Gold has given up some modest overnight gains and is headed for its third straight weekly loss…as of 5:45 am Pacific, the yellow metal is down $12 an ounce at $1,645…it climbed as high as $1,666 overnight and has been as low as $1,639…Silver is off 20 cents to $32.34…Copper is up a penny at $3.88…Crude Oil is 26 cents higher at $105.37 while the U.S. Dollar Index has fallen one-fifth of a point to 80.05…
The greenback has been hot lately but the Dollar Index has reached a resistance level as John shows in the chart below…a “cooling off” period for the Dollar Index appears to be in the cards which would be supportive of Gold…
Gold and platinum in India will be costlier as the government has proposed doubling the import duty on these precious metals…“I propose to increase the basic customs duty on standard Gold bars; Gold coins of purity exceeding 99.5% and platinum from 2% to 4% and on non-standard gold from 5% to 10%,” Finance Minister Pranab Mukherjee said in his Budget speech today…“Gold will get costlier by 3-4% as jewelers will pass on the customs duty and excise duty on to the consumers,” the Gems and Jewellery Export Promotion Council Chairman, Sanjay Kothari, stated…the basic duty on Gold ore, concentrate and dore bars for refining has also been doubled to 2%…excise duty on refined Gold has been increased from 1.5% to 3%…the political “left” in this world always want to point out what they view as “corporate greed”, but do you notice they never bring up “government greed”?…governments are greedy monsters that need to be restrained and limited…they thrive and survive on tax revenues and borrowed money and can never get enough of either…
Gold Stocks Hugely Undervalued
Take a look at the TSX Gold Index which has closed below its 1000-day moving average (SMA) for the first time since early 2010 and for one of the few times in the last decade…this has always been a Golden buying opportunity…with the exception of the Market Crash in 2008, Gold stocks have not been this cheap compared to the underlying metal for a decade…P/E ratios for the producers are in many cases below 10, well under historical averages, and so many of these companies are sitting on piles of cash…
Today’s Markets
Stock index futures as of 5:45 am Pacific are pointing toward another positive open on Wall Street…European markets are healthy today while China’s Shanghai Index climbed 31 points to 2405…U.S. consumer prices rose by the most in 10 months in February as the cost of gasoline spiked, but there is little sign that underlying inflation pressures are building..
Rainbow Resources (RBW, TSX-V)
Average Mined Grade – 61.6 ounces of Silver per ton!
Rainbow Resources (RBW, TSX-V) came out with news a couple of hours after the close yesterday regarding its Big Strike Project in the West Kootenays…if this was just the “warm-up” act for what’s coming over the next couple of weeks, we can’t wait to see the main event!…below are what we consider to be the highlights of RBW’s news…
- A NI-43-101 compliant technical report shows that Rainbow’s Ottawa Property claims, and an area up to 350 metres east of these claims, produced 1.8 million ounces of Silver in the 1900’s (some production occurred as late as 1984) at a phenomenal average mined grade of 2,113 g/t or 61.6 oz/t!!!!!
- The Ottawa Property and the adjacent Gold Viking Property share similar geological signatures. These properties are potential felsic intrusion-associated silver-lead-zinc deposits that could be one large intrusive body, as interpreted in the technical report;
- Rainbow appears to have significantly increased the previously known mineralized area at Gold Viking through rock and soil sampling and airborne surveys…a “distinctive” 1.4-kilometre north-south trend has been identified, and field exploration and drilling plans for Gold Viking (as well as Ottawa) have been expanded…the fact the recent electromagnetic survey revealed a low resistivity feature that matches up exactly to a multi-element geochemical anomaly is highly encouraging…
- Grab samples at Gold Viking returned silver values as high as 14.3 oz/ton;
- These very prospective properties (despite the past production at Ottawa and some artisanal mining at Gold Viking) have never been previously drilled or systematically explored.
We trust Rainbow has the smarts to try and secure some additional ground in the Gold Viking/Ottawa area through other existing claim owners given the possible connection between the two properties and additional conductors discovered through the airborne surveys over northern and southern sections of Gold Viking…
This is a great start for Rainbow which will be reporting on its International, Tin City, President, and Rhea properties in the very near future – we’re expecting more news next week…RBW stated yesterday that it expects to have the Moose Mountain technical report filed on Sedar within the next 10 to 14 days…President David Johnston told us in a recent interview that the company is planning a major function in Calgary at month-end, in conjunction with the Cambridge Resource Show there, so it makes sense to assume that Johnston’s “Big Rainbow In The Sky” plan will be fully laid out by then…this is a fascinating company to watch as it’s moving forward aggressively and making things happen…the more we examine the Rainbow story, the more we like it…Johnston has done a fabulous job assembling the company’s West Kootenay land package and positioning this young and aggressive company for a very successful 2012…Rainbow is showing excellent technical strength and John will be updating the RBW chart at BMR by Monday morning…
Probe Mines (PRB, TSX-V)
We’ve mentioned Probe Mines (PRB, TSX-V) on numerous occasions over the past year or so…the company continues to report solid drill results from its Borden Lake Gold Project near Chapleau, Ontario, though the stock has tumbled this month from a high of $2.00 to a low of $1.22 this week when the markets fell sharply Wednesday…quite possibly contributing to the drop was the fact that 6.5 million shares from a November flow-through financing ($2.45 per share) became free-trading as of March 12…the company released an exploration update with very satisfactory drill results Tuesday…an updated resource estimate for Borden Lake is expected in the near future…the deposit has been expanded along strike by 30% and at depth by as much as 131 metres in some sections since the previously reported NI-43-101 resource estimate in July of last year (11,607,000 tonnes averaging 0.8 g/t Au at a cut-off grade of 0.3 g/t for 305,000 ounces of Gold in the indicated category, and an additional inferred resource of 169,322,000 tonnes averaging 0.69 g/t Au for 3,755,000 ounces of Gold)…at yesterday’s closing price of $1.32, Probe’s current market cap is $85.4 million…the company is in a strong cash position thanks to last November’s $15.2 million financing…
We are adding Probe to the BMR “Strong Play” list (Group “B”) given this week’s 25% off “sale”…technically, the stock has become very oversold as John shows below…there is very strong support at $1.20…
Note: John, Jon and Terry do not hold a position in PRB.
RBW now under selling pressure – the first day that I’ve seen this situation since following RBW.
Comment by Andrew — March 16, 2012 @ 6:32 am
A decade! If you look at the BGMI in terms of gold, it has not been this cheap since the 1950s!!! Talk about a hostile environment for gold shares. Unbelievable!
Comment by Rosco — March 16, 2012 @ 7:35 am
Awfully quiet around here guys! What happened did everyone get slapped today? Lots of RBW hopefuls and the one day it’s traced back, I see tumbleweed crossing these boards.
Jon any words of encouragement for RBW’s poor performance today? Is this manipulation or disappointment?
Comment by Alex — March 16, 2012 @ 10:09 am
Hi Jhon,
Hope you are doing good on this friday 🙂
You have always state that CDNX was a leading indicator of there the market was going. I have been looking at it on a 1,2,3,5 year basis, doesn’t look strong, specially volume wich is so important, it’s is not there. Also a five 5 charts of Dow show a decrease of volume specialy since jan of this year with index increasing in price (divergence)!
What do you think?
Have a nice week-end!
Comment by Martin — March 16, 2012 @ 11:19 am
I’m doing awesome, thank you….a few things regarding the CDNX…first, fundamentally, I believe we had a very significant sentiment change in January…you could see that simply by how a lot of stocks were responding on news…technically, also, the market gained strength in January/February with some important moving averages (50 and 100) reversing to the upside plus other positive technical indicators including a pick-up in volume…
March, of course, has been very sluggish but I would interpret the first 2 weeks of this month as merely a healthy “pause” and a mild and normal pullback within a primary uptrend…on a positive note the CDNX continues its 2012 trend of out-performing Gold and the TSX Gold Index…that’s a change from the “under-performing” trend that started in March of last year…it’s a very positive sign in my view when you’ve got the CDNX doing better than Gold and the TSX Gold Index…support on the CDNX appears to be holding around 1600 which is very encouraging…the 50, 100, and 1000-day SMA’s are all providing support…there is good Fibonacci support as well.
I am extremely bullish on this market and Gold stocks in general…the low in early October last year at 1300 was a very significant bottom.
Comment by Jon - BMR — March 16, 2012 @ 11:58 am
Alex, this is entirely normal market behavior…….keep in mind that RBW, at 25 cents, is up 50% for the year. It has one of the best-looking charts on the entire CDNX which includes major moving averages all in bullish alignment. There is no question the primary trend with RBW is up. On the road from the low teens to 50, 75 cents or a dollar or more, a stock will obviously and understandably pause or pull back on occasion for brief periods…….so no worries here. RBW has a fabulous project on its hands and this is an aggressive company with a clear game plan. What it does on any one particular day doesn’t concern me. The news yesterday was great. Always stay focused on the big picture and by doing that with RBW, we’ll all do extremely well I’m sure.
Comment by Jon - BMR — March 16, 2012 @ 12:08 pm
Thanks Jon,
Comment by Martin — March 16, 2012 @ 12:20 pm
As much as I would of loved RBW to keep going up today, I took the opportunity to buy more. In the long run we will be looking back at 25c and asking why we werent 100% in rbw when we had the chance. I think alot people read the news but didnt really READ the news. All they saw was grab samples but look at the picture Johnston was trying to paint of the relationship between Gold Viking and Ottawa. With a plethora of news coming, this news yesterday was just the tip of the iceberg…
Comment by db — March 16, 2012 @ 12:54 pm
I have to agree. RBW are ow walking the walk and are are showing the market what they are about. This is just the start but who else has these figures. Nobody. This is a no brainer. God luck all.
Comment by Patrick — March 16, 2012 @ 1:31 pm
The last time RBW traded this close to its 50 day moving average was back on Jan 15 2012 when the share price dropped to 14 cents and within a week from that time it gained 50% up to 21 cents. So if history is to repeat itself, then yesterday the price dropped to 23 cents and if we add 50% to that we get 35 cents next week. Seems like a pretty good indicator wouldn’t you agree;)
Comment by Ed — March 17, 2012 @ 10:57 pm
To be honest I am little bit concerned about the sell of in RBW the last couple of trading days. But I’ve decided to be a part of RBW for a while so hopefully you’ve right Ed. Seems that they’ve something great going on!
Comment by Kalkan - Sweden — March 18, 2012 @ 2:36 am
Kalkan, i wouldnt be too concerned about a 3cent loss in a week. Trading has looked very controlled as of late. Just getting ready for the big run we are about to go on…
Comment by db — March 18, 2012 @ 6:29 am
Kalkan, why would u be concerned? This stock is just 4.5 cents off its all-time high, and the overall trading pattern remains very bullish. Few stocks on the Venture have a chart that resembles RBW’s. The primary trend is up – when this is the case (with any stock or market), any brief periods of weakness are always buying opportunities. Do not – I repeat – do not allow yourself to lose your focus on that based on a day or a few days of trading. That is a potentially destructive and wealth-destroying approach, a trap that too many investors fall into. There is an old saying and it’s very true in this case: Let your winners run. And RBW is a winner looking at what is likely to unfold over the coming weeks and months. It doesn’t take a rocket scientist to read between the lines and see what’s coming together with this company. I think we’re in for some “shock and awe” on different fronts and a drill program that is going to send RBW soaring. That’s not hype on my part – I think it’s just plain common sense and very obvious. This is going to be big, very big IMHO. And when you consider the structures RBW will be drilling into – past producers like Ottawa (61 ounces Ag per ton) and the International – I rate the chances of early drilling success as considerable. Another wise reader mentioned this just recently – RBW is showing it can “walk the walk”. This is a powerful group with successful business and mining people including the part-owner of an NHL franchise. Personally, I have bought RBW from the low teens to as high as 28 cents. I’m not in this to flip for pennies. The market cap is currently only $8.5 million. That’s nothing, just chicken feed compared to where this could go. A $50 million market cap or more is very realistic come the summer – just a few months away. That’s what we all need to keep focused on with RBW so we can be as successful with this as possible. Good luck to all. RBW is a keeper – motivated people are building a company with a goal of creating wealth. That’s what it’s all about.
Comment by Jon - BMR — March 18, 2012 @ 7:29 am
Any thoughts on Cadillac? News continues to be very positive, yet the stock has stalled and now is in decline? Based on published information, you would expect it to be worth considerably more than present value. Any insights? Thx.
Comment by Al — March 18, 2012 @ 8:05 am
Cadillac has so much going for it in terms of its Goldstrike Project in Utah and its holdings around Richmont’s Wasamac deposit. Great value and potential in both cases. The problem is, this is a company run by a geologist and an engineer and they don’t understand the markets but they think that they do – and that’s dangerous. CQX should have pulled the trigger on a financing almost immediately after their Feb. 21 announcement (Goldstrike drill results). What on earth are they waiting for??????? This company has continually failed to “seize the moment” on raising money for more than a year now when they’ve had golden opportunities to do so. I hope they figure out something soon before another opportunity passes them by. No matter how great your projects are, if you don’t have money in the treasury or the ability to raise it quickly, you are screwing your shareholders and your stock will go nowhere but down.
Comment by Jon - BMR — March 18, 2012 @ 8:26 am
Thanks. As a shareholder, I will share these thoughts with the company. Hopefully, they will reply – I will forward any interesting responses back here.
Comment by Al — March 18, 2012 @ 9:22 am
Hi BMR,
what do you guys think of WTC? Is it a good entry point at 12 cent? Do you think there will be a run to 1 CAD like it was last year?
Thanks in advance
Brgds
Comment by Peyman — March 18, 2012 @ 10:45 am
Hi Jon,
I really appreciate your comment. With “being little bit concerned” I meant following: I got burned on vgd earlier, although I got out in time before it really fell, and I know that it has been a lot of “selling on news” for some time now. But as you say, the news was good, they have a great team behind RBW and have some good things going on. This one is definately a keeper for me. Once again, thanks for your comment and your strong believe in RBW.
Comment by Kalkan — March 18, 2012 @ 12:30 pm