John: On Friday, Gold Bullion Development (GBB, TSX-V) opened at 53 cents, touched a low of 52 cents, climbed to 54 cents and then closed unchanged for the day at 53 cents on CDNX volume of 954,000 shares. We’ve seen the same range this morning through the first three-and-a-half hours of trading (as of 9:50 am Pacific).
Looking at the 6-month daily chart we see that after the sell-off on February 15, GBB has had 9 volatile sessions followed by 3 sessions of narrow trading between 52 cents and 54 cents. Trading stability has returned. Another important observation is that trading is below both the SMA(50) and SMA(100) moving averages, thus they are now lines of resistance for future upside moves. The SMA(50) is pointing down and there’s also a band of resistance (2 horizontal blue lines) between 69 cents and 77 cents. There is proven strong support (horizontal green line) at the 52 cent level. The SMA(300), not shown here, is at 50 cents.
At the moment trading is confined to the narrow channel because there are investors just waiting to absorb the selling between 52 and 54 cents. They are investors rather than traders because I doubt if this will move significantly to the upside in the immediate future. Thus, for the near-term, GBB is expected to continue to form a horizontal trend channel and a base for future moves to the upside.
Look at the left hand side of the chart. There we see that a downtrend occurred in September. After the 2-day reversal on Sept. 20 and 21, a month-long channel was formed which was a solid base for the surge in November and December. I believe we can expect a similar scenario here. How long it will be before the next breakout to the upside, there is no way to tell. However, given that Gold Bullion’s LONG Bars Zone continues to deliver good results and still shows multi-million ounce potential, more excitement with this play is highly likely. The downside risk from current levels appears to be very limited.
Looking at the indicators:
The RSI(5) is recovering from the shock of the sell-off and is now at the 37% level, out of the oversold zone.
The Slow Stochastics(SS) is still heavily oversold and probably will stay that way for a while. One of the first bullish signs to watch for would be the %K (black line) breaking above the 20% level.
The Chaikin Money Flow (CMF) indicator is at -0.167, showing the selling pressure continues.
Outlook: I expect trading to remain within a horizontal trend channel for at least the near future as shown. This will be the base for potential upside moves later on.
Note: The writer does not hold a position in Gold Bullion Development.
Thanks for the chart John. Jon will your article on GBB be posted today?
Thanks,
Comment by Dan — March 7, 2011 @ 10:00 am
John,
Thanks for the chart update and analysis’s
Appreciate it,
Comment by Charles — March 7, 2011 @ 10:19 am
wORLD MARKETS…Does someone here feels that a major correction is appearing in the tea leaves ? Yes..no. Any opinions ?
Comment by Andre — March 7, 2011 @ 10:46 am
André, I find there’s always something brewing. Today there seems to be a lot of reaction to the rumours of oil reaching $200 and “The Day of Rage” call for March 11th in Riyadh. Apparently the US has asked Saudi Arabia to supply arms to Libya’s freedom fighters? Any of these will trigger negative affects – I just wish nervous investors would rush to the junior gold explorers. I’m watching closely so that I try to have an appropriate investment strategy.
Comment by Andrew — March 7, 2011 @ 11:07 am
Andrew…The first thing investors do is pull out of juniors. Juniors of any type.
Comment by Andre — March 7, 2011 @ 11:13 am
thanks for the GBB update, my thoughts, it took this long to write that up? Seems in the past, you liked GBB alot more and the update, reports came flying out immediately? why is it now taking longer? Also you stated that they should concentrate more on getting the 43-101 done, problably a good idea. But I m guessing GBB wanted to add more shareholder value by perhaps taking advantage of the silver mine, seeing the prices of silver lately. I know in the past when KEX was spinning off their Archean property, you guys really liked that idea, but now when GBB wants to do the same you seem to play it down? Again, seems to me you dont really like GBB or what they are doing lately? I m just curious why, or maybe I m reading too much into it? Your comments plz. Thanks.
Comment by alec — March 7, 2011 @ 12:01 pm
André, what’s your safe haven in times of market turmoil – Gold Trust (GLD:US)? My juniors are not affected to any degree that causes me immediate concern, some are showing lots of bids and some are approaching accumulation opportunities. I try to be responsible, ready to take advantage of unnecessary nervousness but also ready to park temporarily in a safe zone when necessary.
Comment by Andrew — March 7, 2011 @ 12:32 pm
André, what’s your safe haven in times of market turmoil – Gold Trust (GLD:US)? My juniors are not affected to any degree that causes me immediate concern, some are showing lots of bids and some are approaching accumulation opportunities. I try to be responsible, ready to take advantage of unnecessary nervousness but also ready to park temporarily in a safe zone when necessary. Merci beaucoup et bonne chance. 🙂
Comment by Andrew — March 7, 2011 @ 12:33 pm
Alec I don’t think this is the update you have been waiting for, my understanding is that this is yet to come, which is good because we are at 51 cents as I post this and there appears to be very little support between us and the 40’s. I am looking forward to hearing what the BMR fellows have to say, as I too have noticed a little less enthusiasm here of late. I sure hope that we get some recovery because I sold gcu and agg to buy more, which looks like a bonehead move today.
Comment by Mike — March 7, 2011 @ 12:37 pm
Now into the forties, breaking through the .50 support level. Tough to watch the selling.
Comment by Aaron — March 7, 2011 @ 12:42 pm
…So much for charting….just hit.495
Comment by Paul — March 7, 2011 @ 12:56 pm
All of a sudden the write does not hold a position in GBB?? and soft basing??
Comment by Maria — March 7, 2011 @ 1:07 pm
Andrew you want my advice.. simple ..cash. Get out my friend . Wait for thing to calm down. I am trying to give my 20 years and over experiences to the newbies here but I just get a lot of shit when I do it. GBB just closed at 49 cents …. Not to happy but at least I have only 20 000 shares down from 150 000 from last month.
Comment by Andre — March 7, 2011 @ 1:20 pm
and Alec is totally correct……he knows something is not quite right with this picture.
Comment by Maria — March 7, 2011 @ 1:26 pm
Alec, following the Feb. 15 news release that contained a whopping 56 holes (we’re still analyzing a few things), within just a few days John did a chart, and we offered some general comments on the results (and what we thought was a communications miss-step on the part of the company). John did another chart this morning, and we’re also in the process of completing an article covering the fundamentals. So we’re certainly trying to cover this as best we can. We still love the property – nothing has changed at all in that respect. The potential of Granada now is just as bright as it was prior to Feb. 15. But I think the impression the market has right now is that the company has lost some momentum (there are still just 2 drill rigs on the property, that hasn’t changed for 10 months, and that is what I do not like right now). But they can get a drill rig to Castle. The market is focused on Granada – that’s what’s going to drive GBB’s value. Building massive tonnage requires massive drilling. Spinning off Castle may make perfect sense, but GBB needs to handle Castle with sensitivity because you don’t want to give investors the impression that resources are being taken away from Granada in order to develop Castle.
Comment by Jon - BMR — March 7, 2011 @ 2:17 pm
Yes, Mike, we’re still in the process of finalizing an article which I believe is going to be very positive in terms examining the results to date and the continued great potential of the LONG Bars Zone.
Comment by Jon - BMR — March 7, 2011 @ 2:20 pm
Maria, I personally found the latest results to be very encouraging and Granada’s potential is still huge. What is not quite right in my view, and what I find frustrating, is that there are still 2 drill rigs in the LONG Bars Zone after 10 months. This property has absolutely incredible possibilities, so I’m hoping we’re going to see a ramping up of exploration in the very near future.
Comment by Jon - BMR — March 7, 2011 @ 2:25 pm
checked the 1 minute chart.. and there was a divergence with the MACD rising and the SP dropping… low volume took the SP down as someone hit the bid… chart painting?? maybe.. maybe Black Bear is trying his best to sabotage BMR this is a simple overreaction by very nervous people.. and Andre/Andrew talk about the fact that jrs are hit.. because the investors are retail typically.. and they get nervous real easy!!
Comment by Jeremy — March 7, 2011 @ 2:55 pm
Maria, “BMR” doesn’t hold positions in anything. I personally continue to hold a position in GBB, John does not at the moment, Terry does. We call ’em as we see them – if there’s something we think is off or not right, no matter what the stock, we’ll come out and say it.
Comment by Jon - BMR — March 7, 2011 @ 4:02 pm
Thanks guys. I too wish they had more drills for the gold property. I guess they figured they would get more bang for the buck from drilling Castle right now. With silver hot right now, they might be right. We will see.
Comment by Timo — March 7, 2011 @ 4:59 pm
Jon, just curious as to the sudden change……i followed your reports on GBB for the last 10 months and you couldn’t stop praising this stock (even when the sp fell quite a number of times and things did not look good with delayed results etc.)…you never had one negative thing to say……until all of a sudden (after your last visit there)…..you were quiet for a while, hardly mentioning GBB…..and now are being IMO unfare in the way your are reporting on GBB, almost, it seems, that you want this stock to do badly. Howver, i do believe that good prevails and i have faith that GBB will overcome this (there is a light at the end of the tunnel).
Comment by Maria — March 7, 2011 @ 7:19 pm
Maria, nothing has changed with regard to my views on Granada. Obviously it was difficult in January to say much at all regarding Granada because there were no drill results – I can’t invent information. In mid-February, all of a sudden nearly 60 holes were released and to this day I’m still trying to sort through a few things. Gold Bullion gave us very little to be critical about last year. Lately, I have been critical regarding a couple of issues – which I think most people would agree with me on – but I’ve stated unequivocally that my faith in this project remains as firm as ever. I want to see it succeed and I hope people will recognize the incredible value Granada holds. In the article I’m completing now, I’m sure that message will come across forcefully. Hang in there. I have faith too that GBB will ultimately thrive.
Comment by Jon - BMR — March 7, 2011 @ 7:38 pm
Based on my analysis of the potential resourse estimate (based on the drill results from the past 1.5 years), this stock is is trading way below its value. However, I’m really concerned about the way GBB is trading. There are still sellers selling in 100k increments which is a small amount for institutions but bit big amount for an average retail. And I would think that any retail pushing that much amount would do pretty good research. Someone sold 350k at 0.54 today. Once that was done, the stock declined. Anyone know GBB’s cash position?
Comment by Bruce — March 7, 2011 @ 7:41 pm
Maria… this comes from your last statement ” However, i do believe that good prevails and i have faith that GBB will overcome this (there is a light at the end of the tunnel)””. There are very few goods that comes out from the ventur exchange in fact over 90 % of peoples loose there money on the venture… . You got to learn to pull out before it’s to late. GBB is giving out mix signals plus the world is going threw major changes.All of this creates a lot of instability, which is the worst cancer for stocks markets . Juniors , penny stocks are the first to fall and most of the time very quickly. So be careful.
Comment by Andre — March 7, 2011 @ 8:08 pm
Yes there is turmoil in some markets right now causing some investors to decide to sell because they perceive uncertainty. They have sold, but others have bought… for every seller there is a buyer. On each side they have made decisions hopefully based on their own DD. That is what each of you….our readers must do. Do not expect either Jon or I to tell you to buy or to sell. Not only do we not want to make decisions for you but we are not allowed by law to do so. We give you our opinions on good opportunities for you to investigate further…Jon’s are based on a company’s fundamentals and I present my interpretation of the technical analysis.
Remember no chart pattern, indicator or trading system is right every time so don’t throw the baby out with the bath water.
So again, periodically review the situation of each stock in your portfolio and make a decision to hold, sell or buy some more….it is your money…it is your decision, no one else can make it for you.
Good trading everyone
Comment by John - BMR — March 7, 2011 @ 9:17 pm
GBB will go down further to 40 cents… believe it or not…. Placement shares all dumped …. beware guys…. small investors in the pool now and getting less water everyday.
Comment by Theodore — March 8, 2011 @ 3:18 am
Jon,
Here’s a suggestion. Why not interview Frank Basa again and simply ask him why he hasn’t added more drills @ Granada? Moreover, I would even go as far as to ask Frank if he is considering the idea of following the mould that Osisko has laid down for success…Your thoughts?
Comment by Steven — March 8, 2011 @ 6:35 am
For the record Black Bear isn’t trying to “sabotage” anything – no need to – got out at .91 a long time ago. The writing has been on the wall for a long time but the biggest pitfall in investing – greed – takes it’s toll on those who always want more.Black Bear has simply been showing red flags and hopefully some folks are not color blind!
Comment by Black Bear — March 8, 2011 @ 6:36 am
It’s not lack of drills that is an issue at Granada. GBB is drilling about a hole per day. Their problems are:
1. Delays from the labs (GBB still has 50+ holes to report plus any holes drilled since the news release).
2. Ability to process cores on the field (they were short man power to cut the cores. Yeah, really. Hopefully that has been rectified).
3. Horrible PR – mentioned many times above.
Jon, I’d appreciate if you can find their cash position when you speak to them. Thanks.
Comment by Bruce — March 8, 2011 @ 7:51 pm
Bruce, you have made some excellent points and in my article I yesterday I mentioned that more “soldiers” are required on the ground. Having said that, the bottom line is that this is still a significant and growing deposit. So there is fundamental value there. In terms of GBB’s cash position, they were sitting on $8 million at the end of December. The burn rate is at least $1 million per month, perhaps as high as $1.5 million at the moment. They may have some more money coming back from the Quebec government.
Comment by Jon - BMR — March 9, 2011 @ 6:21 am