doubled in the past year. El Paso is reducing its debt, which peaked at $24 billion, and is selling everything except its exploration and production company and its pipeline system, which is the largest in the U.S. They've already lowered their debt to $21 billion from selling off their refinery in the past month. This is a buy in two different ways. One, it sells well below book value and two, it still stands by earnings of $1 to $1.10 a share in 2006. If it is able to stay on schedule and cut its debt to $15 billion, it will probably end up about $1.20 to $1.25 earnings per share in 2006!"
Editor's Note: James Rapholz has recently set up an advanced website for his market letter at www.economicadviceinc.com. This new website is a courtesy for his market letter subscribers. They can now use it to get up-to-the-minute information on any listed security including quotes, charts, opinions and profiles. He invites all Bull & Bear subscribers to try it free of charge, when they require up-dated information on their investments.

Roger Conrad's UTILITY FORECASTER
1750 Old Meadow Rd., Ste. 301, McLean, VA 22102.
Monthly, 1 year, $129.

       Roger Conrad: "Pipelines are the ultimate cash cow of energy. The best pipes company to buy right now is new Income Holding Inter Pipeline Fund (OTC IPPLF.pk $6.35).
       Organized as a Canadian royalty trust, Inter Pipeline pays out all the cash it earns to shareholders, less operating expenses and about 15 percent to develop more assets. Chief of these is its 85 percent interest in the Cold Lake Pipeline. The Fund also operates four crude oil pipeline systems stretching 3,100 miles with daily throughput of over 450,000 barrels.
       Cash flows - up 66 percent last year largely on acquisitions - are exceptionally reliable, demonstrated by Inter Pipeline's BBB (stable) credit rating from Standard & Poor's. Management has further strengthened the balance sheet by cutting debt and issuing equity over the past year, including through its dividend reinvestment plan. Coupled with a conservative payout policy, the monthly dividend is in a steady up trend as well, including a 5.9 percent boost in 2003.
       With equity nearly four times debt and several hundred million dollars in cash and credit lines, the trust is a lock to make more acquisitions of high-cash-flow assets in 2004. That means more increases in its dividend of nearly 9 percent. Inter Pipeline is a buy in Toronto up to C$10 or on the pink sheets in the US under the symbol IPPLF up to 7."

Sy Harding's STREET SMART REPORT
Asset Management Research Corp., 505 East New York Ave., Suite 2, DeLand, FL 32724. 1 year, 17 issues, $250. Includes Hotline.

       Sy Harding's indicators remain on the sell signal for the gold sector of Dec. 9, which ended his timely July 23 buy signal.
       "Gold moved higher after the sell signal, above the upper limit of the trading band that has pretty well confined it since its new bull market began in 2001. We said that extra move indicated excessive euphoria and excitement for gold, making it more likely it was about to plunge again.
       Our work on the dollar said the dollar was due for a brief recovery rally for awhile, which would also be a negative for gold. So we took our profits and await the next buy signal.
       A pullback to the support at its 30-week m.a., which is now at $387, would be normal. As we have been noting on the website updates, gold has become extremely volatile, with one and two day moves both up and down of as much as $10 an ounce, which has been producing some potential wicked whip- saws for those trying to catch the bottom.
       XAU Index of Gold Mining Stocks. The XAU quickly rolled over to the downside after our gold sell signal, then rallied briefly back to its previous peak, where it left a double top in place. It is trying to find support at its 30-week m.a., which has us watching closely. It does not pay to anticipate signals or to jump the gun on the indicators. So we will wait for our next buy signal. A break below the m.a. would likely accelerate the downside.
       U.S. Dollar. Our sell signal for the gold sector continues to be supported by the rally off its lows by the U.S. dollar. This is probably just another temporary rally by the dollar off its oversold condition beneath its 20-week m.a. If so, gold will probably begin its next rally when the dollar's rally ends. (Gold's 3-year bull market will probably end once the dollar begins to strengthen for the long-term. But that might be some time away since the US economy needs a weak dollar as a tool to try to narrow its record trade gap."
       Editor's Note: Sy Harding has been consistently ranked a Top Gold Timer for over the last ten years by Timer Digest. Sy also published Street Smart Report Online which is updated several times a week. It is available for $225 a year and includes the newsletter, Hotline updates online, plus 8-pages of weekend updates plus online articles and charts on market action, gold, bonds, the economy, Wall Street scams, etc.

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       Lawrence Roulston: "Some people may be disappointed that the gold prices have not broken out on the upside. The flip side is that we can take comfort in the firm support exhibited around the $400 level.
       The daily moves in the metal price are generating big mood swings among a significant group of investors. It is important to keep in mind that the percentage moves are not large in terms of commodity prices in general. It is actually a relief to see the gold price consolidating at this level. When it eventually moves higher, it will do so from a firm base.
       Regardless of what happens to the gold price, there are big gains to be made from investing in smaller companies that are exploring and developing gold deposits. Companies that are adding value to their assets do not need a higher metal price to generate a return for shareholders. Instead, these companies are generating big gains in their share prices by advancing gold projects through the development cycle.
       I sense that the attitude of the major producers is becoming increasingly urgent as pressures build from senior management and shareholders to replace reserves that are being steadily depleted. The junior companies that control the vast majority of undeveloped gold deposits are being eyed hungrily by the majors.
       The junior companies represent the future of the mining industry. Investors who evaluate these companies from a business perspective, rather than simply a commodity play, stand to earn big rewards.
       The same story applies to the base metals. Most of the metals have already had big price gains as producers find it increasingly difficult to produce enough metal to meet an ever growing demand. The biggest component in the growing metal demand over the past couple of years has been China. That growth in demand is now being supplemented as economic recovery returns to the rest of the world."
       Roulston's newest recommendation is Virginia Gold Mines (TSX.V VIA) which has C$18 million of cash on hand. It also has 400,000 ounces of gold in resources. "The cash and the gold resource provides a solid foundation for the value of the company," says Roulston.
       "Virginia has an impressive suite of exploration projects in Quebec. Virginia and its joint venture partners will be drilling several targets on each of five projects over the next few month. Each of those projects is a potential company maker, says Roulston.
       Roulston expects Virginia's share price to escalate over the coming months in anticipation of drilling on five projects. "Success on any one those projects, or on any numerous other projects held by the company would have a substantial impact on the share price."

        James Dines is looking for considerably higher uranium prices. "We believe that all portfolios should maintain a position in preparation for "The Coming Uranium Buying Panic," ignoring consolidations and corrections, as we have all the way up within this Major Uptrend."
       Dines continues to recommend investments in this arena as a source of serious profits. "I intend on holding Cameco (TSX CCO) for at least a year and, as the price of uranium metal continues to rise, Cameco's earnings news should get steadily better."
       "Cameco has no competition as the uranium investment of choice, based on its being the world's largest uranium producer and its lion share of uranium reserves. If uranium prices get as high as we expect, we would not be surprised to see earnings above $5 a share in the next year or two, indicating that this high-growth stock is selling for only around 9 times earnings, so this is a strongly-recommended buying opportunity at these, or even hopefully lower, prices."

PEARSON INVESTMENT LETTER
published monthly for clients of Pearson Capital, Inc.
6431 Rubia Circle, Apollo Beach, FL 33572.
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Donald Pearson's recent recommended Growth & Income stock is Harmony Gold Mining Co. (NYSE: HMY, $16.23), a mining company operating in all the main gold producing regions of South Africa. Its main operations are situated in the Free State, Evander and Randfontein regions of the Witwatersrand basin, as well as the Kalgold and Elandskraal mines. As of June 30, 2002, Harmony's mines produced a total of 2,667,572 ounces of gold. The company has identified a number of major capital projects for further development. Feasibility studies for these projects are underway. Net income before acct. change decreased 18% to $71.8 million. Revenues reflect both an increase in gold production and in the gold prices. Net income was offset by increased operating costs and increased depreciation expense. Net income also reflects higher financial charges, and increased deferred and current taxes paid.

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       Vivian Lewis: "Over the next 9 months, the chickens are coming home to roost. And that has nothing to do with Avian flu.
       The Fed said its total holdings of Treasury and agency debt held for central banks abroad rose 4%, from $4.364 billion to $1.126 trillion in the week ended Feb. 11. Most of the inflow was Japanese, but China helped. And the impact was to increase China's money supply by 20% in 2003, triggering inflation there.
       Chinese Central TV reported that Premier Wen Jiabao and top financial regulators were discussing potential alterations to the yuan's pegged exchange rate mechanism. Earlier, China Business Post had cited unnamed 'senior bankers" as saying that if the central bank decided to revalue the yuan, it would "probably happen next month." The report suggested a possible 5% revaluation, followed by a possible additional 5% in 2005. These stories closely followed the G7's weekend statement suggesting that "more flexibility in exchange rates is desirable for major currencies" that currently lack it.
       From Hong Kong, Bear Stearns' Michael Kurtz commented: "In the wake of these announcements, the 12-mo non-deliverable yuan forward is being quoted at 7.8472/USD, vs. a spot price of 8.2772, effectively anticipating a 5.2% revaluation of the currency in a year's time. This is up from 4.6% just prior to the weekend G7 meeting. We think the fact of the meeting does not necessarily imply any imminent move on the currency. Our own conversations with People's Bank of China (central bank) officials and numerous recent statements by senior policymakers lead us to believe China's FX reform agenda remains incremental and contingent on prior progress in financial system and capital account liberalization."
       Bond manager Bill Gross, managing director of PIMCO, writes of the U.S.: "we are hooked on debt; we are a finance-based economy." "Greenspan's economy is globalized, filled with negative vibrations revolving around substitution of cheap Asian and Latin American labor for workers here at home," he wrote in his Feb. 2004 outlook commentary. "It is an economy full of technological wonders such as the Net, cell phones, high-speed data transmission, and the like."
       But "during this period of accelerating growth, the cost of the financing has gone down, down, down. Talk about productivity! In a finance-based economy this IS productivity. Instead of cheaper and cheaper labor per unit of output, we have cheaper and cheaper interest rates per unit of debt. Long-term real interest rates have dropped from an estimated 9% in 1980 to 2.5% now."
       The trend will reverse, he forecasts. "Debt levels and debt ratios have limits. When and if interest rates do go up, the servicing costs of an accelerating debt economy eventually bite the hand of its master." Post-revaluation China stopping its financing of our deficit may be the trigger.
       Economists say that each increase in the fiscal deficit of $10 bn leads to an increase in the GDP of one tenth of 1%. The U.S. is doing well, given the excessive amounts of money being printed and reckless federal spending. But the larger the bubble, the larger the deflationary impact associated with its being burst. There will likely be a slowdown in GDP growth or even a recession once government deficit spending stops and the Fed tightens credit.
       Maybe not until after the Presidential election. But one day the chickens will come home to roost.
       To protect yourself, buy bullion rather than gold mining shares (although don't sell the mines). I have waited months to buy the new World Gold Council ETF but it is being stalled by regulatory and copyright problems. An alternative suggested at a seminar at the World Money Show in Orlando, David Fuller, is to buy the London-listed Gold Bullion Securities, an ETF purchasing gold bullion like the future U.S. GLD. These have been out since Jan. and trade as GBS, in London (poor George Bernard Shaw!)
       They trade at £41.1 per with the high for the year £43.1 and the low £39.65. I used my International discount brokerage, Marquette De Bary to make the trade.
       The bank specializing in ETFs, Barclay's (from San Francisco) has now registered with the SEC to create a gold ETF too. This will help overcome the logjam the WGC has gotten into since it started registration last May. The new ETFs may even push CEF to trade closer to its NAV.
       We reported last month that Merrill Lynch has created an exchange listed entity trading gold, with a whopping 5% charge. We were right about all the details, except this is not a HLDR but a TRKR. Sorry.
       Also at the Money Show at a seminar I ran, I learned about Central Fund of Canada (ASE-CEF), a way to invest in physical precious metals, rather than in shares of mines like we already own. It invests only 57% in gold bullion, and the rest in silver, and it does not attempt to track the XAU index.
       CEF grows from time to time by selling shares to meet demand, like ETFs. But it does not have authorized participants to try to align its price to an index. The proceeds from selling stock are used to buy bullion. Last Dec., CEF sold $74 mn in shares, and invested the lot in gold and silver. The offering cost 0.6%, much higher than an ETF rebalancing of assets. CEF says that new bullion will now lower fund operating costs by spreading them over a wider number of shares. The last time it reported, for 2002, operating expenses were $749,000 to handle assets of $75 mn. That makes it quite competitive with ETFs in general, unlike the new Merrill Lynch Gold HLDRs with their 5% bite.
       CEF has traded in Toronto since 1966 and on the ASE since 1986. It stores its gold and silver in a Canadian chartered bank's vaults, where it is audited regularly. The metal is unencumbered and insured for extra safety. In 2002, the fund held 40% of assets in silver."