BullMarketRun.ca

The bears are about to be left in the dust yet again.

The 24% decline in the CDNX from the 2465 high March 7 to the 1862 low June 28 was exactly what this market needed – a major correction which typically occurs once a year with the Venture Exchange during a multi-year bull market cycle.  That pattern actually goes right back to the days of the CDNX‘s predecessor, the old Vancouver Stock Exchange.

And if history repeats itself and if John’s technical analysis is an accurate guide, as it so often is, we’re now in the beginning stages of a powerful new CDNX wave that’s going to bring in a lot of money that’s sitting on the sidelines at the moment.

John’s three-year weekly CDNX chart below is irrefutable evidence in our view that the corrective period that began in March is indeed over and a fresh bull phase is now underway.  John’s theoretical Fibonacci target (a potential Index level based on technical analysis)  is 2853 though the timeline for the Index hitting that possible area is uncertain.

As we’ve pointed out in recent weeks, however, a 10-year historical review of the CDNX has shown that the Index has gained an average of nearly 30% by the end of December from the low recorded during each year in which there has been a major correction.  So if we take 1866, the June 29 low, and add 30%, it’s reasonable to expect we’ll see the Index close 2011 right around 2400 based purely on historical patterns.  This gives additional credence to John’s technical analysis.

Not everyone will agree with this bullish scenario but that’s what makes a market.  Yes, from a fundamental standpoint, it’s understandable some people are gripped by fear when they look at all the problems confronting the world at this time.  Money and Markets ended a column this morning stating, “Expect crises to ripple.  Be defensive!”

But the CDNX has proven to be the most accurate leading indicator we’ve seen of the global economy and the markets in general.  Unquestionably it remains in a long-term bull market and its chart is telling us that a new bull phase has started.

We also find it extremely encouraging that the American Association of Individual Investors (AAII) survey of investor sentiment, a popular contrarian indicator, showed 77% of individuals were bearish in June – one of the lowest readings since the beginning of this bull market in early 2009, according to J.P. Morgan.

Check out John’s chart below and decide for yourself if our bullish scenario makes sense.  John made a similar great call on the CDNX at almost this exact same time last year.

Gold is stronger this morning, getting a boost from a U.S. non-farm payroll number that came in well below expectations…the Labor Department reported that payrolls rose only 18,000, the weakest reading since September and well below economists’ expectations for a rise of 90,000…the unemployment rate also climbed to 9.2%, the highest since December, and up from 9.1% in May…many economists raised their forecasts yesterday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000…the market is a forward-looking machine…there is plenty of evidence to suggest that the U.S. “soft patch” is ending and that growth will pick up again during the second half of the year, so sentiment should improve after a knee-jerk reaction to a bad June jobs number…President Obama, seeing his re-election chances in serious jeopardy if the jobs outlook in the U.S. doesn’t improve quickly, will try to do whatever he can in an attempt to “grease the wheels” of the stalling U.S. economic recovery…some form of creative new stimulus can be expected in our view and that should be positive for commodities and the markets in general…as of 7:15 am Pacific, Gold is $8 higher at $1,541…Silver is up slightly at $36.52…Crude Oil is off $1.64 to $97.03 while the U.S. Dollar Index is essentially unchanged at 74.94 after being higher by about a third of a point prior to release of the jobs number…the CDNX, following a gain of 120 points or 6.4% over the last six sessions, is off 4 points at 1982 after the first 45 minutes of trading…it’s only about 15 points below its 50-day SMA…Visible Gold Mines (VGD, TSX-V) staged a breakout yesterday, shooting through resistance at 25 cents (the 50-day SMA), hitting a high of 31 cents and closing at 29 cents…as John’s 1-year weekly chart on VGD clearly showed yesterday, the stock sank into extreme oversold RSI territory during May and June, the reverse of what occurred last fall when it ran to an all-time high of 70 cents…the 10 and 20-day moving averages (SMA) have reversed to the upside, confirming a change in trend after the April-May-June weakness…the 300-day and 500-day moving averages (35 cents and 28 cents respectively) continue to rise which supports our view that VGD remains in a long-term bull phase…with regard to the fundamentals, this is a company with a large land package along the Cadillac Break west of Rouyn-Noranda where there is high discovery potential – and they are not afraid to drill deep below any cobalt sediments to get to the prospective Archean rocks…the company’s senior geologist, Robert Sansfacon, is a genius at understanding structure and was involved in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit…VGD has a strong technical team on the ground and all the equipment (including drill rig access) it needs to execute its geological strategy…another potential major trigger for VGD is its Joutel Project, 150 kilometres north of Rouyn-Noranda…Joutel is a significant former Gold producer (two underground operations, one open-pit) that gave birth to Agnico-Eagle (AEM, TSX) in the early 1970’s…there’s a large area to the east of the past producing Telbel, Eagle and Eagle West deposits that looks highly attractive from an exploration standpoint…that’s the area we believe Visible Gold Mines will target in its upcoming drill program which is scheduled to begin soon…between Joutel and its Cadillac Break properties  – the Break properties also include ground immediately south, west and east of Richmont Mines‘ (RIC, TSX) growing Wasamac deposit – VGD is an excellent position to become one of the go-to exploration plays in northwest Quebec over the summer…the company is in a strong cash position with $6.5 million currently on hand…VGD is up another 2 pennies to 31 cents in early trading…Gold Bullion Development (GBB, TSX-V), as we suspected it would, found rock-solid technical support right around its 500-day rising moving average (SMA) and appears to have started what could develop into a very significant new overall uptrend but more technical confirmation is required to support that view…the stock closed at 47.5 cents yesterday, up four pennies, which puts it above its 100-day SMA for the first time since February…it should be a very interesting summer for GBB with many more drill results to pour in along with an expected initial 43-101 resource estimate for the LONG Bars Zone…with drilling in LONG Bars Zone 2, GBB is staring into the eyes of its new neighbor, Osisko, which has optioned the adjacent Adanac Property from Threegold Resources (THG, TSX-V) which closed yesterday at 19 cents (THG, by the way, is now trading right near its rising 500-day SMA)…John updates the technical outlook for GBB in the chart below…

Adventure Gold (AGE, TSX-V) is showing signs of possibly busting through resistance at 60 cents…AGE has a lot happening on the exploration front and we’ll be exploring its prospects in more detail in the very near future…it’s currently up a penny at 60 cents…Kaminak Gold (KAM, TSX-V) broke out on the charts yesterday, climbing 52 cents to $4.36 on over a million shares on the Venture…it opened at $4.37 this morning and is currently down 13 cents at $4.23…any pullback to the $4 level should be considered an excellent “jump in” point from a technical perspective…Kaminak’s Coffee Project in the White Gold District has strong exploration upside and yesterday’s trading activity was a very bullish signal…Silver Quest Resources (SQI, TSX-V), one of our favorites which is active in the White Gold District and elsewhere, has pulled back to $1.10 this morning…the chart for SQI looks exceptionally strong and the company’s 25% interest in the northern portion of New Gold’s (NGD, TSX) Blackwater deposit helps underpin the value of this play…Abcourt Mines (ABI, TSX-V) closed up 2 pennies yesterday at 13 cents, putting it above its 50-day SMA for the first time since April…the stock is facing significant technical resistance between 13 and 14 cents, so how it handles that in the coming days will be interesting to watch…there’s no questioning the potential of Abcourt – it has valuable assets in its Elder-Tagami Gold Project and its Abcourt-Barvue Silver-Zinc Property…both are former producers and the company has been drilling these properties extensively in order to upgrade and expand 43-101 resources and reserves…the problem with Abcourt, however, is that President and CEO Renaud Hinse, who is getting on in years, needs to put himself in the background (he holds a wealth of knowledge and can still contribute significantly to the company) and bring in some fresh blood with new ideas and a new approach to unlocking shareholder value…that’s a difficult decision for anyone to take but a very wise one in our view for Hinse…we continue to like Abcourt for its assets and the potential for a possible takeover…its current market cap is $19.5 million which really only values the Gold operation and not the Silver-zinc play…we’re anticipating higher Silver and zinc prices in the year ahead, so the Barvue-Abcourt Property could certainly garner more attention…the CRB index is looking healthy from a technical standpoint and that’s good news for the CDNX which always perform well when the CRB Index is in an uptrend…the CRB Index averages prices across 17 commodities and across time – it tracks energy, grains, industrials, livestock, precious metals and agriculturals, so it’s a good leading indicator as well of global economic activity…

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

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

A few months ago we added Visible Gold Mines (VGD, TSX-V) to the BMR model portfolio when it was trading around 40 cents.   The weak overall market through April, May and June knocked half the value off the stock, not unlike some other situations, but we see more than just a rebound developing now.  Given its very promising Joutel Property, with drilling scheduled to begin there very soon, and a 20-kilometre stretch of land along the Cadillac Break west of Rouyn-Noranda that could potentially yield a significant discovery given the prospective nature of the Break and the quality of the company’s geological team, we truly believe Visible Gold Mines is about to become a major player in this area of Quebec.

As we’ve already pointed out, VGD’s senior geologist is the highly respected Robert Sansfacon who was involved in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit, the largest in the country.  Sansfacon is a genius when it comes to understanding structure and when a company has a mind like that at work on its properties, all things are possible.

As readers know, we are very bullish on Richmont Mines’ (RIC, TSX) prospects and its growing Wasamac deposit.  VGD is sniffing around that area, working on claims immediately to the south and west, and likely investigating additional opportunities.   Martin Dallaire, VGD’s President and CEO, is a smart operator and understands the significance of a new mining camp emerging at Wasamac.

Technically, Visible Gold Mines‘ chart is telling us that something could be up.  On the daily chart, the RSI(14) has shown slow but steady progression over the last six weeks and has climbed above 50 for the first time since early April.  The Slow Stochastics are looking favorable now as well, and the 10 and 20-day moving averages (SMA) have just started to reverse to the upside which ends a long slump that started in April.  Below, John examines a one-year weekly chart that takes out a lot of the daily “noise” and shows several positive indicators including increased buying pressure as demonstrated by the Chaikin Money Flow.  Also, notice how the weekly RSI(7) is now coming out of extreme oversold conditions.  There’s no doubt in our view that VGD has bottomed out which means it could be ready soon to challenge its 100-day SMA (32 cents) and 200-day SMA (42 cents).  The company is sitting on $6.5 million in cash and has a current market cap of $11.4 million.

As always, perform your own due diligence and understand that any stock we refer to at BMR involves significant risk.  Please read our disclaimer.

Note: Both John and Jon hold positions in Visible Gold Mines (Terry does not).

Gold continues to power higher after briefly dropping very close to a major support level at $1,475 last week…as of 8:00 am Pacific, the yellow metal is up another $13 an ounce at $1,529…Silver, after a big run yesterday, is another 37 cents higher at $35.85…Crude Oil is down 54 cents at $96.35 while the U.S. Dollar Index has climbed nearly half a point to 75.06…euro zone debt concerns continue which is helping to fuel precious metals…China has raised its benchmark interest rates for the third time this year, adding to efforts to cool the world’s fastest-growing economy with inflation at a three-year high…the one-year lending rate will increase to 6.56% from 6.31% tomorrow while the one-year deposit rate will also go up 25 basis points to 3.5%…this could mark the end of tightening this year for China with a very gradual loosening of monetary policy possible through the remainder of the year…inflation is expected to top out in June at 6%…recent comments from Chinese authorities, including the premier, suggest officials in that country believe they have inflation under control which will allow China to focus more on growth going forward…statistics have shown the Chinese economy has been slowing somewhat in recent months…GDP, however, is not expected to drop below 8% which will keep commodity markets healthy…China, in the context of its own economy, seems to have successfully engineered a “soft landing”…the growth story there continues and that’s what will help support commodities…the CDNX is up another 14 points this morning to 1946…as expected, results from the Yukon are beginning to light a fire underneath this market and investors have to pay attention to what’s unfolding there…ATAC Resources (ATC, TSX-V), though it already has a very healthy market cap, is up another 37 cents this morning to $8.02 after reporting a 114.93-metre intersection grading 3.15 g/t Au from the first hole of the 2011 season at the Conrad Zone at its Rackla Gold Project – a 100-metre step-out from last year’s discovery hole that returned 21.13 metres grading 8.03 g/t Au…the Conrad Zone is one of four Carlin-type Gold zones drilled to date within the Osiris area, located in the eastern part of ATAC’s 185-km long project…some 80 companies are spending approximately $400 million this summer in the Yukon, so there is going to be an avalanche of news over the next few months that could potentially spark a major run in the CDNX and lift the Index much higher…fundamentally and technically, the pullback we’ve seen since March has been nothing but a normal correction within an ongoing bull market and the balance of this year could indeed be quite dramatic…there are many excellent plays in the Yukon but just some of the ones we believe have the best potential, besides ATAC if it indeed makes a Carlin-scale discovery, include Silver Quest Resources (SQI, TSX-V), Kaminak Gold (KAM, TSX-V), Golden Predator (GPD, TSX-V), and Ethos Capital (ECC, TSX-V)…another geologically fascinating part of the country of course to keep an eye on is northwest Quebec, an area we’ll be visiting again in the near future to check on the likes of Gold Bullion Development (GBB, TSX-V) – GBB is stirring again and looking very strong – Adventure Gold (AGE, TSX-V), Visible Gold Mines (VGD, TSX-V), Golden Valley Mines (GZZ, TSX-V), Abcourt Mines (ABI, TSX-V), Mazarro Resources (MZO, TSX-V) and others…while there is plenty of excitement and huge opportunities in some of those situations, one of the most exciting stories in the area is Richmont Mines (RIC, TSX)…while we focus almost exclusively at BMR on Venture-listed companies, one of our favorite Gold stocks and a “super growth” opportunity with earnings momentum and major exploration upside is TSX-listed Richmont which we’ve become very familiar with given our keen interest in the Cadillac Trend and the Rouyn-Noranda area since late 2009…this is a company with no debt, $50 million in cash, earnings per share of 46 cents through the first six months of this year, exploration drilling of 100,000 metres in 2011, and annual production that’s expected to increase by 40% in 2012 and possibly triple from current levels (80,000 to 85,000 ounces in 2011) within about three years if it’s growing Wasamac deposit goes into production by then which seems quite possible…developments at Wasamac are highly intriguing as demonstrated by the updates the company has issued on the property over the last year and recent months in particular…Richmont has already outlined an all-category 43-101 resource estimate of 1.4 million ounces, a figure that could still grow significantly if mineralization continues to be discovered at deeper levels and trends eastward…results such as 46.6 metres of true width grading 3.45 g/t Au  (#65, Main Zone, 713 metres vertical depth) and 68.4 metres of true width grading 2.66 g/t Au (Zone 1, #66A, 534 metres vertical depth) demonstrate how robust this system is…if Richmont is able to connect the various zones (which are already quite wide) and continue to discover mineralization at deeper levels and further eastward, Wasamac could very easily develop into a multi-million ounce deposit…Richmont continues to feverishly drill Wasamac and will be delivering a scoping study on the project by the end of this year…Wasamac of course is a former producer and the increase in the price of Gold forced Richmont to take another look at it, and the results have been impressive…it’ll be an underground operation in one of the best mining jurisdictions in the world…with a current market cap of just $233 million, the potential of Richmont is obvious given its earnings momentum and rapidly growing production profile…it has been one of the best performing stocks on the TSX this year, as mentioned in this morning’s Globe and Mail, and John likes how the stock looks from a technical standpoint as outlined below…

Currie Rose Resources (CUI, TSX-V) gave an exploration update yesterday on its projects in Tanzania…drilling has started at Mabale Hills where the company has completed three holes at Sisu River…506 samples have already been sent in for assaying to a nearby lab and more holes are being drilled there at the moment which suggests CUI’s geological team likes what it sees so far…it’s believed that drilling didn’t go deep enough in the first-pass drill program late last year which is why one of the first three holes went as deep as 150 metres…Sisu River still has the potential to get quite interesting…to the southwest there are new targets at Mwamazengo, west of a previous discovery area, and drilling will also take place at Dhahabu where encouraging trenching results have been previously reported…the possibility of Currie Rose pulling out some dandy holes at Mabale Hills certainly exists, as history has shown, but what has us most excited is the Sekenke Project which is about 200 kilometres to the southeast…ground preparations continue for a major drill program there…Sekenke is strategically located as it includes a land package that surrounds and runs in between two former high-grade mines including one of Tanzania’s original producers…there has been consistent accumulation in Currie Rose over the last several months and as activity heats up on its properties, a major breakout through resistance at 22.5 cents seems very possible with CUI which is currently at 18 cents…John updates the chart below…

Gold is back above $1,500 after Friday’s weakness to begin the month of July…as of 8:30 am Pacific, the yellow metal is $13 higher at $1,509…Silver has shot up 84 cents to $34.99…combined large and speculative net long positions in Silver, as shown by the COT report, have dropped to an historically low level while commercial short positions have also fallen to a low level – very bullish signs for the Silver market…(one of our favorite Silver plays, Great Panther Silver – GPR, TSX – is looking strong with a 50-day moving average – SMA – that’s ready to reverse to the upside)…Copper hit a two-month high yesterday, an encouraging sign, and is currently unchanged at $4.29 a pound…what the action in Copper seems to be suggesting is that there is indeed going to be a pick-up in global economic growth over the final half of the year…Crude Oil is up $1.49 at $96.43 while the U.S. Dollar Index has gained one-quarter of a point to 74.53…a survey of 80 central bank reserve managers shows that the most significant change in their reserves over the next 10 years is expected to be the addition of more Gold, as reported over the weekend by U.S. Global Investors…furthermore, respondents predicted that Gold will be the best performing asset class over the next year, citing sovereign debt defaults as the principal risk to the global economic landscape….the big economic number investors are waiting for this week is Friday’s U.S. June employment report, expected to show that just 100,000 new jobs were added for the month…other data includes the ADP private sector jobs report and ISM non-manufacturing survey tomorrow…chain stores report monthly sales on Thursday….China’s GDP for the second quarter is due on July 15…Colombia’s GDP in the first quarter grew by 5.1% versus an expected 4.8%…mining was the driver of growth, up 9.4%…the Dow, Nasdaq and S&P each enjoyed their best week last week since 2009…the Dow was up 5.4%, the S&P increased 5.6% while the Nasdaq jumped 6.2%…the CDNX continues to show signs of having bottomed out and we can’t help but think this market is going to enjoy a terrific final two quarters of 2011…the Index has gained 56 points or 3% over the last three trading sessions and is up another 8 points as of 8:30 am Pacific to 1930…Currie Rose Resources (CUI, TSX-V) is about to begin the fourth hole of its 10,000 metre drill program in Tanzania…the company is starting at its Mabale Hills Project with the RC rig initially at Sisu River before it shifts over to Mwamazengo…a significant near-surface expression was outlined in a first-pass drill program late last year at Sisu River which is open both to the north and the south and at depth…reading between the lines of this morning’s news, geologists may have liked what they saw in the first three holes (506 samples were sent in for assay) as the rig is staying there for now for additional holes…at Mwamazengo, the company will be testing a geochemical anomaly traced over a few hundred metres that runs parallel to the west of a previously reported discovery that included notable high-grade intercepts such as 34 metres grading 3.60 g/t Au, 12 metres grading 9.11 g/t Au, 63 metres grading 2.59 g/t Au and 31 metres of 5.97 g/t Au…Dhahabu, a few kilometres northeast of Sisu River, will also be drilled…field work continues at the Sekenke Project which includes some highly prospective ground that Currie Rose will be drilling for the first time ever this summer…we have two new situations to share with our readers this morning for their due diligence…we’ll be keeping a close eye on each of them…Azimut Exploration (AZM, TSX-V) holds one of the largest (if not the largest) mineral exploration portfolios in Quebec…AZM closed yesterday at $1.29, just four pennies above its rising 100-day moving average (SMA)…the company, which has only 33 million shares outstanding, completed a $5.8 million financing in March, most of which was hard cash at 90 cents…another situation we find very interesting is Camino Minerals (COR, TSX-V), which technically doesn’t look that strong at the moment but we like the story and the fundamentals…Camino Minerals is well-funded and was formed in connection with Goldcorp’s (G, TSX) $300-million acquisition of Canplats Resources…Camino is led by Canplats‘ former management and is focused on precious and base metal projects located in Mexico…the company started a 6,500 metre drill program at its promising Rodeo Gold Project just a few days ago…from 2004 to 2007, Canplats drilled 3,500 metres at Rodeo but tested only 600 metres of a five-kilometre long epithermal system with only two holes exceeding 200 metres’ depth…COR is currently up a penny at 35 cents on light volume…one of our favorite plays for the summer is Silver Quest Resources (SQI, TSX-V) which is came out with more news this morning and is active on a number of fronts with quality projects in the White Gold District of the Yukon and British Columbia…John updates the chart this morning on SQI which is currently up 3 pennies to $1.18…

Silver Quest will be drilling 15,000 metres in the Yukon this summer…it holds 17 properties in the White Gold District covering 85,000 hectares…more money will be spent on Gold exploration in the Yukon this summer (approximately $400 million by about 80 different companies) than ever before…Atac Resources (ATAC, TSX-V), which is aiming for a Carlin-scale deposit, is up 21 cents to $7.42 this morning…Kaminak Gold (KAM, TSX-V) is 16 cents higher at $3.85 while Golden Predator (GPD, TSX-V), another Yukon play we like, is off a penny at 95 cents…we’ll be focusing a lot on northwest Quebec in the near future, from west, north and south of Rouyn-Noranda down the Golden Highway to the east…after a difficult few months, Visible Gold Mines (VGD, TSX-V) is looking a lot healthier and its Joutel and Cadillac/Lucky Break Projects could trigger a major reversal very soon…VGD is currently up half a penny to 22 cents…the market has yet to catch on to the significance of what’s unfolding at Richmont Mines‘ (RIC, TSX) growing Wasamac deposit which is going to have major positive implications for the area in our view…

It was a horrible month of June for the CDNX which lost 190 points or a whopping 9.1% after finishing May at 2094.  That was the worst monthly performance for the CDNX since November 2008 when the Index plunged 13% (the CDNX fell 8.7% in May of last year).

So what can we expect in July?  While some weakness is likely in Gold (it could test $1,425 as John detailed earlier this week), a trend reversal we expect to see develop this month is an outperformance of Gold by the CDNX.  So don’t be alarmed by Gold’s drop this morning – it’s down $20 an ounce to $1,480 as of 10:05 am Pacific. Seasonally, this is a traditionally weak period for Gold with the yellow metal typically firming up by sometime in August. Physical demand is very strong which will help support prices during a period of short-term technical weakness.

Are the summer “doldrums” upon us?  Not necessarily.  Intense exploration in the Yukon, northern B.C., Quebec, the western U.S. and elsewhere around the globe should produce some very positive results over the summer – possibly even a major discovery – and provide the CDNX with important support and the lift it needs.  While a drop to the 1800 area can’t be ruled out, we see a good chance for a potentially robust market from mid-August through the balance of the year, a pattern we’ve seen often in the CDNX over the past decade.  The last half of the year likely won’t be as robust as the July to December period last year but should be strong enough to produce some decent gains and get the Index back within shouting distance at least of its 2010 close just below 2300.

John’s updated CDNX chart below is certainly reason for encouragement.

Canadian markets are closed this July 1, Canada Day, and we wish to take this opportunity to wish all of our Canadian readers a safe and happy Canada Day full of many blessings.

In order to allow our group to enjoy the long weekend and some needed time off, there will be no postings Saturday, Sunday or Monday at BMR.  Postings will resume Tuesday morning.  Canadian markets will be quiet Monday as our American friends celebrate Independence Day, and we wish them a great holiday weekend as well and a terrific 4th of July.