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CDNX and Gold

The CDNX continues to lack direction though the signs late last week were quite bullish…what seems to be happening is that the Venture is basing out in preparation for an uptrend that we’re convinced will occur…our BMR technical analyst gave some good advice this week…”one big lesson I’ve learned over time in studying TA is don’t tell the markets what to do,” stated John, who added he had to remind one of his friends to stop ‘talking to his charts’…in otherwords, the market will do what it wants to do and when it chooses to do it…the CDNX charged higher in the early hours of trading Monday morning, almost touching 1500 (1498), then suddenly reversed as Gold unexpectedly turned negative…the CDNX found support at 1450 and closed the week on a positive note at 1459 with a 7-point gain Friday…volume continues to be light…there have been only 4 100+ million share days in June…every single trading day in both April and May featured over 100 million shares with the exception of the final 2 days in May…there are fewer buyers at the moment rather than more sellers…we saw declining and light volume in June of last year before activity picked up significantly in July, so history could be set to repeat itself…Gold finished last Friday at a new record high, took a dive on Monday and then headed north again later in the week…it hit a new all-time high Friday of $1,259.50 before closing at $1,255.70…as we stated last Friday, it seems quite clear that Gold is headed to at least $1,300 and perhaps as high as $1,350 over the short term (anytime over the next few months) based on technical factors alone…fundamentally, the market was encouraged today by the fact that the new U.S. financial regulation bill allows investment banks to remain in the gold business as they’ll still be able to use 3% of their funds to trade the market…they’ll also be able to use credit default swaps in “safe” assets like gold to hedge risk…what will be important is to see in the near future is if the TSX Gold Index can break out to a new all-time high and therefore finally confirm the new high in Gold…the Index closed at 387 Friday, just 9 points shy of the all-time high when Gold ran just over $1,200 early last December…the TSX Gold Index is at the same level now as it was in early January, 2008, when Gold was trading at only about $850 an ounce…

Gold is trying hard to break through resistance in the $1,250’s…as of 8:50 am Pacific time, Gold is ahead $13 an ounce to $1,256…the CDNX, trying to snap a 4-session losing streak, is up 2 points to 1,454…Seafield Resources (SFF, TSX-V) is looking extremely attractive at the moment…we first introduced Seafield nearly a year ago when it was sitting at just 6 cents, so this is a company we’re very familiar with and have been following closely…a series of events have occurred over the last few months with Seafield that are quite interesting which we will expand on in more detail over the weekend…Seafield is in a strong cash position (approximately $5 million) and has assembled a solid portfolio of gold properties in the Quinchia District of Colombia where drilling will commence shortly…the company has the right people in Colombia to advance those projects…Seafield also holds the Elora Gold Property in northwestern Ontario (Manitou Gold, MTU-TSX-V, is currently drilling immediately adjacent to Elora) and the Picachos silver-gold-zinc project in Mexico…some “movers and shakers” are involved with Seafield which clearly has the potential to succeed in a big way on the exploration front…technically, the stock has formed an impressive base around current levels and is resting just above its rising 300-day moving average…the stock is off a penny this morning to 17 cents where there is strong support…the funny thing is, many investors don’t approach the market in the same way they approach their everyday purchases…in otherwords, when a quality stock is “on sale” (languishing or dropping in price) a lot of investors are too scared to make a purchase…they’d rather wait until everyone else starts buying before jumping in and paying a higher price…Gold Bullion Development (GBB, TSX-V) is up 3 cents this morning to 70 cents but on fairly light volume in the context of GBB (270,000 shares)…technically, the stock is in the “overbought” area based on Stochastics and RSI, so near-term we expect some further consolidation as we’ve witnessed before with GBB when it has shot up into overbought territory…Fire River Gold (FAU, TSX-V) is quiet this morning, down a penny to 64 cents…we like this opportunity a lot (we first mentioned Fire River when it was in the low-to-mid 50’s) but the stock is likely “range bound” until the company closes its proposed $5.5 million financing at 50 cents and receives CDNX approval…it should be an interesting summer for Fire River as it drills its Nixon gold mine project in Alaska…

Markets are generally weak across the board this morning though Gold has inched into positive territory after being down as much as $10 an ounce…Gold is now up $1 to $1,238 as of 7:30 am Pacific time…the CDNX is down two points to 1454…as we indicated yesterday, a key technical support level for the Venture is 1,440…Gold Bullion Development (GBB, TSX-V) is taking a breather after a couple of strong days that pushed it into overbought territory on the RSI…GBB is off 2 pennies to 67 cents…Fire River Gold (FAU, TSX-V) is unchanged at 66 cents…the company is in the process of completing a proposed $5.5 million private placement at 50 cents to raise additional capital for its Nixon gold mine project in Alaska…the stock is likely “range bound” until that financing is completed and approved but this could be a very interesting summer for Fire River…Kent Exploration (KEX, TSX-V) and many other companies got some good news this morning with the sudden resignation of Australian Prime Minister Kevin Rudd…Rudd has been on the hot seat lately for his proposed “super tax” on producing mining companies in that country…Deputy Labor leader Julia Gillard has been sworn in as Austalia’s new Prime Minister and becomes that country’s first female leader…she is thought to be more flexible on the issue of the mining tax but actions speak louder than words…it will take some time and probably the election of a new government in Australia before investors in the mining and exploration sector get comfortable again with that jurisdiction…it’s important to note however that two of Kent’s three flagship properties are not in Australia…Kent is up half a penny to 11 cents…we see good things in store in the near future for Seafield Resources (SFF, TSX-V)…the stock has languished for the past few months which is one reason we see a lot of value at the moment…the company has completed a $3 million private placement and should commence drilling operations at its Quinchia gold properties in Colombia shortly…the stock has formed a nice base over the last while and is resting just above its rising 300-day moving average at 16 cents…quite often the best time to buy a stock is when not that many people want it…the outlook for Seafield is very positive going forward…

Gold shot up over $1,240 overnight but has retreated and is now down $8 on the day to $1,231 as of 8:30 am Pacific time…the CDNX, which was looking very strong heading into this week, is off 1 point this morning to 1457…it’s possible the CDNX could be in the process of putting in a double bottom at 1440, an important technical level it really must hold…Gold Bullion Development (GBB, TSX-V) is up another nickel to 67 cents…Jordan Capital was a strong buyer right out of the gate this morning which is a positive sign…we’ve had quite a few inquiries at BMR regarding Golden Hope Mines (GNH, TSX-V) which is also exploring property in Quebec…from a technical standpoint, GNH is currently extremely overbought which increases the risk substantially for buyers at current levels…the stock reacted this morning after jumping as high as 73 cents…it’s now trading at 67 cents, up 1 penny from yesterday…we believe it’s best to wait for drill results from GNH and assess from there…Fire River Gold (FAU, TSX-V) has increased its proposed financing from $3 million to $5.5 million…FAU is seizing the opportunity to raise additional capital and further strengthen its treasury which makes a lot of sense in the current environment…their Nixon gold mine project has excellent potential…FAU is off 3 pennies to 61 cents…Richfield Ventures (RVC, TSX-V) came out with more drill results this morning…312 metres grading 0.76 g/t Au at Blackwater in the 4th hole of its planned 70-hole, 25,000 metre program…that’s a solid result but the stock is quiet, down 4 cents to $1.03…drilling has proceeded slowly at Blackwater since it started in April and Richfield’s second drill rig is not scheduled to arrive on the property until mid-July…we remain very bullish on the prospects for Blackwater but the slowness of the drilling and the lack of any spectacular results to date have put downward pressure on the stock…it could be a couple of months yet before Richfield can regain some serious momentum…Seafield Resources (SFF, TSX-V) approved a bunch of stock options and made an IR hiring yesterday, further signs this stock could be close to making a move…if you look at what has developed with Seafield over the last 6 weeks or so, it seems all the ducks have been lined up nicely in a row…we expect news very soon from Seafield on its Quinchia gold properties in Colombia where drilling is likely almost ready to commence…technically, the stock has formed a nice base from which to power higher once again…Seafield is unchanged this morning at 17 cents as it continues to rest just above its rising 300-day moving average…we’re continuing to keep a close eye on Manitou Gold (MTU, TSX-V) which should have drill results coming out soon from its drilling at the former Big Master Mine in northwestern Ontario…Manitou was just listed on the CDNX in March…it has $5 million in the bank and is conducting a very aggressive drill program in the highly prospective Gold Rock mining camp…Goldcorp Inc. (G, TSX) owns over 10% of Manitou which is in a bid-ask range of .44 to .47 this morning…it has just under 27 million outstanding shares…MTU is a light trader but that could change dramatically on drill results…

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Gold is rebounding this morning after a sharp sell-off yesterday…as of 8:35 am Pacific time, Gold is up $8 an ounce to $1,241…the CDNX is off 3 points to 1470…Gold Bullion Development (GBB, TSX-V) is unchanged at 57 cents…an intra-day reversal yesterday took GBB from a low of 53 cents back up to the high of the day at 57 cents…buyers have shown a strong tendency to swoop in on even any minor weakness in GBB…the first set of Phase 2 drill results from Granada are likely just around the corner as drilling began 7 weeks ago…there’s every reason to believe that in general the Phase 2 results from Granada should be even better than Phase 1 given the fact GENIVAR has a much enhanced understanding of the overall geological system at Granada after the 2,800 metres of shallow drilling last December and January…what will also be very interesting to see in the Phase 2 results is the mineralization below 100 metres vertical depth where very few holes have ever been drilled at the property...Fire River Gold (FAU, TSX-V), developing the Nixon gold mine project in Alaska, is up 4 pennies to 60 cents…the company just finished raising $4 million and has proposed another $3 million financing at 50 cents…due to the financing Fire River is likely “range bound” for a short time until that is completed, but this is an attractive and interesting situation that deserves attention…Fire River has the potential to be a very strong performer over the summer as they’ll be starting a major drill program shortly at Nixon…Sidon International (SD, TSX-V) remains unchanged at 6 cents…the company is anxiously waiting for approvals from the CDNX regarding its private placement and letter of intent for an option to acquire the Morogoro East Gold Property in Tanzania…Seafield Resources (SFF, TSX-V) is quiet with no trades so far today after closing at 17.5 cents yesterday…Seafield is in a strong cash position and the company is getting set to start a major exploration program at its Quinchia properties in Colombia…it has been a frustrating few months for Seafield investors with the stock dropping in half from its late February high and seemingly stuck in the mud at current levels…patience is critical with the market…Seafield remains a very strong play and a sharp turnaround in the stock is close at hand in our view…

11:05 am Pacific Time:

Gold Bullion Development (GBB, TSX-V) is under some pressure today which represents an unexpected gift for investors who understand the “big picture” with the Granada Gold Property and wish to add to their positions.

As of 11 am Pacific time, Gold Bullion is off 4 cents to 53 cents on volume of over 1.2 million shares.  We’ve seen this type of a healthy pullback several times since early March and, in retrospect, every single occasion such as this has been a “golden” buying opportunity with GBB.

The LONG Bars Zone is indeed exactly that – very long with huge potential for a massive open-pit deposit as we have outlined so many times here at BMR.  Stay the course with GBB as this is one of those rare opportunities, we believe, in an investor’s lifetime.