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March 30, 2012

BMR Morning Market Musings…

Gold is steady this morning on this final trading day of the month and quarter…as of 5:40 am Pacific, the yellow metal is up $7 an ounce at $1,668…Silver is 31 cents higher at $32.57…Copper, on track for a 10% increase in Q1, is up a nickel to $3.85…Crude Oil has rebounded 46 cents to $103.24 while the U.S. Dollar Index is off one-quarter of a point at 78.77…

Gold, which posted its first quarterly drop in three years at the end of last year, is set for a respectable 6% climb for the first quarter of 2012…of course it had a powerful move in January and February and has retraced some of those gains this month…as John’s chart shows below, Gold has successfully tested support at the Fibonacci $1643 level on nine occasions over the last 12 sessions…

Today’s Markets

It appears a positive day is shaping up for the markets with strength in commodities and after yesterday’s intra-day recovery…as of 5:40 am Pacific, stock index futures in New York are pointing toward a higher open…Europe is strong as euro zone finance minsters meet in Denmark today and tomorrow…they’ve already issued a statement that they’re increasing the firepower of the region’s bailout fund to just over 700 billion euros…

Rainbow Resources (RBW, TSX-V)

It wasn’t the best day for any company to put out news yesterday, but Rainbow Resources (RBW, TSX-V) went on the offensive and announced it’s optioning a property along the Battle Mountain-Eureka Trend in Nevada on either side of two major projects – and this came just a few hours after an update on the company’s promising International Property in the West Kootenays…that was a lot for the market to swallow in one day and the stock was surprisingly quiet with RBW trading just 87,000 shares (all exchanges) and falling a penny-and-a-half to 25.5 cents…we spoke with President David Johnston late yesterday afternoon after the company held an event in Calgary (“information session” for investors)…”We had an excellent turnout,” Johnston told us, “and we actually carried on with some people until after 5 o’clock…the feedback on both the Kootenay project and Nevada was very positive…I know the overall markets haven’t been great recently but we’re doing all the right things corporately and on the ground to move this company forward each and every day…that’s what we’re focused on and investors should get an even better picture of that next week”…

In our view, Rainbow’s entry into Nevada makes a lot of sense as it gives the company the ability to explore and drill on a year-round basis…in a way Jewel Ridge reminds us a little of Cadillac Mining’s (CQX, TSX-V) Goldstrike Project in Nevada in the sense that it contains several past producing open-pits…RBW should be able to go in there – just like CQX did with Goldstrike – and have an excellent chance of pulling out some nice holes with a properly executed drill program…we’ll have more on our Johnston interview in a couple of days, but he did tell us that Moose Mountain loves what it has seen so far at Jewel Ridge and believes it has multiple mineralized zones at that property to pursue…”The folks at Moose Mountain are perfectly capable of walking and chewing gum at the same time,” Johnston chuckled…”They know they have a huge commitment to fulfill with our flagship Kootenay properties but they’ve assured us they have all the resources they need to carry out an immediate program in Nevada and carry out all the plans for the Big Strike Project”…yes, indeed, it looks like some busy times ahead for Rainbow...RBW has enjoyed a terrific first quarter which should be just the start of great things to come…

Great Panther Silver (GPR, TSX)

One of our favorite Silver producers continues to be Great Panther (GPR, TSX) which appears to have bottomed out just below $2 at the end of December after reaching nearly $5 early last year…the question is, when will it break out of downsloping channel?…patience remains the key with GPR…it’s up about 10% for the year after closing yesterday at $2.27…

Note: John, Jon and Terry do not hold positions in GPR.

16 Comments

  1. what is happening with Richmont – seems to be pushed down pretty hard?

    Comment by Barry — March 30, 2012 @ 6:45 am

  2. Here is a great article describing the likely prognosis for gold juniors and
    producers for the near future.

    resourceinvestor.com/2012/03/26/gold-stock-panic-levels

    Comment by Paul — March 30, 2012 @ 8:04 am

  3. Greencastle Options Nevada Gold Property to Rainbow Resources Inc.
    03/29/2012 1:06 PM HE

    Comment by Martin — March 30, 2012 @ 8:12 am

  4. Martin – that was RBW’s second NR yesterday. 🙂

    Comment by Andrew — March 30, 2012 @ 8:18 am

  5. Martin – RBW’s NR also mentioned that they were possibly going to have a second Nevada property. Maybe another NR next week?

    Comment by Andrew — March 30, 2012 @ 8:25 am

  6. gbb up 4 cents news today or monday, sell rbw at 23 buy gbb at 17. next week sell gbb 23 buy back rbw. might even work!

    Comment by mike — March 30, 2012 @ 9:16 am

  7. Barry – I think Richmont came out with the PEA at a time gold producers and juniors were/are vulnerable to sell offs. I don’t think the PEA met analysts expectations: forecast annual production fell short; mine capital costs were significantly higher ($503m); life of mine cash costs were also significantly higher ($688/oz)

    Comment by Andrew — March 30, 2012 @ 9:36 am

  8. I’m no PHD grad, but I don’t think RBW’s news was taken well. Down almost 15% after they do exactly as planned and on time. Pretty amazing how the corrupt ventures operate huh? Oh well, treat this as your gold buying opp. I know I will.

    Good luck,

    Comment by alex — March 30, 2012 @ 11:15 am

  9. Not a good day for rbw, not good at all!

    Comment by Kalkan - Sweden — March 30, 2012 @ 11:53 am

  10. I’m glad I sold RBW to buy CAN and VTR two days ago.

    RBW is being driven by speculation – no real fundamentals yet. Your better off buying CAN, LVN or VTR which have proven reserves in the ground and known target prices by analysts.

    Comment by Andrew M — March 30, 2012 @ 2:12 pm

  11. Even though I still hold RBW and plan to for a while, I took off some off the table yesterday and agree Andrew. Thats why they call it the venture though….I put my profits into HDA. Silver mine in BC expecting to go into production in the next quarter…

    Comment by db — March 30, 2012 @ 3:51 pm

  12. Alex- don’t worry, Steve says its in a uptrend. I guess he was sick the day they taught TA school.

    Comment by dave — March 31, 2012 @ 12:52 am

  13. I really don’t understand what people was expecting from rbw. Yes it has been driven by speculations but the news this week tells me that the have good things to come, nice landpackage and as soon as drilling starts I think we will see some good results. Why this sell off, I came in around 0,18-0,19 and I thought it would break through 0,30 this week. Immediately regretting not selling couple of days ago, just to collect profit… But that’s life! See what happens in the beginning of the coming week. Hat off for those who sold in time! Have to learn not to marry the stock I buy 🙂 have a great weekend everyone!

    Comment by Kalkan - Sweden — March 31, 2012 @ 1:48 am

  14. Kalkan – I tend to agree with your comments. RBW has assembled a land package with great potential at Big Strike. They added to that area recently and now they have a gold – silver property in Nevada with possibly a second Nevada property in the works. This gives them the capability to drill year round which would be good for news flow and shareholders assuming they have decent drill results. Investors may have picked up on some negatives from RBW in that they did not exhibit at PDAC nor Cambridge. It’s also not good timing – gold and silver stocks have been floundering for a year and there doesn’t seem to be any near term change to that scenario, in short for many investors its the wrong sector. The first acquisitions to augment Big Strike was not anticipated news and Moose Mountain’s reports are basically just historical information that was previously known. Where there are recent grab samples they have largely been insignificant and I think the last NR re International had only one Moose Mountain grab sample that was, again, insignificant.
    Then we had the news regarding the Nevada deal with Greencastle – in my mind, RBW could not have chosen a more distrusted (by investors) pair of sidekicks to do business with! That will take some time to digest. Now there is the prospect of a second Nevada property. So we have a company that is being aggressive in acquiring land packages but it surely means share dilution and financings and it’s not a good market for raising cash? They plan on starting work in Nevada immediately, so presumably that means defining drill targets for the Winter? Investors would probably have liked to have read more on a drill plan and time frame for Big Strike first? We have to wait for the heli-borne surveys before that. So this perhaps means no drill results until the Summer at the earliest, probably the third quarter? The sell off has been on relatively low volume so hopefully it will not precipitate panic selling resulting in stop losses being triggered as the bids are now so small. RBW shareholders are, hopefully, largely in this one for the long term. However, the Sell:Buy ratio throughout Level 2 depth is currently biased towards selling, this is unusual for RBW. There was a brief bias towards selling a couple of weeks ago and the sp did drop. Then recently a single investor through house 79 placed large asks which started to alter the ratio. I think the investor was expecting the sp to break through .29 and into the low .30s prior to and after the news release. That investor has been moving his asks lower in recent days putting pressure on selling. With a stock with a large share float it would be immaterial but with RBW it has the potential to drive down the sp significantly, it will be interesting to see where his asks are on Monday morning. RBW has a higher market cap than VGN – logistically it doesn’t make sense at present, but VGN’s low market cap is a result of the CEO and sidekick’s management, RBW need to keep their market cap gaining in strength. RBW need a a NR next week that will kick a conversion and get this stock moving again, they also need to do more publicity work. I wonder what the reaction to the news would have been if they had done a deal with Elmer Stewart or CQX (but I don’t know that CQX can drill in the Winter in Utah?). That’s my take! 🙂 Have a good weekend!

    Comment by Andrew — March 31, 2012 @ 6:35 am

  15. Thanks Andrew for your good take. RBW did promise some news for next week. And let us see what those Calgary brokers have concluded from their Thursday meeting with management.

    Comment by Alexandre — March 31, 2012 @ 7:17 am

  16. Thank you for your comment, really appreciate that! Let’s see what happens. Hopefully no panicing like you say. Have a great weekend!

    Comment by Kalkan - Sweden — March 31, 2012 @ 8:40 am

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