Gold has traded between $1,531 and $1,542 so far today…as of 8:45 am Pacific, the yellow metal is off $3 an ounce at $1,536…Silver is up 28 cents at $38.35, crude oil has climbed $2.16 to $102.75 while the U.S. Dollar Index has slipped one-tenth of a point to 74.63…U.S. markets are higher this morning following the Memorial Day holiday while Asian stocks rose sharply overnight as investors cheered news that Japan’s industrial and manufacturing activity is showing signs of rebounding after the devastating earthquake and tsunami in March…India’s economy grew more slowly than expected in the January-March fourth quarter (March 31 is the end of India’s fiscal year) but still maintained a robust pace, reassuring policy makers that the economy is in good shape despite sustained monetary tightening over the past year (The RBI – India’s Reserve Bank – has hiked interest rates nine times since March of last year to fight persistent inflation)…gross domestic product expanded 7.8% on-year in Q4 as growth in mining and manufacturing output weakened, the government said today…the reading was below the median expectation for 8.2% expansion, according to a poll of 19 economists…the economy had expanded 8.3% in the October-December quarter…for the full fiscal year ended March 31 the economy grew a provisional 8.5%, in line with the government’s projection of 8.6%…that was well ahead of the 8% growth in the previous fiscal year when the economy was shrugging off the effects of the global economic crisis…India’s Sensex Index climbed 1.49% today to 18,503…it had dropped as much as 8% since early April but appears to have found support…the Wall Street Journal reported this morning that the German government has decided to drop its demands in a bid to facilitate a new package of loans for Greece ahead of a report by the European Union, the European Central Bank and the IMF on that country’s compliance with the terms of a previous bailout…in order to get agreement on a new package, reports indicate Athens will be forced to accept international oversight over its tax collection and there will also have to be major privatizations of state-controlled assets with both conditions likely to be hugely unpopular with the Greek electorate…that’s the price, however, of irresponsible fiscal management…the likely outcome of this mess, though, is that Greece likely will default on its loans so any measures being put in place now are simply delaying the inevitable…other debt tragedies in the world are brewing as well which of course is very supportive for Gold…Euro zone consumer prices grew slower than expected in May, though remained well above the European Central Bank’s target, according to data released this morning, while unemployment held steady in April for the third month…the European Union’s statistics office Eurostat estimated that inflation in the 17 countries using the euro was 2.7 per cent year-over-year in May, down from 2.8 per cent in April…the CDNX opened higher this morning but has since pulled back slightly…it’s currently unchanged at 2098…the Index has posted gains in six of the last eight sessions, climbing nearly 150 points or 7.6% since the important low of 1957 May 17…the CDNX will post a decline of approximately 7% for the month but June is shaping up to be much better based on various technical indicators…Adventure Gold (AGE, TSX-V) has released solid results this morning from the final five holes of a Phase 1 program at its Pascalis-Colombiere Gold Property, which encompasses the past producing L.C. Beliveau Mine near Val d’Or…AGE has responded by gaining 4 pennies to 55 cents…hole #20 returned an interval of 33.1 metres grading 4.8 g/t Au with an overall intersection of 129.3 metres of 1.4 g/t Au…all five holes returned high-grade intervals and lower grade mineralization over significant widths…this property is developing very nicely and is showing excellent potential as a future small producer…the former mine was a very profitable operation for Cambior Inc. (now IAMGOLD) when it produced 167,000 ounces of Gold between 1989 and 1993…Adventure Gold has a lot going for it with several quality projects…Gold Bullion Development (GBB, TSX-V) climbed as high as 54 cents yesterday when it ran into resistance at its declining 100-day moving average (SMA)…the 50-day, however, has reversed to the upside (it now provides support near 45 cents) and that means a significant turnaround in this play is underway…GBB is down 2.5 cents at the moment to 47 cents…Gold Canyon Resources (GCU, TSX-V) has drilled 292.5 metres grading 1.13 g/t Au at its Springpole Project in Ontario, 110 kilometres northeast of the Red Lake Mining Camp…the last metre of that hole (SP11-059), which was drilled in the southeast part of the Portage Zone, averaged 3.60 g/t Au…the company released assays from three other holes as well this morning – the final holes from its winter program…SP11-57 returned an interval of 73.5 metres grading 1.32 g/t Au within a total of 220.5 metres grading 0.84 g/t Au…Sp11-60 intersected 204 metres of 1.15 g/t Au while Sp11-55, an exploration hole collared approximately 650 metres southeast of #59, encountered multiple intervals of low-grade Gold mineralization…the weighted average grade of all 2010-2011 drill intercepts in the Portage Zone is 1.3 g/t Au…”We believe the Portage Zone will prove to be one of the highest grade bulk tonnage deposits in the Shield,” stated Dr. Quinton Hennigh, Technical Adviser and Director of GCU…GCU is up a penny at $3.20…Silver Quest Resources (SQI, TSX-V) has topped the $1 level for the first time since last September…SQI, which holds a 25% interest in the northern portion of Richfield’s impressive Blackwater deposit, is 6 pennies higher this morning at $1.04…SQI is up for the seventh straight day and based on RSI readings it could be due for a brief rest soon…iSign Media Solutions (ISD, TSX-V), one of our favorite technical plays at the moment, jumped as high as 66 cents this morning and is currently up 2 pennies at 62 cents…while ISD has been very volatile and is likely to continue to be volatile, it’s not showing that it’s overbought technically at the moment…Currie Rose Resources (CUI, TSX-V) is off 1.5 cents at 20 cents…the company is expected to launch an aggressive drilling program in Tanzania next month…its 50-day SMA has reversed to the upside and the 100-day SMA is about to do the same, so this one is showing a lot of bullishness and could be a very strong performer over the summer…Spanish Mountain Gold (SPA, TSX-V) is up 6 pennies at 67 cents…SPA has terrific support right around 60 cents and given the resource it’s building at its Spanish Mountain Project in British Columbia, we believe it’s safe to say the best is yet to come from this play…the chart shows a slow but steady progression since late 2008 with rising long-term moving averages…
May 31, 2011
May 30, 2011
Gold has traded in a narrow range on this Memorial Day holiday for our American friends…as of 8:15 am Pacific, the yellow metal is up $2 an ounce at $1,539…Silver is 22 cents higher at $38.18…crude oil is off 28 cents at $100.41 while the U.S. Dollar Index is up slightly at 74.97…China National Gold Group Corp., the state-owned company that controls the nation’s largest Gold deposits, wants to invest in projects in Africa as it expects bullion to trade near record levels for the next three years…“We aim at large-scale mines with good potential in countries that have close ties with China and domestic stability,” President Sun Zhaoxue, 48, stated in an interview…“Gold prices will foreseeably fluctuate at historically high levels for another three years”…in a startling (not to mention idiotic) decision, Germany has decided to abandon nuclear power which currently supplies 23% of its energy needs…the country will be phasing out its remaining 17 plants by 2022…the Canadian economy, the world’s 11th largest, grew at its fastest pace in a year in the first quarter as increased activity in manufacturing and business investment outweighed faltering consumer spending…Stats Canada reported this morning that the country’s gross domestic product expanded at a 3.9% annualized rate, up from 3.1% in the fourth quarter of last year, and outstripping the 1.8% pace in the United States…G8 leaders were talking up the global economy at their recently concluded meetings in France…key manufacturing data is coming out this week along with the U.S. employment report for May (Friday)…the European debt crisis is weighing heavily on traders’ and investors’ minds right now along with the idea of a potential slowing in global economic growth…the action in the CDNX over the last week, however, has been very encouraging and suggests to us that those who are spreading doom and gloom right now are going to miss out on a significant upside move in the markets…the CDNX is down 2 points at the moment at 2099…the second most active stock is iSign Media Solutions (ISD, TSX-V) which has indeed broken out according to John’s recent chart analysis…ISD, which came out with news this morning regarding a unique in-room digital coupon delivery service using TV content as a distribution trigger, is up 7 cents at 57 cents on volume of over 3 million shares…on the resource front, Currie Rose Resources (CUI, TSX-V) enjoyed a powerful day Friday when it broke out technically as predicted…CUI has settled back a penny to 21 cents this morning…Currie Rose’s 50-day moving average (SMA) has reversed to the upside, a very bullish development, and what’s really interesting is that its 100-day SMA is now poised to reverse to the upside likely during the first week of June…the company is gearing up for a major drill program at its properties in northwest Tanzania…of particular interest is the Sekenke Project which is a geologist’s dream – it surrounds and runs in between two former high grade Gold mines including Tanzania’s original major producer from the first half of the 20th century…the ground at Sekenke is highly prospective and not just for Gold…the area has been under-explored and this project is the reason we started following CUI when it was trading at just a dime last fall…Gold Bullion Development (GBB, TSX-V), also in the beginning stages of a turnaround, is up 4 pennies at 48 cents…GBB bottomed out in the mid-30′s recently after more than three months of weakness…we continue to be very bullish on how the LONG Bars Zone at Granada is shaping up…key things to watch out for include results from LONG Bars Zone 2 (Aukeko) where drilling recently started, numerous important holes from the northern part of the Eastern Extension that have yet to be reported, the initial 43-101 resource estimate which is expected sometime during the third quarter, and developments with the Castle Silver Mine which GBB will be spinning off into a separate publicly-traded company…in addition to a better overall market moving forward, there are plenty of potential “drivers” to send GBB higher over the coming weeks…we also like the fact that Osisko Mining (OSK, TSX) has taken an equity interest in Threegold Resources (THG, TSX-V) and has also entered into an option agreement to earn as much as a 70% interest in THG’s Adanac Property which is on strike with the LONG Bars Zone…this shows that Osisko has to be watching developments closely with GBB and we all know what that could potentially lead to…the strong possibility of Gold breaking out to new highs next month could really impact the Q2 bottom lines of some smaller producers like Richmont Mines (RIC, TSX)…while we generally focus on the penny stocks, it’s hard to ignore a situation like Richmont as the company is quickly developing into an earnings machine and expanding its resource inventory with great results from Wasamac…RIC is up 3 pennies at $8.37 this morning…while some investors don’t like the idea of paying $8 for a stock, we love that idea if it’s a stock that has the potential to increase by 50% or more over the short term as Richmont clearly does if the right conditions materialize…as always, do your own due diligence…favorable chart patterns including a potential near-term reversal in its 20-day SMA are showing up in Gold Canyon Resources (GCU, TSX-V) which is a nickel higher this morning at $3.25 on light volume…
Independent Research and Analysis of Emerging Junior Resource Companies: Speculative, Undervalued, Home Run Opportunities in Today’s Markets
Welcome to our site, or at least the initial version of it! BMR has been online for nearly two years and strictly through word-of-mouth we have built a loyal following.
We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now. While we focus a lot on the Gold market and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on small and undiscovered junior resource companies, mostly in the Gold exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity. However, investors must understand that these are still highly speculative situations. Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. Please read our disclaimer at the bottom.
We use a combination of fundamental and technical factors in determining the value and potential of a stock. In terms of fundamentals we look for a company with a superb project supported by strong management. Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.
At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it - there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with. By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely in order to make it work for us. If it’s the other way around - if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly - you’re in trouble and you’ll never be blessed financially. We have a God who thinks big – He created the universe – and He wants us to think big in every area of our lives. When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible. This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life. It is the most important decision you’ll ever make.
BullMarketRun.com (BMR) is completely independent from any companies it covers. BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site. We accept no advertising either. Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time. Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.
May 29, 2011
Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines (VGD, TSX-V) was unchanged last week on light volume at 26 cents which actually ended a 7-week losing skid…despite an aggressive exploration campaign and plenty of talent in the front office and on the ground, VGD has yet to excite the market…however, the right project will do that and we believe VGD’s Joutel Property is that project…exploration is expected to begin early this summer at Joutel which is a joint venture between VGD and Agnico-Eagle Mines (AEM, TSX)…Visible Gold Mines is the operator…Joutel is a significant former Gold-Silver producer that gave birth to Agnico-Eagle in the 1970′s…Robert Sansfacon, VGD’s senior geologist who has a knack for finding Gold, believes a lot has yet to be discovered at Joutel which is why he’s so eager to tackle that project…other companies in Quebec have had great success with former producers…Joutel has an interesting history and should prove to be an exciting story…BMR was the first to discover Gold Bullion Development (GBB, TSX-V), which led to massive profits for some of our readers, and we’re confident history could repeat itself with Visible Gold Mines as we are on this story before anyone else through careful research and due diligence…the company is blessed with strong management and one of the best geologists in the country in Sansfacon who was instrumental in the discovery of Osisko’s (OSK, TSX) Canadian Malartic Deposit…VGD is quietly emerging as an exploration leader in northwest Quebec, specifically in the Rouyn-Noranda region…at the moment VGD is running two drill programs with one rig at the Silidor Gold Property, a small former producer, and another rig at its Kanasuta claims (Cadillac Break Project) very close to Vantex Resources‘ (VAX, TSX-V) Moriss Zone discovery at its Galloway Project…following completion of four holes at Kanasuta, the drill rig is expected to move east to the area near Richmont Mines‘ (RIC, TSX) growing Wasamac deposit…initial drill results from VGD’s Silidor Property were released April 20…each of the first 10 holes at Silidor intersected mineralization and Hole #8 is of particular interest as four sections of Gold were hit between depths of 70.85 metres and 130.5 metres including 2.70 metres grading 5.45 g/t Au and 1.5 metres grading 5.70 g/t Au…this area has never been drilled before and it’s 700 metres southwest of the former Silidor mine…a total of 23 holes were completed by April 20 (assays pending for 13 of them) and drilling continues in a northeasterly direction toward the former mine…Silidor is just one of four major projects Visible Gold Mines is currently advancing…besides Joutel and Cadillac Break, VGD holds the Stadacona-East Property at Rouyn-Noranda which has an inferred resource of 164,000 ounces with potential for significant expansion with additional drilling…the President and CEO of Visible Gold Mines is Martin Dallaire, a very successful entrepreneur in Rouyn-Noranda with an engineering degree who understands the mining industry and what an exploration company needs to do to succeed and build shareholder value…Dallaire is fluently bilingual, presents himself extremely well and knows how to run a business and make money…he thinks big but is focused…he has also recruited some key people including Sansfacon who honed his skills for many years with Lac Minerals…in short, Dallaire has put something together you don’t often see in the junior speculative market – a powerful dynamic of business, geological and marketing expertise with a strategic plan to rapidly build value…the company’s niche and sole geological focus is northwestern Quebec where it has acquired several promising land packages, mostly west and north of Rouyn-Noranda…Dallaire is taking an aggressive approach to exploration and he’s targeting under-explored areas and past producing mines where major new extensions are possible…
GoldQuest Mining (GQX, TSX-V)
GoldQuest was up half a penny on increased volume last week, closing at 19 cents…the stock has had a difficult four months, falling from a high of 48.5 cents in early February…GQC’s prospects remain solid, however, as the company has an outstanding portfolio of projects in the Dominican Republic and Spain…GoldQuest announced Friday it’s proposing the election of Patrick Michaels and Florian Siegfried as new non-executive directors…both are with Precious Capital AG, a Zurich-based fund specializing in global mining investments…while GQC is now slightly below its 300 and 500-day moving averages, these long-term term SMA’s continue to rise and are in no danger of rolling over anytime soon…technically and fundamentally, the downside risk from current levels is very limited in our view…the stock became extremely oversold recently based on a range of indicators…the 200-day SMA at 29 cents continues to rise and that’s where major resistance can be expected for now on the upside… the substantial drop in the share price from a high of 48.5 cents in early February was due to general market weakness and selling from speculators whose expectations may have been too high regarding initial drill results from the company’s La Escandalosa Project in the Dominican Republic…the results were decent though far from spectacular…the final set of assays for seven holes came out May 16…the best intersection from Escandalosa Sur, where an initial 43-101 inferred resource of 400,000 ounces was outlined last fall, was 20 meters grading 1.32 g/t Au…results from this area overall (21 holes) were somewhat disappointing though more drilling is required and will take place later this year…however, the company drilled three holes at the Hondo Valle target 1.6 kilometres to the north (outside the resource area) and all three intersected significant mineralization including 29 metres grading 2.18 g/t Au in hole #65…that’s the thickest and highest grade mineralized section drilled to date at Hondo Valle…the theory is that mineralization trends north from Escandalosa Sur to Hondo Valle…GoldQuest is carrying out a 16-square kilometre IP survey and magnetic ground geophysical survey from 2 kilometres north of Hondo Valle to 2.2 kilometres south of Escandalosa Sur…this will be completed by the end of July and GQC will use the data to pinpoint key targets for an additional 3,000 metres of drilling…GoldQuest also has other promising projects in the DR it’s working on in addition to its lead-zinc-silver deposit in Spain…GoldQuest’s potential has not diminished whatsoever yet the share price has dropped by more than half from its early February high…the company released a 43-101 resource estimate March 2 on its Toral zinc-lead-Silver deposit in Spain…it showed slightly lower grades but much higher overall tonnage than the previous historical non-compliant estimate…as a result, total resources came out 15% higher…resources in the indicated category are 4.04 million tonnes grading 11.8% lead and zinc (5.3% lead, 6.5% zinc) as well as 41 g/t Ag and 0.11% Cu… inferred resources are 4.67 million tonnes grading 9.8% lead and zinc (4.44% lead, 5.4% zinc), 32 g/t Ag and 0.14 Cu…Toral has significant exploration and development upside as a majority of the historical drilling (40,000+ metres) was conducted over one relatively small part of the property…the zone of sulphide mineralization is open along strike to the northwest toward a known lead deposit as well as along strike to the southeast and downdip…the project is also an ideal candidate for a fast-track to production…the deposit is close to a power line, highway and rail line…a large smelter is located just 300 kilometers away by rail…
Greencastle Resources (VGN, TSX-V)
Greencastle firmed up a bit last week, closing Friday at 22 cents for a weekly gain of 4.5 cents…Friday’s action took the stock almost to its still-rising 200-day moving average (SMA) where resistance for the time being can be expected…the fact Tony Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…Roodenburg had been trying to ease his way out of Seafield since 2009 without much success until earlier this month…he’ll now be able to focus almost exclusively on Greencastle which has been a favorite project of his for many years…we suspect he’s going to take a serious look at spinning out the oil assets or the Gold assets into a separate company…Greencastle’s market cap is just $10 million which means the stock is trading just 20% or so above its cash value…history shows that whenever this occurs in VGN, a terrific buying opportunity has opened up though investors must be patient…it’s interesting to note that the stock’s rising 500-day moving average (SMA) and its 1000-day SMA, which has flattened out, have converged at 17 cents where there is exceptional support…VGN’s strong underlying fundamental value is clearly shown in the latest financials which were released March 24…as of December 31, Greencastle held $5.1 million in cash and $2.6 million in marketable securities…some of those securities are likely shares in Seafield Resources (SFF, TSX-V) while the company disclosed it held 1,148,000 shares of Evrim Resources Corp. (EVM, TSX-V), formerly Avaranta, which started trading on the Venture Exchange January 25…current oil prices should maintain Greencastle’s monthly cash flow of approximately $130,000 as it receives royalties from heavy crude production at Primate in Saskatchewan…Greencastle tripled in value over a six-week period from late October to early December…since the beginning of January, though, the stock has struggled due mostly to impatient investors frustrated with the lack of news…patience is required here…over the years the successful strategy with Greencastle has been to accumulate on weakness when the stock is near cash value and then sell into strength when something develops…with $8 million in working capital, three Gold properties (including land near Richfield’s Blackwater Project) and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that Greencastle offers excellent value at current levels…the long-term chart remains very encouraging with rising 200 and 300-day SMA’s that are in no danger of reversing at the moment…it’s also important to note that Roodenburg, a large shareholder in VGN, refrained from selling any of his holdings during the late 2010 run-up in the share price…this is different from past bullish in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle – it’s poised for what we believe could be a massive breakout sometime this year…Pinetree Capital has also accumulated more shares in Greencastle, so there’s every reason to be very optimistic regarding this company’s prospects…Greencastle is up 57% since we added it back in to the BMR model portfolio last October…
Adventure Gold (AGE, TSX-V)
We recently warned about some potential weakness in Adventure Gold based on technical factors, and indeed that’s what has occurred…the stock has found support as predicted at the 200-day moving average (SMA) in the mid-40′s (it fell as low as 42 cents Tuesday and then rebounded strongly to close at 51 cents)…AGE closed Friday at 50 cents, a loss of 1 penny for the week…the declining 20-day SMA, currently at 54 cents, is an area of resistance for now on the upside…overall, the long-term technical picture remains very encouraging…Agnico-Eagle Mines (AEM, TSX) has started a 4,000-metre drill program at AGE’s Dubuisson Property near Val d’or…Dubuisson is contiguous to the Goldex mine property and also straddles a 5-kilometre segment of the prolific Cadillac-Larder Lake Gold break…the company released good results from two more holes April 7 from its recently completed Phase 1 drill program at the Pascalis Colombiere Gold Property near Val d’Or…hole #17 intersected four separate zones of mineralization at depths ranging from 6 metres to 187 metres (5.7 g/t Au over 4.3 metres, 4.6 g/t Au over 5.7 metres, 12.9 g/t Au over 8 metres, and 5 g/t Au over 6.1 metres)…hole #16 intersected 5.5 g/t Au over 5.9 metres…results from five more holes are pending…follow-up drilling will commence once all assays have been received and reviewed…a NI-43-101 resource calculation is planned for later this year…AGE’s latest financials, released April 1, show the company with $3 million in working capital at the end of January…AGE runs an efficient operation and knows where to direct its energies…we first mentioned Adventure Gold to our readers in an article September 29, just a couple of days following the company’s announcement that it had acquired land at Granada, when the stock was trading in the low 20′s…we officially added AGE to the BMR model portfolio at just 34 cents October 28…Adventure Gold has been around only since late 2007 and we are impressed by the company’s solid portfolio of properties (19 in six strategic areas in Quebec and Ontario)…also of immediate interest is AGE’s partnership with Lake Shore Gold (LSG, TSX) on the Meunier 144 Property where deep drilling is still testing the down-plunge extension of Gold zones located at the Timmins and Thunder Creek deposits…the current initial deep drill hole onto the Meunier JV property is continuing and is on track to reach the 2,400 metre target level in the near future…if a discovery is made, AGE will instantly explode higher…
Sidon International (SD, TSX-V)
Still nothing new to report here…Sidon traded between 4.5 and 5 cents last week, closing Friday unchanged for the week at 4.5 cents…there has been no news from the company since March 14 when it announced a proposed private placement at 8 cents and an option to acquire an 80% interest in a 50-square kilometre property adjacent to Canaco’s (CAN, TSX-V) Handeni discovery in Tanzania…Sidon has yet to recover from a sharp drop in early March following disappointing assay results from its Morogoro East Gold Property…the six shallow holes drilled in December at Morogoro East did not produce significant results, the best hole showing 3 metres grading 1.7 g/t Au…the company has drilled four deeper holes with results for those still pending…what the initial six holes have given Sidon, however, is a better understanding of the Morogoro geological structure which will aid in any future drilling…exploration, especially at such an early stage, is never easy and disappointing early results don’t necessarily mean a property doesn’t hold excellent potential…the company is also trying to develop a placer operation at Morogoro…there is certainly hope here for better days ahead for Sidon…from a technical standpoint, previous support between 9 and 10 cents will now provide resistance…the turnaround in the stock price will start once the 50-day SMA has reversed to the upside…Sidon off half a penny since we introduced it to BMR readers just over a year ago at a nickel…the company currently has approximately 140 million shares outstanding for a market cap of $6.3 million…
Seafield Resources (SFF, TSX-V)
Seafield enjoyed a great week, finally gaining some traction on high volume after dropping as low as 21 cents the previous week…SFF traded as high as 33.5 cents last week and closed Friday at 30 cents for a weekly gain of 9 pennies or 43%…the company announced the closing of a $3 million private placement at 30 cents with a “strategic” long-term investor and also released an updated 43-101 resource estimate for its Miraflores Property…that project has gone from an inferred resource of 776,000 ounces (at a cut-off grade of 0.5 g/t Au) to a measured and indicated resource of 1.2 million ounces and an inferred resource of 354,000 ounces (at a cut-off grade of 0.3 g/t Au)…another round of drilling will begin shortly at Miraflores…there was big news out of Seafield May 9 with a change in management which has to be considered a bullish development…Cesar Lopez, who has a strong background in South American exploration management and development, is the company’s new Chief Executive Officer…he replaces Tony Roodenburg who will remain as a director…Tom Henricksen, meanwhile, takes over as Vice-President, Exploration, from James Pirie who also remains as a director…Henricksen has over 35 years of mineral exploration experience and has spent the last 15 years on projects in South America…Seafield exploded from the low 20′s to an all-time high of 77 cents in just one day last December but gave up all of those gains until last week’s turnaround…the company’s Quinchia land package in Colombia has a great deal of untapped potential and Seafield is also sitting on approximately $18 million in cash…the company announced April 5 that drilling has commenced at Santa Sofia, about 1 kilometre north of Dos Quebradas where drilling continues…Seafield geologists have identified a promising porphyry target measuring 1,050 metres in length and 850 metres in width at Santa Sofia with soil values up to 2.3 g/t Au…on March 7, assays were reported from the first three holes completed at Dos Quebradas with hole #2 intersecting a whopping 511 metres grading 0.58 g/t Au…the hole ended in mineralization…hole #1 delivered 269 metres grading 0.37 g/t Au while hole #3 was drilled to define the eastern limit of mineralization and returned no significant results…a total of 10 holes were completed at Dos Quebradas as of early this month…significant intercepts well outside areas of historical drilling would start to get the market excited…the geological case for Seafield’s Quinchia land package is compelling and we’re looking forward to more results from Dos Quebradas as well as initial assays from Santa Sofia…patient investors have an opportunity to do extremely well with this play given the geological merits of Quinchia and the real potential for 5 million+ ounces from several potential deposits…we have confidence the new management group will unlock value by bringing fresh insight and new energy to this play along with a more aggressive exploration approach…Seafield has gained 400% since we made it the first company in the BMR model portfolio in the summer of 2009…its current market cap of approximately $50 million is modest given its cash position and resource potential…
Gold Bullion Development (GBB, TSX-V)
“Turnaround time” has arrived for Gold Bullion Development…GBB, which successfully tested its 35-cent March low in mid-May, gained 4 pennies last week to close at 44 cents, its highest closing price since the beginning of May…the stock’s 50-day moving average (SMA) has flattened out and is now just beginning to reverse to the upside, a sure sign that higher prices are on the way…in addition, the 20-day SMA is poised to reverse to the upside this coming week…so there are very encouraging indications that after more than three months of weakness, GBB is getting ready to roar once again which coincides with the release of the initial 43-101 for the LONG Bars Zone, expected sometime during the third quarter…the market is a forward-looking machine and the GBB market won’t wait until after the 43-101 comes out before reacting…the company’s current market cap of $70 million puts a value of just $23 an ounce on Gold in the ground at Granada if one were to assume the 43-101 will outline approximately 3 million ounces in the measured, indicated and inferred categories…that’s just a hypothetical number on our part at the moment but whatever number GENIVAR comes up with, we believe it should exceed the 2.4 to 2.6 million ounce conceptual figure that Gold Bullion gave in April of last year…based on all the drill results to date, this appears to be shaping up as a half-gram deposit with a higher grade starter pit and massive volume…it’s all about volume at Granada which is why the drills have to keep turning and why we want to see more than just two rigs in the LONG Bars Zone which has such incredible potential…Gold Bullion released fresh drill results from Granada May 12 which were consistent with previous numbers…hole #173 was the star of the batch of 25 holes…it provided additional evidence that the north and northeastern parts of the Eastern Extension are highly intriguing…#173 cut 80 metres grading 1.36 g/t Au within a total intersection of 363 metres of 0.35 g/t Au…a 1-metre section of high-grade (89.83 g/t Au) was hit near the bottom of the hole below 300 metres…#173 was collared approximately 115 metres northeast of #55 and 100 metres east-northeast of #108, two stellar holes released last fall…this is critical – assays are still pending on 9 holes (165, 168, 178, 183, 241, 243, 246, 254, and 257) north of #55 drilled over an east-west distance of about 250 metres and a north-south distance of 200 metres…results from those nine holes will go a long way toward confirming just how prospective these parts of the Eastern Extension are…#241 is the most northerly of those holes…meanwhile, hole #200 in the southeast portion of the Eastern Extension (northeast of discovery hole #86) returned an impressive interval of 48.50 metres grading 1.68 g/t Au within a total intersection of 210.5 metres of 0.44 g/t Au…results from the second most northerly hole drilled north of the Preliminary Block Model suggest more drilling is definitely required in that area…hole #31 hit a modest 18.5 meters grading 0.64 g/t Au close to surface (36 to 54.15 metres) and another 28 metres grading 0.59 g/t Au between a depth of 125 to 153 metres…where’s there’s smoke, there’s fire, and our theory is that there could be a significant trail of mineralization running north of the Preliminary Block Model and connecting with what has been discovered over the northern part of the Eastern Extension…six more holes (213, 214, 215, 217, 221 and 224 and 224) from the southwest portion of the Preliminary Block Model returned mixed results – we were hoping to see a couple of exciting holes from that area but that hasn’t materialized yet…overall, Gold Bullion continues to hit long intersections of lower grade mineralization over a wide area at Granada…this is a massive project with much more drilling required but the multi-million ounce model that Frank Basa has in mind remains intact…the 43-101 resource estimate should reassure investors and give this play more focus and a big lift…drilling is also underway now in LONG Bars Zone 2 near the old Aukeko Property (2 kilometres east of Phase 1 discovery hole #17) and if Gold Bullion is able to connect these two zones, look out…GENIVAR’s Nicole Rioux, the head geologist for Granada, is genuinely excited about the Aukeko area and she is normally quite conservative in sizing things up…a couple of excellent results from this area could really ignite this play and based on all the historical information we have reviewed from “LONG Bars Zone 2″, the chances of a “hit” in this area have to be considered very good…
Cadillac Mining (CQX, TSX-V)
Cadillac fell to a yearly low of 8.5 cents Friday before quickly snapping back to close at 14 cents, a 4-penny increase for the day and the week…this is a company with tremendous potential given its property packages but management has so far shown an inability to comprehend or gauge the market and create shareholder value by “seizing the moment” and taking advantage of the opportunities they have been blessed with…we remain patient for now because the possibilities with CQX are still incredible, especially considering the current market cap which is just $3.5 million even after Friday’s jump…not often does a company get the kind of opportunity that Cadillac was handed (and still has)…CQX holds a 100% interest in a very strategic piece of property that adjoins Richmont Mines‘ (RIC, TSX) Wasamac deposit, 15 kilometres west of Rouyn-Noranda…the principal Gold structure hosting mineralization at Wasamac dips northerly onto the seven claims held by Cadillac…Richmont started drilling Wasamac in the spring of last year and steadily ramped up its drilling due to excellent results…in February of this year, Richmont reported a nearly five-fold increase in resources (from 285,000 to 1.4 million ounces) at Wasamac…as a result RIC has been one of the best performing Gold stocks on the TSX this year…throughout the past year since Richmont started drilling Wasamac, and in particular over the last five months, Cadillac management has completely failed its shareholders by doing essentially nothing (or the wrong things) to take advantage of Richmont’s success at Wasamac…BMR brought the Wasamac situation to the attention of its readers in December…investors got excited about the story and the potential of Cadillac’s “Wasa” claims…the stock ran to 50 cents by early January and the market was clearly eager to see Cadillac pursue this project as quickly and vigorously as possible…in this business, it’s critical to “seize the moment” and take immediate advantage of opportunities like this when they present themselves…the company easily could have leveraged the Wasamac situation into a major financing anywhere between 25 to 40 cents (they began the year with only about $200,000 in the bank)…in order to take advantage of any opportunity, a company must be well-financed and Cadillac management absolutely dropped the ball during the first quarter of this year when they did have a chance to raise at least $1 million (potentially much more) and failed to do so…we give the company credit for securing an excellent project (Goldstrike) in Utah on fabulous terms but several million dollars is going to be required to tackle Goldstrike in the right way…Cadillac has fallen from a high of 50 cents in early January to a yearly low of 8.5 cents last week…there is no excuse for that and management has only itself to blame…after talking about getting a drilling program going at Wasamac “in the near future” shortly after their mid-February AGM, Cadillac has reversed course and stated in a news release May 16 that it needs more information from Richmont’s work before drilling for down-plunge extensions of the Wasamac main, #1 and #2 zones…President and CEO Victor Erickson’s heart is with the Utah project, not with Wasamac…in retrospect, that has been demonstrated in many ways over the last six months…Erickson would have to admit that himself…the only solution, then, in our view, is for Cadillac to cut a deal with another company for exploration at Wasamac and the natural partner for that is Visible Gold Mines (VGD, TSX-V) which last December entered into a JV with CQX on its other Rouyn-Noranda area properties…VGD has all the money and expertise necessary to unlock the value of Cadillac’s Wasa claims…Cadillac could let others do the heavy lifting at Wasa and then focus its energies on developing the Goldstrike Project…talk is cheap – the onus right now is on Cadillac to show investors that it can “walk the walk” and make things happen…
Abcourt Mines (ABI, TSX-V)
Abcourt closed unchanged last week at 13 cents…an overall market turnaround is welcome news for ABI which is down 28% since the CDNX correction started March 7…the stock, which now has 149 million shares outstanding for a market cap of $19.4 million, has found support at current levels and should begin to firm up given strong fundamentals and an aggressive exploration program at two properties…ABI’s decline from a 52-week high of 25.5 cents in late March was brought on by the closing of a financing (35 million units at 18 cents), a sharp drop in Silver, overall CDNX weakness, and selling by MineralFields Group…ABI’s 100-day moving average (SMA) has now started to decline and will provide resistance for now around 17 cents…the 200-day SMA is still rising, however, and is currently sitting at 16 cents…the company released more results from its Abcourt-Barvue Silver-Zinc Property last week including 4.9 metres grading 300.99 g/t Ag and 3.05% Zn in AB-11-24, and 10 metres grading 129.48 g/t Ag and 3.12% Zn in ABI-11-27…drill results to date should significantly upgrade and increase all-category reserves and res0urces…the 10,000 metre drill program continues…the last set of results from the company’s Elder-Tagami Gold Property near Rouyn-Noranda came out May 16…mineralization continues to expand to the west and the east of the former underground Elder Mine which is now being dewatered…the Tagami area to the north, meanwhile, has untapped potential including some higher grades…the latest NI-43-101 resource estimate of 216,000 ounces was released in the summer of 2009…the possibility of Abcourt expanding that resource beyond 500,000 ounces certainly exists given the encouraging results to date (look what Richmont has done at Wasamac)…the heavy accumulation that began in Abcourt in December was no fluke in our view…this is a company with significant assets that could justify a substantially higher valuation…nearly 60 million shares of ABI changed hands on the CDNX in December and January – record volume for this stock, accompanied by a price jump from 14.5 cents…while the stock price is now slightly below that level, the record volume in ABI since late last year (take a look at a 10-year chart) is still a very bullish sign…Abcourt has been under significant accumulation and our best guess is that some savvy players like the assets in the ground…continued drilling success and higher prices for Gold, Silver and zinc would be exciting developments for this stock which has a history of major moves…from mid-2005 to early 2006, Abcourt rocketed from 15 cents to nearly $1.40…
Currie Rose Resources (CUI, TSX-V)
Currie Rose exploded to the upside Friday in a technical breakout that we were expecting…the stock broke through resistance in the high teens and closed at 22 cents, a gain of 4.5 pennies for the day and a nickel for the week…CUI’s 50-day moving average (SMA) has reversed to the upside and the fact that the 100-day SMA is very close to reversing is going to add more fuel to the fire…what’s causing the excitement, in our view, is that news is likely just around the corner as the company gets set to start a major new drill program in northwest Tanzania where it holds some outstanding properties in the prolific Lake Victoria Greenstone Belt…of particular interest is Currie Rose’s Sekenke Project…Sekenke has “blue sky” written all over it and it’s why we decided to start following this company when it was trading around a dime last fall…CUI will soon be drilling Sekenke for the very first time…it covers nearly 300 square kilometres and surrounds and runs in between two former high grade Gold mines including Tanzania’s original major producer…we should get an even better picture of the potential of Sekenke when Currie Rose releases results from a recent (and perhaps still ongoing) extensive ground-based and airborne geophysical program as well as satellite imagery…previous exploration work by Currie Rose has yielded excellent results…the company has already identified a highly prospective structure (12 km x 800 metres) within a shear zone on the margins of a large granite intrusion that hosts numerous quartz reefs of the same type and even larger than those that developed at the nearby historic mines…as often is the case, chances are that much was overlooked at and around the former mines which were in operation during the first half of the 20th century…in addition to Sekenke, which has to be regarded as its flagship project, Currie Rose’s Mabale Hills Project also holds considerable promise…while its Tanzanian properties are the market’s major focus, Currie Rose could also benefit over the summer from continued good exploration news out of Trueclaim Exploration (TRM, TSX-V) which is currently conducting an 8,000 metre drill program at the Scadding Gold Property near Sudbury…Trueclaim, which continues to release encouraging assay results, has earned a 51% interest in Scadding and can acquire a full 100% interest by completing a feasibility study, paying $2 million to Currie Rose, and giving Currie Rose a 3% net smelter royalty…CUI announced a joint-venture deal January 25 with Australian-based Liontown Resources for Currie’s Jubilee Reef Gold Project in Tanzania…CUI’s focus is on the Sekenke and Mabale Hills Projects, so finding a partner for Jubilee Reef made sense…the deal commits Liontown to at least 5,000 metres of drilling at the property this year which will give Currie Rose a minimum of 23,000 metres of drilling at all of its properties in 2011…while Currie Rose has had its market cap shaved in half, from a high of nearly $40 million late last year to the current $19.5 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as ever…Currie Rose has all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) beginning next month, so there will not be any dilution of the stock at current levels as confirmed by President and CEO Harold Smith…
Richfield Ventures (RVC, TSX-V)
Richfield, moving of course in step with New Gold Inc. (NGD, TSX), was up another 64 cents last week to close at $9.02…it has climbed for five consecutive trading days after bottoming out at $8.00, just below its supporting 50-day moving average (SMA), May 19…on May 10, Richfield announced more positive drill results from its Blackwater Project in central British Columbia including 378 metres grading 1.09 g/t Au over the northern section which Silver Quest Resources (SQI, TSX-V) holds a 25% interest in (this northern part is looking very interesting and Silver Quest broke out late last week to close at 95 cents Friday)…of course at the beginning of April, Richfield announced a plan of arrangement with New Gold for a takeover of Richfield (in NGD stock) valued at that point at $10.38 per RVC share or $550 million…the drop in New Gold’s share price has been a reflection of overall market weakness and the market responding to the upcoming share dilution required for the deal…there are, however, enormous benefits down the road for NGD once Blackwater gets into production…we had been speculating on a potential buyout of Richfield for some time…the proposed deal is certainly a very positive fit for New Gold whose New Afton Project in the interior of British Columbia, not far from Blackwater, is on target to start production by the middle of next year…New Gold sees some obvious synergies between the two deposits…Richfield recently outlined approximately 4 million ounces of Gold in the indicated and inferred categories at Blackwater in a NI-43-101 resource estimate released March 2…the New Gold deal is expected to close next month (no competing offers for Richfield have yet been made)…New Gold recently released its first quarter results which showed continued solid growth, lower costs and earnings of six cents per share…the company expects to double its cash flow when production begins at New Afton next year…Richfield is up 652% since we introduced it to BMR readers in December, 2009, at $1.20…the Blackwater Gold District is still full of opportunity for investors and we encourage readers to check out the web site, www.BlackwaterGoldDistrict.com…
TSX Venture Exchange and Gold
It was a pivotal week for the CDNX which gained 70 points or 3.4% over the shortened four-day trading period to close at 2101 (it significantly out-performed all the major markets). This is not a dead-cat bounce. In fact, for technical reasons we presented last weekend, a major “Wave 4″ correction has ended in our view and a potentially powerful “Wave 5″ move to the upside, which could last for an extended period, is now underway. This suggests that Gold will soon take off to new all-time highs and that the CDNX will also be powered higher by companies reporting exciting drill results and fresh discoveries. Call it an optimistic view if you wish, considering the doom and gloom that is so prevalent at the moment, but history and the technicals are on our side. June, being the first full month of a market turnaround, could be particularly interesting. Of course there will be some ups and downs over the balance of the year but history tells us 2465 is not likely the high for 2011.
One of the keys to making big money on the CDNX is understanding that once a year you can count on a major correction of about 20%. Just like once a year you can count on filing a tax return. You need to be prepared for both – make money serve you, not the other way around. In the case of the CDNX, you always want to be in a position when you can really take advantage of these corrections and load up on some of your favorite stocks when the crowd is dumping them. The last thing you want to do is fall victim to fear and sell everything, particularly near the end of a correction, when you should be doing exactly the opposite.
Below are the last 10 major CDNX corrections (excluding the Crash of 2008) over the last decade:
2011………21% drop over 51 trading sessions from March to May (2465 to 1957)
2010……20% drop over 45 trading sessions from May to July (1688 to 1343)
2009…….No major correction
2008…….19% drop over 14 trading sessions in January (2891 to 2331)
2007…….30% drop over 23 trading sessions from mid-July to mid-August (3342 to 2348)
2007…….19% drop over 31 trading sessions from November to mid-December (3193 to 2580)
2006…….29% drop over 24 trading sessions in May (3310 to 2352)
2006…….19% drop over 22 trading sessions from September to early October (2819 to 2291)
2005…….22.5% drop over 52 trading sessions from March to May (2050 to 1588)
2004…….19% drop over 31 trading sessions from early April to mid-May (1898 to 1530)
2003…….No major correction
2002…….29% drop over 91 trading sessions from June to mid-October (1256 to 887)
If you were a buyer toward the end of the nine major corrections prior to this year cited above, you likely made A LOT of money. The CDNX rebounded sharply after each of those corrections. Excluding the extraordinary fall of 75% over the last half of 2008 (the “Great Crash” which we’ve left out as it was an anomaly, the average percentage decline in the nine major corrections cited above between 2002 and 2010 was 23% over an average of 37 trading sessions.
This year’s correction started March 7 and lasted until May 17 (one could argue there were two separate corrections which makes it less likely we’ll see another major drop later this year) when the CDNX dropped as low as 1957 intra-day. The magnitude and duration of this drop (20.6% over 51 trading sessions) was very comparable to last year’s and the one in 2005 which also occurred during the months of March, April and May (ironically, the 2005 correction started March 7 and ended May 18 – by the end of June the market was up 9% from its low). The market gained an average of 55% by the end of the year after the corrections of 2010 and 2005. If we were to have a repeat of that this year, the CDNX would close at 3033 at year-end which incidentally is very close to John’s latest Fibonacci target for the CDNX.
The average gain in the market, measured by the year-end close, after the eight corrections cited above from 2002 through 2010 (excluding 2008) was an impressive 27% which would give us a year-end target of 2485 for the CDNX. Investors cannot ignore this kind of statistical information over such a lengthy period – in a 30% gain by the CDNX, a good number of stocks will double, triple or even quadruple in value. There will be some 10-baggers as well.
The best time to be long on the CDNX is when the wind is at your back and that’s exactly the case right now given that a major correction has just ended. The CDNX’s 20-day moving average (SMA) could reverse to the upside as early as next week, a development that would add fresh fuel to the advance. The action in certain individual stocks (Canaco Resources being a great example) adds to our confidence that a major upside move is underway in the CDNX. The 10 and 20-day moving averages should provide strong support on the way up as they have following other major corrections.
Can we be 100% certain the CDNX correction for 2011 is over? Of course not – something completely bizarre could always happen – but in this business you go on probabilities. Based on all the technical indicators and historical information we look at, we would be foolish not to conclude this correction is over – the odds are so heavily in favor of that. We expect a strong market in June, perhaps some consolidation through July and August, and then another push higher over the final four months of the year. In terms of the fundamentals, Gold is looking exceptionally strong and the commodity “Super Cycle” continues. The Fed’s accommodating monetary policy is expected to last well into next year.
Gold broke through resistance at $1,530 Friday, closing at $1,536.50 for a gain of $17 for the day and $23 for the week. Gold, which in euro terms reached a new all-time high last week, has been finding consistent support at its rising 30-day moving average (SMA) and it seems to have gotten very comfortable with the $1,500 level which is a bullish sign.
Silver powered higher last week, closing at $37.96 for gain of $2.90.
The U.S. Dollar Index declined sharply Friday and was off nearly a point for the week at 74.75.
Utah has now made official the use of Gold and Silver coins as legal tender. This marks the first time since 1971 that any government entity in the United States has legalized the use of Gold and Silver as currency. The law, signed by Governor Gary Herbert, does not require citizens to pay or accept payment in Gold or Silver, but rather offers an alternative to the fiat-based Federal Reserve note. The Utah law will also exempt the sale of Gold and Silver coins from state capital gains taxes.
The Associated Press noted that earlier this month, “Minnesota took a step closer to joining Utah in making Gold and Silver legal tender. A Republican lawmaker there introduced a bill that sets up a special committee to explore the option. North Carolina, Idaho and at least nine other states also have similar bills drafted.”
Investors are closer to being able to use Gold as a trading security after a European parliamentary committee approved a proposal to allow clearing houses to accept Gold as collateral. “It is very significant that the European Parliament is putting its weight behind the argument that the unique characteristics of Gold make it an ideal form of high quality liquid collateral,” said Natalie Dempster, director of government affairs at the World Gold Council (WGC).
Gold demand continues to be strong. First quarter world Gold demand grew 11% from the same period a year ago to 981.3 metric tons, according to the WGC in its quarterly supply/demand trends report released recently. Much of the increase was due to investment demand with a 52% jump in purchases of bars and coins more than offsetting a decline in holdings of exchange-traded funds. Jewelry interest also rose with China and India collectively accounting for nearly two-thirds of the global jewelry demand.
The WGC issued a included a separate section on China in the quarterly supply/demand trends report (data was compiled by the consultancy GFMS). In the spring of last year the WGC issued a report stating it expected Chinese Gold demand could double over the next decade. “With the sustained momentum in Chinese Gold demand, this target will probably be achieved in a shorter time scale,” according to Eily Ong, investment research manager with the WGC. Gold demand grew by a whopping 32% in China last year despite a concurrent 25% rise in the average local currency Gold price.
Demand for Gold in China was so strong during the first quarter that for the first time the country outpaced the combined total of the developed West. If you lump together the Gold demand of the U.S., France, Germany, Italy, Switzerland, the U.K. and other European countries (despite large increases in demand from France, Germany and Switzerland), the sum of these countries is still outpaced by China.
A slight pullback in prices during the middle of the first quarter and “persistent high inflation levels” pushed China into the position as the world’s largest market for Gold investment. Chinese citizens devoured nearly 91 tons of Gold bars and coins, more than double the amount of a year ago.
This isn’t exactly a new phenomenon in China. From 2007 to 2010, investment demand grew at a compounded annual growth rate of 68 percent, according to the CPM Group. The firm forecasted Chinese investment demand to increase 34.7 percent during 2011 but based on this new data, it may need to adjust its forecast.
Song Qing, director of Shanghai-based Lion Fund Management, told Bloomberg news that, “Gold has taken on a new role in China amid concern about inflation. Just imagine the total wealth in China and even a small percentage of that choosing to buy Gold. This demand is going to be enormous.”
The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, an environment of historically low interest rates and negative real interest rates (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on. It’s hard to imagine Gold not performing well in this environment. The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.
May 27, 2011
Gold seems ready to finish the month of May on a very bullish note…the yellow metal is breaking out above resistance at $1,530 this morning…a move to new highs next month seems likely given the “feel” of this market right now and the strong technicals…the turnaround in the CDNX also suggests something is brewing in Gold…as of 7:15 am Pacific, Gold is up $15 an ounce at $1,534…Silver is 81 cents higher at $38.00 while crude oil has gained 69 cents to $100.92…Goldman Sachs’ reversal on its outlook for oil prices over the next six months is bizarre – they’ve gone from bearish to bullish in just six weeks, making one wonder why they made their April call in the first place…the U.S. Dollar Index is off over one-third of a penny to 75.11…real action on the U.S. deficit problem is unlikely until the 2012 presidential election, a stalemate that is helping make the stock market a better bet for investors than Treasurys, Pimco’s Bill Gross told CNBC this morning…G-8 leaders say a strengthening global economy will pave the way to cuts in the debt built up during the recession that followed the 2008 financial crisis…Europe vowed to fight its fiscal woes with “determination” while President Barack Obama promised a “clear and credible” U.S. deficit-reduction strategy…Japan was allowed to put off savings measures until its economy rebounds from the March earthquake and tsunami…“The global recovery is gaining strength and is becoming more self-sustained,” according to a statement after the two-day summit in Deauville, France…without mapping out binding targets, the leaders pledged to “remain focused on the action required to enhance the sustainability of public finances”…the G-8 also stated, ““The sharp increase in commodity prices and their excessive volatility pose a significant headwind to the recovery”…the truth, of course, is that the greatest underlying threat to the economic system across the developed world is government which has also grown insanely too big…a loss of confidence in government is clearly one of the factors driving Gold and even commodities in general…last weekend, we predicted the strong probability of a major reversal in the CDNX and indeed that has been confirmed after three trading days this week with the Index closing at 2072 yesterday, a 6% gain from last week’s important low of 1957 which was the bottom of a 20.6% correction that lasted 51 trading days…that correction was almost identical to the one in 2005…the early days of this reversal are also very similar so far to the recovery pattern in 2005…from its May low through the end of December in 2005, the CDNX climbed a whopping 40%…whether we see that this time remains to be seen but clearly the bulls are back in control for now and June is shaping up to be a very positive month…John’s updated chart this morning shows 2100 as the next level to watch in this new uptrend…
The CDNX is up another 14 points to 2086 through the first 45 minutes of trading this morning…yesterday we gave a list of quality situations for our readers’ due diligence, stocks outside the BMR model portfolio that have strong potential to be market leaders in the days and weeks ahead…those include Silver Quest Resources (SQI, TSX-V) which broke out yesterday on 3.6 million shares to close at 92 cents, a gain of 14%…it’s up another 6 pennies at the moment to 97 cents…Silver Quest holds 25% of the northern portion of Richfield Ventures’ (RVC, TSX-V) Blackwater deposit, a project we have followed closely and have been very bullish about since late 2009 (Richfield has gained nearly 900% since we introduced it to BMR readers in December, 2009)…Currie Rose Resources (CUI, TSX-V), which we started covering when it was around a dime last September, is one of our top picks in the under-20 cent category going into the month of June…the company’s Sekenke Project in Tanzania runs in between and surrounds two former producing high-grade mines and offers exceptional exploration potential which Currie Rose is soon going to test with a 5,000 metre Phase 1 drill program…we have studied Sekenke in detail and it’s one of our favorite properties – a significant discovery at this project this summer is clearly within the reach of CUI’s geological team headed by Michael Griffiths from Australia…we’ve spoken with Griffiths and he’s like a kid in a candy store when he looks at Sekenke…so the fundamentals are in place here – what about the technicals on the stock?…that’s where it gets even more interesting…John, our wizard of charts, was bang-on with the CDNX reversal and he sees patterns (including heavy accumulation since the end of March) that suggest Currie Rose is gearing up for a major breakout…it’s 50-day SMA is also just now beginning to reverse and that’s a sure sign of fresh bullishness coming into this stock…
As of 7:15 am Pacific, Currie Rose is up a penny at 18 cents on strong volume…Osisko Mining (OSK, TSX-V) has taken an interest in Threegold Resources‘ (THG, TSX-V) Adanac Project which should be a huge wake-up call for Gold Bullion Development (GBB, TSX-V) investors…Adanac is on strike with the LONG Bars Zone and the fact Osisko has cut a deal to earn as much as a 70% interest in Adanac suggests they are keeping a very close eye on developments at Granada…OSK has acquired a 9.2% stake in THG by buying shares on the open market, and a potential OSK takeover of both THG and GBB down the road cannot be ruled out…GBB is off half a penny at 41 cents – time to back up the truck and load up on GBB again…Richmont Mines (RIC, TSX), which is looking very strong both technically and fundamentally, is up another 28 cents this morning to $8.50…Richmont is turning into an earnings machine and we wouldn’t be surprised to see RIC reach new all-time highs as early as next month…iSignMedia Solutions (ISD, TSX-V) continues to trade in a bullish symmetrical triangle and is currently up a penny at 46 cents…Spanish Mountain Gold (SPA, TSX-V) is moving (up a nickel at 64 cents) and Gold Canyon Resources (GCU, TSX-V) is looking strong as well, up 3 pennies at $3.23…
May 26, 2011
Gold is taking a bit of a breather this morning…as of 7:15 am Pacific, the yellow metal is off $8 an ounce at $1,518 after briefly climbing above $1,530 overnight…Silver is down 93 cents at $36.97, crude oil is off slightly at $101.15 while the U.S. Dollar Index has fallen nearly half a point at 75.56…G8 leaders have gathered in France for a discussion of a wide range of issues, not the least of which (formally and informally) will no doubt be the recently departed IMF leader who’s currently under house arrest…new U.S. claims for unemployment benefits unexpectedly climbed to 424,000 last week from a revised 414,000 in the prior week, pointing to a painfully slow improvement in the nation’s job markets…meanwhile, surging gasoline prices and sharp cutbacks in government spending caused the U.S. economy to grow only weakly in the first three months of the year…consumer spending slowed even more than previously estimated…the Commerce Department reported this morning that the overall economy grew at an annual rate of 1.8% in the January-March quarter…that was the same as the government’s first estimate a month ago…consumer spending grew at just half the rate of the previous quarter and a surge in imports widened the U.S. trade deficit…the CDNX, which is up another 5 points to 2054 after the first 45 minutes of trading this morning, is looking much healthier from a technical standpoint right now and it seems highly likely a major reversal is underway after the Index dropped as low as 1957 last week…June, therefore, looks like it could be quite a positive month after declines of 4% in March, 2% in April and 9% so far in May…the similarities with the 2005 March-April-May correction are stunning…in the current market, expect the more established exploration plays to lead the CDNX higher at first…by that we mean companies that are well-financed with developed projects that have 43-101 resources or 43-101′s in progress, such as Gold Bullion Development (GBB, TSX-V)…there will be exceptions, of course, and adding fuel to the any CDNX move will be news of fresh discoveries or potential discoveries…in the case of GBB, it’s clear to us that the stock – technically and fundamentally – has found an important bottom in the mid-30′s and another great opportunity has opened up in this play…other situations (outside the BMR model portfolio) we believe are worthy of our readers’ consideration and due diligence include Levon Resources (LVN, TSX-V), Gold Canyon Resources (GCU, TSX-V), Spanish Mountain Gold (SPA, TSX-V), Silver Quest Resources (SQI, TSX-V), Prodigy Gold (PDG, TSX-V), Golden Predator Corp. (GPD, TSX-V), Probe Mines (PRB, TSX-V), Wildcat Silver (WS, TSX-V) and Hinterland Metals (HMI, TSX-V)…we’ll be going into more detail on some of those situations in the coming days and we’ll have others to add as well…outside the resource sphere, we continue to like iSign Media Solutions (ISD, TSX-V) which is trading within a symmetrical triangle with a breakout to the upside possible in the near future…Silver Quest, of course, holds a 25% interest in the northern portion of Richfield’s (RVC, TSX-V) Blackwater deposit in central British Columbia…some excellent drill results have been coming in from that northern section of Blackwater which continues to develop nicely as a multi-million ounce Gold deposit with Silver and copper values as well…New Gold Inc. (NGD, TSX) is scheduled to complete its acquisition of Richfield before the end of June…as John outlines below, Richfield’s chart is looking very bullish which we believe is also a good omen for this market…
As of 7:15 am Pacific, Richfield is down a nickel at $8.75…as we mentioned yesterday, we continue to be very excited about the prospects for Richmont Mines (RIC, TSX) which is expected to produce approximately 80,000 ounces of Gold this year from its Beaufor and Island Gold Mines in northwest Quebec…Richmont has only 31.6 million shares outstanding, approximately $50 million in cash, no debt and no hedging contracts…first quarter earnings came in at a robust 28 cents per share…technically and fundamentally, we see a strong case for a 50% move in Richmont over the next couple of months if this Gold rally really starts to take off…of course Richmont continues to aggressively drill Wasamac which is a property we are extremely bullish about…the RIC chart is phenomenal…Richmont is currently down 23 cents at $8.03…a less expensive but more speculative opportunity is Currie Rose Resources (CUI, TSX-V)…CUI’s Sekenke Project in Tanzania has enormous potential given its proximity to two former producing high-grade mines and the ground work that has already been completed…Currie Rose will soon be drilling Sekenke for the first time…CUI is currently up half a penny at 17.5 cents…Abcourt Mines (ABI, TSX-V) released more positive results from its Abcourt-Barvue Silver-Zinc Property yesterday…while the market doesn’t really see it yet, Abcourt appears to be significantly upgrading and increasing existing resources and reserves at this property…the same holds true for the Elder-Tagami Gold Property near Rouyn-Noranda…ABI is currently off half a penny at 12.5 cents…
May 25, 2011
So far, so good. A genuine reversal appears to be unfolding in the CDNX as we recently suggested was probable based on a series of technical indicators. The Index was up 22 points today to close at its session high of 2049.
And could history be repeating itself? Back in 2005, from March into May, the CDNX corrected 21% over 50 trading sessions. The market then climbed above its 10-day moving average (SMA) and never looked back the rest of the year – it rose steadily and gained 40% from the May low within seven months. This year, from March 7 through May 17, the Index fell 20.6% over 51 sessions. It has now climbed above its 10-day SMA, though we’re still waiting for that moving average to reverse to the upside – that could happen as early as tomorrow.
The bullish action in certain individual stocks – Canaco Resources Inc. (CAN, TSX-V) for example – is additional evidence that a powerful run could be underway in the CDNX. The big early movers (within the resource sphere) are likely going to be the more established exploration plays and we’ll be reviewing some of those in our morning update which we’ll be posting at approximately 7:45 am Pacific.
John provides two chart updates tonight – the CDNX and the CRB Index which often move in tandem – we need to watch the CRB closely in order to gauge the potential strength of any upside move in the CDNX.
TSX VENTURE EXCHANGE (CDNX)
Gold has traded between $1,520 and $1,529.60 so far today…as of 8:15 am Pacific, the yellow metal is up $3 an ounce at $1,529…its recent strength in the face of a higher U.S. Dollar has to be particularly encouraging for Gold bulls…Gold is going up no matter what…there are so many fundamental factors for that, not the least of which is that nasty four-letter word – “debt”…lingering and even worsening sovereign debt problems in the euro zone are creating even more demand for Gold, and of course the U.S. has its own debt issues to sort out – not just at the federal level but also at the state and local levels…federally, the U.S. is spending $4 billion a day more than it’s taking in, putting the country on an unsustainable fiscal path perpetuated by both Democrats and Republicans…the nation has hit its $14.3 billion debt ceiling and the wrangling continues in Congress over that issue and where and how deep to cut spending…we have little faith in government which makes us even more bullish regarding Gold…Silver has broken through some resistance at $37 and is currently 89 cents higher at $37.52…crude oil is off slightly at $99.54…Goldman Sachs has turned bullish on crude again after a bearish call last month…the U.S. Dollar Index is flat at 75.91…at BMR, we focus almost exclusively on the speculative juniors exploring for Gold deposits…many of these companies trade below 50 cents a share but have excellent prospects and could be the stars of tomorrow…but we also see great opportunities in some much higher-priced producers, one of which is Richmont Mines (RIC, TSX) which we’ve mentioned here many times in recent months because of our interest in the growing Wasamac deposit just west of Rouyn-Noranda…Richmont has been one of the best performing Gold stocks on the TSX this year but has yet to garner a wide following – we believe that will change as more investors and institutions take notice of the incredibly strong fundamentals with this situation…earnings drive share prices and Richmont, which expects to produce at least 80,000 ounces of Gold this year and more than 100,000 ounces in 2012 with its Francoeur Mine kicking into gear, is rapidly becoming an earnings machine…Richmont reported earnings of 28 cents per share for the first quarter, though about 10 cents of that can be attributed to the sale of a property…still, 18 cents per share from its mining operations is an impressive number and the company’s Island Gold Mine was a big driver of that with lower costs and higher grades…Richmont sold 19,234 ounces of Gold in Q1 at an average price of $1,389 per ounce…they will fetch more than that per ounce in Q2…conservatively, one would have to think this company is on pace to make at least 20 cents per share in Q2…it’s not hard to see that this is going to be a stellar year for Richmont and the stock right now could be trading at just 10 times the company’s potential earnings for this year…Richmont was sitting on nearly $50 million in cash at the end of the first quarter with no debt and no hedging contracts…the company continues to aggressively drill its Wasamac Property where a 43-101 all-category resource of 1.4 million ounces has been outlined – expect that figure to grow…Wasamac is a future 100,000 ounce per-year producer…Richmont has laid out a strategy to eventually produce 200,000+ ounces per year, with at least a 30% increase in production next year…it’s hard not to love this story, and the chart is phenomenal as John outlines below…
John’s Fibonacci target for Richmont, by the way, is $12.62 per share (that’s not a BMR price target, just a theoretical Fibionacci target level based on technical analysis)…even at $12 a share, though, Richmont would be trading at maybe only 15 to 20 times its projected 2011 earnings…as of 8:15 am Pacific, RIC is up another 28 cents per share at $8.09…the TSX Venture Exchange is up 9 points at 2036 as it continues to show signs of a major reversal…the strength in Canaco (CAN, TSX-V) the last few days is another clue, in our view, that this market is about to head higher and that 1957 last week was the bottom of a 20.6% correction that lasted 51 trading days…Canaco, which dropped as low as $3.25 May 17 when the Index touched 1957, is up another 31 cents this morning to $4.45…we’re looking at numerous other situations at the moment which we’ll be reporting on once we’re more comfortable the reversal in the CDNX we speculated about last weekend is indeed underway as it appears to be…