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July 7, 2011

BMR Morning Market Musings…

Gold has traded in a range between $1,523 and $1,536 so far today…as of 9:00 am Pacific, the yellow metal is off $1 an ounce at $1,528…Silver is 48 cents higher at $36.38…Crude Oil is strong, up $2.25 a barrel to $98.90 while the U.S. Dollar Index is flat at 74.99…Gold prices are up over $40 this week on persistent euro zone sovereign debt fears with the latest rally driven in part by Moody’s downgrade of Portuguese debt to junk…there are some encouraging signs this morning with regard to the U.S. jobs outlook which fits well with our theme of a stronger second half for the U.S. economy and the global economy in general…the number of new people filing jobless claims in the U.S. fell more than expected over the past week while the private sector created jobs at a far faster pace than anticipated, according to separate reports released this morning…though still stubbornly high, weekly jobless claims dropped 11,000 to 418,000 over the last week, more than an expected 3,000 drop…meanwhile, the private sector added 157,000 jobs from May to June (source: ADP), well ahead of estimates though still not enough to make a meaningful cut into the unemployment rate…an important jobs report from the U.S. Labor Department comes tomorrow…the CDNX has broken through a resistance area at 1950 and is up 20 points through the first two-and-a-half hours of trading at 1974…as we have mentioned repeatedly recently, the Yukon Gold Rush is kicking into high gear and this really has the potential of setting off a major spark that ignites the entire market – something that has happened before through other area plays…one of the 80 or so key companies exploring in the Yukon this summer is Kaminak Gold (KAM, TSX-V) whose 150,000 acre Coffee Project is shaping up very nicely…the company is well-funded (it was sitting on $31 million in cash as of March 31) and the potential for a multi-million ounce find at Coffee certainly exists…the stock is up 31 cents as of 9:05 am Pacific at $4.15, a new all-time high…below, John updates the KAM chart entering trading today and we can see that a breakout appears to be unfolding…

Silver Quest Resources (SQI, TSX-V) is off a nickel at $1.15…for technical and fundamental reasons, we consider any weakness in SQI to be an opportunity…smart money will be buying into the dips with SQIGolden Predator (GPD, TSX-V) is not as strong technically at the moment as SQI but it’s still holding steady around the $1.00 level…GPD just released some fresh assay results from its Brewery Creek Project, nothing spectacular but encouraging nonetheless…Atac Resources (ATC, TSX-V) is up another 29 cents to $8.33 but ATC is showing signs of being temporarily overbought on the charts based on RSI, Stochastics and the CMF…we suggest investors due their due diligence on Ethos Capital (ECC, TSX-V) which is trading at $1.20…ECC has increased its land position to 104,000 hectares in the White Gold District…the company has established a dominant position along the Coffee fault, totaling 40 kilometres of strike length immediately to the east of Kaminak’s Coffee Project…Visible Gold Mines (VGD, TSX-V) is looking stronger recently and we suspect the company is going to make a major push with its Joutel Project and Cadillac/Lucky Break Projects beginning this month which means renewed interest in this play and potentially a substantial increase in volume in the stock…VGD is in the midst of a major drill campaign which is soon going to ramp up with Joutel as disclosed by the company last month…in addition, VGD geologists are also working in areas immediately south and west of Richmont Mines‘ (RIC, TSX) Wasamac deposit, south of the north-dipping Wasa Shear but in another Gold system as defined by Wasamac’s Wildcat Zone which trends to the southeast and the southwest…we recently spoke with Richmont President and CEO Martin Rivard, in advance of an interview we hope to do with him within the next few weeks, and he confirmed that Richmont is watching with interest what VGD may come up with in the area around Lake Wasa which is about 1,500 meters southwest of the Wildcat Zone…Wasamac is an emerging new mining camp with Richmont’s February 43-101 giving an estimate of 1.4 million ounces in all categories…that number has the potential of growing significantly given recent drill results from Richmont and the projected strike length of the Wasa shear…VGD is currently up a penny at 25 cents…technicals are improving as John outlined in his chart earlier this morning…Adventure Gold (AGE, TSX-V) is up a penny at 60 cents…we’re still working on a major report concerning AGE which will include an interview with President and CEO Marco Gagnon…a few weeks ago we mentioned how beaten down Colombian Gold Mines (CMJ, TSX-V)…it became extremely oversold and just recently fell as low as 45 cents…CMJ has certainly been unloved lately but given the company’s cash position and extensive land holdings in Colombia, there is definitely value with this play…it’s worth putting CMJ on the radar screen – it’s an underdog that could surprise over the second half of the year…John sees some interesting signs in the CMJ chart…

19 Comments

  1. Hey Guys
    can we get an updated chart on GBB, seems to be moving back up over the last couple of days.
    thx

    Comment by GREG H — July 7, 2011 @ 8:15 am

  2. Hi Greg, yes, didn’t have time to mention GBB this morning but it’s looking good…I’m making plans for a trip to northwest Quebec by early August, an extensive visit that should cover a lot of ground…there are interesting developments in a number of situations from the Val d’Or area through to Rouyn and westward, and also to the north…gentlemen (and ladies), I cannot emphasize enough the importance of what is developing in this area on several fronts which is one reason why we highlighted VGD this morning…keep a very close eye on northwest Quebec in addition to the Yukon…BTW, Wasamac could be much bigger than anyone imagines…sources tell me drills are turning there like crazy…VGD has their geologists roaming around the area…something is definitely up and I think things could really intensify there very quickly….

    Comment by Jon - BMR — July 7, 2011 @ 8:27 am

  3. Hey Jon, what do you make of Tony’s visit to Mexico? Could he FINALLY be pulling the trigger on a MASSIVE deal maker for VGN??

    Comment by john — July 7, 2011 @ 8:31 am

  4. Thanks Jon

    do you think that all of the activity at wasa will give CQX a second chance to get something done there on their ground?
    thx

    Comment by GREG H — July 7, 2011 @ 8:43 am

  5. Johnny

    It’s strange to see you asking questions about VGN, when a few
    days ago, you gave the board the impression that you were up to
    date on VGN., after talking with Tony. Slow down Johnny, you
    just can’t make things’ happen any faster.

    R !

    Bert

    Comment by bert — July 7, 2011 @ 9:00 am

  6. Hello Greg, GBB sp has been to .48, so far, today. However, its approaching being overbought and historically the sp has come down when the rsi hits overbought.

    Comment by Andrew — July 7, 2011 @ 9:17 am

  7. How do you know when something is overbought especially when there is not a volume surge? I have never understood. Would appreciate the help.
    Thanks,
    Andrea

    Comment by andrea — July 7, 2011 @ 9:48 am

  8. Yes, Greg, I believe so. They just need to execute better in terms of their decisions and the market. Be patient. Right now VGD is swarming around Wasamac like bees around honey, is what I’m told. And they’ve got $6.5 million in cash and all the ground support they need with geologists, technicians and drill rigs.

    Comment by Jon - BMR — July 7, 2011 @ 10:04 am

  9. Hello Andrea, John could answer your question better than me. However, if you look at the chart above you will see the top circle indicates an oversold area (below 30). The top line is at 70 and anytime the line goes above this (the shaded areas) the stock is overbought. The slow stochastics above the volume (at the bottom of the chart) can be given different values to indicate overbought and oversold – I use them as early signals.

    Comment by Andrew — July 7, 2011 @ 10:21 am

  10. I guess Johnny spoke to Tony on his mobile while he was on the beach in Mexico on 24th June. 🙂

    Comment by Andrew — July 7, 2011 @ 10:42 am

  11. VGD over .30 at long last, hope it keeps on truckin’ but big spread now between bids and asks. A great day for VGD in any event!

    Comment by Andrew — July 7, 2011 @ 11:33 am

  12. VGD as everyone is aware, closed at 0.29, i’ll take it & am thankful. The question remains, is there
    something going on & if so, we can look forward to it continuing, but could it be the result of BMR’s
    writeup, if so, it’s legs may not be ready to run. Whatever, bring on friday’s trading…. No doubt,
    companies’ are feeling better, now that they have their windows dressed.

    R !

    Bert

    Comment by Bert — July 7, 2011 @ 12:55 pm

  13. Hello Bert, National and RBC did the majority of VGD buying today. Venture was up 1.6% and fast approaching 2000 hopefully. GBB and ABI were up today and ABI now has that wall of asks to chomp through. CQX shows some signs of life every now and then as well. Things look much brighter to me but maybe some profit taking tomorrow and hopefully not a “spoil your weekend” close! Unfortunately, though BMR seem to have dropped ABI – no comments on important recent news releases and I’m confused as to whether ABI are now putting more weight on gold than silver in their exploration.

    Comment by Andrew — July 7, 2011 @ 1:22 pm

  14. Hi Andrew, I’ve been convinced for months now about the prospects for VGD – they have the money, the geological team, and the properties for a significant discovery in northwest Quebec, and I have a hunch they’re going to make an important play out of Wasamac – a couple recent news releases indicate that…Joutel is a barnburner of a project – there is a large area to the east of the past producing deposits that has been mostly unexplored….this is what I think they’re going to target……..there are at least 5 significant former deposits within the immediate vicinity (a few kilometres northwest and southwest) of that eastern leg……they picked up a terrific project with a lot of historical data which will allow them to tackle it quickly with immediate drilling…….

    As far as ABI is concerned, we haven’t forgotten about it – not a chance…….we’ll probably make some comments tomorrow…….valuable assets which makes ABI a takeover target….that’s why we’re still following the story…….current management has not been able to unlock the value…….

    Comment by Jon - BMR — July 7, 2011 @ 1:43 pm

  15. Thank you, Jon – appreciated as always. Renaud Hinse is a 50-year veteran and his enthusiasm is clear in his interview with Jay Taylor on the ABI website. I hope he can see this one come to fruition.

    Comment by Andrew — July 7, 2011 @ 1:55 pm

  16. Renaud definitely has a lot of enthusiasm and knows his stuff – what I think he needs to do, at least, is bring someone else into the picture who can be the face of the company and put a really positive spin on the market side of things…..that’s the problem……..he’s trying to do everything himself…some new blood needs to come in but he can certainly remain busy in the background…..that’s my assessment for what it’s worth….the company’s assets are very significant and I’ve spoken with some CEO’s who wouldn’t be surprised if there’s a takeover at some point…

    Comment by Jon - BMR — July 7, 2011 @ 2:05 pm

  17. Huge volume in ABI late fall until now . Really significant increase perhaps there is a move on to take it over . Renaud seems to be trying to get some action going with drilling and dewatering . I just can;t see him getting anything into production and managing it .

    Comment by Frank Speaker — July 7, 2011 @ 4:38 pm

  18. GBB will go beyond 50 cents before it comes down. There might be a lot of selling pressure in the 53 cents as the private placement lots have not come into play. In a longer run, it will go beyond the 58 – 64 cents mark. Amongst the penny stocks, GBB has less risks than others with good profit potential. SD will move back to 4 – 4.5 cents when larger lots come in a couple of weeks time. I am holding SD and with cash after selling all GBB today.

    Comment by Theodore — July 7, 2011 @ 7:00 pm

  19. I wouldn’t sell GBB for all the tea in China. This will go above $1 Canadian before year end. I expect the market to start giving a premium to safer jurisdictions during the coming fall rally. This is the safest bet in my portfolio and I will humbly eat my hat if I am wrong on this one. Really looking forward to our annual second half yearly rally and the excitement that comes with it. Go GBB

    Comment by Patrick — July 8, 2011 @ 4:12 am

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