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March 9, 2015

BMR Morning Market Musings…

Gold has traded between $1,167 and $1,176 so far today after Friday’s biggest single-day sell-off in more than a year…as of 8:15 am Pacific, bullion is down $1 an ounce at $1,168…Silver is off 15 cents at $15.78…Copper has added a nickel to $2.67…Crude Oil is up $1 a barrel to $50.59 while the U.S. Dollar Index has retreated slightly to 97.63 following Friday’s sharp rise…

Physical demand from emerging markets will be key in supporting bullion through the rest of this month, which is normally one of the weakest periods of the year…the Shanghai Gold Exchange saw withdrawals of 412 metric tons through the end of February…that’s a robust number and means that Chinese demand is on track for a potentially very big 2015…additionally, imports by India are expected to surge this month following the governmentā€™s decision to maintain current tax rates…the expectation had been for taxes on imports to drop, causing locals to hold off on purchases during February…

Sprott Asset Management’s Rick Rule told Kitco in an interview at PDAC that he continues to see Gold as an excellent store of value.Ā  ā€œIā€™ve seen a room at Motel 6 where an ounce of Gold would by you 6 nights, and now an ounce of Gold buys you 16 nights. Thatā€™s what Gold is supposed to do,ā€ he said. ā€œThere are people who have different expectations for Goldā€¦for people like me, Gold hasnā€™t disappointed at all.ā€

Updated Gold Chart

This 2.5-year weekly Gold chart has proven to be highly reliable…what it shows is bullion trading within a downsloping flag since the spring of 2013…it met resistance at the top of the flag in late January, and potentially could once again test strong support at the bottom of the flag, currently around $1,100…there are other support levels above $1,100, however, including a band between $1,130 and $1,150 that held last November…

Over the past year, RSI(14) has moved within a 30% to 60% channel, and is currently at 39%…

Again, physical demand will be critical in keeping a floor under the price of Gold in the days ahead…

GOLD33

Gold vs. 10-Year Treasury Note

Gold has an inverse relationship with the U.S. 10-year Treasury Note, and this fact has been very evident over the last month or so as the yield on the 10-Year (TNX) has shot up from below 1.7% near the end of January to just over 2.2%…that surge in the yield has been accompanied by an equally significant drop in the price of Gold

What’s highly encouraging for Gold is that the TNX is rapidly approaching stiff resistance at its declining 200-day moving average (SMA)…at the same time, RSI(2) is at a high extreme of 96% based on Friday’s close…

There’s every reason the believe the TNX will back off shortly, giving bullion some support…

TNX1(1)

Oil Update

Canadians of all political stripes should be outraged at the unprecedented attack on this country’s Oil industry by an American President…never has an American President launched such a scathing misinformation campaign against a Canadian industry, especially the Oil sector which is so vital to both American and Canadian energy security…Obama ratcheted up his reckless rhetoric again Friday in a town-hall session at a South Carolina college, declaring:Ā  “The way that you get Oil out in Canada is an extraordinarily dirty way of extracting Oil (another lie from this President).Obviously, he added, “there are always risks in piping a lot of Oil through Nebraska farmland and other parts of the country.”

Rising Canadian imports over the last decade have – thankfully – allowed Americans to rely less on Oil imports from OPEC, including ghastly regimes such as Venezuela…

And of course the network of Crude Oil pipelines in the U.S. is already extensive, and pipelines have proven to be safer and more efficient than rail at moving Oil (a CN Rail train carrying Crude Oil had an accident over the weekend in northern Ontario with some Oil spilling into a local river system)…there are approximately 55,000 miles of Crude Oil trunk lines (usually 824 inches in diameter) that connect U.S. regional markets, but Keystone XL is a symbol that’s being targeted by radical American environmentalists who just hate Oil and have a naive ally in the White House…

Obama’s relentless and increasing attacks on Canada’s Oil industry are not only shameful for an American President, but outright silly – secure access to Canadian Oil was a key aim of U.S. negotiators during NAFTA negotiations…this is not the way for a U.S. President to handle the largest bilateral trading relationship in the world, and the overall special relationship that exists between the 2 countries…fortunately, all Republicans and a good number of Democrats in Congress don’t share Obama’s views regarding Keystone or Canadian Oil…

U.S. Oil Rig Count Dips Below 1000

The U.S. oil-rig count fell by 64 to 922 in the latest week, data from Baker Hughes Inc. confirms…that marks the 13th straight week of declines and the first time since June 2011 that the number of Oil rigs had dipped below 1,000…however, it’s important to point out that there’s a major disconnect between the rig count and production activity which hasn’t stabilized just yet…

Goldman Sachs Calls For $40 Crude

Goldman Sachs is calling for a further 25% drop in Crude Oil prices to around $40 a barrel…after tumbling 60% since June into early this year, WTIC rallied by almost a third between late January through February on the back of Middle East supply disruptions, strong winter demand and high refinery margins…

“While we continue to forecast a strong demand recovery in 2015, we believe that sequentially weaker activity, the end of winter and the end of potential restocking demand, will lead to a sequential deceleration in demand-growth as we enter the spring,” the bank said.

Today’s Equity Markets

Asia

China’s Shanghai Composite jumped 60 points or nearly 2% overnight to close at 3302 as bank stocks led the way…data over the weekend showed a 48% surge in China’s exports for the month of February, sharply above analysts’ forecasts…however, the figures were likely distorted by a number of factors including comparisons with a weak tally a year ago as authorities cracked down on export fraud, as well as the timing of the Lunar New Year holiday…

Japanā€™s Nikkei average fell 180 points overnight…the Japanese economy grew slower than initially estimated in the October-December quarter, a sign that anemic household spending and business investment after a recession last year are weighing more heavily on the nationā€™s recovery than previously thought…GDP grew an annualized 1.5% in the October-December period, down from an initial reading of 2.2% in February, but still showed the country emerging out of recession…

Europe

European markets are mixed in late trading overseas…the ECB launched its 1 trillion euro ($1.1 trillion U.S.) bond-buying program today…

North America

The Dow is up 97 points through the first 75 minutes of trading today…there are no major U.S. economic reports today…highlighting this week’s data will be Thursday’s release of February retail sales figures…

Apple Inc. (AAPL, NASDAQ) will also be in focus today as it holds its first major event of the year…the company is set to formally unveil the price and final features of its watch at a meeting in San Francisco which kicks off at 10 a.m. Pacific…

In Toronto, the TSX is down 27 points as of 8:15 am Pacific while the Venture is off 2 points at 687

Garibaldi Resources Corp. (GGI, TSX-V) Update

As a Phase 2 drill program continues, one cannot help but believe there are more stellar results to come for Garibaldi Resources (GGI, TSX-V) at its high-grade Rodadero Silver-Gold Project in central Sonora State, Mexico…

Results from the first 15 holes at Silver Eagle demonstrate a nearly flat-lying tabular mineralized body that remains wide open for expansion, particularly to the north and the south…the structural “tie-in” between Silver Eagle and the Reales target to the south is key, as upcoming initial drilling at Reales could add significantly to the size of this emerging deposit…meanwhile, the bonanza grades intersected in SE-1415 – a 150-meter step-out to the north of discovery hole SE-1401 – are strong evidence that this very shallow high-grade system indeed has “legs” to it…feeder zones are also quite possibly present at depth…

“We’re In A Very, Very Large System”: GGI President/CEO Steve Regoci

As impressive as Silver Eagle is becoming, GGI President and CEO Steve Regoci is focused on the bigger picture of what’s evolving overall at the nearly 50 sq. km Rodadero package…

Silver Eagle and Reales are just 2 of a dozen targets identified to date…immediately to the east and southeast of the “SR High-Grade Zone”, and several km to the north, the mineralogy at Rodadero changes to a mix of high-grade Silver and high-grade Gold, trending east-west, as confirmed through surface sampling…

Gold-rich drill targets have already been defined at Tarichi and La Tortuga…

In an exclusive interview with BMR, Regoci had the following comments on developments at Rodadero:

“The secret to Rodadero is the scale of it,” Regoci stated. Ā  “We’re in a discovery process.Ā  A lot of people suggested that we made a discovery with the first hole at Silver Eagle.Ā  Yes, but we’re in a very, very large system as our latest news states.Ā  There are going to be a number of bodies I think that are all connected at depth.Ā  The structures are there.Ā  Everything’s lined up along these crosscutting structures.Ā  There has been a huge amount of pressure and fluid driven through here.Ā  I’m really excited about what this is going to evolve into.Ā  It’s not just about Silver Eagle.Ā  It’s not just about Tarichi.Ā  It’s about Rodadero.Ā  It looks to me like a mineral complex that could be a world class situation for our shareholders.”

GGI 2-Year Monthly Chart

This 2-year monthly GGI chart shows a bullish “Wave 5” pattern now in progress after “Wave 4” bottomed at 15 cents, approximately the same level as the top of “Wave 1” which is significant from a technical perspective…accumulation in GGI has been strong and steady since the end of 2013, and the ADX indicator confirms the primary bullish trend…

GGI21(1)

Walker River Resources (WRR, TSX-V) Update

Speaking of high-grade targets, Walker River Resources (WRR, TSX-V) will be taking aim at some very prospective ones shortly at its Lapon Canyon Gold Project in Nevada…with a financing now complete and approved by the Venture, and a market cap of only $2 million, we see some exciting near-term possibilities for this play…we’ll be detailing the favorable geology at Lapon Canyon this week and why WRR has such an excellent opportunity for immediate drilling success…

Technically, the scenario here is extremely bullish given the recent breakout on record volume above the downtrend line, the rising 50-day SMA, and the RSI(14) uptrend that started in late October last year…

WRR5

Silver Short-Term Chart

Silver has been trading within a downsloping channel since near the end of January, and the test now it whether it finds support at the bottom of that channel where it’s currently resting…

The metal reacted in January at $18.50 (almost exactly at chart and Fib. resistance) and has been consolidating in recent weeks within this downsloping channelā€¦a move outside of that channel – either up or down – would be technically very significantā€¦

RSI(14) has dropped below a previous support level and is now at 35%, a drop in half from late January…

In December, Silver finally staged a definitive breakout above a downtrend line that was in place since the summer (note how the downtrend line became new support in early December)ā€¦

The December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significantā€¦as expected, superb support was demonstrated at $15 and is also evident around $15.60ā€¦

SILVER7(2)

Silver Long-Term Chart

This 34-year monthly chart continues to give hope that Silver could be in the very early stages of a powerful ā€œWave 5ā€ move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)ā€¦the reasons for such a move are also not clearā€¦

RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15ā€¦

One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressureā€¦based on historical patterns, sell pressure could persist for a considerable time yet ā€“ though that doesnā€™t necessarily mean that the price canā€™t still trend higherā€¦nonetheless, it would be encouraging to see this sell pressure begin to abateā€¦it has eased off only slightly in recent monthsā€¦

SILVER8(2)

Note:Ā  John and Jon both hold share positions in GGI and WRR.

37 Comments

  1. BMR – (another lie from this President). ā€œObviously,ā€œ

    Bert – The President doesn’t have a chance. By the way, his view
    is shared by millions, including Canadians. Reverse the
    pipeline, so that it passes by the BMR site, would they
    be happy i wonder ??? I’m sure that pipeline is leaking
    says he, i’m sure i smell oil….

    Comment by Bert — March 9, 2015 @ 7:34 am

  2. ELO continues to creep up on accumulation and most importantly insider buying. Chart looks good. 13.5 million shares outstanding with one insider owning 5 million shares so float is low.

    Look at Canadian Insider Site…

    Comment by d4 — March 9, 2015 @ 8:58 am

  3. GBB- Jon have you some news from GBB. We can heard that they probably make consolidation of the share. Is it true?

    Comment by Carl — March 9, 2015 @ 8:59 am

  4. Your average American could care less about Canada’s oil industry. For the U.S. it’s all about energy independence now. Everyone and his grandmother knew that Obama was not going to budge on this issue…why it comes to a surprise to some I don’t know. Now, instead of blaming Obama maybe we should shift the blame to Harper for sitting on his rear-end and not coming up with a back-up plan. Why not keep the oil in Canada and create jobs here? If you look at Canada’s job reports, you’ll notice more often than not the jobs created are part-time ones. A lot of Canadians would jump at the chance at securing one of these good paying full-time jobs.

    Bert, you make a good point. It’s easy to point your finger at these people when you’re living in the city…but if I lived out in the country and someone proposed to pass a pipeline through my property or somewhere nearby, I don’t think I would be too keen on the idea.

    Anyhow, both sides make valid points, but it’s one of those issues were we agree to disagree.

    Comment by chris — March 9, 2015 @ 9:00 am

  5. GGI has a lot of over hang that it needs to clear before it can move. Still don’t understand why people would want out at these prices with everything it has going for it and all the news flow this summer.

    Comment by d4 — March 9, 2015 @ 9:01 am

  6. Chris

    I am not really concerned about pipelines in general, but because i am able to
    reference dead birds & animals in the tailing ponds in Alberta, i am able to rest
    my case.
    Another really sad event, that is, the killing of one of our Great Canadian
    Soldiers in Iraq, it’s a good thing they are not on the front lines & should
    remind all, what can happen in a War & on a larger scale, may i add..
    I commend anyone, who can keep our troops from participating in a ground war,
    even if he or she is to be considered weak. They who walk away, may live to enjoy
    another day..

    Comment by Bert — March 9, 2015 @ 10:51 am

  7. Bert, I don’t have anything against pipelines, but there are some risks. Regarding Keystone- you guys have to understand that there are several powerful people who do not want the pipeline to be built…one of those individuals has to be Buffet, since he has a monopoly on oil transport by rail. I am sure he’s twisting several politicians’ arms.

    Sgt.Andrew Doiron: another young man lost too soon. May he R.I.P.

    Comment by chris — March 9, 2015 @ 12:06 pm

  8. Hello,

    Any news or update from your visit to the site of GBB? Thank you in advance.
    Regards,

    Arjan

    Comment by Arjan — March 9, 2015 @ 12:13 pm

  9. d4 – good trade on ELO for you. I also agree with you on GGI – my personal opinion is the market care less about silver right now. They want gold assays. The non-mining stocks have been performing very well this year and I see this to continue. BLO perfect example.

    I own GGI, VGD, and WRR. I will not part with the WRR shares. Simply put, I will never get my .02 and .03 back again. I would be shooting myself in the foot.

    I mentioned to watch ARY even though its a mining. U308 is up and if that big financing comes through on it, she runs. I sold NPH today, I’m hoping for a correction. I mentioned to watch SLC, if she closes at or above .72, she should run to .95 easy.

    Comment by dave — March 9, 2015 @ 12:15 pm

  10. More tomorrow on GBB, Arjan.

    Comment by Jon - BMR — March 9, 2015 @ 12:20 pm

  11. d4 – Also, I wanted to mention that I saw thier NR on 12-09-14 and thought about entering, but it was so iliquid that I could not have bought a lot. I usually don’t play with low dollars. It turned out I should have just thrown a couple grand in it.

    Good trade for you d4, congrats. I am concerned though on how VGD is trading and remember ELO is moving based on VGD success. I am HOPING that VGD MM’s are scaring the market out, and now because of it, we have what might be a possible tight good looking “W” in the chart. Next few days will tell us.

    Comment by dave — March 9, 2015 @ 12:23 pm

  12. Oh, one last thing I forgot to mention. WRR – its either the mm’s with thier games or a retail that decided not to cough up thier .045.
    The .045 sells got smaller at 3:59, I was clicking level 2 every minute near the close.

    Comment by dave — March 9, 2015 @ 12:28 pm

  13. Thank you in advance Jon…Cheers…

    Comment by Arjan — March 9, 2015 @ 12:40 pm

  14. D4

    Regarding GGI., there’s some little thing that the market doesn’t like,
    otherwise it would be moving up. No matter how optimistic we feel, we
    must realize that it takes time, (time gentlemen please), to prove up
    a deposit, worthy of a take over. Gold/silver is no different than
    any other stock, it goes up, it goes down, so most out there realize
    this & one would think they would be buying for the future, but that
    is not the case. I feel the market is holding most buyers back, for
    example, i am following a dozen or so stocks & the volume today
    indicated few buyers. This has been going on for an extended period
    of time & what it will take to turn it around, remains anyone’s
    guess. This is why i have let it be known that trading in and out
    is the way to go, failing this, i would be a dang fool.

    Comment by Bert — March 9, 2015 @ 1:14 pm

  15. GBB… I believe that reverse split is good for GBB. 5 to 1 …should be good….. that means back to 20 cents. I mentioned this long time ago and this is going to happen soon.

    Comment by Theodore — March 9, 2015 @ 4:26 pm

  16. I doubt it, Theodore. What’s far more likely with GBB is a takeover, perhaps sooner than later.

    Comment by Jon - BMR — March 9, 2015 @ 5:10 pm

  17. bmr picks:

    Nar filled the gap at .70 and is now support.

    GGI – turned bullish on the Dave-o-meter

    WRR – turned very bullish on the Dave-o-meter.

    DBV – lets hope those 2 walls disappear tomorrow morning.

    GBB – neutral on the Dave-o-meter.

    Comment by dave — March 9, 2015 @ 6:48 pm

  18. VGD – resistance at .19 has grown in confluence number, lets see what she does tomorrow.

    Comment by dave — March 9, 2015 @ 6:50 pm

  19. d4 – just for you sir, ELO only resistance is .19 – yes, she closed there but she has to close above it to have blue sky sailing. She is doing well despite VGD suspicious trading behavior. Good luck to you.

    Comment by dave — March 9, 2015 @ 6:53 pm

  20. Theodore – GBBā€¦ I believe that reverse split is good for GBB. 5 to 1 ā€¦should be goodā€¦..
    that means back to 20 cents. I mentioned this long time ago and this is going
    to happen soon.

    Bert – I refused to become a shareholders because of the number of shares o/s & if it is
    correct, that there will be a reverse split, i feel pleased that i didn’t. It is my
    opinion that none of those small companies, trading for pennies, are likely to make
    moves with shareholders in mind. It’s always the company first & if, as you state,
    they intend doing a 5-1 reverse split to increase share value, they are at the same
    time, decreasing your number of shares. So they get their share price up to approximately
    0.20, while leaving some, owning, say 1,000 shares with only 200, not even a board lot.
    I realize most have more than 1K shares, but i used that amount to make a point & no
    matter what one owns, they will still be divided by 5. We are in desperate times &
    desperate moves will be made, but hopefully things work out & they do have a plan, but
    i for one, am not willing to take a chance. Have a good day..

    Comment by Bert — March 10, 2015 @ 3:46 am

  21. Dave- thanks. ELO has been under accumulation for a little while and as you indicated it seems to be doing its own thing and not moving in tandem with VGD….this could be due to its last PR about grab samples from its other property. The asks keep getting hit and as they do the bids are raised so I really like the way its trading under this accumulation phase. It just needs something to ignite a spark under it and VGD could provide it. If it does, I think ELO could be a big gainer due to its low O/S, low float and weak asks on L2. Its a perfect set-up if VGD excites the market again.

    Comment by d4 — March 10, 2015 @ 4:29 am

  22. Looking forward to your write-up on GBB. Frank stated many times that a share consolidation is not in the cards. This rumour was started and repeated many times by the same poster. I think his handle is pumpme.

    Comment by Ted — March 10, 2015 @ 4:45 am

  23. I am in agreement with Bert on the number of shares outstanding. I also will not touch a stock like GBB due to the number of shares it has and I learned this through experience. They are very hard to make move and even harder to sustain gains. Also, I do not agree that any reverse split is good for any stock if one is a current shareholder. From experience, shortly after a split the price goes lower and one actually ends up with a value much less than pre-split values. Its only good for new post split shareholders that get in at a good price because now they finally have a low outstanding stock that can finally move easier on good news.

    Comment by d4 — March 10, 2015 @ 4:45 am

  24. ARY looks like it is going to open with high volume

    Comment by dave — March 10, 2015 @ 5:20 am

  25. If GBB do not need to raise cash by way of additional shares, why do they need to do a roll-back? The SP should respond to the fact that they are in production and financing their operations themselves.

    Comment by Tom UK — March 10, 2015 @ 5:24 am

  26. Companies that do rollbacks are companies that have a lot of shares outstanding and don’t have the project to back it up. In the case of GBB, there’s no need for a rollback given the near-term cash flow possibilities and the robust nature of the PFS. They could also get taken out.

    Comment by Jon - BMR — March 10, 2015 @ 5:28 am

  27. Thanks Jon. It would seem the GBB basher from Stockhouse has found your website.

    Comment by Ted — March 10, 2015 @ 5:43 am

  28. Jon- It seems that a buyout of GBB at these prices, is our greatest risk at the moment. How do you see a takeover playing out(price), in light of the relationship with IMG. If someone hostile wants to take you out, I don’t think one can inevitably prevent it. As we are so undervalued,I would be interested in
    your thoughts as this is so relevant to the value going forward.

    Comment by Bob — March 10, 2015 @ 5:57 am

  29. Bob, I understand what you’re saying…any opportunistic buyout of GBB, however, certainly wouldn’t be at 4 cents…the simple fact is, this is hugely undervalued given the location, the known resource in the ground, the still very high exploration potential, and the robust numbers in the PFS. Those are the current facts I’m focused on. Some people may not want to see a near-term buyout as they believe this has a chance to make its way back up to its old highs down the road. I understand that, but there are also some quick dollars to be made on a potential near-term buyout.

    Comment by BMR — March 10, 2015 @ 6:10 am

  30. Jon – Companies that do rollbacks are companies that have a lot of shares outstanding
    and donā€™t have the project to back it up. In the case of GBB, thereā€™s no need for
    a rollback given the near-term cash flow possibilities and the robust nature of the
    PFS. They could also get taken out.

    Bert – I appreciate your positive re-action, but the number of shares o/s means everything.
    It even has a bearing if & when a takeover did happen. A company would have to have
    outstanding numbers proven, in order to dwarf the number of shares o/s. Also, Will
    a buyer ever make a profit, considering the costs involved to put a mine in operation.
    I could go on & on, but one also has to realize that project buyers are no fools.

    Comment by Bert — March 10, 2015 @ 6:12 am

  31. Number of shares doesn’t matter on a take-over….(500 million shares at .01 is 5 million and 50 million shares at .10 is also 5 million) its the market cap that counts and the premium over it based on the economics, size, etc of the project.

    Comment by d4 — March 10, 2015 @ 6:26 am

  32. OK, my turn. What is all this talk about a buy out on GBB. Did they sign a CS. Jon, did a birdie whisper in your ear. I think it is far fetched that they visit thier all time high’s with the o/s. IMHO

    Comment by dave — March 10, 2015 @ 6:44 am

  33. Nope, SLC don’t want to break that .72 – wait for next news release.

    Comment by dave — March 10, 2015 @ 6:53 am

  34. d4 – Number of shares doesnā€™t matter on a take-over

    Bert – Sorry my buddy, i disagree. The # of shares will be an
    important factor in any possible takeover & will be
    dominant in negotiations & in fact, even a hostile bidder,
    would have to consider the shares o/s. The more shares,
    the more they have to pay shareholders, so they try to
    get it as cheap as possible. I hereby bid 0.05/share for GBB.

    Comment by Bert — March 10, 2015 @ 7:09 am

  35. To those, who thought traders needed some time to digest the GGI news,
    we see the results today, so far, 500 share volume. Although i am in
    for the longer term, it is disappointing to watch such a good play
    be overlooked by the market, especially since it has numerous promoters.

    Comment by Bert — March 10, 2015 @ 7:16 am

  36. Once GBB has poured Gold and increased their reserves the risks also decrease for any potential takeover company. Though the company doesn’t have a poison pill in place, by adopting the shareholder gold ownership program an unfriendly takeover would not be in the cards.

    Comment by Ted — March 10, 2015 @ 7:20 am

  37. Ted – GBB does have a poison pill in place, Frank just posted a link to it on the Forum. I don’t think anyone is expecting the all-time high to be repeated in the short term but perhaps 50%, which would be a 10 bagger from here.

    Comment by Bob — March 10, 2015 @ 8:16 am

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