Seasonal Influences - (WE ARE NOW IN PHASE II) Traditional gold and silver bull season has only just begun; 1) Gold has a period of seasonal strength from July 12 to October 9th (the trade has been profitable 18 of the past 24 periods). 2) A period of seasonal strength also exists from the first week of November to the first week in February (a trade that has been profitable in 8 of the last 10 periods) for an average gain per period of 13.9%. Figure 1. Average Returns in Spot Gold Over the Last Four Decades (excluding 2009 data).   Precious Metals Equities: The Philadelphia Gold and Silver Index (^XAU) has a period of seasonal strength from July 27 to September 25 and has been profitable in 16 of the past 24 periods, outperforming the S&P 500 by an average of 8.4% per period. In the first week of November to the first week of February the Philadelphia Gold and Silver Index has advanced in 7 of the past 10 periods for an average gain of 9.5%.   Philadelphia Gold and Silver Index Components: Company Weighting Barrick Gold Corp. 21.98% Goldcorp Inc. 14.92% Newmont Mining Corp. 14.13% Freeport McMoran Copper & Gold Inc. 12.92% Kinross Gold Corp. 7.37% AngloGold Ashanti Ltd. 6.55% Agnico-Eagle Mines Ltd. 4.65% Gold Fields Ltd. 3.98% Yamana Gold Inc. 3.47% Harmony Gold Mining Co. Ltd. 3.13% Randgold Resources Ltd. 2.34% Pan American Silver Corp. 1.10% Royal Gold Inc. 1.09% Silver Wheaton, Inc. 1.05% Coeur D' Alene Mines Corp. 0.77% Silver Standard Resources Inc. 0.56%   The HUI gold-stock index (A.K.A. AMEX GOLD BUGS INDEX HUI) offers an excellent measure to gauge the gold-mining industry, the 15 miners that comprise the HUI are as follows (BARRICK GOLD CORP. ABX, AGNICO EAGLE MINES AEM, YAMANA GOLD INC AUY, COMPAÑÍA DE MINAS BUENAVENTURA SA BVN, COEUR D'ALENE CP CDE, ELDORADO GOLD CORP EGO, GOLD FIELDS LTD GFI, GOLDCORP INC GG, RANDGOLD RES LTD GOLD, GOLDEN STAR RES LTD GSS, HECLA MINING CO HL, HARMONY GOLD MNG HMY, IAMGOLD CORPORATION IAG, KINROSS GOLD CP KGC, NEWMONT MIN CP NEM) Gold Price Forecast and Commentary Madison Avenue Research Group's outlook for gold and silver is bullish. Our sentiments echo John Licata, Chief Investment Strategist at the energy and metals independent research and advisory service Blue Phoenix. Last year Licata wrote a note to his clients telling them gold was going to hit $1200 this year - a bold prediction at the time yet stunningly accurate in retrospect. On BNN this week Licata said he is still in the process of formulating targets for 2010 but did say he "could see gold going North of $1,500 next year”.   Licata cited the recent move in gold on a myriad of factors including : Statements that came out of the G20 last weekend supporting continued stimulus; Licata said “If we keep getting more stimulus, that conversation could go from ‘deflation’ to ‘hyper inflation’ maybe towards the end of 2010 even 2011.” Lack of support for US dollar; there is an “absence of US Treasury Secretary backing support for the US dollar” … “the administration has been so laissez faire”. Increased unemployment, now at 10.3% in the USA ; “the unemployment picture is a barometer”, albeit a lagging indicator. Last week when the Federal Reserve came out with their interest rate decision and is clear they are not going to raise rates any time soon, they see these low rates prolonging even longer than what they had anticipated. Licata said “it does not make sense to put your money in a stale investment” i.e. 30 year bonds and 10 year notes, intimating gold is dynamic and the smart play. Late last week India bought 200 tonnes of gold from the IMF and that was seen by the bullion markets as very supportive. Licata pointed out the simplicity of taking a stand on the direction of gold not by looking at the minutia of ordinary data but rather looking to large and respected miners; “You hear management from companies like Goldcorp and Barrick Gold talking about prices continuing to move higher; I would rather side with the miners who actually have a greater feel for supply than just look at some of the ordinary data.” Licata pointed out that stocks of the miners have tended to lag the price of gold and that they offer a very solid way to play the move in gold.   Review of Top Senior Gold Producers Gold prices are well above cost of production and many major producers are throwing off large amounts of free cash, have vast reserves, and are still at attractive prices relative to the potential they hold as a hedge against where the dollar they are denominated in may be heading in the long run. As the price of gold rises, positively leveraged gold producers should be well-positioned to earn handsome returns for their shareholders as they derive higher prices for their gold. Below is a review of the top ten gold producers in ascending order of ounces produced. Source Market Equities Research Group Q4 Fall Resource Book and subject company websites/corporate presentations:   First place) Barrick Gold Corp. (NYSE: ABX)(TSX: ABX) Production of 7.2 - 7.6Moz at total cash cost of US$450-475/oz and guidance of 7.7-8.1Moz in 2010. Barrick is the world's largest gold company in terms of market capitalization, annual production, and reserves. The company reported reserves of 138.5Moz at the end of 2008. Current growth projects include Buzwagi, Cortez Hills, Pueblo Viejo, and Pascua-Lama.   Second place) Newmont Mining Co. (NYSE: NEM) 2009 gold sales guidance is 5.2-5.5Moz at costs of $400-440/oz and planned capital expenditures of US$1.5-1.7B. The guidance includes 200-300koz at Boddington from August 2009, but commercial production is likely in November 2009. Newmont is the world's second-largest gold company in terms of production. Yanacocha and Nevada remain Newmont's foundation, but it operates in most other gold-producing regions, including Australia, Canada, Indonesia and most recently West Africa. Reserves were 85.0Moz at December 31, 2008.   Third place) AngloGold Ashanti Ltd. (JSE: ANG)(NYSE: AU) The company forecasts gold production of 4.9 - 5.0Moz in 2009 at cost of US$450-460/oz using R9.25/US$ and US$460-475/oz at R8.50/US$. AngloGold Ashanti is a global gold producer domiciled in South Africa. Production is sources from Africa, Australia and the Americas. Reserves were 74.9Moz at year-end 2008.   Fourth place) Gold Fields Ltd. (JSE: GFI)(NYSE: GFI) the company is targeting a 4Moz per year run rate. Gold Fields Ltd. is a senior gold producer with roughly two-thirds of its production sourced from South Africa. It also has assets in West Africa, South America and Australia. Safety stoppages at Kloof and Driefontein may affect numbers. Total cash costs are expected to increase to US$521-590/oz, mainly due to wage and electricity increases.   Fifth place) Goldcorp Inc. (NYSE: GG)(TSX: G) The company states that over the next five years Goldcorp’s production will increase by over 50%; a growth unparalleled in the gold mining industry. Gold production for 2009 is estimated at 2.3 million ounces at a total cash cost of $365 per ounce excluding by-product credits or US$400/oz on a co-product basis. Strategy for growth is predicated on strong focus on organic growth, no gold hedging, low cost gold producer, maintain a strong balance sheet, focus on low political risk jurisdictions, $95 million exploration budget for 2009.   Sixth place) Freeport McMoRan Copper & Gold Inc. (NYSE: FCX) Projected production in 2009 is 2.4Moz of gold, 56Mlb of molybdenum, 3.9Blb copper (with targeted by-product cash cost of US$0.70/lb). Freeport-McMoRan Copper & Gold, Inc. engages in the exploration, mining, and production of mineral properties primarily in Indonesia, North America, South America, and Africa. It focuses on the copper, gold, molybdenum, and silver prospects; FCX is a market proxy for copper. The 2007 Phelps acquisition diversified the business, but Grasberg remains the key generative asset.   Seventh place) Harmony Gold Mining Co. Ltd. (JSE: HAR)(NYSE: HMY) ~2.2 Moz annual gold production. Through mergers and acquisitions, Harmony has become a significant South African gold producer. The company is restructuring its asset portfolio around core operations in South Africa and growth projects in Southeast Asia. Production and costs are forecast to increase in 2010 with labour costs up 10% and power costs up 35%. In fiscal 2009, labour accounted for approximately 56% of total costs and power around 12%.   Eighth place) Kinross Gold Corp. (NYSE: KGC)(TSX: K) ~1.58Moz annual gold production from what Market Equities Research Group determined for 2008, a review of the corporate website only shows "gold-equivalent" production guidance is 2.3-2.4Moz at average costs of US$390-420/oz NOTE:  this is a slight downward revision due to longer-than-expected ramp-up of the Paracatu expansion. Capital expenditures are expected to increase by US$25M to US$500M. Kinross is a senior gold producer with operations located in North America, Brazil, Chile and Russia. The company commissioned the Kupol mine in Russia, and is completing the Paracatu expansion in Brazil and the Buckhorn project in the United States. At December 31, 2008 reserves were 45.6 Moz.   Ninth place) Newcrest Mining Ltd. (ASX: NCM) In FY2010 Newcrest expects gold production in the range of 1.81-1.91Moz and copper production of 83-87kt, with capex of A$805-855M and exploration of A$95-105M. The company forecasts gold production of 2.3Moz by FY2014. Key operations are located in Australia and Indonesia. The company has an extensive development pipeline, including Cadia East, Ridgeway Deeps and Kencana.   Tenth place) Rio Tinto Plc (LSE: RIO)(NYSE: RTP) ~1.23 Moz annual gold production is what was referenced by Market Equities Research Group for 2008 -- Rio Tinto is a diversified metals and mining company and produces gold and silver primarily as by products of their copper operations. The company is the world's second largest producer of iron ore and coal, the third-largest producer of uranium and gem-quality diamonds, the fourth-largest copper producer and the largest aluminum producer. It is also the world's largest producer of bauxite, titanium dioxide slag, borates and talc, and the largest exporter of industrial salt.   Insight on Jr. Miners The chart to the left compares 'the average value of gold in situ for an index of junior/mid-tier gold miners' to 'the price of gold'.  The chart clearly shows the divergence that has existed for ~ 1 year and signals bullish opportunity to junior mining equity investors as the equities are justified in upward price revaluation relative to the price of the commodity.   Values were engineered from index data comprised of the following components: Alexis Minerals Corp., American Bonanza Gold Corp., Anatolia Minerals Development Ltd., Andean Resources Ltd., Andina Minerals Inc., ATNA Resources Ltd., Axmin Inc., Brett Resources Inc., Canarc Resource Corp., Canplats Resources Corp., Comaplex Minerals corp., CBR Gold Corp., Detour Gold Corporation, Etruscan Resources Ltd., Gabriel Resources Ltd., Golden Queen Mining Co Ltd., Gold Reserve Inc., Grayd Resource Corp., Great Basin Gold Ltd., Greystar Resources Ltd., Guyana Goldfields Inc., International tower Hill Mines Ltd., Intrepid Mines Limited, Keegan Resources Inc., Kirkland Lake Gold Inc., Klondex Mines Ltd., Kimber Resources Inc., Lake Shore Gold Corp., Luna Gold Corp., Metallic Ventures Gold Inc., Nevsun Resources Ltd., NovaGold Resources Inc., Osisko Mining Corporation, Pacific Rim Mines Limited, Rainy River Resources Ltd., Seabridge Gold Inc., Tyhee Development Corp., US Gold Corporation, Vista Gold Corp.   Figure 2 (left): Gold price versus average value US$/oz in situ Weighted average and ratios used; Canadian$ : US$ conversion = 0.93, Gold : Silver ratio = 63:1, shares outstanding were as of available Q2 2009 numbers.       Below is a superior exploration junior mining company that is deeply undervalued with key assets in mining friendly regions.   AMG.V Pinaya Geomodel 666,000 oz gold and 385,000,000 lb copper resource defined in 2006. Since then 93 additional holes have been drilled totaling 163 holes (representing well over 40,000m of drilling) and thus the resource estimate if done now would likely be significantly larger. Also since then gold has doubled in price significantly enhancing the value of the Pinaya deposit. Case Study: Acero-Martin Exploration Inc. (TSX-V: AMG) (US Listing: ACERF.PK)       ● 666,000 ounces of gold and 385 million pounds of copper resource       ● Near term open pit mine potential       ● Multi-billion bulk tonnage potential       ● Current in-situ gold equivalent resource valuation under $4/oz       ● Only ~28M shares outstanding and trading under CDN$0.30   Acero-Martin Exploration Inc. is a Canadian-based mineral exploration mining company listed on the TSX Venture Exchange (ticker symbol AMG) (US Listing: ACERF.PK). Acero-Martin is advancing projects on two key fronts;   1) Pinaya Gold-Copper Project, Peru - 100% owned Acero-Martin possesses a NI 43-101 compliant resource estimate report completed in 2006 which yielded an Indicated Resource of 29.13 million tonnes grading 0.53 g/t gold and 0.42% copper and an Inferred Resource of 12.72 million tonnes grading 0.41 g/t gold and 0.41% copper at Pinaya. This equates to approximately 498,000 ounces of gold and 269,000,000 pounds of copper in the Indicated category, and 168,000 ounces of gold and 115,000,000 pounds of copper in the Inferred category.   NOTE: The property possesses multi-billion bulk tonnage potential and not surprisingly Acero-Martin has fielded significant interest from entities probing the possibility of purchase and/or taking on the risk of development in the last couple months. AMG.V has yet to make a decision, however we note that ~200,000 ounces gold of the 666,000 ounce gold resource is readily available for the taking from the pit area -- the current valuation of AMG.V relative to the inherent value of assets appear disproportionate and is poised for substantial upside revaluation. Acero-Martin only recently (since ~mid October 2009) began trading under the symbol AMG.V as a revised mining entity with a nominal 27,347,128 shares outstanding.   2) Red Mountain Gold Project, Yukon - 80% owned The Red Mountain gold project within the Tintina Gold Belt, Yukon in the same geological belt as Underworld and several very large multi-million oz gold type bulk tonnage open-pit world class deposits including gold producer Kinross's Fort Knox mine and International Tower's 12M oz discovery. ##.