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GoldQuest Mining (GQC, TSX-V)

GoldQuest is off to a roaring start this month after performing very well in January when many Gold stocks were under some pressure…GoldQuest finally blasted through resistance in the low 40’s and climbed as high as 48 cents Friday before closing at 45 cents for a weekly gain of 7 cents or 18%…very bullish technicals, which John outlined in a chart earlier today, are in sync with this company’s strong fundamentals…we stated in December that GoldQuest is one of our top picks for 2011 and we’re even more certain of that after our conversation Thursday with newly appointed GQC Chairman Bill Fisher…Fisher, a professional geologist with over 30 years’ experience as a geologist and mining company executive, brings a very successful track record to this company (he became a director last summer and was named Chairman January 20) including eight years as CEO of GlobeStar Mining which got taken over by Perilya Ltd. late last year…during his tenure, GlobeStar developed, financed and built the Dominican Republic’s first copper mine at Cerro de Maimon…Fisher is very excited about GoldQuest’s La Escandalosa Property where drilling continues in an effort to expand the 43-101 inferred resource of 400,000 ounces…this is a flat-lying ore body and “the economics could be really quite compelling,” Fisher told us…it’s important to stress the 43-101 was completed on La Escandalosa  at a very early stage and the possibility of a discovery of one million ounces or even more is possible as this is such an attractive geological target…the deposit is open at depth as well as to both the south and the north toward another discovery of Gold mineralization by the company at Hondo Valle, approximately 1.2 kilometres away…Gold at La Escandalosa occurs as a flat-lying stratiform zone at shallow depth with mineralization interpreted to be part of a larger intermediate sulphidation replacement-style system which has now been defined intermittently over a strike length of 2,100 metres…the source of the mineralizing fluids remains unknown at La Escandalosa, leaving open the possibility of the discovery of mineralization in structural feeder zones or perhaps in a porphyry copper-Gold type system…the 400,000 inferred ounces outlined so far are over a 25-hole section 350 metres long…successfully linking this central mineralized zone to the north and the south is what could take this deposit to the million ounce plus category which would allow for production of 100,000 ounces per year…no major infrastructure or political hurdles…the regulatory framework in the DR is conducive to mining…GoldQuest has many other targets of considerable merit throughout its large DR land package including Las Animas which has a 43-101 inferred resource of 129,000 ounces of Gold, 2.5 million ounces of silver, 106 million pounds of copper and 130 million pounds of zinc…GQC will be drilling Las Animas immediately after Escandalosa…that will be followed by a drill program at Jengibre, a promising target about 30 kilometres southeast of Escandalosa…in Spain, Goldquest holds the Toral zinc-lead-silver deposit which has an historical (non-43-101 compliant) resource of 5.4 million tonnes grading 9% zinc, 6% lead and 45 g/t Ag…a 43-101 on Toral is currently being completed and is due very soon…GoldQuest has also acquired a second polymetallic project in the area (Lago, just a 20-minute drive from Toral), and more details are expected upon approval from the Spanish government of a mineral rights application for the property… GoldQuest, which has nearly $4 million in the bank, is up 131% since we introduced it to our readers near the end of September…this is a stock that got as high as $1.80 ($100 million market cap) in mid-2007 on less than what it has now…February potentially could be very busy in terms of news flow for GoldQuest…the long-awaited announcement of a new President and CEO, a 43-101 compliant resource estimate for Toral, and initial drill results from Escandalosa could all come this month…GQC has all the ingredients to become a huge winner this year as the bull markets in Gold and the CDNX intensify…

Greencastle Resources (VGN, TSX-V)

Greencastle was up 2 pennies last week to 25.5 cents after a weak January when it dropped 31% from 36 cents to 24.5 cents…the stock hit a low of 22 cents last week where it appears to have bottomed out…a declining 50-day moving average (SMA) at 31.5 cents can be expected to provide resistance over the short term…a complete lack of news over the past two months is really what has caused Greencastle to drift lower…however, with approximately $6 million in working capital, three Gold properties and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that VGN is a bargain at current levels…volume has been low on the move down which confirms there’s nothing to be concerned about here…Greencastle will have its day in the sun again soon enough…the long-term chart remains very bullish with rising 100, 200 and 300-day moving averages (SMA) that are in no danger of reversing…it’s also interesting to note that President and CEO Tony Roodenburg, a large shareholder in VGN, has refrained from selling any of his holdings in recent months despite the fact the stock price more than tripled in value on high volume…this is different from past runs 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 during the first half of 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 in the days, weeks and months to come…Greencastle is up 82% since we added it back in to the BMR model portfolio three months ago…

Adventure Gold (AGE, TSX-V)

Adventure Gold continues to show some strength and climbed another 2 pennies last week to close at 48 cents….volume has picked up over the last 13 sessions after a low of 36 cents January 19, and the technicals are looking quite promising as John outlined in an updated AGE chart today…AGE released significant news January 20…the company got some free drilling on its Granada Eastern Extension Property as it reported that one of Gold Bullion’s holes (#85) was drilled entirely on Adventure Gold land (just inside the boundary) while three other holes (#78, #83 and #98) were collared north of AGE’s property but finished within it…this didn’t surprise us and it’s not an unusual event in the industry…it worked out well for both parties in this case, however – all the core from those holes has been given to AGE who will share results with GBB…this represents at least $100,000 of drilling and all AGE has to do is pick up the assaying costs…given GBB’s “hit ratio” on holes, it’s reasonable to assume that at least one of the holes (or partial holes) on AGE’s property could be of the “stellar” variety…with more results coming soon from Gold Bullion, we expect Adventure Gold could continue to firm up…they do hold small but strategic parcels of land around Granada (immediately to the south and the west in addition to the east) that could become part of a large open-pit…their claims hold significant potential value and they have drill assay results coming in without even doing their own drilling which they plan to start upon completion of their program at Pascalis-Colombiere…that property in the eastern part of the Val d’Or mining camp is heavily underrated in our view…a 2,500 metre drill program started at Pascalis-Colombiere last month and is testing the former L.C. Beliveau Mine at depth (below 300 metres) as well as near-surface parallel Gold structures to the west…Pascalis-Colombiere is just 1.5 kilometres east of Richmont’s (RIC, TSX) operating Beaufor Gold Mine which has produced over one million ounces in its lifetime…it’s safe to assume Richmont will be watching developments at Pascalis-Colombiere with interest…Adventure Gold’s property has significant upside exploration potential…the geological setting is favorable for the identification of new high-grade Gold bearing veins and structures or bulk-style ore shoots…there are many untested areas and excellent potential at depth…L.C. Beliveau was a very profitable former producer…if AGE can prove up something significant through extensions to this deposit, we see a potential deal with Richmont which would be the natural choice to bring the mine back into production…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 34 cents October 28, so the gain since then is 35%…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 currently 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…when completed it’s estimated the hole will provide a deep cut on the projected target area at about a vertical depth of 2,600 metres…this will enable shallower wedge cuts to be considered if significant mineralization is found to be present in this area…the initial deep hole was collared on LSG’s Timmins mine property last August and has now passed the 2,000 metre mark in depth…if this deep hole succeeds, AGE could absolutely explode…

Sidon International (SD, TSX-V)

Sidon traded in a narrow range last week between 12.5 cents and 14 cents, closing down a penny for the week at 13 cents…the stock is currently sandwiched between its rising 100-day moving average (SMA) at 17.5 cents and its rising 200-day SMA at 11.5 cents…this stock has shown clear trading patterns since last spring and has been quite volatile…however, the primary trend remains up and Sidon has consistently found support at or just above the 200-day SMA…BMR will be interviewing President and CEO Kamal Alawas in the near future but a date for that has not yet been confirmed…results are pending from drilling at Sidon’s Morogoro East Gold Property…the company reported zones of disseminated sulphides of pyrite and pyrrhotite as well as some chalcopyrite and arsenopyrite throughout all six holes drilled over intervals of 30 to 70 metres…we caution that visuals are not always reliable but there’s reason to be optimistic that Sidon could be on to something…the company is also trying to develop a placer operation at Morogoro and has also acquired ground near Canaco’s discovery…this company has come a long way since last March when we first introduced it to BMR readers at a nickel, and its new web site is just one more indication of how impressively Sidon has developed and matured…we see exciting possibilities for 2011…the company raised over $1 million through the exercise of options and warrants in November and December…

Seafield Resources (SFF, TSX-V)

Seafield appeared to reverse course last Tuesday when it fell as low as 42.5 cents and closed at its high of 47 cents on over two million shares…Seafield closed Friday at 46.5 cents, a loss of 1.5 cents for the week…we still view the overall trend since early December as very bullish and we’re expecting a significant turnaround this month, assuming more drill results come in… Seafield’s current market cap of approximately $68 million is very attractive as this company continues to work on building a substantial Gold resource at its Quinchia District properties in Colombia…on December 3, SFF announced a spectacular drill result from its Miraflores Property in Colombia and the stock rocketed to 77 cents…results are pending on nine more holes at Miraflores…given historical results, at least some of these holes should be very good…drilling now is taking place at Dos Quebradas, a property we believe gives Seafield its real “blue sky” potential at Quinchia… SFF reported December 8 that the first three holes had been completed at Dos Quebradas which is rich in porphyry targets over a wide area…DQ is just a few kilometres northwest of Miraflores…visual reports indicate that these three holes have similar styles of mineralization to an historical hole drilled by AngloGold that returned an interval of 39.5 metres grading 1.67 g/t Au…the potential of Dos Quebradas is evident from limited historical drilling and was confirmed by Seafield last year through soil geochemical surveys and magnetic surveys which are crucial to discovering hidden porphyries in areas of very little outcrop…Seafield also released results recently from trenching in one location from the southern end of the gold-in-soil anomaly that defines the northern extension of the Dos Quebradas porphyry…1.75 g/t Au was returned over 94 metres…Seafield has an excellent opportunity to develop a multi-million ounce Gold resource at its three major properties at Quinchia (Chuscal is the third property)…Seafield has in excess of $15 million in the bank to fund an aggressive program in Colombia…

John: On Friday, GoldQuest Mining (GQC, TSX-V) gapped up at the open from Thursday’s close of 42.5 cents to 45.5 cents.  It rose to a high of 48 cents before closing at its low of 45 cents for a gain of 2.5 cents (5.88%) on CDNX volume of 677,000 shares.  This is a very bullish chart with a confirmed breakout.

Looking at the 6-month daily chart, we see that through December and January the price met strong resistance at the 40 cent level. On Jan. 25 there was an apparent breakout to the upside but this failed the following day (a bull fake) and the price declined to the close supporting SMA(50). On February 1 it bounced up and this strength has continued over the last 3 sessions.  The previous resistance at 40 cents is now strong support (green horizontal line).

The volume on Friday was more than double Thursday’s (the number of individual trades Friday increased dramatically to 197, the highest single day total in over 2 months).  Thursday’s trading was significant in that it was a breakout to the upside from the 40 cent resistance and Friday’s bullish move with the increased volume was confirmation this breakout is for real.

The first Fibonacci set (blue) has the seed wave from a base of 11 cents and the 100% at 33 cents.   It projected a target of 47 cents, the level at which the price met resistance on Friday. The green Fibonacci set projects the next target to be at 69 cents (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci level based on technical analysis).

Looking at the indicators:

The RSI has shown a strong move up from a “W” formation and is at 66% – very bullish.

The Chaikin Money Flow (CMF) indicator shows the buying pressure has been bullish for the last 12 sessions. This supports the price breakout – very bullish.

The ADX trend indicator has the +DI (green line) climbing strongly at 33.  It’s above the -DI (red line) which is at 17 and pointing down. The ADX (black line) trend strength indicator has turned up at 17 – a very bullish orientation.

Outlook: The confirmed breakout and the indicators all point to continued strength in GoldQuest in the days and weeks ahead.  This one will be interesting to watch.

Note:  The writer holds a position in GoldQuest Mining.

John: Adventure Gold (AGE, TSX-V) opened at 46 cents Friday, fell to a low of 43 cents and then climbed and closed at its high of 48 cents for a gain of 2 pennies (4.35%) on CDNX volume of 151,000 shares.

Looking at the 9-month weekly chart, we see that near the end of May AGE started on an uptrend from the 16 cent level and continued up to a high of 56 cents by early December.  From November 1 to now it has traded within a horizontal trend channel in a distribution mode.  This channel has a top boundary denoted by a horizontal blue dotted line and the lower boundary by the horizontal green support at 40 cents.  During this distribution period both the volume and the buying pressure denoted by the Chaikin Money Flow indicator have been fairly consistent. The EMA(20) provides close bullish uptrend support and is pointing up.

The Fibonacci set #1 (blue) has a seed wave with a base at 14 cents and 100% at 37 cents.   The target for this set was at the 52 cent level which corresponds very well with the top of the channel. The Fibonacci set #2 (green) has its 100% level at 52 cents and projects a target at the 75 cent level (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci level based on technical analysis).

Looking at the indicators:

The RSI at 65% has unwound the overbought condition that existed from September to December and has turned up from support at the 60% level – bullish.

The Chaikin Money Flow (CMF) indicator at 0.132 as stated above has been fairly consistent during the distribution phase and has been bullish now for over 9 months.

The ADX trend indicator has the +DI (green line) at 28, flat and above the -DI at 15 which is also flat. The ADX (black line) trend strength indicator is high at 47. This orientation shows the primary trend is both bullish and very strong.

Outlook: Adventure Gold is looking very strong. We’re waiting for the distribution phase to be completed and the price to then get through the resistance in the low-to-mid-50’s, accompanied by a large increase in volume. This is a very bullish chart which illustrates it’s only a matter of time before AGE makes a powerful move to the upside.

Note:  The writer holds a position in Adventure Gold.

Gold Bullion Development (GBB, TSX-V)

Gold Bullion had a relatively quiet week, trading in a range of 71 to 77 cents and closing Friday at 76 cents…that was a 1 penny increase for the week…the 10-day SMA, in decline for most of January into early February, has flattened out and is starting to rise again while the 20-day SMA has also flattened out and could soon reverse…the stock remains in an impressive and firm overall uptrend with the Chaikin Money Flow (CMF) showing very strong buying pressure recently…there are plenty of buyers around to soak up any loose stock...with Gold likely having bottomed out, and new results expected soon from the LONG Bars Zone, this should be an interesting month for Gold Bullion…while some have expressed a concern that no drill results have come out since late November, our take is that GENIVAR is probably reviewing an immense amount of data and trying to connect the dots…based on visuals that have been reported, the drill map pattern, and GBB’s January 21 news release,  we have total confidence that the news when it does come soon will be very positive…Granada has consistently delivered over the past year and we see no reason why that won’t continue…

Cadillac Mining (CQX, TSX-V)

Our updated chart on Cadillac this morning shows a stock whose retracement from a January high of 50 cents likely bottomed out last week…CQX hit an intra-day low of 21 cents Thursday and closed Friday at 25 cents for a weekly loss of 3.5 cents…selling pressure has eased considerably the last few sessions, as shown by the CMF, and RSI and Stochastic indicators are looking a lot more positive as well…this stock has had a huge run-up the past couple of months, surging from a low of 5.5 cents to a high of 50 cents…a pullback to the mid-20′s, in retrospect, was healthy and normal from a technical standpoint and has paved the way for another potential major surge…there are many reasons we like Cadillac so much and why we believe it has the potential to soar in 2011…the tight share structure (25 million outstanding and 27.5 million fully diluted) is highly attractive and the management team is focused and shrewd….Victor Erickson and Andre Audet also have a combined immense amount of geological and engineering expertise…all of this was clearly demonstrated when the company announced January 21 a very significant precious metals property acquisition in the Great Basin of southern Utah near the Nevada border…the market hasn’t quite caught on to this yet but that’s okay – we have and so have some of our readers…what Erickson and Audet skillfully pulled off, through negotiations with individual landholders, was the acquisition of an entire former mining camp (the “Goldstrike District”) with patented claims that cover a dozen former near-surface deposits…in addition, the company staked further ground, contiguous with the patented claims…those mined deposits very likely feature extensions…our research shows this area has been hugely under-explored despite the production of 200,000 ounces of Gold and nearly 200,000 ounces of silver between 1988 and 1996…not only could there be near-surface extensions but there are parallels here to Nevada where some major deposits have been discovered underneath old heap leach operations…Erickson has a lot of successful experience in the Great Basin and wants to aggressively explore this 15 square kilometre area at Goldstrike….we expect Cadillac will employ some sophisticated techniques to help unlock the potential of this mining camp…they have a wealth of historical data at their disposal which will lead directly to numerous drilling targets…the property acquisition came at minimal expense for Cadillac (no stock issued either) which demonstrates this group’s business savvy – you don’t always have to spend a small fortune and issue vast amounts of paper to acquire a quality project…some of the most successful properties were picked up for a song through careful research which is what Cadillac has pulled off with Goldstrike…as far as CQX’s Cadillac Trend presence is concerned, Richmont Mines (RIC, TSX) is expected to come out with new results and an updated resource estimate for its Wasamac Property within the next week or two…we’re expecting a major upward revision in resources…the principal structure hosting Gold mineralization at Wasamac plunges north onto claims held 100% by Cadillac…Visible Gold (VGD, TSX-V) has also announced an aggressive exploration program for 2011 over its Quebec properties which include its Cadillac Break venture with CQX…

Abcourt Mines (ABI, TSX-V)

Volume dropped off in Abourt last week but the stock held its ground, closing Friday at 18.5 cents for a loss of half a penny for the week…the rising 50-day moving average (SMA) at 16 cents is providing tremendous technical support…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…we’ve seen these type of volume surges before and they are always a very positive sign…Abcourt is being accumulated, and our best guess is that some savvy players like the assets in the ground…the company came out with news January 27, announcing it had intersected two new zones of high grade silver and zinc mineralization at its Abcourt-Barvue Property near Val d’Or…the 10,000 metre drill program continues with the goal of upgrading and augmenting existing 43-101 reserves and resources…the company is also trying to justify an expansion of the proposed mill from 650,000 tonnes to 1 million tonnes…Abcourt-Barvue is a former producer and one of the best silver assets in the country with nearly 20 million ounces in all-category reserves and resources (plus nearly 300,000 tonnes of zinc)…in addition, the company holds the former producing Elder Gold Mine near Rouyn-Noranda which it hopes to put back into production within 18-24 months (considerable infrastructure is already in place as we saw during our recent site visit)…drilling continues at both Elder and the adjacent Tagami Property where there is excellent potential for a significant discovery…technical analyst Clive Maund came out with a buy recommendation on Abcourt thisone of the things that caught his attention was exactly what caught our attention initially – the sudden spike in volume starting in December…there has been some major accumulation of this stock and for good reason – the value of this company’s Gold, silver and zinc assets…Abcourt recentlyraised $4 million…with 110 million shares outstanding, its market cap currently sits at just $20 million…continued drilling success and even higher prices for Gold, silver and zinc would be extremely bullish 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)

Last weekend we stated that a turnaround was likely underway with CUI which was starting to come out of deeply oversold conditions…sure enough, the stock jumped as much as 41% with a move from 16 cents Monday to a high of 22.5 cents Wednesday with a combined CDNX volume Tuesday and Wednesday of over seven million shares…rumor has it, some brokers who thought the stock had become undervalued decided to jump in and grab a bunch of paper at what they felt were very favorable prices…the 22.5 cent high coincided with the still-rising 100-day moving average which is providing resistance for the moment…CUI closed Friday at 19 cents for a gain of 3 pennies for the week…the company last came out with news January 25, announcing a joint-venture deal 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…an 8,000 metre program is now underway at its Scadding Gold Property near Sudbury which was optioned to Trueclaim Exploration (TRM, TSX-V)…this property will be getting some major exposure with a segment on “Today in America” which is expected to air nationally on the FOX Business Network and regionally on CNN Headline News…while Currie Rose has had its market cap shaved considerably, from a high of nearly $40 million to the current $16 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as it ever was in our view…

Richfield Ventures (RVC, TSX-V)

Richfield hit a new all-time high of $5.24 Friday before being pushed back and closing the week at $4.90…that was still a 20-cent jump over the previous Friday…given the state of the Gold market and the likelihood of continued exploration success at Blackwater, we don’t believe the stock will be hanging around current levels for very long…we were very pleased to see that Richfield got a well-deserved buy recommendation recently from GMP Securities which has initiated coverage on RVC with a 12-month target price of $11.10 per share…BMR introduced Richfield to its readers in December, 2009, when the stock was trading at only $1.20…GMP sees the potential for at least five million ounces of Gold at the company’s Blackwater Project in central British Columbia…Richfield released results on six more drill holes January 25…BW-106 returned 205 metres grading 2.04 g/t Au including 81 metres of 4.33 g/t Au…this hole was collared 70 metres northeast of previously reported BW-76 and 111 metres northeast of BW-78 which also returned excellent values over considerable widths…together the three holes outline an area of about 7,000 square metres of near-surface high grade which offers starter pit potential…another phase of drilling is underway as Richfield continues to define a potential multi-million ounce Gold deposit at Blackwater with silver and copper values as well…the primary trend remains up with Richfield and there’s every reason to expect more excellent drill results throughout 2011…RVC is ahead 308% since we introduced it to BMR readers just over a year ago at $1.20…we believe the company’s ultimate objective is to find a buyer who can put Blackwater into production…if good drill results continue as we expect they will, we’re confident that objective will be met and the takeover price could be much higher than the company’s current market cap of approximately $210 million…

CDNX and Gold

As predicted in this space last weekend, the CDNX finally overcame resistance at 2300 with a powerful advance of 102 points last week (4.4%) on strong volume.  The market was down as much as 11 points intra-day Friday on weakness in Gold but rallied to close the week at 2370.

What we saw last week was a major breakout in the CDNX and the start of a new uptrend with the first significant area of resistance at about 2450.  John’s new Fibonacci target level is 2790.  It appears the pause in January was exactly what the CDNX needed to re-energize itself and resume its amazing uptrend and bull market run. It’s possible that through the rest of February and March we could see a return of the situation we saw from September through early November when the CDNX got into an extended overbought condition as it climbed about 500 points.  Only time will tell, but it appears this market wants to test significantly higher levels.  The strong out-performance of the CDNX vs. Gold and the TSX Gold Index since early December suggests Gold hit bottom just above $1,300 and could surprise some people with an explosive move to the upside.

One of our astute readers recently pointed out how Gold once again held support at its 150-day moving average (SMA).  The bottom in late January was $1,308, just $2.50 above the 150-day at that point.  Gold successfully tested the 150-day in February, 2010 (followed by a big rally in March), and again in July of last year (followed by a major rally).  The last time Gold fell below its 150-day SMA was in July, 2008, just prior to a major crash. Gold has managed to hold above its 150-day for two years now since January, 2009.

The TSX Gold Index, meanwhile, has once again bounced off its 300-day SMA where it has repeatedly found support over the last two years.

Given the action in the CDNX and the other indicators mentioned above, we believe there is no doubt that Gold has indeed hit bottom and could now be on its way to John’s $1,650 target area as illustrated in his January 16 article, “The Big Golden Picture”.

Gold gained $11 this past week to close Friday at $1,349.  The fundamental case for Gold remains solidly intact – currency instability and an overall lack of confidence in fiat currencies, an extended period of negative real interest rates (inflation is greater than the nominal interest rate, even in China and India despite increasing rates there), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitcal unrest and conflicts, and the list goes on.  It’s hard to imagine Gold not performing well in this environment.

Silver enjoyed a strong week, finishing at $29.14, and is looking very bullish as well.

The U.S. Mint reported record sales of one-ounce American Eagle silver coins during January, nearly 50%  higher than any month in the Mint’s 26 years of published sales. January, 2011, sales were more than 300% higher than the 1,900,000 one-ounce silver coins sold during January, 2010.

John: Friday, Cadillac Mining (CQX, TSX-V) opened at its low of 24 cents and closed at its high of 25 cents on low CDNX volume of only 92,000 shares.  It was up 1 penny for the day and down 3.5 cents for the week.

Looking at the 3-month daily chart, we see how on November 25 CQX started a very orderly advance from a base of 7 cents to a high of 50 cents on January 4. The move up on Jan. 4 from the resistance level of 42 cents to 50 cents was a false breakout or bull fake. Since then the stock has retraced down to find support at 24 cents.  

The last 5 trading sessions are of particular importance. The candles for Monday, Tuesday and Wednesday are all dojis – indecision, typical of trading action at the end of a retracement. Then on Thursday, another bottom sign, the candle is a hammer with the close right on the support at 24 cents.   Friday’s trading, although light, was bullish, with a small white candle. Another important point is that 24 cents coincides with the Fibonacci 50% retracement level which also provides support.  Indeed, this very much looks like a bottom.

The EMA(10) moving average provides close support for uptrend trading and is resistance for retracement or downtrend moves. The bullish sign we look for in a reversal is a close above the EMA(10) with much higher volume and a white candle the following day on high volume for confirmation of the reversal.  There are two resistance levels shown (blue horizontal lines) at 32 cents and 42 cents.

Looking at the indicators:

The RSI overbought condition in December has been completely unwound. The RSI declined all of January but has now turned up and is at 38% – bullish.

The Chaikin Money Flow (CMF) indicator shows how the stock has been under selling pressure for most of January but this has started to ease during the last 3 trading sessions. The CMF is at – 0.141.

The ADX trend indicator has the -DI (red line) at 27 and above the +DI (green line).  Both are flat. The ADX trend strength (black line) indicator is also flat at 29. This is a typical orientation at the end of a retracement.

Outlook: There is a strong case for CQX to be at the bottom of a retracement, so good news should move the stock to the upside rather quickly.

Note:  The writer holds a position in Cadillac Mining.

After a powerful move yesterday, Gold is taking a rest so far today and is off $9 an ounce to $1,347 as of 8:35 am Pacific…Silver is just 3 cents lower at $28.92 while the U.S. Dollar Index is up one-quarter of a point at 78.07…U.S. employment rose far less than expected in January with bad weather throughout most of the country cited as the main reason…non-farm payrolls grew just 36,000, according to the Labor Department, which was well below the 145,000 increase economists had expected…the overall (official) unemployment rate, however, which is calculated from a separate survey, declined more than expected to 9% from 9.4% in December (weather related as well)…in any event, if anyone really trusts all the numbers from government (American or Canadian), then please contact us today as one of us has some beautiful waterfront property in Arizona for sale…perhaps the most honest assessment of the U.S. employment situation came from Federal Reserve Chairman Bernanke yesterday who stated, “It will be several years before the unemployment rate has returned to a more normal level”…Bernanke is holding a news conference at 12:30 pm Eastern today when he’s expected to defend the Fed’s monetary easing policies…an important technical breakout has occurred with the CDNX as John illustrated with his updated chart last night…the CDNX is off a few points this morning – it’s not going to jump 40 points every day – but keep in mind the primary trend is up, so any pullbacks present opportunities…as of 8:30 am Pacific, the CDNX is down 5 points at 2359…we had a very interesting discussion yesterday with GoldQuest Mining (GQC, TSX-V) chairman Bill Fisher, a professional geologist with an impressive 30-year track record in the industry…his credentials are impeccable…we encourage our readers to listen to the interview, do their own due diligence and connect the dots…we see GoldQuest as a major opportunity given the excellent potential for an expansion of resources at its La Escandalosa and Las Animas properties in the DR…drilling continues at La Escandalosa where the goal is at least one million ounces and the company is already 40% there (400,000 inferred 43-101 ounces) based on just 25 drill holes over a 350-metre distance (north to south)…mineralization has been traced for 2,200 metres from Hondo Valle in the north to La Hilguera in the south..the Gold is near-surface…it’s a flat-lying structure, ideal for open-pit mining…Fisher has already put one property into production in the DR (Cerro de Maimon, the country’s first copper mine)…GoldQuest has an impressive pipeline of advanced and early stage properties in the DR, along with a substantial zinc-lead-silver project in Spain (Toral)…a 43-101 resource calculation is due out shortly on Toral…initial results from Escandalosa are very possible this month along with the appointment of a new President and CEO who Fisher no doubt has been involved in recruiting…GoldQuest is currently up 3.5 cents to 46 cents…Richfield Ventures (RVC, TSX-V) is also looking very strong, showing the power that can come into a stock from a major discovery…Richfield has climbed over 40% since hitting a low of $3.63 January 24…with new drilling underway at Blackwater and more results due, Richfield still has a lot of upside potential and could perform extremely well during this fresh wave up in the CDNX…RVC is currently 7 cents higher at $5.07 after reaching a new all-time high of $5.24…GMP Securities issued a buy recommendation a week ago with a 12-month target price of $11.05 per share…at some point we expect the excitement at Blackwater will spill over into Troymet Exploration (TYE, TSX-V) and Greencastle Resources (VGN, TSX-V) which both have land packages near Richfield’s discovery (Troymet is further along with drilling starting shortly)…both are facing some pressure at the moment from declining 50-day moving averages but these are definitely two companies with excellent prospects over the coming months…Troymet is up half a penny to 26.5 cents while Greencastle is 1 penny higher at 25.5 cents…Adventure Gold (AGE, TSX-V) has perked up nicely lately…its 48-cent close yesterday was its highest closing price since December 31…the stock appears to have started a new uptrend with a reversal in its 20-day moving average (SMA) which had been in decline since late December and through all of January…we very much like AGE’s presence around Granada but the company has several other high quality projects including the Pascalis-Colombiere Gold Property near Val d’Or…a drill program started there in December…drilling is testing for potential extensions at depth and near surface around the past producing Beliveau Mine…we like that project a lot and AGE may catch the market by surprise as results start to flow in from the current program…Adventure Gold is quiet so far this morning, down a penny at 47 cents…the waiting game continues as far as fresh results are concerned with Gold Bullion Development (GBB, TSX-V)…our faith in the Granada Property is as strong as ever and we expect more good results, consistent with a positive trend over the past year…GBB is currently off a penny at 74 cents…we hope readers took a look at Great Panther Silver (GPR, TSX), one of our favorite silver stocks, when we mentioned it recently while it was trading below two dollars…GPR is currently up 4 pennies at $2.44…it got as high as $2.50…technically, it could be ready for a slight pullback, so watch this one carefully as another great opportunity could open up on the charts between $2.15 and $2.35…

John, BMR’s chart wizard, has made two more dazzling calls with a low on Gold at $1,300 and a bottom on the CDNX of 2200.  When many were panicking near the end of January, we were telling our readers not to flinch and use the weakness to look for some fabulous opportunities in quality junior resource stocks.  The CDNX, which has proven to be the #1 leading indicator of the future direction of Gold prices, confirmed to us last month that Gold simply wasn’t about to collapse and in fact could reverse quickly and dramatically to the upside.

With the CDNX smashing through resistance at 2300, things are now about to get really interesting.  John has provided an updated CDNX chart analysis this evening with a new Fibonacci target level of 2790 (see below).

In the coming days John will be highlighting some individual companies with particularly favorable charts, one of those being GoldQuest Mining (GQC, TSX-V) whose new Chairman, Bill Fisher, was interviewed by BMR earlier today (a classic example of technicals and fundamentals perfectly in sync).

John: The CDNX gapped up at the open from Wednesday’s close of 2324 to 2331, then closed the gap before climbing to its high of 2364 for a gain of 40 points (1.71%) – another powerful bullish move.

Looking at the 3-month daily chart, we see that on November 18 Wave #1 of a bullish motive phase began and continued until December 6 when corrective Wave #2 began. This was of 8 sessions’ duration before the uptrend Wave #3 began. As expected this was a long wave and took the CDNX from a 2100 low to the 2300 level. Then Wave #4 started and the trading pattern for this wave is a horizontal trend channel which began in the first week of January and lasted until Jan. 25. The volume was fairly constant over this period of distribution. Distribution is the street’s way of supply overcoming demand – it takes time and a change of ownership of a large number of shares. This horizontal trend channel is shown with the blue horizontal top line as resistance at 2300 and the bottom green dotted line is support at 2200. On Jan. 26 the white candle signaled the start of Wave #5 which is looking very powerful.  We’ve had bullish white candles the last 5 trading days and the volume has been increasing over the last 4 sessions. Combining increasing volume with a rising Index creates a very bullish scenario.

Also note from this morning’s chart the next major resistance level is at 2450 and the Fibonacci target is at the 2790 level (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci level based on technical analysis).

Looking at the indicators:

The previous RSI overbought condition has been completely unwound. It has broken above the down trendline (orange).  It’s at 69% and pointing up –  very bullish for Wave #5 to continue.

Chaikin Money Flow:  During the last 3 days of Jan. the buying pressure was very low but has increased the last 3 sessions – very bullish.

The ADX trend indicator has the +DI (green line) at 44%, pointing up and above the -DI (red line) which is pointing down. The ADX trend strength indicator (black line) is flat at 29% – very bullish scenario.

Outlook: The CDNX is showing considerable upside strength. Combining that with the present bullishness of Gold and Silver, I see an extended run- up for the near future.