For the tale of the tape, the TSX Exchange tacked on 1.38%, while the TSX Gold Index gained 3.6% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, added 0.33% with the advancing issuers inching past the decliners by a 499 to 487 margin on volume of 195 million shares traded.

Sprott Inc.’s first day of trading proved to be a negative one as shares in the well-known resource investment firm fell C$0.16 to close at C$9.84. The company, whose mutual funds and hedge funds made C$42.3 million last year, completed its $200 million initial public offering at C$10 each.

Shares of Brazauro got a boost after the company announced a 125 metre drill intercept running 2.31 grams gold per tonne form its Tocantinzinho project in Brazil. Brazauro ended the day up C$0.12 at C$0.69.

Meanwhile shares of Cue Resources sold off as investors digest the new resource estimate for a portion of the San Antonio uranium deposit in southeast Paraguay. The indicated resources tally 7.8 million tonnes grading 0.03% eU3O8, while the inferred resources come in at 2.5 million tonnes grading 0.4%. Cue ended the day down C$0.10 at C$0.50.

Tenajon Resources added C$0.03 to close at C$0.47 after reporting that its Ajax deposit in British Columbia hosts an inferred resource of 483.1 million tonnes grading 0.061% molybdenum and an indicated resource of 69.0 million tonnes grading 0.065% molybdenum.

It was yet another strong day for Canada’s big board stocks with even the gold guys taking part in the action. That said, the junior bourse continues to struggle to keep pace. We will see what Friday trading has in store.

Source: Resource Stock Roundup: Friday, May 16th, 2008

A: This is the billon-dollar question when it comes to commodities. The United States is far and away the largest economy in the world, so of course, a severe recession would dampen demand for oil and other raw materials.

On the other hand, China and India are cramming decades of industrial revolution and massive infrastructure expansion into the next five to 10 years. From what we’ve seen so far, this build-out (which requires awesome amounts of raw materials) is offsetting the decline in U.S. demand.

However, speculating on demand is more like gambling than investing. We’ve got to consider supply constraints…The mining industry survived on such low prices for so long that now very few new projects are in the pipeline. In addition, some of the industry giants are in decline. For example, metal production from Chile’s Codelco, the world’s largest copper miner, has fallen for three straight years… and 2008 doesn’t look any better.

And new giant projects are suffering from the same higher costs hitting everyone…

The construction estimate to build the Galore Creek mine (NovaGold and Teck Cominco’s giant copper and gold project in British Columbia) escalated from $2.5 billion in 2006 to over $5 billion in late 2007. Most of that increase came from the rising price of basic materials like fuel and steel. Also, the cost of Canadian labor rose dramatically on the strength of the Canadian dollar.

However, I think the market is giving us an opportunity. I think we should own the companies that own the best new projects – ones that won’t produce anything for the next year or two. Those projects, because of the risk of development and the state of the market, are essentially free right now. (You can read about one of my favorite projects here.)

Q: What is the deal with the “Toronto” and “Venture” stock exchanges? I don’t know how to buy stocks on those things. – B.W.

A: I get this question a lot, because many of the world’s top mining companies are listed on foreign exchanges. Resource investors who limit themselves to the NYSE, Nasdaq, and AMEX are putting large shackles around their ankles. I often recommend stocks on the Toronto (TSX), Toronto Venture (TSX-V), London Aim (AIM), and Australian (ASX) exchanges.

But few discount brokers will buy these stocks directly on the exchange. While you can work your way through the deal, you often wind up paying huge fees for the service. Starting a position down 25% because of fees is a lousy way to speculate.

If you want to buy stocks on these exchanges, you’ve got to be prepared to elevate your game. If your regular broker can’t execute the trade without gouging you, I know of three brokers who can buy and sell international stocks with ease:

Global Resource Investments Ltd.
(800) 477-7853
www.globalresourceinvestments.com

Jeff Winn – International Assets
(800) 432-4402
jwinn@iaac.com

Dave Sjuggerud – Key Investment Group
(877) 539-1004
dsjuggerud@lasallest.com   

These brokers have provided honest, solid service to many of our readers in the past. They have excellent reputations for a reason. Neither Stansberry Research (publishers of Growth Stock Wire) nor I receive any kind of compensation for mentioning these guys. This is simply a short list of reputable brokerages that can buy these stocks.

If you want to use an online broker, I believe E*Trade and Interactive Brokers both trade stocks on foreign exchanges. But I’ve never tried either one myself.

And if you want to trade these stocks online, I recommend doing some research into the rules, tax laws, and currencies of each country. A good place to start on the currency research is EverBank’s currency research portal.

There are pitfalls out there for the unwary international investor. I actually found a company that U.S. investors were not legally allowed to own. It was a Canadian Trust that had my mouth watering… but it was for Canadians only. That’s why I recommend using a qualified broker to buy foreign stocks.

Good investing,

Matt Badiali