BullMarketRun.ca

Gold is firmer on this U.S. Memorial Day holiday…as of 6:50 am Pacific, the yellow metal is up $9 an ounce at $1,395…volatility could ramp up tomorrow which is options expiration day for June Gold…Silver has gained 27 cents to $22.66…Copper is unchanged at $3.29…Crude Oil is off 60 cents at $93.55 while the U.S. Dollar Index is down slightly at 83.60…

Barclays estimates that 109 metric tons of global Gold exchange-traded-product holdings are still cash negative, meaning potential for future liquidation…net redemptions have hit 94 metric tons so far in May, with year-to-date outflows in the 55 physically backed products tracked by Barclays at 443 tons…”As we have highlighted previously, net inflows above the $1,500/oz level are the most vulnerable in the near-term; the build in holdings above that price point is sizeable but also represents the interest that is relatively new,” Barclays stated…”The minimum amount of cash negative holdings has now fallen to 109 tons; thus, in our view, prices continue to be exposed to downside risk in the near term…but once this metal is flushed out, we believe prices are more likely to stabilize”… (source: Kitco news, Allen Sykora)…

John’s 2-year weekly Gold chart, posted yesterday, offers some encouragement for Gold bulls – for the short-term at least…RSI(14) has formed a low “W” while sell pressure is weakening according to the CMF indicator…lastr Monday’s strong intra-day reversal could prove to be important but what will lift Gold out of this current trap below $1,400 is anyone’s guess…strong physical buying around the globe continues below $1,400, helping to offset the “paper” selling…central banks continue to be net buyers…according to IMF data released today, Turkey, Belarus, Azerbaijan and Greece joined Russia and Kazakhstan in adding Gold to reserves last month…as Rick Rule has stated, strong hands are central banks in frontier and Eastern markets and retail investors who are buying bullion for cash…that trend should be considered as a very bullish sign for the long-term…

Informative web site we suggest our readers take a look at:  http://www.visualcapitalist.com/what-is-the-cost-of-mining-gold

Interestingly, the Gold-to-S&P 500 Index ratio has fallen to lows not seen since 2008, according to UBS Investment Research…it’s possible the ratio could become even more extreme, if equities continue to climb over the near to short-term, but sooner or later something’s got to give…

Today’s Markets

Japan’s Nikkei average went on another wild ride overnight, falling as much as 4% before paring losses and finishing down 470 points or 2% at 14143…some investors are saying that the real economy in Japan hasn’t had time to catch up with monetary measures…China’s Shanghai Composite was up slightly overnight, gaining 5 points to close at 2293…European shares are mostly modestly higher in late trading, but volumes are light due to the U.S. holiday…trading activity in Canada will also be subdued today of course…the TSX is up 18 points through the first 20 minutes while the Venture has added 4 points to 952…

Solvista Gold Corp. (SVV, TSX-V)

A close examination of the trading in Solvista Gold Corp. (SVV, TSX-V) Tuesday through Friday last week underscores a few important facts about the current junior resource market…a) Reaction to really good news is generally slow (many investors are of course very tentative at the moment, which actually gives astute investors an unusual advantage; b) There is still an appetite for very good exploration stories and “upside” surprises;  c) There are still excellent near-term opportunities as well as terrific long-term opportunities in the current market, though one must be careful and selective; and d) Technical analysis is important, and investors are stepping up to the plate in stocks that are showing momentum…

Also, it’s unfortunate that many investors who were so active in the junior resource market just a couple of years ago aren’t even paying attention right now as money can be made if you’re selective – the strange thing is, the hordes will come rushing back at just the wrong time somewhere down the road when the market is on a roll and the risk is higher…

Many investors are followers…it’s like standing at the street corner, waiting for the pedestrian light to turn green…one pedestrian is bold and doesn’t perceive any risk and starts walking despite the red light…others follow right behind…that’s what happened with Solvista Friday as the bold jumped in, based on the fundamentals and the improving technical picture, and the rest soon started to follow…

Below is a 1-year weekly SVV chart from John after Friday’s breakout…previous resistance in the mid-40’s is now support…Solvista reported fresh drill results from its Caramanta Property in Colombia last Tuesday which included 456.7 metres of 1.4 g/t AuEq in CAD-1218, drilled within the Caramanta porphyry cluster…check out Morning Musings last Wednesday for further details and analysis…as always, perform your own due diligence…SVV climbed as high as 58 cents in early trading this morning…as of 6:50 am Pacific, it’s up 7 cents at 57 cents…note the technical resistance areas beginning around 60 cents…

GoldQuest Mining Update (GQC, TSX-V)- BMR Speaks With Bill Fisher

Last week, we spoke with GoldQuest Mining (GQC, TSX-V) Executive Chairman Bill Fisher, an interview we’ll be posting sometime this week…it was an interesting discussion, as usual, with Fisher who remains very upbeat about his company’s prospects in the Dominican Republic even though investors have knocked more than 80% off the value of GQC since its high of $2.03 last summer when the overall market was in much better shape and the early drill results from Romero showed such great promise…Romero has not turned out to be as big of a Gold-Copper find as investors were initially betting on or hoping for, but it is significant nonetheless…an initial resource estimate is expected by the 3rd or 4th quarter…in addition, GoldQuest is working on upgrading resources at La Escandalosa – 2 km to the south of Romero…the company’s financial position remains very healthy with $14.5 million in cash at the moment and a current burn rate of $600,000 per month, Fisher told us…based on Friday’s closing price of 33 cents, GQC’s market cap is approximately $48 million, leaving plenty of room for growth if another discovery is made or the markets rebound…the “Big Picture” with GoldQuest is very simple…they are exploring a large land package in a hot geological area…often it takes a lot of holes to hit the motherload…2 deposits have been uncovered but the company is still searching for the HEAT ENGINE for these systems (Romero and Escandalosa could merely be “side branches”)…buried somewhere could be a massive intrusive body that could have created all the heat and pressure to mobilize the Gold and Copper over a wide area…if and when they find it, last year’s market event – a run from a nickel to $2 a share – may look like a tea party in comparison…

It’s possible, but certainly very speculative at this point, that the heat engine GoldQuest is looking for could exist somewhere along the recently identified Guama trend, a couple of kilometres west of Romero, where drilling started last week…

“If you had the information we have today, you’d definitely drill the Guama trend first (ahead of Romero),” Fisher told BMR…not only did GoldQuest get some impressive IP readings from Guama (there’s a very big anomaly in the north end of this trend), but strong Copper mineralization is interestingly outcropping at surface there which is not the case at Romero…Copper is being picked up and taken to surface in quartz veins, and some sort of a system has to be responsible for that…

GoldQuest is also still exploring a possible link between Romero and Escandalosa…overlooked by many investors in GQC’s May 16 news release was hole LTP-135…this is important…the hole was collared 800 metres south of the centre of the Romero mineralization and 700 metres north of Escandalosa, basically right in between the two systems…it was the first deep hole in this part of the Las Tres Palmas IP chargeability geophysical trend…it was terminated in strong Gold mineralization by poor drilling conditions within a fault breccia at a depth of 445 metres, where the final 2.1-metre assay interval graded 10.6 g/t Au…GoldQuest will revisit that hole and that area…what they’re hoping is that they hit the top of a system that ultimately might link with Escandalosa…

One thing is for certain – it’s going to be an interesting summer for GoldQuest with potential for a discovery at Guama…

Iskut River – Stunning Map From B.C. Geological Survey Is Good News For Victory Ventures (VVN, TSX-V)

From the bowels of the B.C. Ministry of Mines web site, we are posting a fascinating map this morning from the B.C. Geological Survey that shows major regional fault zones in the Iskut River area…we showed this map (see below) to an independent geologist over the weekend, someone with general knowledge of the area but not connected to any of the companies currently exploring in the district, and he confirmed the significance of it…this map strengthens our confidence in the geological possibilities of Victory Ventures’ (VVN, TSX-V) Copau Property which is about to be drilled – in fact, VVN will be the first company outside of Colorado Resources (CXO, TSX-V) to drill in the Iskut River area since CXO’s discovery was announced a month ago…

Prior to this map, what we knew about Copau – based on Victory’s news – is that an IP survey carried out by the company last summer located a strong chargeability response underlying the southwestern portion of the property…the chargeability anomaly occurs from depths of approximately 200 metres with increasing response to 450 metres (similar to patterns at North ROK), which was the maximum reading depth of the IP…the present known extent of the anomaly varies between approximately 300 and 400 metres wide (east-west) and over 1,200 metres long (north-south), appearing open to both the west and south and at depth…the interpretation is that there is increasing sulphide content within a southwest-dipping body of syenite rock, possibly related to hydrothermal processes within the syenite body…rock outcrop samples containing traces of pyrite, chalcopyrite and magnetite in syenite were found during the survey work, and their locations coincide with underlying IP chargeability responses…in 2011, a ground magnetic survey located a pronounced northwest-southeast linear-trending anomaly throughout much of the claim area…the property has never been previously drilled…the B.C. Geological Survey made the initial discovery at Copau during a 1994 prospecting program as they identified what’s called the “B31” showing…

Now to the map…what it shows is major regional fault zones at Iskut River with the Copau Property positioned at the intersection of 2 of these zones…this is a zone of weakness, something mineralization often likes…there is much for geologists to still learn about these faults, and it’s true of course that not every major fault is metallogenically well-endowed…but this is the kind of set-up that can get a geologist’s (and an investor’s) heart beating very rapidly as it’s seen in other deposit situations…a significant number of deposits are directly related to movement of metal-bearing hydrothermal fluids along faults…whether these faults around Copau control a potential mineralized system there, we’re about to find out…

Indeed, there is nothing like a map to clarify the picture…note the fault structures (indicated by the lines) at and near Colorado’s discovery (Mabon and Edon) as well…the fault setting is similar in both areas…we circled the approximate Copau claim area which is almost 5 sq. km around the B31 showing…all things considered, Victory has a very legitimate chance for a discovery – at the very least, initial results that would be encouraging enough to warrant plenty of additional drilling and exploration work throughout the summer…that, of course, could translate into some very robust trading activity…VVN closed Friday at 12 cents, giving it a modest market cap of $2.5 million prior to this week’s anticipated closing of the latest financing…drilling is scheduled to commence next week…

Understanding fault structures was critical to exploration success at the Red Chris deposit 11 km the south of Copau…that massive deposit (300 million tonnes) is primarily associated with the Red stock, a monzodiorite intrusion which has quartz, sericite, ankerite, potassium feldspar and hematite alteration, and is subsequently cut by a sulphide-bearing quartz stockwork… the northeast trending South Boundary fault and the quasi-parallel East zone fault converge from the southwest, according to the latest Imperial Metals’ (III, TSX) technical report on the deposit…the Red Chris is expected to go into production next year upon completion of the Northwest Transmission Line…

Editor’s Note: We are continuing to finalize a report on the Iskut River play that will cover at least a dozen companies…due to some late information we’ve received, including the above, we now are planning to post this on Wednesday as opposed to later today…we’ll update our readers on this again tomorrow…

Updated Silver Charts

As usual, John has long-term and short-term Silver charts this morning…they both show that Silver is trying to build a base of support around $22…

Short-Term (3-Year Weekly) Silver Chart

Long-Term Silver Chart (11-Year Monthly)

Note: John and Jon both hold share positions in VVN.  Jon also holds share positions in SVV and GQC.