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February 15, 2011

BMR Morning Market Musings…

Gold is stronger this morning as it tries to battle through resistance between $1,370 and $1,380…as of 6 am Pacific, the yellow metal is $13 higher at $1,375…Silver has climbed 27 cents to $30.87 while the U.S. Dollar Index is off one-quarter of a point at 78.38…the CDNX, which climbed 22 points yesterday to 2380, may try to overcome 2400 today…January inflation numbers came out from China this morning…prices excluding food rose 4.9%, the most in at least 6 years…the number, although high, was less than the 5.4% the market was anticipating…structural inflation, however, has certainly taken hold in China where the acceleration in inflation reflects rising rents, a 48% surge in money supply in two years and increasing domestic demand in the nation that has replaced Japan as the world’s second biggest economy…Chinese officials are likely to engage in more monetary tightening as the year progresses but negative real interest rates still exists in China which is bullish for Gold…British consumer price inflation for January was in line with expectations, 4% vs. 3.7% in December, but it has nonetheless surged to double the Bank of England’s target…the Bank of England is expected to raise interest rates from their record low of 0.5% later this year…the budget plan President Obama sent to Congress yesterday foresees a record deficit of $1.65 trillion this year… that would be just under 11 percent of the $14 trillion economy – the largest proportion since 1945, when wartime spending swelled the deficit to 21.5 percent of U.S. gross domestic product…Obama’s deficit-cutting plan over the next decade lacks a great deal of credibility and could really be thrown out of whack if interest rates climb higher than expected…our Morning Musings have been posted earlier than usual today due to travel commitments…Seafield Resources (SFF, TSX-V) had a wild ride yesterday, climbing early in the trading session to a high of 46.5 cents after exploration news came out before the opening bell…however, a few hours later, an article from a Stockwatch business reporter concerning Seafield’s Colombian manager Ian Park sent the stock into a tailspin and SFF dropped as low as 31 cents before closing at 33.5 cents…markets often work on fear and greed, and yesterday was a fear-driven day in the Seafield market which was unfortunate because Park, a geologist and geophysicist, has a proven track record of exploration success in Colombia and has been instrumental in assembling a first-rate land package for Seafield (Quinchia) with multi-million ounce potential…the market has also been too focused on Miraflores (thanks in part to James West) because of last month’s spectacular drill result and hasn’t paid enough attention to what’s developing at Dos Quebradas, Santa Sofia and La Loma where the real blue sky potential exists for Seafield…we stated in December that Miraflores, while a decent deposit, has limited growth potential but that’s not the case with the porphyry targets at Dos Quebradas and elsewhere at Quinchia…we suggest investors do their due diligence on Visible Gold (VGD, TSX-V) which is quickly becoming one of the most aggressive explorers along the Cadillac Trend…the chart for VGD also looks very favorable as John pointed out yesterday…VGD has approximately $9 million in the bank and has already outlined a $6.5 million exploration budget for 2011 which includes at least 40,000 metres of total drilling, some of which is now underway…Visible Gold closed up 1.5 cents yesterday at 47 cents…the last half of February could be quite interesting for GoldQuest Mining (GQC, TSX-V)…newly-appointed President and CEO Julio Espaillat officially starts March 1 and by about then (and just prior to PDAC where the company will be showing some core) it’s reasonable to assume GoldQuest will have some initial drill results from Escandalosa in the DR and perhaps a 43-101 resource estimate for its Toral zinc-lead-silver project in Spain…with Espaillat as President and CEO, and the highly respected Bill Fisher as Chairman, GoldQuest has the right people in place to make this company a major winner this year…Fisher and Espaillat, who helped make GlobeStar a big success in the DR, will undoubtedly use the GlobeStar model to take GoldQuest to the next level…GoldQuest has plenty of technical support in the low 40’s…it closed yesterday at 43 cents…its market cap of $44 million is only one-quarter of the takeover price GlobeStar fetched late last year…Gold Bullion Development (GBB, TSX-V) is looking strong technically in advance of news from Granada which is a positive sign…GBB closed up 2 pennies yesterday at 75 cents…

31 Comments

  1. Thx for this Jon.. wondered about SFF and the drop.. cant figure that out when you are on a golf course:)
    is this short term in your view?? seems very drastic with high volume to be just a ;rumor’ as such.
    comments appreciated

    Comment by Jeremy — February 15, 2011 @ 6:32 am

  2. Hi guys, GBB finally released a huge news release. Any comments?

    Comment by Elof — February 15, 2011 @ 8:01 am

  3. Hi Jon
    Thanks for all the informative work you do. Could you provide your views on the Mr. Ian Park issue and connections to SFF. Have had some poor dealings with less than credible company affiliations in the past and this one looks suspicious. I took profits a couple of weeks ago so missed the drop and would like to get back in if the contractor / management is legit. Big thanks to John for his chart work! I have been working with charts for three years and John has clarified the use of indicators and how to interpret them with much better accuracy. Great work.

    Comment by Steve — February 15, 2011 @ 8:14 am

  4. I dumped all GBB at 76 cents and 73 cents…. I don’t like the news…. but at 60 cents… I will buy back

    Comment by Theodore — February 15, 2011 @ 8:30 am

  5. Theodore , what news at GBB? Down right now at .59!

    Comment by MJJP — February 15, 2011 @ 8:31 am

  6. Crazy action with GBB – this will be back up shortly. Should have guessed the market was expecting bigger news and they might disappoint the ‘get rich quick’ dreamers – this is actually good news so I am staying put!

    Comment by Herb — February 15, 2011 @ 8:40 am

  7. I think Jon would say buy on fear. Looks like this could be appropriate for GBB and SFF. I nearly bought GBB this morning at .71 and then it started to plummet before the nr showed up on Quotestream. EVR and GQC are also good buys today. ABI had a news release and is holding. Now if only AGE would slip a little I would pick up some shares there. It’s a buffet today and I can’t make up my mind what to eat/buy. 🙂

    Comment by Andrew — February 15, 2011 @ 8:55 am

  8. Hi Jon,

    Don’t miss the conference call at 14h00 for SFF statement, today.

    Comment by Sylvain — February 15, 2011 @ 10:02 am

  9. Really disappointed with the reaction to the gbb news. I am curious about BMR’s interpretation of the NR. Is the lack of commentary significant? I ask because generally BMR has really been quick to comment and put a very positive spin on previous news releases, is this one in need of more time to put such a spin on?

    Comment by Mike — February 15, 2011 @ 10:36 am

  10. If you notice that BMR morning market musings was early today and before GBB results .I guess this is the reason that Jon is not comming out with his conclusions on the latest GBB news release. It was a hard week but after investing in the ventur since 20 years nothing surprise me. I think the results were not bad but not good enough yet to keep the stock over 75 cents.

    Comment by Andre — February 15, 2011 @ 10:55 am

  11. Andre

    jon mentioned they were traveling this morning that is why the market musings were out so early.

    Comment by GREG — February 15, 2011 @ 11:11 am

  12. For those who are concerned about the drill results, I would suggest that they go and google Brett Resources and have a look at Brett’s Hammond Reef project. Similar grades to GBB, long and shallow intervals. Osisko bought out Brett to get a hold of the Hammond Reef project.

    GBB surely had some holes that may be a bit of a disappointment, but as long as they continue to have results that show long continuous intervals of low grade gold, they will be fine.

    I truly cannot believe that there are people dumb enough to sell this in the low 50’s.

    Comment by aaron — February 15, 2011 @ 11:33 am

  13. Seafield Conference Call was worthwhile listening to. I hope they put the recording on their website. It was brief, 30 minutes but Tony and Jim spoke well and addressed the questions without hesitation. I think this was a good idea and would have helped allay fears in those shareholders that rode out yesterday.

    Comment by Andrew — February 15, 2011 @ 11:43 am

  14. Hello!

    I would be very please of getting your thought about the new update from GBB and also what you think about the coming month for the company. The market really kill the stock today..

    Thanks!

    Comment by Eric — February 15, 2011 @ 12:42 pm

  15. What a horrible display by GBB!!!!!

    Comment by Forb — February 15, 2011 @ 1:17 pm

  16. I cant understand why people would want to sell GBB, so much news in the pipeline and prospect for the unfolding story.

    Comment by Herb — February 15, 2011 @ 1:54 pm

  17. We saw Mob Psychology today. A couple of investors chose not to take the time to
    concentrate on this great NR, chose to panic and pull the trigger, sold 300,000 shs.
    This was the flame that ignited the Mob Psycology button, people fled, not taking
    time to make mature, responsible decisions. I have every confidence that Jon will
    be working most of the night, analysing the results and providing we shareholders
    with a mature, responsible summary in the morning. We need common sense and logic
    to prevail tomorrow and the coming days. GBB are drilling for structure, how
    about the vein grading 162.75 gton gold over 1.09 meters.

    Comment by betty anne — February 15, 2011 @ 2:56 pm

  18. One final SFF issue that is nagging me: “Mr. Park is not an officer or director of Seafield and therefore, in my view, not in violation of the SEC ban,” These are reportedly Tony Roodenburg’s words. This is rather vague for a CEO and leaves it open to challenge. I wonder what the SEC’s view is and if there will be an investigation which would entail a cease trade order? I hope not as I bought at the close today. 🙂

    Comment by Andrew — February 15, 2011 @ 3:27 pm

  19. Hi Andre, yes, I’m sorry….I was on a plane early this morning and I was in Vancouver all day today attending meetings, including the Cadillac Mining Annual General Meeting. Hence I was unable to do any postings during the day today or analyze the GBB news until my return home tonight. Bad timing, unfortunately. I will be looking at everything in some detail tonight and provide some comment in the morning.

    Comment by Jon - BMR — February 15, 2011 @ 7:10 pm

  20. Hi Eric, sorry, I just returned home tonight from a long day of meetings in Vancouver including the Cadillac Mining AGM. Will comment on GBB in the morning after I analyze things and get a good rest. Appreciate your patience. Bad timing on my part today, unfortunately.

    Comment by Jon - BMR — February 15, 2011 @ 7:14 pm

  21. Hi Mike, unfortunately I left early this morning for Vancouver prior to the market open for meetings including the Cadillac Mining AGM. I had no opportunity to do any postings during the day and I apologize for that. Just returned home this evening. Will be looking at everything tonight and commenting in the AM.

    Comment by BMR — February 15, 2011 @ 7:15 pm

  22. Hi Steve, I missed being able to comment on two developing stories today – the GBB news and the SFF conference call. Very bad timing on my part, unfortunately, but these things happen. I was in Vancouver for meetings all day including the Cadillac Mining AGM. We’ll try to get on top of all of this by tomorrow.

    Comment by Jon - BMR — February 15, 2011 @ 7:17 pm

  23. Hi Elof, sorry…….was away from the office all day today attending meetings including the CQX AGM. Will be commenting in the morning after fully analyzing everything.

    Comment by Jon - BMR — February 15, 2011 @ 7:18 pm

  24. Dude, why did you erase my post about insider trading? People should be aware of it. I thought it was an open community.
    When you have a chance, can you please ask Roger Thomas why he changed share ownership prior to the news release. Thanks.

    Filing Date Transaction Date Insider Name Ownership Type Securities Nature of transaction # or value acquired or disposed of Unit Price
    Feb 14/11 Feb 10/11 Thomas, Roger David Control or Direction Common Shares 90 – Change in the nature of ownership -1,301,852

    Comment by Bruce — February 15, 2011 @ 7:45 pm

  25. Hi Bruce, I’m sorry! That was a technical glitch and entirely my fault…..we have a few of those here sometime. I accidentally erased an entire Morning Musings posting recently. Anyway, you bring up a good point but I know that Roger is a man of integrity and there could have been any number of reasons for a change of ownership……tax reasons, who knows….why not give him a call yourself tomorrow, I’m sure he’d be very open in terms of a response….

    Comment by Jon - BMR — February 15, 2011 @ 8:18 pm

  26. Jon,

    Thanks for all of your responses to each person that asked you a question today, however I can’t speak for everyone here but I would think most of the people here would understand if you just posted one answer that you were traveling, out of office, etc. and you will get back to everyone later . Would save you alot of time and I would rather you have that time to rest and get caught up on the happenings of the day. Just my 2 cents

    thanks for all you do and I look forward to hearing more about Cadillac soon.

    Greg

    Comment by GREG H — February 15, 2011 @ 10:01 pm

  27. Hello BMR!

    Any comments about ABI:s NR yesterday??

    Comment by Carl — February 16, 2011 @ 12:52 am

  28. It will be very curious to see how GBB responds for the balance of the week and what type of volume we get. I can only think that there are some big orders that might get placed to take advantage of the sub-70 cent share prices.

    Comment by Michael — February 16, 2011 @ 4:51 am

  29. Hi Carl, yes, I’m just beginning to look at that as well in some detail but after a quick, first glance…very impressive. There is no question they have a terrific asset at Abcourt-Barvue, which is why we brought this to our readers’ attention. This is one of the best undeveloped silver plays in the country, without a doubt. It will either be developed by Abcourt, or there’s also the possibility of a JV with a major or an outright takeover. I also love their Elder-Tagami Gold property. They are developing the Elder-Tagami Gold Property near Rouyn which is certainly a potential producer looking out over the next 18 months.

    Comment by Jon - BMR — February 16, 2011 @ 5:24 am

  30. Hi John
    No apologies necessary for doing your great research. After reviewing all your comments (Morning Musings – Feb 14) regarding the Ian Park / SFF issue, no response to my earlier question is necessary. You have provided ample reasons related to company value and project development in Columbia. I do hope your great information page does NOT turn into another manipulation bull board like Stockhouse! Thanks again for all your groups work in getting us (investors) useful information for furthering our due diligence.
    Steve

    Comment by Steve — February 16, 2011 @ 8:07 am

  31. Thank,s Betty Anne for yours ripeness comments. We saw greed and fear of investors when they sold stocks after the NR of GBB.
    Patience is necessary in this case. GBB publish good news and continu for drilling. 43-101 results will coming after phase 3 and watch out.

    Comment by Sylvain — February 16, 2011 @ 10:28 am

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