BullMarketRun.caGold broke out to a new all-time high today, touching $1,589 intra-day, and Gold stocks put in a strong performance as well with the CDNX gaining 37 points to close at 1989 while the TSX Gold Index jumped 2.5% to finish at 394, its highest level in more than two months. John’s two-year weekly Gold chart below shows a very impressive upsloping trend channel.
Gold is on fire and has hit a new all-time high…as of 8:15 am Pacific, the yellow metal is up $20 an ounce at $1,587…Silver has shot up $1.94 to $38.09…Crude Oil is $1.09 higher at $98.52 while the U.S. Dollar Index is down sharply at 75.15…Fed Chairman Ben Bernanke, in testimony before Congress this morning, has stated that a new stimulus program is in the works which will entail more asset purchases, so here we go again…as far as Gold is concerned, it has obviously broken out which makes John look like a genius as he was calling for Gold back in January to hit $1,650 by the end of June…as you can see from John’s updated 1-year weekly chart below, Gold’s RSI has plenty of room to move higher now unlike the situation when Gold hit its previous high recently of $1,575…an unwinding of that overbought condition has set the stage for Gold to make a significant move now after clearing resistance at $1,575…
The CDNX staged a strong reversal yesterday, finding support between its 10 and 20-day moving averages (SMA) and closing at its high of the day, 1952, for a gain of 6.66 points…we’ll avoid comment on the “666” number but we do see great things in store for this market over the summer as we’ve been stating repeatedly in recent weeks…the “Big Picture” CDNX chart is extremely powerful, indeed, and if John’s Fibonacci target of 2853 comes true, those who were brave enough to buy into the 24% correction from early March to late June stand to make a fortune over the next year…this market is going to rock…much of our focus through July, August and September is going to be on northwest Quebec, British Columbia and the Yukon plus selected other spots around the globe including Tanzania where we’re keeping a close eye on Currie Rose Resources (CUI, TSX-V) and others…we have confirmed a visit to Quebec in August where there is a plethora of opportunities…as of 8:15 am Pacific, the CDNX is up 32 points to 1984…before we look at some individual situations on the Venture, a quick comment concerning Richmont Mines (RIC, TSX) which is now in a very bullish new uptrend…Richmont is our favorite small producer (both Jon and John are long on this one) and we were delighted to see it got a nice plug on BNN yesterday…at BMR we have our ears very close to the ground in northwest Quebec, and Richmont is truly a special situation given its earnings momentum, growing production profile, and developments at Wasamac which the market just hasn’t caught on to yet…Richmont is conducting nearly 100,000 metres of exploration drilling this year, it has $50 million in the bank, no debt, with estimated 2011 production of 80,000 to 85,000 ounces…that number should jump by about 40% next year with the Francoeur Mine 10 kilometres west of Wasamac expected to be in commercial production by Q1 of 2012…Wasamac is a “company maker” for Richmont and could ultimately triple RIC’s annual production from where it is now…Richmont should be reporting its second quarter earnings next month and at its current price of $7.93 (up 45 cents), RIC is still trading conservatively at only 10 times anticipated 2011 earnings…RIC is a keeper for the long haul in this bull market and its 50-day moving average (SMA) has just reversed to the upside…Gold Bullion Development (GBB, TSX-V) released assay results from another 32 holes at Granada this morning…much of the same and no major breakthroughs…Hole #165, however, collared approximately 50 metres northeast of hole #108, offers encouragement with regard to the very promising northern portion of the Eastern Extension…#165 returned 141.50 metres grading 0.31 g/t Au with no high-grade intervals…it included a 20.5-metre section grading 1.20 g/t Au…assays have yet to be reported on 8 more important holes drilled in this general area (168, 178, 183, 241, 243, 246, 254, 257) according to GBB’s most recent drill map…along with additional results, GBB’s 43-101 resource estimate is going to be critical along with potential discoveries in LONG Bars Zone 2 and the Castle spin-off..infill drilling is GBB’s focus at the moment with drill hole spacing tightening (which could help to improve grade) in preparation for a resource calculation…GBB is off half a penny but looking good at 43.5 cents…Levon Resources (LVN, TSX-V), which we’ve been very bullish on the last few months, appears to be breaking out above resistance at $2 this morning which is obviously a bullish sign…LVN is currently up 11cents at $2.06…John updates the LVN chart below…
Silver Quest Resources (SQI, TSX-V) is one of our favorites for this new market uptrend…not only does the company hold a valuable 25% interest in the northern portion of New Gold’s (NGD, TSX) Blackwater deposit, but it’s very active in the White Gold District where it has just increased its exploration budget for this summer to $7 million…SQI should be one of the go-to plays on the Venture over the next couple of months at least…it’s currently up a penny to $1.12 after backing off from a high of $1.18…Kaminak Gold (KAM, TSX-V) is looking very strong, down 3 pennies at the moment to $4.47, while Golden Predator (GPD, TSX-V) has broken above its 50 and 100-day moving averages (SMA) and appears to be gaining momentum…GPD is up 4 pennies at $1.04…Visible Gold Mines (VGD, TSX-V) has major upside potential with its Joutel Project in northwest Quebec (there are several former significant Gold and copper mines in the immediate area where VGD will be drilling) and of course the company is also aggressively drilling a 20-km long stretch of the Cadillac Trend west of Rouyn-Noranda including claims that are within 1500-2000 metres of Richmont’s Wasamac deposit…VGD is currently up 2 pennies at 30.5 cents…
Gold has traded in a range of $1,540 to $1,556 so far today…as of 8:00 am Pacific, the yellow metal is off $3 an ounce at $1,551…Silver has dropped 31 cents to 35.44…Crude Oil is is essentially unchanged at $95.13 while the U.S. Dollar Index, which has touched its highest level in more than three months, is now up just slightly at 76.07 after gaining as much as three-quarters of a point earlier in the morning…Gold priced in euros has hit a record high as fears Europe’s debt crisis could spread despite European Union officials’ pledges to help heavily indebted euro zone members…euro zone finance ministers promised cheaper loans, longer maturities and a more flexible rescue fund yesterday to help Greece and other EU debtors in a bid to stop financial contagion engulfing Italy and Spain…Italy’s borrowing costs came off a euro-era high this morning after a relatively successful debt auction in Rome…however, markets are fearing that Italy, the fourth largest economy in Europe with a debt of about 125% of GDP, will be drawn into the sovereign debt crisis…Italian Prime Minister Silvio Berlusconi didn’t help matters after an apparent falling out with his fiscally conservative finance minister, Giulio Tremonti, who has skillfully kept Italy out of trouble in the bond market despite the country’s high debt levels and sluggish growth…the controversial Berlusconi was quoted in an Italian newspaper as saying Tremonti was not a “team player”, only “spoke to markets”, and “thinks he is a genius and thinks everyone else is a cretin”…sounds like Italy has its own version of Jean Chretien and Paul Martin…anyway, not to underestimate the debt problems in Europe, but commodities are showing surprising resilience in the face of a toxic mix of worries about global growth and debt concerns…Copper, for example, continues to hold up very well and you won’t see that headline in the mainstream media…it’s trading up 3 cents at $4.35 a pound this morning…the Copper chart is bullish as John has pointed out and this metal is such a powerful leading indicator…China’s Copper imports rose 9.9% last month, snapping two months of losses…Crude Oil is certainly not collapsing and the Canadian Dollar is holding strong, just above its rising 100-day moving average (SMA) as measured against the greenback, despite the resource-heavy Canadian economy…market weakness yesterday allowed the fearmongers to come out in droves, though a pullback was really not surprising given the 6% jump in the Dow in three weeks and a 4% jump in the CDNX last week alone…Richard Young’s Intelligence Report stated yesterday, “”Twice in just 10 years, investors have been badly burned by excessive stock market valuations, and it’s about to happen AGAIN…this time it’s going to really hurt…you, and millions of other investors, are about to be blindsided by a falling market that will pull the rug out from under you…we’re going to see just how fast stocks can fall without the support of QE2″…well, there are many Richard Youngs out there who want us to cower in fear…the CDNX has proven over the years to be an extremely reliable leading indicator and it remains in a long-term bull market, as John’s latest chart has shown, which is a positive sign for equity markets in general, commodities and the global economy…below is also an interesting chart from www.usfunds.com which shows where the broad market is at on the “negativity pendulum” (it has quite possibly swung too far)…
After a 40-point loss yesterday, the CDNX is off another 12 points as of 8:00 am Pacific at 1933, just a couple of points below its rising 10-day moving average (SMA)…the 20-day SMA provides additional support at 1918…individual situations to keep an eye on…Currie Rose Resources (CUI, TSX-V) is trading at 17 cents, just 1 penny above its supporting and rising 300-day SMA…drilling is ongoing at CUI’s Mabale Hills Project in Tanzania and each of the company’s three main properties there has the potential to produce some stellar results…Adventure Gold (AGE, TSX-V) got smacked down to 54 cents yesterday, just above its supporting 200-day SMA…AGE is one of the top plays along the Cadillac Trend in our view and we are particularly excited about the company’s Pascalis-Colombiere Gold Property near Val d’Or which is an attractive emerging deposit…we’ll have more on Pascalis-Colombiere in the near future…Visible Gold Mines (VGD, TSX-V) has the potential for a powerful summer with drilling beginning shortly on its Joutel Project and drilling continuing on its large Cadillac/Lucky Break land package west of Rouyn-Noranda…with about 30,000 metres of drilling over the final six months of this year, it’s hard to imagine VGD not hitting something significant in northwest Quebec given the quality of its geological team…GoldQuest Mining (GQC, TSX-V) has a superb portfolio of projects in the Dominican Republic and Spain and is trading right around support at 19 cents…of course we’re bullish on some of the Yukon plays…Silver Quest Resources (SQI, TSX-V), which also has an interest in the northern portion of the Blackwater deposit in central British Columbia, is up a penny at $1.12 this morning…Kaminak Gold (KAM, TSX-V) dropped as low as $4.06 yesterday before rallying to finish the day at $4.30…it’s off 6 cents currently at $4.24…Golden Predator (GPD, TSX-V) is down 3 pennies at 95 cents…Ethos Capital (ECC, TSX-V) is up 2 cents at $1.23…ECC is exploring aggressively and holds over 100,000 hectares in the White Gold District…Richmont Mines (RIC, TSX) got a nice plug on BNN this morning and has jumped 37 cents to $7.37 after a ridiculous drop of 45 cents yesterday…we’ve been screaming from the rooftop with regard to Richmont lately…perhaps the market will finally awaken to this play when the company’s second quarter earnings come out next month…RIC in our estimation is trading at less than 10 times projected 2011 earnings and the company’s Gold production is expected to jump by 40% next year and could triple within three years – tuck RIC away for the long-term, you’ll be glad you did…Gold Bullion Development (GBB, TSX-V) continues to be one of our favorites…a 43-101 resource estimate on Granada and the spin-off of the Castle Silver Mine Property are major developments to watch out for this summer in addition of course to continued results from the LONG Bars Zone…John’s chart shows strong support at the Fibonacci 38.2% level at 42 cents which is also two pennies above the supporting 500-day moving average (SMA)…GBB is currently unchanged at 43.5 cents…
Drilling along the Nadaleen Trend (ATAC's Osiris discovery), a 25-km long belt in the central Yukon.
Gold has started the new week on a positive note…as of 7:50 am Pacific, the yellow metal is up $6 an ounce at $1,550 despite a stronger greenback…Silver is 67 cents lower at $36.04…Crude Oil has softened to $95.42 while the U.S. Dollar Index has gained three-quarters of a point to 76.08…Republicans appear to have given up hope of striking a large debt reduction deal with Democrats due to concerns about the rift between the two U.S. parties…House Speaker John Boehner announced over the weekend he was lowering his expectations about the size of the deficit reduction package that Congress would be able to pass due to Democrats’ insistence on revenue increases through tax hikes for the “wealthiest” of Americans…the American government doesn’t have a revenue problem – it has a spending problem, and starving this money-sucking monster is the only strategy that will bring sanity and fiscal discipline back to Washington…the debt talks continue with President Obama holding a news conference this morning…a scaled-down deal on the debt issue should be bullish for Gold…it appears Americans won’t be able to properly address their financial mess until after the 2012 elections…China released data over the weekend showing its Consumer Price Index (CPI) accelerated to 6.4% for June, putting inflation at a three-year high in that country…the June number was slightly above expectations and considerably higher than May’s 5.5% rate…the PBOC jacked up rates by 25 basis points last week for a fifth time since October 2010 in a bid to tame the country’s stubbornly high inflation…most analysts, however, believe inflation has peaked for the time being in China and that authorities there will be able to negotiate a “soft landing” for the world’s second largest economy…investors need to cut out the daily noise from CNN and CNBC and focus on the big picture which is the fact that the growth story continues in the emerging markets…one of our favorite analysts with regard to that is Frank Holmes of U.S. Global Investors…readers should bookmark his site (www.usfunds.com) and check it out on a regular basis…India’s largest Gold bullion supplier and the biggest trading arm of the government, MMTC Limited, expects to import around 275 tonnes of Gold in 2011-12…this is compared to the 245 tonnes that it imported a year ago…Silver imports are expected to jump by around 30% to 1,200+ tonnes during the same period…MMTC plans to increase its jewelry outlets from 15 to 55 by the end of 2012…the company also aims to increase its jewelry franchise base from 75 at present to 200 by the end of next year…strong physical demand for Gold in emerging markets and in parts of the Middle East are helping to underpin prices…the CDNX gained 81 points or 4.25% last week, and a close examination of the Venture’s 3-year weekly chart speaks volumes about where this market is likely headed over the final half of the year…the Index appears to be in the beginning stages of a very bullish move with John’s Fibonacci target – no timeline given – being 2853…we suggest readers check out our alert posted Saturday morning but for the benefit of those who haven’t yet viewed this chart, here it is again…
As of 7:50 am Pacific, the CDNX is down 20 points at 1965 in sympathy with the broader markets but that’s normal trading behavior within the context of the bullish new phase we believe is underway and will gather steam as the summer progresses…we view any weakness in the CDNX at the moment as an opportunity to accumulate quality plays…the picture in the top left corner of our post this morning is from one of our geological contacts in the Yukon…a summer of strong exploration results out of the Yukon would certainly provide some high-octane fuel for the CDNX…ATAC Resources (ATC, TSX-V), searching for a Carlin-scale discovery, and Kaminak Gold (KAM, TSX-V) are two of the leaders who have already come out with encouraging results recently…ATAC, which already has a healthy market cap of nearly $850 million, has to meet high expectations but we wouldn’t want to bet against that happening…ATC is challenging its November 2010 all-time high of $9 per share…technically, it’s overbought at the moment based on various indicators including RSI(14)…that doesn’t mean it can’t become even more overbought in the immediate future but at some point soon it may need to pause and catch its breath…ATC is currently up a penny at $8.71…Kaminak, after breaking through resistance at $4 last week, is looking very strong technically as John detailed…$4 should now be the new support for KAM which is off a penny at the moment at $4.17…Silver Quest Resources (SQI, TSX-V) has increased its 2011 field season exploration budget for its properties in the White Gold District to $7-million…the budget increase will expand the company’s previously announced exploration programs which include soil sampling, geological mapping, airborne geophysical surveying and diamond drilling…we see a lot of value in Silver Quest which of course holds a 25% interest in the northern portion of New Gold Inc.’s (NGD, TSX) very attractive Blackwater deposit in central British Columbia…SQI is currently unchanged at $1.12…from one part of the country to another, we’re of course keeping a close eye on our favorite area – northwest Quebec where we expect things will heat up on several fronts over the summer…Richmont Mines (RIC, TSX), developing its growing Wasamac deposit 15 kilometres west of Rouyn-Noranda, should be reporting its second quarter earnings (ending June 30) in about a month or so and our expectation is that they could come in at better than 20 cents per share given a likely increase of about 15% in Gold production and higher Gold prices during Q2…Richmont is a classic example of how Gold stocks are about the cheapest they’ve been relative to Gold in the last 30 years (the cheapest point obviously having been during the Market Crash of 2008)…Richmont has no debt, $50 million in cash, a rapidly growing production profile thanks to 100,000 metres of drilling this year, and it’s currently trading at likely no more than 10 times potential 2011 earnings…RIC is up 3 cents at $7.46, giving it a market cap of only $236 million…Visible Gold Mines (VGD, TSX-V), which is sniffing around the very interesting Wasamac deposit, came to life last week as it gained 9 cents to close at 31.5 cents…a geologist from another company we spoke to Friday stated Joutel is a “fabulous” project for VGD…Visible Gold Mines is preparing to launch a major drill campaign for Joutel which gave birth to Agnico-Eagle in the early 1970’s…the Eagle, Eagle West and Telbel Mines combined to produce over a million ounces of Gold…the property runs 25 kilometres from west to east and parts of Joutel, in particular the eastern leg of the property, offer the potential of satellite deposits similar to what Agnico-Eagle mined for 20 years…VGD is unchanged at 32 cents…Gold Bullion Development (GBB, TSX-V) has weakened slightly this morning, down 3 pennies to 43 cents…technically, GBB is trading in an area of strong support at the moment that includes the rising 500-day moving average (SMA) at 40 cents…Seafield Resources (SFF, TSX-V) continues to look strong…volume in SFF has really kicked into high gear since early June and the stock is now threatening to push through resistance in the mid-30’s…it’s currently up a penny at 33.5 cents on CDNX volume of nearly 900,000 shares…volume is such a key indicator, so the spike in volume over the last month in Seafield is certainly an encouraging sign…last week the company announced it has hired SRK Consulting to conduct a scoping study on Miraflores which forms just part of Seafield’s attractive land package in the Quinchia district of Colombia…we consider the company’s “blue sky” property there to be Dos Quebradas and more results are pending from there…
Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines has turned the corner and advanced strongly last week on the best volume in over 2 months…the stock gained 9 cents or 40% to finish Friday at 31.5 cents, the highest closing price since May 6…as John’s 1-year weekly chart showed Thursday, the stock had become extremely technically oversold through May and June – the exact opposite of the overbought conditions last fall when it climbed as high as 70 cents…this is more than just a “rebound” in our view, however…we added VGD to the BMR model portfolio a few months ago when it was trading around 40 cents in part because of the quality of this company’s projects, its aggressive approach to exploration, and the team of people it has on the ground and in the front office…VGD is in the process of drilling 40,000 meters in one of the best places in the world for mining and exploration – northwest Quebec – and the company’s senior geologist is Robert Sansfacon who’s a genius at understanding structure…he honed his skills for many years in the exploration division of Lac Minerals and was involved in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit, now the largest Gold mine in the country…Sansfacon is determined to make a discovery for VGD and if anyone can, it’s him…he sees great potential with the company’s projects along a 2o+ kilometre stretch of the Cadillac Break west of Rouyn-Noranda, where drilling continues, but he’s particularly anxious to start drilling the Joutel Project 150 kilometres to the north…Joutel is a joint venture between VGD and Agnico-Eagle Mines (AEM, TSX) with VGD acting as the operator…several high priority drill targets are being finalized, work begins on the ground shortly and the property will be drilled aggressively through the balance of the year…a geologist from another company we spoke to recently called this a “fabulous” project…Joutel is a significant former producer that Agnico-Eagle mined from three zones between 1974 and 1993…the operation was closed prematurely as AEM turned its attention to its huge LaRonde Mine…the theory is that there are additional potential undiscovered deposits on this 500+ claim land package, and the area we believe VGD will be targeting initially is the eastern portion of Joutel which has not been fully explored…Joutel is a geologist’s dream with a great story…”When we picked up all the Joutel boxes and maps from the Agnico-Eagle exploration offices, it took us two pick-up trucks for all the data,” VGD President and CEO Martin Dallaire told us in a recent interview…”We were flooded with data but we love it because we have the capacity to analyze all of it and bring some fresh ideas to the project…the trend is very large and there’s a lot of potential for many new mines in the area”…Dallaire, an engineer and entrepreneur from Rouyn-Noranda, understands the mining industry and what an exploration company needs to do to succeed and build shareholder value…he’s fluently bilingual, presents himself extremely well and knows how to run a business and make money…he thinks big but is focused…he has also recruited some key people including Sansfacon…in short, Dallaire has put something together you don’t often see in the junior speculative market – a powerful dynamic of business, geological and marketing expertise with a strategic plan to rapidly build value…the company’s niche and sole geological focus is northwestern Quebec where it has acquired several promising land packages, mostly west and north of Rouyn-Noranda…Dallaire is taking an aggressive approach to exploration and he’s targeting under-explored areas and past producing mines where major new extensions are possible…armed with $6.5 million in the bank, Visible Gold Mines is well positioned to make things happen in northwest Quebec…
Cadillac Mining (CQX, TSX-V)
Cadillac firmed up last week, closing Friday just below resistance at 14.5 cents…the stock was up 4.5 cents for the week and on an uptick in volume…this continues to be a company with tremendous potential given its property packages but we don’t see a game plan yet for moving Cadillac forward in an effective and sustainable manner…we are frustrated but remain patient for now because the possibilities with CQX are still incredible, especially considering the current market cap which is just $4 million…not often does a company get the kind of opportunity that Cadillac was handed (and still has)…CQX holds a 100% interest in a very strategic piece of property that adjoins Richmont Mines‘ (RIC, TSX) Wasamac deposit, 15 kilometres west of Rouyn-Noranda…the principal Gold structure hosting mineralization at Wasamac dips northerly onto the seven claims held by Cadillac…Richmont started drilling Wasamac a year ago and steadily ramped up its drilling due to excellent results…in February of this year, Richmont reported a nearly five-fold increase in all-category 43-101 resources (from 285,000 to 1.4 million ounces) at Wasamac…as a result RIC has been one of the best performing Gold stocks on the TSX this year…BMR brought the Wasamac situation to the attention of its readers in December…investors got excited about the story and the potential of Cadillac’s “Wasa” claims…the stock ran to 50 cents by early January and the market was clearly eager to see Cadillac pursue this project as quickly as possible…management’s delay in doing so has been frustrating and has led to a substantial drop in CQX’s share value…the company is also cash poor and needs to raise some money…we give CQX credit for securing an excellent project (Goldstrike) in Utah on fabulous terms but several million dollars is going to be required to tackle Goldstrike in the right way…the best solution in our view is for Cadillac to cut a deal with another company for exploration at Wasamac and the natural partner for that appears to be Visible Gold Mines (VGD, TSX-V) which last December entered into a JV with CQX on its other Rouyn-Noranda area properties…VGD has all the money and expertise necessary to unlock the value of Cadillac’s Wasa claims…Cadillac could let others do the heavy lifting at Wasa and then focus its energies on developing the Goldstrike Project…talk is cheap – the onus right now is on Cadillac to show investors that it can “walk the walk” and make things happen, however they decide to proceed…
Abcourt Mines (ABI, TSX-V)
Abcourt gained 2 pennies last week to close at 13 cents, putting it above its 50-day moving average (SMA) for the first time since early April…in addition the 20-day SMA has reversed to the upside after being in decline through all of May and June…so there are certainly some encouraging technical signs with ABI which gives us hope that resistance at 13 cents may soon be overcome…Abcourt has traded in a narrow range between 10.5 and 13 cents over the last 43 sessions…the stock, which now has 149 million shares outstanding for a market cap of $19.5 million, is ripe for a takeover given the value of its assets and management’s apparent inability to unlock that value which is why we still view this company with considerable interest…ABI’s decline from a 52-week high of 25.5 cents in late March was brought on by the closing of a financing (35 million units at 18 cents), a sharp drop in Silver, overall CDNX weakness, and selling by MineralFields Group…ABI’s 100 and 200-day moving averages are declining and will provide significant resistance between 15 and 16 cents…it’s going to take some substantial news or bullish new overall market sentiment to drive ABI through that level in the immediate future, so investor patience will be required…the company released more results from its Abcourt-Barvue Silver-Zinc Property June 13 including 20 metres grading 108.33 g/t Ag and 1.49% Zn in hole #31…drill results to date should significantly upgrade and increase all-category reserves and resources…more drilling will take place at Abcourt-Barvue later this year…the rig was just recently moved to the Vendome Gold-Silver-copper-zinc property approximately 13 kilometres south of Abcourt-Barvue…more results came out last week from the company’s Elder-Tagami Gold Property near Rouyn-Noranda including 8.50 metres grading 3.71 g/t Au…that was from the Tagami area to the north which has untapped potential including some higher grades…the latest NI-43-101 resource estimate of 216,000 ounces was released in the summer of 2009…the possibility of Abcourt expanding that resource beyond 500,000 ounces certainly exists given the encouraging results to date (look what Richmont has done at Wasamac)…the heavy accumulation that began in Abcourt in December was no fluke in our view…this is a company with significant assets that could justify a substantially higher valuation…nearly 60 million shares of ABI changed hands on the CDNX in December and January – record volume for this stock, accompanied by a price jump from 14.5 cents…while the stock price is now slightly below that level, the record volume in ABI since late last year (take a look at a 10-year chart) is still a very bullish sign…Abcourt has been under significant accumulation and our best guess is that some savvy players like the assets in the ground…continued drilling success and higher prices for Gold, Silver and zinc would be exciting developments for this stock which has a history of major moves…from mid-2005 to early 2006, Abcourt rocketed from 15 cents to nearly $1.40…
Greencastle Resources (VGN, TSX-V)
Greencastle was up a penny-and-a-half last week last week at 18.5 cents but there’s nothing to report here – just a continued waiting game…the company released its Q1 financials June 9 which show working capital of 16.4 cents per share ($7.5 million)…oil royalties have declined significantly – just $212,000 for the first three months of 2011 vs. $355,000 over the same period a year ago which underscores the need for VGN to make some major changes as Primate just isn’t the cash cow it used to be…the fact Tony Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…Roodenburg had been trying to ease his way out of Seafield since 2009 without much success until a couple of months ago…he’s now able to focus almost exclusively on Greencastle which has been a favorite project of his for many years…we suspect he’s going to take a serious look at spinning out the oil assets or the Gold assets into a separate company…something needs to happen here to move VGN forward and boost shareholder value, but we’re confident Roodenburg will do it – eventually…Greencastle’s market cap of $8.4 million means the stock is now trading just 2 cents above its cash value…history shows that whenever VGN is near cash value, a terrific buying opportunity has opened up though investors must be patient…Greencastle tripled 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 definitely required with VGN or one shouldn’t invest in it…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 $7.5 million in working capital, three Gold properties (including land near the Blackwater Project) and monthly (albeit declining) cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that Greencastle does offer excellent value at current levels…the long-term chart remains encouraging with rising 200 and 300-day SMA’s that are in no danger of reversing at the moment (the 200-day could start declining however if something doesn’t develop by the end of August)…it’s also important to note that Roodenburg, a large shareholder in VGN, refrained from selling any of his holdings during the late 2010 run-up in the share price…this is different from past bullish in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle – it’s poised for what we believe could be a massive breakout sometime during the last half of this year…Pinetree Capital also accumulated more shares in Greencastle late last year, so there’s every reason to be very optimistic regarding this company’s prospects…Greencastle is up 25% since we added it back in to the BMR model portfolio last October…
Sidon International (SD, TSX-V)
Still very quiet on the Sidon front though the stock closed up a penny last week at 4 cents…the company hasn’t been able to recover yet from its fall in March, one day after the CDNX correction began, on poor drill results from its Morogoro East Gold Property in Tanzani…there has been no news from the company since March 14 – they effectively “sat out” the correction in the CDNX – when it announced a proposed private placement at 8 cents and an option to acquire an 80% interest in a 50-square kilometre property adjacent to Canaco’s (CAN, TSX-V) Handeni discovery in Tanzania…the 6 shallow holes drilled in December at Morogoro East failed to produce significant results, the best hole showing 3 metres grading 1.7 g/t Au…the company has drilled 4 deeper holes with results for those still pending…what the initial 6 holes have given Sidon, however, is a better understanding of the Morogoro geological structure which will aid in any future drilling…exploration, especially at such an early stage, is never easy and disappointing early results don’t necessarily mean a property doesn’t hold excellent potential…the company is also trying to develop a placer operation at Morogoro…there is certainly the possibility of better days ahead for Sidon but the lack of news is not encouraging…the climb back up won’t be easy and the company potentially may have to look at a consolidation of its capital…Sidon ran as high as 26.5 cents last winter but is now off a penny since we introduced it to BMR readers just over a year ago at a nickel…the company currently has approximately 140 million shares outstanding for a market cap of $7 million…
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We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now. While we focus a lot on the Gold market and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on small and undiscovered junior resource companies, mostly in the Gold exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity. However, investors must understand that these are still highly speculative situations. Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. Please read our disclaimer at the bottom.
We use a combination of fundamental and technical factors in determining the value and potential of a stock. In terms of fundamentals we look for a company with a superb project supported by strong management. Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.
At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it – there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with. By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely in order to make it work for us. If it’s the other way around – if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly – you’re in trouble and you’ll never be blessed financially. We have a God who thinks big – He created the universe – and He wants us to think big in every area of our lives. When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible. This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life. It is the most important decision you’ll ever make.
God Bless,
Terry Dyer
Owner/Publisher, www.BullMarketRun.com
Disclaimer:
BullMarketRun.com (BMR) is completely independent from any companies it covers. BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site. We accept no advertising either. Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time. Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.
Gold Bullion Development (GBB, TSX-V)
It was a good week for GBB as the stock climbed 8.5 cents to close Friday at 46 cents…significantly, perhaps, GBB closed above its still-declining 100-day moving average (SMA) for the first time since the mid-February collapse…the last several months, however, can be viewed as a period of “range trading” or see-saw action between support at the 500-day SMA (just below 40 cents) and resistance at the 300-day SMA in the mid-50’s…GBB will officially have broken out if and when it blasts through the mid-50’s…our expectation is that the 100-day will reverse by early next month and that will signal a new wave to the upside…higher lows and higher highs on the RSI(14) since April is encouraging…GBB’s initial 43-101 resource estimate for the LONG Bars Zone, expected during the third quarter, should re-energize this play…the market is a forward-looking machine and those who follow GBB won’t be waiting until after the 43-101 comes out before getting positioned appropriately in the stock…the company’s current market cap of $77 million puts a value of just $26 an ounce on Gold in the ground at Granada if one were to assume the 43-101 will outline approximately 3 million ounces in the measured, indicated and inferred categories…that’s just a hypothetical number on our part at the moment but whatever number GENIVAR comes up with, we believe it should exceed the 2.4 to 2.6 million ounce conceptual figure that Gold Bullion gave in April of last year…based on all the drill results to date, this appears to be shaping up as a half-gram deposit with a higher grade starter pit and massive volume…it’s all about volume at Granada which is why the drills have to keep turning and why we want to see more than just two rigs in the LONG Bars Zone which has such incredible potential…Gold Bullion released fresh drill results from Granada May 12 which were consistent with previous numbers…hole #173 was the star of the batch of 25 holes…it provided additional evidence that the north and northeastern parts of the Eastern Extension are highly intriguing…#173 cut 80 metres grading 1.36 g/t Au within a total intersection of 363 metres of 0.35 g/t Au…a 1-metre section of high-grade (89.83 g/t Au) was hit near the bottom of the hole below 300 metres…#173 was collared approximately 115 metres northeast of #55 and 100 metres east-northeast of #108, two stellar holes released last fall…this is critical – assays are still pending on 9 holes (165, 168, 178, 183, 241, 243, 246, 254, and 257) north of #55 drilled over an east-west distance of about 250 metres and a north-south distance of 200 metres…results from those nine holes will go a long way toward confirming just how prospective these parts of the Eastern Extension are…#241 is the most northerly of those holes…meanwhile, hole #200 in the southeast portion of the Eastern Extension (northeast of discovery hole #86) returned an impressive interval of 48.50 metres grading 1.68 g/t Au within a total intersection of 210.5 metres of 0.44 g/t Au…results from the second most northerly hole drilled north of the Preliminary Block Model suggest more drilling is definitely required in that area…hole #31 hit a modest 18.5 meters grading 0.64 g/t Au close to surface (36 to 54.15 metres) and another 28 metres grading 0.59 g/t Au between a depth of 125 to 153 metres…where’s there’s smoke, there’s fire, and our theory is that there could be a significant trail of mineralization running north of the Preliminary Block Model and connecting with what has been discovered over the northern part of the Eastern Extension…six more holes (213, 214, 215, 217, 221 and 224 and 224) from the southwest portion of the Preliminary Block Model returned mixed results – we were hoping to see a couple of exciting holes from that area but that hasn’t materialized yet…overall, Gold Bullion continues to hit long intersections of lower grade mineralization over a wide area at Granada…this is a massive project with much more drilling required but the multi-million ounce model that Frank Basa has in mind remains intact…drilling is also underway in LONG Bars Zone 2 near the old Aukeko Property (2 kilometres east of Phase 1 discovery hole #17) and if Gold Bullion is able to connect these two zones, look out…GENIVAR’s Nicole Rioux, the head geologist for Granada, is genuinely excited about the Aukeko area and she is normally quite conservative in sizing things up…a couple of excellent results from this area could really ignite this play and based on all the historical information we have reviewed from “LONG Bars Zone 2″, the chances of a “hit” in this area have to be considered very good…the company provided an update on its Castle Silver Mine Project June 8…the 6,000 metre Phase 1 drill program is nearing completion and a strong new vein structure was intersected at the first IP target…a 43-101 technical report on the property has also been released…assay results from the 10 holes drilled so far are still pending…GBB plans to spin-off this asset into a separate publicly traded entity…GBB is up 557% since we introduced it to BMR readers in late December, 2009…
Currie Rose Resources (CUI, TSX-V)
The Currie Rose drill is turning in Tanzania, so a summer of interesting action in CUI can be expected…the stock gained a penny-and-a-half last week to 18 cents and got as high as 19.5 cents last Tuesday when news hit the wire that the company has already completed 3 holes at one of its Mabale Hills projects (Sisu River)…CUI‘s first-ever drill program at Sisu River late last year gave reason for encouragement but this time around the plan is to push the holes a little deeper (150 metres or more) in hopes of cutting wider intersections and higher grade…reading between the lines of last Tuesday’s news release, it’s possible the geologists liked what they saw in the first three holes as 506 samples were delivered to a nearby lab for assaying and drilling continued…after more holes are completed at Sisu River, the rig will move about 6 kilometres to the southwest to test targets at Mwamazengo…geochemical analysis has outlined a continuous anomaly over a few hundred metres that runs parallel to the west of a previously reported discovery at Mwamazengo where drill results included notable high-grade intercepts such as 34 metres grading 3.60 grams per tonne gold, 12 metres grading 9.11 g/t Au, 63 metres grading 2.59 g/t Au and 31 metres grading 5.97 g/t Au…Dhahabu, another promising target at Mabale Hills, will be tested in the near future as well…we’re most excited, however, about the Sekenke Project which has “blue sky” written all over it…Sekenke is why we decided to start following CUI when it was trading around a dime last fall…results from satellite imagery provide additional evidence that Sekenke is a highly intriguing geological target and part of the same northwest trending structure that hosts Canaco’s (CAN, TSX-V) Handeni Project…satellite imagery has also shown that the structures at Sekenke are coincident with a strong alteration envelope…what’s unique about this project is that it surrounds and runs in between two former high grade Gold mines including Tanzania’s original producer…this greatly increases the chances of a discovery as it’s unlikely the former mines were fully exploited or explored as techniques a century ago in this industry obviously weren’t what they are today…CUI has a terrific chance to hit it big at Sekenke and we also wouldn’t be surprised if the company takes a shot at acquiring the former Sekenke Mine…that’s speculation on our part but it makes sense from a strategic point of view…pre-drilling exploration work continues at Sekenke to pinpoint the best targets…technically, the stock’s rising 300-day moving average (SMA), currently at 16 cents, has provided rock-solid support throughout the year…CUI’s chart is quite favorable in our view and suggests a breakout above resistance in the low 20′s is only a question of when, not if…the 100-day SMA has flattened out since late May and the sure sign of a major reversal is when this turns decisively to the upside…while its Tanzanian properties are the market’s major focus, Currie Rose could also benefit over the summer from continued good exploration news out of Trueclaim Exploration (TRM, TSX-V) which is currently conducting an 8,000 metre drill program at the Scadding Gold Property near Sudbury…Trueclaim, which continues to release encouraging assay results, has earned a 51% interest in Scadding and can acquire a full 100% interest by completing a feasibility study, paying $2 million to Currie Rose, and giving Currie Rose a 3% net smelter royalty…CUI announced a joint-venture deal January 25 with Australian-based Liontown Resources for Currie’s Jubilee Reef Gold Project in Tanzania…CUI’s focus is on the Sekenke and Mabale Hills Projects, so finding a partner for Jubilee Reef made sense…the deal commits Liontown to at least 5,000 metres of drilling at the property this year which will give Currie Rose a minimum of 23,000 metres of drilling at all of its properties in 2011…while Currie Rose has had its market cap shaved by more than half, from a high of nearly $40 million late last year to the current $16 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as ever…Currie Rose has all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) in Tanzania this summer, so there will not be any dilution of the stock at current levels as confirmed by President and CEO Harold Smith…
Adventure Gold (AGE, TSX-V)
Adventure Gold remains one of our favorites this summer with several exciting projects on the go…chances are that at least one of those projects will “hit” and our prediction is that it will be the Pascalis-Colombiere Gold Property near Val d’Or…AGE was unchanged last week at 60 cents where there is obviously some minor resistance…we recently interviewed President and CEO Marco Gagnon and we’re continuing to perform some additional research on AGE in advance of some postings in the near future…Gagnon is a sharp operator who knows how to maximize every dollar spent…he also has the strong backing of Montreal investment firm Windermere Capital which holds just under 20% of AGE as disclosed January 21…the company has five active key projects, two of which are in the hands of joint venture partners Lake Shore Gold (LSG, TSX) and Agnico-Eagle Mines (AEM, TSX)…AGE is currently drilling its very promising Pascalis-Colombiere Property and its Lapaska Property as well, both near Val d’Or…the Granada Extension Property will be worked on later this year…on June 16, Adventure Gold gave the market a pleasant surprise when it reported results from the first 2 holes of a drill program at Lapaska…AGE is the operator of this project which Mazarro Resources (MZO, TSX-V) can earn a 70% interest in (30% to AGE) under which we consider to be quite favorable terms for Adventure Gold…the Lapaska Property is located along the Cadillac-Larder Lake Gold Break and the first holes returned solid results at shallow depths…LP-11-16 cut an interval of 1 g/t Au over 103.4 metres (from 45.3 to 148.7 metres), including 10.3 g/t Au over 3.8 metres, while LP-11-17 returned 1.2 g/t Au over a 156.9-metre interval (25.2 to 182.1 metres)…LP-11-16 included a Gold halo of 564.1 metres grading 0.3 g/t while LP-11-17 featured a Gold halo of 245.5 metres grading 0.8 g/t, providing evidence of a potentially strong Gold system…both holes were drilled perpendicular to the strike of the vein system in the Lapaska Central zone and are therefore close to true thickness…this will be interesting to watch and the market will be eagerly awaiting additional results to size up the potential of this play…at the end of May the company reported significant news regarding Pascalis-Colombiere…AGE is in the middle of a 5,000 metre Phase 2 drill program at the property after releasing more highly encouraging drill results including 4.8 g/t Au over 33.1 metres in hole #20 (plus lower grade halos over significant widths)…the intent of this program is to further define the Gold system, leading to a resource calculation which is already being worked on…Pascalis-Colombiere encompasses the past producing L.C. Beliveau Mine (Richmont’s Beaufor Mine is just a few kilomeres away)…we found a comment from Gagnon in the June 2 news release quite interesting…“Following positive drill results and the permitting process, an open-pit or an underground operation could be producing in the near future“…we believe Richmont Mines (RIC, TSX) may have interest in this project…earlier this year we met with AGE’s Jules Riopel, VP Exploration, regarding the company’s strong portfolio of properties…he was very keen at that time on Pascalis-Colombiere and given the drill results, his bullishness on this property appears to have been justified…the former L.C. Beliveau Mine was a very profitable operation between 1989 and 1993, producing nearly 170,000 ounces of Gold for Cambior…we believe a lot of Gold was overlooked in that area…meanwhile, Agnico-Eagle has likely ompleted its 4,000 metre drill program at AGE’s Dubuisson Property near Val d’or…Dubuisson is contiguous to the Goldex mine property and also straddles a 5-kilometre segment of the prolific Cadillac-Larder Lake Gold break…also of immediate interest is AGE’s partnership with Lake Shore Gold 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 has reached a core length of 2500 metres with another 500 metres to go…if a discovery is made, AGE will instantly explode higher…AGE’s latest financials, released April 1, show the company with $3 million in working capital at the end of January…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…AGE is clearly a keeper for the long haul and we wouldn’t be surprised to see a major breakout in this play over the summer…
GoldQuest Mining (GQX, TSX-V)
GoldQuest was off a penny-and-a-half for the week, closing at 19.5 cents on a substantial pick-up in volume which was interesting…the 300-day moving average (SMA), which continues to rise which is a good sign, has been providing resistance for the past few months (currently it’s at 25 cents) while support for the stock has held just below the rising 500-day SMA at 20 cents…there’s no question in our view that GQC presents a great opportunity for patient and long-term investors…Chairman Bill Fisher certainly saw a deal he couldn’t refuse – he recently picked up 211,000 shares in the open market between 18 and 20.5 cents according to insider trading reports…GQC’s prospects remain solid as the company has an outstanding portfolio of projects in the Dominican Republic and Spain…the substantial drop in the share price from a high of 48.5 cents in early February was due to general market weakness and selling from speculators whose expectations may have been too high regarding initial drill results from the company’s La Escandalosa Project in the Dominican Republic…in addition, the company has stopped all drilling in the DR for the time being in order to conduct extensive IP surveys over Escandalosa and other properties…overall assay results from Escandalosa were decent though far from spectacular…the final set of assays for 7 holes came out May 16…the best intersection from Escandalosa Sur, where an initial 43-101 inferred resource of 400,000 ounces was outlined last fall, was 20 meters grading 1.32 g/t Au…results from this area overall (21 holes) were somewhat disappointing though more drilling is required and will take place later this year…however, the company drilled three holes at the Hondo Valle target 1.6 kilometres to the north (outside the resource area) and all three intersected significant mineralization including 29 metres grading 2.18 g/t Au in hole #65…that’s the thickest and highest grade mineralized section drilled to date at Hondo Valle…the theory is that mineralization trends north from Escandalosa Sur to Hondo Valle…GoldQuest is now carrying out a 16-square kilometre IP survey and magnetic ground geophysical survey from 2 kilometres north of Hondo Valle to 2.2 kilometres south of Escandalosa Sur…this should be completed by the end of this month and GQC will then use the data to pinpoint key targets for an additional 3,000 metres of drilling…GoldQuest also has other promising projects in the DR (in particular, Loma Oculta – formerly Las Animas – where an exploration program aimed at identifying new drill targets is now underway) in addition to its lead-zinc-silver deposit in Spain…GoldQuest’s potential has not diminished whatsoever yet the share price has dropped by about 60% from its early February high…the company released a 43-101 resource estimate March 2 on its Toral zinc-lead-Silver deposit in Spain…it showed slightly lower grades but much higher overall tonnage than the previous historical non-compliant estimate…as a result, total resources came out 15% higher…resources in the indicated category are 4.04 million tonnes grading 11.8% lead and zinc (5.3% lead, 6.5% zinc) as well as 41 g/t Ag and 0.11% Cu… inferred resources are 4.67 million tonnes grading 9.8% lead and zinc (4.44% lead, 5.4% zinc), 32 g/t Ag and 0.14 Cu…Toral has significant exploration and development upside as a majority of the historical drilling (40,000+ metres) was conducted over one relatively small part of the property…the zone of sulphide mineralization is open along strike to the northwest toward a known lead deposit as well as along strike to the southeast and downdip…the project is also an ideal candidate for a fast-track to production…the deposit is close to a power line, highway and rail line…a large smelter is located just 300 kilometers away by rail…GQC is unchanged from when we introduced it to BMR readers last fall…
Seafield Resources (SFF, TSX-V)
Seafield has certainly been churning out the volume recently and the stock is definitely looking stronger and quite bullish from a technical point of view…the 200-day moving average (SMA) at 35 cents continues to provide resistance while there is plenty of support in the upper 20’s at the 50-day SMA which has just started to reverse to the upside, a very positive sign…SFF closed Friday at 32.5 cents, a gain of a penny for the week…the company announced last Tuesday that it has hired SRK Consulting to complete a preliminary economic assessment or scoping level study on the Miraflores Property which is expected to be completed during the first quarter of next year…SRK will evaluate the potential positive economics of developing an open-pit and underground mining operation at Miraflores…it will also provide recommendations to advance the project to prefeasibility…Seafield announced the closing of a $3 million private placement at 30 cents May 24 with a “strategic” long-term investor and also released an updated 43-101 resource estimate for Miraflores…the project has gone from an inferred resource of 776,000 ounces (at a cut-off grade of 0.5 g/t Au) to a measured and indicated resource of 1.2 million ounces and an inferred resource of 354,000 ounces (at a cut-off grade of 0.3 g/t Au)…another round of drilling will begin shortly at Miraflores…there was big news out of Seafield May 9 with a change in management which has to be considered a bullish development…Cesar Lopez, who has a strong background in South American exploration management and development, is the company’s new Chief Executive Officer…he replaces Tony Roodenburg who remains as a director…Tom Henricksen, meanwhile, has taken over as Vice-President, Exploration, from James Pirie who also has stayed on as a director…Henricksen has over 35 years of mineral exploration experience and has spent the last 15 years on projects in South America…Seafield exploded from the low 20′s to an all-time high of 77 cents in just one day last December but then proceeded to give up all of those gains…the company’s Quinchia land package in Colombia has a great deal of untapped potential and Seafield is also sitting on nearly $20 million in cash…the company announced April 5 that drilling has commenced at Santa Sofia, about 1 kilometre north of Dos Quebradas where drilling continues…Seafield geologists have identified a promising porphyry target measuring 1,050 metres in length and 850 metres in width at Santa Sofia with soil values up to 2.3 g/t Au…on March 7, assays were reported from the first 3 holes completed at Dos Quebradas with hole #2 intersecting 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…significant intercepts well outside areas of historical drilling at Dos Quebradas would start to get the market excited…the geological case for Seafield’s Quinchia land package is compelling and we’re looking forward to more results from Dos Quebradas as well as initial assays from Santa Sofia…patient investors have an opportunity to do extremely well with this play given the geological merits of Quinchia and the real potential for 5 million+ ounces from several potential deposits…we have confidence the new management group will unlock value by bringing fresh insight and new energy to this play along with a more aggressive exploration approach…Seafield has gained 442% since we made it the first company in the BMR model portfolio in the summer of 2009…its current market cap is $54 million…
TSX Venture Exchange and Gold
The CDNX enjoyed a strong week, gaining 81 points or 4% to close at 1985. As John’s three-year weekly chart showed yesterday, the evidence in our view is irrefutable that the correction in the CDNX that began March 7 is finally over. The market bottomed at 1862 June 28, slightly below the 300-day moving average (SMA) which has also provided key support during bull markets throughout the last decade. A major pullback of more than 20% was exactly what the CDNX needed after climbing a whopping 83.5% over an eight-month period beginning in early July of last year. This correction of 24% was exactly in line with the historical average for major CDNX corrections which typically occur once a year during a bull market cycle.
How quickly the Venture wants to push forward remains to be seen – we’ll let the market give us that answer. There is obviously some technical resistance at the 2000 level, right around the declining 50-day moving average (SMA), so one possible scenario is that the CDNX could react at 2000, fall back marginally and catch its breath for a short period. Another scenario, of course, is that the Index could blast right through 2000 and then challenge the next resistance level which would be 2050. But the bottom line is this: Based on technical and historical evidence, we should see a very strong CDNX through the balance of the year with the possibility of one or two minor pullbacks (5% to 7%, for example) that would present excellent buying opportunities. A year-end close of 2400 is very realistic. Over the last decade, the CDNX has closed the year an average of nearly 30% above the low of a major correction. A 30% move from 1862 would represent a gain of 559 points by the final trading day of the year or a 2011 close of 2421. Just a prediction based on historical patterns, but those patterns do give additional credence to John’s technical analysis and his Fibonacci target for the CDNX – no timeline given – of 2853. A year-end close around 2400 would certainly set the stage for a push to the 3000 level and perhaps beyond by sometime in 2012 when the CDNX 1000-day SMA can also be expected to reverse to the upside.
The CDNX 10 and 20-day SMA’s are now pointing north and we suspect the market will really start gaining momentum once the 50-day SMA reverses which is likely to occur sometime this month. John gave us a “Big Picture” chart yesterday – this morning he provides a daily chart going back to last fall for us to examine.
Any bull market phase in the CDNX requires regular injections of fuel, the high octane variety. That should come from even higher Gold (and Silver) prices, continued strength in Copper, and fresh discoveries given the immense amount of exploration taking place in the Yukon, northern BC, Quebec, the western U.S. and elsewhere around the globe. From brokers we’ve spoken with, there’s a lot of cash sitting on the sidelines at the moment waiting to jump into this market. There should be some moderate improvement in the U.S. and global economy over the last half of the year and there seems to be a coordinated effort among major governments, led by the White House, to try to keep a lid on oil prices by bringing more supply onto the market. Wisely or unwisely, it seems strategic reserves are going to be used over the short term as an economic stimulus tool. Bernanke will try to pull another rabbit out of the hat if he has to.
Gold
Gold enjoyed a powerful week. After briefly falling below $1,500 the previous week, finding support at John’s 61.8% Fibonacci level at $1,475, the yellow metal shot up to close at $1,544 Friday thanks to a weak U.S. jobs number (more stimulus coming?) and ongoing euro zone sovereign debt concerns. Republicans and Democrats on Capital Hill are now talking about a much smaller debt deal which Gold bulls will love – there’s no question now that the U.S. deficit and debt problems won’t be properly addressed until after the 2012 elections for a variety of reasons.
Silver is looking strong once again, finishing at $36.71 Friday. Crude Oil regained some lost ground and closed at $96.20. Copper continues to look very bullish – a positive sign as it’s a leading indicator of the global economy – and is at $4.36 a pound, while the U.S. Dollar Index finished the week at 75.08.
Gold stocks are about the cheapest they’ve been relative to Gold in the last 30 years (the cheapest point of course during the Market Crash of 2008). As readers know, one of our favorite smaller producers is Richmont Mines (RIC, TSX) which at $7.43 is trading at less than 10 times anticipated 2011 earnings. The company has no debt, $50 million in cash, and a growing production profile (80,000 to 85,000 ounces this year, a 40% increase next year and a potential three-fold jump in current production within about three years if Wasamac is brought on stream as expected).
The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies and governments in general, an environment of historically low interest rates and negative real interest rates (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on. It’s hard to imagine Gold not performing well in this environment. The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.
We suggest readers check out Frank Holmes’ excellent article (“Investor Alert – Will Gold Equity Investors Strike Gold“) posted June 17 at www.usfunds.com. Holmes has one of the brightest minds in the investment industry and in that article he paints a very clear picture of how Gold mining shares present such a great opportunity at the moment for long-term investors. Some interesting facts regarding Gold from his June 24 alert include:
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