Canadian Mining Setups

Avion Gold Corp (TSE:AVR):
Back in November I hesitated on buying the company at the $1.05 level in anticipation of their drilling results. Before I had the capital (was locked up in a number of movers that I did not want to part with) it passed me buy and rocketed to the $1.70 level. This was based on the strong valuation of their Segala Gold Project based out of Mali, Africa.  Normally, I shy away from mining companies that do not own their projects in what I will simply call “stable” areas (government, civil unrest etc.); However, the easily accessible depth and grades of gold and projected mine life (mixed other recoverable small grade silver, copper, and iron) makes this an exception. Avion has now returned to what I consider an appropriate entry point. If you look at the chart below, the run has formed a long trend line base for what appears to be an ascending triangle. I think she will react to the strong movement of precious metals, but more importantly this one is favorable for its likelihood for good news releases over the coming months. Avion is starting production, and thus far has exceeded estimates of production. If the price of gold continues to climb (I support these PM bulls) Q1 2011 should be phenomenal. Who knows maybe some cross lift is coming down the pipes as well (see cross lift benefit below). Could see a boost from Barrick’s  earnings report tomorrow (Feb17th).

Avalon Rare Metals Inc. (TSE:AVL):
A lot of bubble followers and Rares junkies have become big on this company since its listing on the AMEX. I entered AVL while it traded rather quietly on the TSX in early December based on their reserves. I expected Avalon to reach maybe, $7 by the end of 2011. Dumbfounded, I opened my computer one day to find that Avalon had climbed a dollar in anticipation of listing to the AMEX, followed with another $1 on the opening day of trading on the AMEX, and subsequently China greedily placed more money in my pocket by trying to secure their stranglehold on the Rares’ sector. I am back looking at Avalon for a couple of reasons. Firstly, I am still extremely bullish on rares due to their usage in modern technology and furthermore their use as stabilizing agents for transformational strengthening in medical alloys (yittrium for example). I think a lot of Rare Earth Metals potential is rather unknown at this point, but as the demographic specifically in North America grows substantially older, their demand (besides technology growth) will be amplified significantly. I only mention medical applications since the common trader already knows about touch screens, hybrid batteries, and other technology. I sold out of Avalon in January, and I am revisiting it again now. The chart appears to be forming a cup,  small handle or handle pending. If there is a gradual pullback over the next few days I will be adding with force. But, it may have already passed me by.

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