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Gold is quieter today…as of 8:40 am Pacific, the yellow metal is off $3 an ounce  at $1,493 while Silver is essentially unchanged at $43.37…crude oil is up slightly at $107.15 while the U.S. Dollar is off one-third of a point to 75.16…China’s Foreign Ministry said today that the United States must take “responsible” measures to protect investors in its debt after Standard & Poor’s threatened to lower its credit rating on the United States due to a bulging budget deficit…China’s foreign exchange reserves, already the world’s biggest, rose by nearly $200 billion in the first quarter to $3.05 trillion…about two-thirds are estimated to be invested in American dollars…U.S. housing starts and permits for future home construction rose more than expected in March, snapping back from the prior months’ winter depressed levels according to government data released this morning…the CDNX is looking to find its footing after falling 161 points or nearly 7% over six sessions…2200 is major support…as John’s chart yesterday showed, we could be looking at the Index trading in a band between 2200 and 2300 for the immediate future – that’s probably the best case scenario given some of the technical deterioration in the Index since April 11…as of 8:35 am Pacific, the CDNX is off another 14 points at 2225…GoldQuest Mining (GQC, TSX-V) has reported assay results from its La Escandalosa Property this morning…17 holes are in with seven more pending…results confirm the 43-101 resource model with mineralization remaining open to the north toward Hondo Valle, a distance of 1200 metres…best assays included 36.5 metres grading 2.74 g/t Au in hole #62, 16 metres grading 2.45 g/t Au in hole #47, and 9.2 metres grading 3.54 g/t Au in hole #48…the fact that any potential southern extension of La Escandalosa may have been displaced by faulting, as reported this morning, is not a big surprise or a major concern as the ground going north has always been considered more prospective and provides GoldQuest with all the opportunity it needs to achieve its goal of a 1 million+ ounce deposit…another round of drilling at Escandalosa is scheduled for the second half of this year…in the meantime the company has other highly prospective targets in the DR to explore including Las Animas and Jengibre…the stock is currently off 4.5 cents to 25.5 cents…the chart shows excellent support in the low-to-mid-20’s…the 300-day moving average (SMA) is 23 cents…Richfield Ventures (RVC, TSX-V) has also reported drill results this morning – five holes from the northern section of the Blackwater deposit where Silver Quest (SQI, TSX-V) holds a 25% interest…two step-out holes to the west of  BW-59 produced impressive numbers…hole #135 cut 82 metres grading 3.29 g/t Au while #138 intersected 163 metres grading 1.01 g/t Au…Richfield, which of course has been moving in step with New Gold Inc. (NGD, TSX) ever since NGD announced its friendly buyout offer April 4, is off 15 cents at $9.05 (NGD is down 16 cents at $9.90) while SQI has gained 3 pennies to 75 cents…Gold Bullion Development (GBB, TSX-V) is unchanged at 49.5 cents…GBB’s rising 20-day SMA at 47.5 cents is providing technical support…Abcourt Mines (ABI, TSX-V) came out with news at 7:30 am Pacific, saying it expects to close its unit offering at 18 cents possibly this week…the offering could raise as much as $5.5 million…ABI is currently off a penny at 15.5 cents…Visible Gold Mines (VGD, TSX-V) is unchanged on light volume at 36.5 cents…with a strong cash position ($8 million), excellent management and a very attractive land package in northwestern Quebec, VGD is definitely one of the companies bargain hunters should be looking at closely in this period of CDNX weakness…there are of course other opportunities as well in this market and we’ll be examining some of them in the days ahead…despite the weakness in the CDNX we’ve seen over the last seven trading sessions, and the fact the Index is now off slightly for the year, the long-term bull market remains fully intact and it’s likely one of the greatest bull markets we’ll ever see…

It was a shaky start to the week for stocks and the speculative and resource-rich CDNX was hit the hardest, declining 52 points to close at 2239.  The CDNX did a very abrupt and unexpected u-turn a week ago today after it climbed as high as 2399, a 17% jump over the early March low of 2050.  This market was looking very strong until last Monday when Goldman Sachs issued a bearish short to medium-term commodities call which shook both the TSX and the CDNX.  Today, S&P downgraded its outlook on U.S. long-term government debt to negative which spooked the markets yet again though this should not have come as any surprise.  Perhaps it will have the effect of waking up some American politicians, including the President, and get them much more engaged in what should become a “war on debt”.  Not surprisingly, Gold rose today and hit a new all-time high of $1,499 but the U.S. Dollar Index interestingly also gained ground.

Where to from here for the CDNX?  It’s troubling the CDNX has shed 6.6% over the last six trading sessions with Gold actually advancing $21 during that same time period to a new record high.  The CDNX 50-day moving average (SMA) is now firmly in decline which suggests lower prices are likely on the way.  However, this market has shown a lot of resilience over the past two-and-a-half years and won’t cave in easily.  The long-term bull market remains intact and there are major support levels beginning at 2200.  Below is a weekly CDNX chart that John completed after today’s close.

Interestingly, the TSX Gold Index chart is looking healthier than the CDNX right now and it’s quite possible we could see a situation over the next while where the producers or near-producers outperform the speculative junior exploration plays.  Investors should keep this in mind and look for opportunities in that regard.  In terms of CDNX stocks, the current environment is such that it’s more critical than ever that investors focus on companies that are not only well-managed but have very strong balance sheets and outstanding properties.

We’re in a volatile period in which it’s harder than ever to predict the market’s near-term moves.  We’ll do the best we can and continue to point out the companies that we believe are the rising stars.

It has been a volatile day for Gold and a terrible day so far for stocks…the yellow metal dropped as low as $1,477 this morning but quickly reversed to the upside and hit a new record high of $1,499 after Standard & Poor’s downgraded the long-term debt outlook for the United States to negative, saying it believes there’s a risk U.S. policymakers may not reach agreement on how to address the country’s fiscal pressures…Gold has lost its gains, however, and as of 7:40 am Pacific the yellow metal is unchanged at $1,486…Silver has fallen 57 cents to $42.48 while the U.S. Dollar Index has strengthened half a point to to 75.41… the Dow and TSX are both sharply lower along with the Venture Exchange which is currently off 58 points at 2233…the CDNX has done an about-face after rallying from the 2050 low in early March to 2399 a week ago today…John takes a detailed look at the technical situation now with the CDNX based on Friday’s close below 2300…

John: On Friday the CDNX opened at 2299, rose to a high of 2304 and then fell to a low of 2290 before closing at 2291 for a loss of 10.13 points (-0.44%) on volume of 312 million shares. This was the fifth consecutive daily loss, thus the Index fell 98 points (-4.1%) on the week.  And there’s significant weakness again this morning.

Looking at the chart the first thing we examine is the trading pattern. In this case it’s very obvious that a “rounding top” pattern is being formed (mauve lines). The downside started after the high at the beginning of 2011. After the sell-off in March from the high of 2465 down to 2050 we have seen a 3-wave up bounce to the 2400 level. Then last week a decline started which surprised us and resulted in 5 consecutive down days.  With a close at 2291, the 2300 level now becomes resistance thus the CDNX is working in the 2200 – 2300 support band. I have shown 2 major resistance levels at 2300 and 2400 and 4 major pivotal support levels at 2200, 2100, 2050 and 1950.  The Fibonacci set (black) shows the 61.8% level close to the 2300 level which makes this a strong resistance and the 38.2% level is close to the 2200 level which makes the 2200 level a strong support area.

Looking at the indicators:

The RSI at 46% is showing an increasing loss of momentum. The RSI support level was just below the 50% mark, so Friday’s dip suggested there was more trouble ahead and we’re seeing it this morning.

The Slow Stochastics (SS) has the %K (black line) at 19% in oversold territory and below the %D (red line) at 25%. Last week’s trading has taken the %K from overbought to oversold, showing a reversal in bullish momentum. Note the SS is much more sensitive to momentum changes than the RSI. SS can stay in the oversold region a long time. This does not necessarily indicate a reversal is near.

The Chaikin Money Flow (CMF) indicator shows that there has been an overall decline in buying pressure since November and last week’s trading showed a rapid decline from above 0.3 down to 0.114.

What does all this really mean?  It means that after reaching the resistance level of 2465 the CDNX appears to have run out of steam – it is tired. It has had an almost uninterrupted upside move since the low in December, 2008, about 28 months. The time has come to start the recharging process before continuing its climb to new highs. With the long-term commodities bull market still very much intact, there is no doubt the CDNX will eventually overcome the 2465 resistance.  For the investor, until there is a confirmed reversal to the upside, caution is the name of the game. The Index is showing weakness at the moment but this does not mean there won’t be opportunities. The investor must be selective in his or her investments and be constantly aware of the “sell on news” market actions. It is impossible to say at this time how long this weakness will persist or when a reversal will occur. Just let the charts tell you what the markets are doing and adjust your trading accordingly. Develop a trading plan which includes the first rule of investing – “Protect Your Capital”.  As the movie mogul Samuel Goldwyn once said, “It is always difficult to forecast, especially the future”.  There’s no reason to panic but be careful.

We will provide another market report by this evening.

Visible Gold Mines (VGD, TSX-V)

Visible Gold Mines was off 3 pennies for the week but fashioned a bullish reversal Friday, dropping as low as 36 cents but closing at its high of the day at 38.5 cents…volume has picked up significantly over the last six trading sessions…the 50-day moving average (SMA) has started to reverse to the upside and the stock has clearly demonstrated it has powerful support in the mid-30’s…it appears now that resistance in the low 40’s will once again be put to the test…VGD is currently drilling two properties (Sildor and Cadillac Break) west of Rouyn-Noranda while the company is also gearing up for exploration programs at Stadacona-East and its newly-acquired Joutel Project that was recently optioned from Agnico-Eagle Mines (AEM, TSX)…Joutel, a significant former producer that gave birth to Agnico-Eagle, has the potential to become a huge winner for VGD…this is a company that’s rapidly developing as one of the most aggressive Gold explorers in northwestern Quebec…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 Robert Sansfacon, one of the most respected geologists in the country who honed his skills for many years with Lac Minerals…Sansfacon played a critical role in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit…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 is currently armed with $8 million in working capital (17.5 cents per share)…he’s targeting under-explored areas and past producing mines where major new extensions are possible…two drill programs are in progress, as mentioned above, and initial assays are expected in the near future from the Silidor Property where a high-grade Gold discovery was made last summer in field exploration, 950 metres from the former Silidor Mine…21 holes (nearly 5,000 metres of drilling) have been completed so far at Silidor…On March 31 the company announced the Joutel deal with Agnico-Eagle…VGD has acquired an option to earn a 50% interest in Joutel which is 150 kilometres north of Rouyn-Noranda…Joutel’s Eagle and Telbel mines produced over 1 million ounces of Gold at a grade of 6 g/t Au and some Silver between 1973 and 1993 (Agnico Mines merged with Eagle Mines Ltd. in 1972, allowing for the development of Eagle Mines’ Joutel mining complex)…Agnico-Eagle closed the mine prematurely in the early 90′s in order to concentrate its efforts on the massive LaRonde Mine…the fact it would cut a deal with VGD on Joutel speaks volumes about their confidence in this junior…if anyone can unlock the value of Joutel, it would be Sansfacon…VGD’s exploration there could turn into a very exciting story…

GoldQuest Mining (GQX, TSX-V)

It was another quiet week for GoldQuest which closed at 32.5 cents, a gain of half a penny from the previous Friday…the stock is off 33% from its early February high of 48.5 cents but we’re not concerned about GoldQuest as the underlying fundamentals remain strong…interestingly, the stock has given up half the gains it enjoyed from the beginning of September to the February 7 high…that’s a very normal pullback after a nearly five-fold increase in the stock price over just five months, so one has to keep things in perspective…the prospects for GQC this year are very bright given the company’s pipeline of quality Gold projects in the Dominican Republic where a mining boom is clearly in full swing…GoldQuest has been conducting a Phase 2 drill program at its promising La Escandalosa Property in the DR since mid-December and initial results are expected very soon…based on the success of the last drill program, GoldQuest is getting closer to the centre of the mineralizing system at Escandalosa and we’re expecting results that could ultimately elevate this project to the 1 million+ ounce category…400,000 inferred ounces have already been outlined (NI-43-101) based on just 25 drill holes (it’s important to note the 43-101 was done at an early stage)…approximately 40 holes are being drilled in the current program…Escandalosa is a flat-lying, near-surface deposit where the Gold should be easy to extract…as Chairman Bill Fisher told us in a February interview, “the economics could be really quite compelling”…proving up a 1 million ounce deposit at Escandalosa could give GoldQuest production of at least 100,000 ounces a year…GQC’s other promising priority projects in the DR are Las Animas and Jengibre which are next in line for drilling after Escandalosa…GoldQuest 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…GoldQuest is up 67% since we introduced it to BMR readers last fall at 19.5 cents…

Greencastle Resources (VGN, TSX-V)

Greencastle was off half a penny last week at 23.5 cents…the stock has been trading above its 50-day moving average (SMA) in April for the first time since January…the 50-day has flattened out but the all-important reversal in that SMA has yet to kick in…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…at 24 cents, Greencastle’s market cap ($11 million) exceeds its working capital by just $3 million…the potential of higher oil prices in the coming months could bolster 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…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 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…investors need to be patient, however, as they often do with Roodenburg’s plays…Greencastle is up 68% since we added it back in to the BMR model portfolio six months ago…

Adventure Gold (AGE, TSX-V)

Adventure Gold settled back a bit last week, declining by a nickel to close at 63 cents, but the overall uptrend remains firmly intact…the rising 50-day moving average (SMA) at 61.5 cents continues to provide excellent support along with the 100-day SMA at 54 cents…this chart has some similarities to GBB’s chart last year…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…the stock remains in an overall long-term uptrend with the supporting 50-day SMA at 60 cents and the 100-day (SMA) at 53 cents…we expect AGE will begin drilling its Granada Extension Property in the near future…results from Gold Bullion reveal exciting potential over the far western portion of GBB’s Preliminary Block Model which supports Adventure Gold’s geological interpretation that it holds part of the western extension of the LONG Bars Zone…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 by the end of next month…if a discovery is made, AGE could explode…

Sidon International (SD, TSX-V)

Sidon continues to form a base around the 7-cent level after a sharp drop early last month following disappointing assay results from its Morogoro East Gold Property in Tanzania…volume has lightened up considerably and the stock closed Friday at 7.5 cents for a gain of half a penny for the week…on March 14 the company announced it has arranged a private placement of up to $2 million at 8 cents…Sidon also announced that day it has signed an option to acquire 80% of a property adjacent to Canaco’s (CAN, TSX-V) Handeni Project…initial drill results from Morogoro, announced March 8, fell short of market expectations…the six shallow holes that were drilled in December 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 should help in 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…acquiring ground near Canaco’s discovery also helps…there is certainly hope here for better days ahead…from a technical standpoint, previous support between 9 and 10 cents will now provide resistance…Sidon is up 50% since we introduced it to BMR readers a year ago at a nickel…the company currently has approximately 140 million shares outstanding for a market cap of $10.5 million…

Seafield Resources (SFF, TSX-V)

Seafield lost 3.5 cents last week to close Friday at 32 cents…a declining 50-day moving average (SMA), currently at 36 cents, and a rising 300-day SMA at 29 cents continue to define the trading range…the company announced April 5 that drilling has commenced at Santa Sofia, about one 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 have now been completed at Dos Quebradas…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…the company has already outlined a NI-43-101 inferred resource of nearly 800,000 ounces at its Miraflores Property, a number that’s expected to increase following the 12-hole, 4,000 metre program completed late last year…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…the company is sitting on at least $15 million in cash and has a very modest market cap of $49 million…Seafield has gained 433% since we made it the first company in the BMR model portfolio in the summer of 2009…it’s encouraging to see that Anglo-Ashanti Ltd., the world’s third largest Gold producer, plans to spend $300 million over the next three years on further exploration in Colombia…

Gold Bullion Development (GBB, TSX-V)

Gold Bullion digested its strong gains from the week of April 4 and closed unchanged for last week at 53 cents, just above its 50-day moving average (SMA)…this was a considerable achievement considering the CDNX as a whole was down significantly last week…last Monday, GBB announced its intention to spin off its Castle Silver Mine Property into a separate publicly traded company…such a move makes good strategic sense and Gold Bullion is hoping the proposed transaction will be completed before the third quarter of this year…that could be optimistic as this type of move typically runs into unexpected delays but the important point is that GBB is going in the right direction with this important asset…Castle is a significant former producer with a lot of unexplored potential for cobalt and silver, in particular, in addition to nickel and copper…GBB continues to trade within a resistance band up to 60 cents, and the 50, 100 and 200-day SMA’s are still in decline, but sentiment has changed and that’s encouraging to see…investors should keep focused on the fundamentals that drove this play so hard in 2010 – the growing LONG Bars Zone and the potential of it to develop into a multi-million ounce system…more drill results were released April 5…there were no eye-popping numbers but that’s okay – virtually ever hole continues to hit near-surface mineralization and tonnage keeps building…hole #179 (72.25 metres grading 1.25 g/t Au and 156 metres of 0.61 g/t Au) shows mineralization continues to push eastward from Pit #1…six holes drilled just NE and SE of #179 under the waste pile will be important to look for (holes #198, #199, #201, #248, #250, and #253 – assays to come)…hole #97 was a nice cut likely of Vein #2, 46.7 metres grading 1.51 g/t Au…holes like #69, #124, #136 and #193 don’t get most investors excited but they’re very important to the overall picture with long intersections of lower grade (177, 113, 189 and 165 metres respectively grading between 0.31 and 0.42 g/t Au)…Frank Basa will have no problem with those numbers, keeping in mind the “upgrading” effect at Granada…structure is there…more bulk sampling and different types of drilling will quantify and improve the grade…just a few holes reported from the southwest corner of the Block Model with many more to come from there – it continues to be a promising area…there were a smattering of holes from the Eastern Extension but nothing that jumped out at us…many more results are yet to come from the Eastern Extension including the northern part where good visuals were reported earlier…it’s interesting to note that on GBB’s drill map, three step-out holes have been drilled about 90 to 145 metres north of holes #55 and #108…we’ll be watching closely for results from those holes…assay results are now in on nearly half of the 228 holes completed so far (45,000 metres) in Phases 2 and 3…47,730 metres in total have been completed since December, 2009…the case for the LONG Bars Zone remains intact…much, much more drilling lies ahead as this is all about volume (which is why we wanted to see more than two rigs by 2011)…the 43-101 this summer will be extremely helpful in terms of pushing this exciting project forward…Gold Bullion is sitting on a potentially huge near-surface Gold deposit in one of the best jurisdictions in the world for mining and exploration during the greatest bull market in history for the yellow metal…GBB has gained 657% since we introduced it to BMR readers over 15 months ago and much more excitement in our view is yet to come from the LONG Bars Zone…

Cadillac Mining (CQX, TSX-V)

Cadillac continues to hover around the 20-cent level on light volume…the stock was off 2 pennies last week to close at 21 cents…drilling is now underway on ground optioned to Visible Gold Mines (VGD, TSX-V)…a total of 7,400 hectares are in that package and VGD, which can earn a 60% interest, is starting with four holes within 800 metres of Vantex Resources‘ (VAX, TSX-V) Moriss Zone discovery at its Galloway Project, 30 kilometres west of Rouyn-Noranda…the opportunity with Cadillac is immense in our view given the company’s strategic land package in northwestern Quebec, the astute acquisition of a former Gold-Silver mining camp in Utah, and the tight share structure…the current market cap is only $5.4 million which allows for plenty of upside potential…management’s challenge is to “seize the moment” and capitalize on the excellent opportunities the company has been blessed with in order to drive shareholder value…technically, the 50-day moving average (SMA) has flattened out and the first indication of a serious turnaround will be a reversal to the upside in the 50-day…the CMF indicator shows that buying pressure has recently been increasing but volume needs to pick up substantially…Richmont’s (RIC, TSX) success at its Wasamac Property west of Rouyn-Noranda is very bullish for Cadillac which is now preparing an exploration program including diamond drilling for its adjacent 100%-owned “Wasa” claims…Richmont, which released a NI-43-101 report on Wasamac April 1, is drilling an additional 35,000 metres to upgrade and further expand resources at this growing deposit where the principal structure hosting Gold mineralization plunges north at a dip between 50 and 55 degrees toward Cadillac’s claims…while there’s no guarantee, of course, in theory there’s certainly the possibility that Cadillac’s Wasa claims at depth could host a significant high-grade extension of Richmont’s deposit…this is what Cadillac will be examining…in addition they’ll be going after some highly prospective VMS targets on the property…the infamous Horne Creek fault runs right through the Wasa claims and Cadillac discovered a zone last year (by deepening the only hole they’ve ever drilled on the property) that’s interpreted to be a feeder system typical of those seen under VMS systems in the Noranda camp…Cadillac’s Wasa clams have excellent potential and we’re pleased to see they intend on proceeding with a drill program…actions speak louder than words, however, and investors are anxious to see some positive developments as quickly as possible…

Abcourt Mines (ABI, TSX-V)

Abcourt continues to bounce back and forth and closed Friday at 17 cents, a loss of 2-and-a-half cents for the week…the stock has very strong support in the 16 to 17 cent range and is in the midst of completing an 18-cent financing with Alliance Securities Inc. to raise between $3.5 and $5.5 million…boosting its cash position will help Abcourt which finished 2010 with working capital of approximately $4 million as revealed by the latest financials released after the close Friday…there’s no question Abcourt is sitting on some tremendous assets that simply aren’t being fully valued by the market…the most effective strategy for Abcourt moving forward, we believe, is to re-brand itself as an exploration play only and drop any plans for putting any of its properties into production…all they need to do is drill, drill, drill at both Elder-Tagami and Abcourt-Barvue as both properties still have considerable exploration upside…as resources increase, other companies will be watching and Abcourt can then put itself into play as a potential takeover target…this would be a much simpler strategy and one that we believe would resonate with investors…Abcourt released more positive assay results March 3 from its ongoing 10,000 metre drill program at its Elder-Tagami Gold Project near Rouyn-Noranda…mineralization continues to expand to the west of the former underground Elder Mine…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)…meanwhile, Abcourt released results February 15 from six more holes at its Abcourt-Barvue Silver-Zinc Property near Val d’Or and the numbers continue to be very encouraging…the holes were all drilled 150 to 200 metres from surface and five of them intersected two zones of high-grade silver and zinc…Hole #16 cut 152.26 g/t Ag over 12.7 metres…the 10,000 metre drill program at Abcourt-Barvue continues with the goal of upgrading and augmenting existing NI-43-101 reserves and resources…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)…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…continued drilling success and even 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 was off half a penny for the week as it closed Friday at 17 cents, exactly at its 50-day moving average (SMA) which has flattened out…buying pressure has increased significantly this month as demonstrated by the CMF…the 200 and 300-day SMA’s continue to rise while the declining 100-day SMA, currently at 23 cents, provides resistance…looking out over the next couple of months, the CUI chart shows great promise but investors just have to be patient…the rainy season has not been as severe as usual in northwest Tanzania and that’s good news as Currie Rose prepares to launch a major drill program during this second quarter…while its Tanzanian properties are the market’s major focus, Currie Rose could benefit over the coming weeks and months from continued good exploration news from Trueclaim Exploration (TRM, TSX-V) which is currently conducting an 8,000 metre drill program at the Scadding Gold Property near Sudbury…Trueclaim, which released assay results March 4 including 15.78 metres grading 5.36 g/t Au near-surface, is in the process of earning a 51% interest in Scadding by carrying out a $2 million work commitment…Trueclaim 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 considerably, from a high of nearly $40 million to the current $15 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…Currie Rose has all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) this spring and summer in Tanzania, 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 off 70 cents last week to close at $9.32…this followed a week of tremendous accomplishment for the Richfield group as the company announced a plan of arrangement April 4 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 knee-jerk reaction to some potential share dilution without investors properly considering the enormous possible benefits down the road to this company if it were to add Blackwater as a producer…we’ve been speculating on a potential buyout of Richfield for some time now…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…will another company step into the picture and start a takeover battle for Richfield?…the possibility of that can’t be ruled out, especially with Gold as strong as it is and the likelihood in the minds of some that the current resource at Blackwater could be expanded significantly…we’re now living in a world where there is a fierce battle for resources of all types…Richfield is up 677% 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…we also see great value in New Gold which has been exceeding analysts’ expectations with terrific numbers…New Gold’s AGM is May 4 when the company will also be releasing its Q1 results and no doubt commenting on the potential benefits of the proposed Richfield acquisition…

TSX Venture Exchange and Gold

It was a disappointing week for the CDNX (Gold performed as expected but not the CDNX) which declined each day and shed 98 points or 4.1% to close at 2291, erasing all the gains of the previous week.  While the market closed below 2300 Friday for the first time since April 1, there is still strong technical support in the 2275 to 2290 area as we saw in late March.  The rising 100-day moving average (SMA) also provides support around 2270.   The Chaikin Money Flow (CMF) indicator is very close to a support level – the same with the Slow Stochastics which is near the March lows.  So the probabilities do not lean toward a breakdown.  The five down days follow eight consecutive daily advances for the CDNX.

The CDNX got as high as 2399.66 shortly after the opening bell Monday morning before going into a reversal that closely mirrored that of the TSX which fell nearly 3% for the week.  The sell-off seemed to have been sparked by a bearish short to medium term commodities call (three to six months) by Goldman Sachs (oil and copper in particular) which also cut its ratings on Canadian stocks.   Only time will tell if they are correct.  There will be a significant pullback at some point in this long-term and robust commodities bull market – the only question is when.  The CDNX, a very reliable leading indicator of the direction of commodity prices, is holding its own (it’s essentially flat for the year so far) and has shown great resilience.

Gold hit another new all-time high last week and closed Friday at $1,486 for a weekly gain of $11.   Silver is showing no signs of slowing down as it enjoyed another powerful week and a fresh 31-year high, climbing $2.12 an ounce to close at $43.05.  A new record high in Silver certainly seems achievable this year (its previous high came January 18, 1980, when it hit $49.45).

It seems quite likely that Gold will touch the magic $1,500 mark next week where it will probably meet some resistance and pause to catch its breath.  In fact, John’s first Fibonacci target is $1,493 as shown in his chart posted here a week ago.

Gold charged higher Thursday after a weaker than expected U.S. jobless claims number.  The yellow metal gained additional strength Friday after stronger than expected inflation data out of China combined with the announcement that China’s foreign exchange reserves rose above $3 trillion.

The U.S. consumer price index for March rose 0.5%, in line with February’s gain, while core CPI rose 0.1% (less than expectations) after gaining 0.2% the month before.  Fed officials will look at the core CPI number and argue that underlying inflation remains subdued.  However, the chart below which plots the consumer price index as well as import prices on a year-over-year basis clearly shows that inflation is on the upswing in the United States:

Import prices are highly influenced by oil prices which rose 31.3 percent but other areas are rising rapidly as well such as food and beverages, up 18.9 percent year over year and industrial supplies rising 23.5 percent.  Canadian import prices have risen 8.2% year-over-year given the weakness in the U.S. Dollar.

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, rising oil prices, 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.

For those pundits who mistakenly claim that Gold is in a “bubble”, its interesting to note that Gold ownership as a percentage of global financial assets is only 0.7% vs. 0.2% in 2002 at the beginning of the current bull cycle (a majority of that increase has been fueled by Gold’s sharp price appreciation).

As an asset class, Gold is still very much under-owned. And the “masses” still haven’t piled into Gold stocks.  We’re not even close to a bubble in Gold.

All eyes will be on the Fed later this month as Chairman Ben Bernanke holds an unprecedented press briefing following the April 26-27 FMOC meeting.  There is all sorts of speculation regarding the Fed’s quantitative easing program and if it will end as scheduled in June.  “QE” is like a drug, however, and Bernanke’s addiction to it in our view is not likely to suddenly end.  He doesn’t perceive inflation to be a major threat in the United States and there continue to be risks to American and global economic growth.

Gold has hit another new all-time high of $1,484.50…as of 8:00 am Pacific, the yellow metal is up $6 an ounce at $1,482…Silver has hit a fresh 31-year high and is currently up 50 cents at $42.68…crude oil is 34 cents higher at $108.45 while the battered U.S. Dollar Index has jumped one quarter of a point to 74.92…as John outlined in his chart last night, critical support for the Dollar Index is at 74…plenty of economic numbers for investors to chew on this morning…U.S. consumer sentiment (preliminary April reading) rose more than expected as worries about the impact of higher oil prices on economic growth eased slightly…meanwhile, the U.S. consumer price index for March rose 0.5%, in line with February’s gain, while core CPI rose 0.1% (less than expectations) after gaining 0.2% the month before…Fed officials will look at the core CPI number and argue that underlying inflation remains subdued…it’s a different story in China where that country’s turbo-charged growth eased only slightly in the first quarter while inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel…China’s gross domestic product increased by an annual rate of 9.7% in the first quarter, down from 9.8% in the final three months of 2010 but ahead of an expected 9.5% pace…inflation in China, meanwhile, jumped to 5.4% in March, topping market forecasts for a 5.2% increase…more increases in reserve requirements and interest rates can be expected in China as that country deals aggressively with the inflation threat…after all that chest-thumping by some U.S. political leaders a week ago over the budget deal and an “historic” cut to the deficit, a Congressional Budget Office reports shows the package only saves a paltry $352 million from non-war accounts this year – compared with the $38.5 billion in cuts that were claimed…the CBO study confirms the measure trims more than $38 billion in new spending authority relative to current levels, but many of the cuts come in slow-spending accounts like water-and-sewer grants that don’t have an immediate deficit impact…other cuts come in areas where the government was unlikely to spend the money anyway, the CBO suggested…the bottom line is that President Obama and many American politicians have simply not come to grips with the deficit and debt issues and aren’t prepared yet to make the really difficult choices necessary to effectively address the problem…the ensuing battle over the debt ceiling and the 2012 budget will be fascinating to watch…Gold is going higher as a result of the financial mess the U.S. is in…the CDNX is unchanged at 2301 after dropping as low as 2295…an intra-day reversal appears to be in the works today but it has been a disappointing week for the CDNX which has been down each day and has given up all the gains it made (91 points or 4%) last week…this highly speculative market can be very unpredictable at times…however the CDNX has strong technical support at 2280 which is also just above the rising 100-day moving average (SMA)…in a market such as this, a takeover or some spectacular drill results (not to mention a big move in Gold) could very quickly produce a wave of buying…it’s encouraging to see that Everton Resources (EVR, TSX-V) seems to have finally overcome the 40-cent resistance area…EVR got as high as 45 cents this morning and is currently up half a penny at 42 cents…the other company in the Dominican Republic we remain very excited about is GoldQuest Mining (GQC, TSX-V)…initial drill results are pending from its La Escandalosa Property…GQC has been hovering in the low 30’s, a strong support area, over the past couple of weeks…while this has not been a great week for the overall market, the weakness in Visible Gold Mines (VGD, TSX-V) has been a mystery…VGD is off another penny-and-half this morning at 36 cents and is clearly oversold…buying solid companies on weakness is always a recipe for making money…we know we have identified a winner in VGD which is emerging as one of the most aggressive explorers along the Cadillac Trend and elsewhere in northwest Quebec…it’s not often a Venture Exchange company gets a buy recommendation on CNBC but that’s what happened yesterday with Spanish Mountain Gold (SPA, TSX-V) which enjoyed one of its best volume days ever (3.1 million on the CDNX)…SPA is developing a multi-million ounce deposit in the Caribou of B.C. which is a high tonnage, low-grade system and a favorite as well of investment guru Jim Slater who we interviewed last year…not only are the fundamentals interesting with this situation, but a very bullish technical picture has suddenly emerged with a reversal in both the 50 and 100-day moving averages…good things appear to be on the horizon for Spanish Mountain…the stock is currently off a penny at 67 cents…Gold Canyon Resources (GCU, TSX-V) is recovering after yesterday’s “sell on news” reaction…GCU is up 8 cents to $3.50…the company delivered more stellar drill results yesterday from its Springpole Property in Ontario…deeper drilling has now commenced and results are still pending for 10 more holes from the winter program…

John: Today we have a 4-year weekly comparative chart showing the U.S. Dollar Index and the CDNX. In this case we’re not looking for a direct relationship between them but merely an an opportunity to view both on the same chart.

With regard to relationships I believe we should view it this way:  The CDNX and Gold have a direct relationship. Gold and the U.S. Dollar generally have an inverse relationship, thus we can say the CDNX typically varies inversely with the U.S. Dollar Index. The CDNX has a direct association with the price of Gold but an indirect association with the U.S. Dollar Index.

Looking at the chart we see that the main focus is the U.S. Dollar in candle format and all indicators are referenced to the Dollar Index. We see that today’s close is within the top support band (2 green horizontal parallel lines), thus the Dollar Index has made partial penetration of support. The bottom of this band is at the 74 level. From a high in June, 2010, the U.S. Dollar declined in a 5-wave pattern and has now reached the pivotal support of November, 2009. If the 74 level is penetrated it could fall to the top of the next support band at 72. The next 2 weeks could be critical for the greenback which in turn will have an impact on the price of Gold and the CDNX.

Looking at the indicators ($U.S. Dollar):

The RSI at 20% has room to fall to the RSI support level of 10.

The Slow Stochastics (SS) is in deep oversold territory but as we can see, between April and December, 2009, it can remain oversold for months.

The ADX trend indicator shows that the -DI (red line) at 28 is climbing and above the +DI (green line) at 12 which is falling. The ADX (black line) trend strength indicator at 26 is climbing rapidly, showing the strength of the decline is increasing.

The outlook for the U.S. Dollar Index is quite bearish, at least for the near term.   Therefore, if the greenback is bearish, this should provide an excellent opportunity for Gold and the CDNX to move higher.   The chart shows the CDNX near resistance and if the U.S. Dollar Index continues to fall, I expect it will try again to break the resistance at 2465.