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June 22, 2015

BMR Morning Market Musings…

Gold has traded between $1,181 and $1,200 so far today…as of 9:30 am Pacific, bullion is down $17 an ounce at $1,183…Silver is up 4 cents at $16.12…Copper is flat at $2.56…Crude Oil is 27 cents lower at $59.34 while the U.S. Dollar Index is up one-fifth of a point at 94.25

The U.S. Oil rig count fell by 4 to 631 in the latest week, according to Baker Hughes Inc., marking the 28th straight week of declines…the number of drilling rigs, which is a proxy for activity in the Oil industry, has fallen sharply since Crude prices headed south last year…there are now about 61% fewer rigs working since a peak of 1,609 in October…

The latest Gold withdrawals figure from the Shanghai Gold Exchange (SGE) are encouraging – just over 46 tonnes for the week ending June 14 which is a solid figure for this time of year when seasonality factors are taken into account..half-year Chinese Gold demand as represented by SGE withdrawals is comfortably heading for a new record at well over 1,100 tonnes or more…

China continues to be the world’s largest buyer of Gold as Chinese authorities continue to work toward establishing the renminbi as a reserve currency…

China Gold Demand

Gold 20-Year Weekly Chart

This 20-year weekly Gold chart shows a very interesting RSI(14) pattern that could foreshadow a significant upside move in Gold at some point during the 2nd half of this year…RSI(14) has gradually been trending higher since mid-2013 and is working within a symmetrical triangle as you can see below…a breakout above the triangle would be a very bullish development…

Note the flag formation as well…resistance at the top of the flag ($1,300) and also at the declining 1,000-day moving average (SMA) at $1,445

GOLD5(1)

Today’s Equity Markets

Asia

After suffering its worst week in 7 years, China’s Shangai Composite tumbled again today as it fell another 304 points or 6% to close at 4481 – a healthy correction from very overbought technical conditions that were clearly evident in recent charts…

Japan’s Nikkei average climbed more than 1% overnight to close at its highest level in nearly 2 weeks…

Europe

European markets were sharply higher today as a deal between Greece and its creditors looked to be edging closer…the equity surge came as crucial meetings among euro zone leaders and finance ministers continued to discuss new reforms offered by Greece to its creditors…

North America

The Dow is up 94 points as of 9:30 am Pacific…U.S. home resales surged to a 5-1/2-year high in May as first-time buyers piled into the market, the latest indication that housing and overall economic activity were gathering steam in the 2nd quarter…

In Toronto, the TSX has shot up 125 points while the Venture is up a point at 685

Richmont Mines Inc. (RIC, TSX) Update

Richmont Mines (RIC, TSX-V) is holding steady today despite the fall in the Gold price, another indication how strong this producer is…

Richmont has become an earnings machine and is also benefiting from the weak Canadian dollar…Q1 2015 net earnings were $4.6 million, or 9 cents per share, against a Q1 2014 net loss of $1.9 million, or negative 5 cents per share…Q1 revenues were $37.2 million vs. $29.5 million during the same period last year…

Richmont’s accelerated development of its Island Gold Mine in northern Ontario is on schedule and on budget, while RIC’s Quebec assets performed robustly during Q1 with cash costs and all-in-sustaining costs less than expected…

The company has maintained 2015 production guidance of 77,000 to 88,000 ounces, but our guess is that they will beat those expectations…Richmont had $71 million in cash ($1.22 per share) at the end of March and long-term debt of only $5.2 million…a tremendous turnaround for Richmont and the long-term outlook has to be considered exceedingly positive given the expansion of the Island Gold Mine into a deep high-grade zone…

RIC has been trading within a bullish downsloping flag since the beginning of the year with the rising 200-day SMA at $3.59 coinciding with Fib. support…watch for another important breakout in RIC over the summer…

RIC is up a penny at $4.06 as of 9:30 am Pacific…note the possibility of a confirmed breakout this week above the downsloping flag…

RIC3(3)

Doubleview Capital Corp. (DBV, TSX-V) Update

Breakouts above downsloping flags are usually very bullish signs…we saw this occur in April in Doubleview Capital (DBV, TSX-V) and since then the top of the flag has provided new support…rising 50 and 100-day SMA’s at 15 cents are also encouraging…note the bullish “W” in the RSI(14)…

DBV

Discovery Ventures Inc. (DVN, TSX-V) Update

Discovery Ventures (DVN, TSX-V) has pulled back to an attractive support area after hitting a 7-month high of 25 cents a week ago…a recent game-changing development for Discovery has been the recruitment of a major new investor, Winnipeg entrepreneur Dan Omeniuk, who is also slated to take over as CEO…Omeniuk, who heads up a successful transport business, brings a lot of new synergies to Discovery as it advances its Willa-Max high-grade Gold-Copper Project in southeast British Columbia…

There’s every reason to believe DVN will enjoy another strong summer as it did in 2013 and 2014 based on its current technical posture and the addition of Omeniuk who is also providing $7 million in credit facilities to the company…

DVN closed Friday at 19.5 cents…

DVN June 22 BMR Chart

Ascot Resources Ltd. (AOT, TSX-V) Update

Keep an eye on Ascot Resources (AOT, TSX-V) this summer…in April, the company commenced its 2015 drill program at the Premier Property near Stewart…it covers more than 100 sq. km and includes the old Premier mine, a past producer of 2.1 million ounces of Gold and 44.9 million ounces of Silver…

This year’s drilling will be concentrated in the Premier main zone and Premier west zone areas, following up on last year’s successful campaign that produced many multi-ounce Gold intercepts including 14,394.5 g/t Au over 0.75 m…

Technically, Ascot found strong support between Fib. levels $1.28 and $1.48, as expected, and has now pushed above a downsloping flag…look for new support around $1.80 on any pullback from Friday’s big move (next Fib. support below that is $1.63)…

AOT is up 6 cents at $1.96 as of 9:30 am Pacific

AOT1(3)

Silver Short-Term Chart

As expected, Silver continues to test support at the top of the downtrend line (dotted blue, near $16) where it broke out from in May…

Silver is about to enter a traditionally strong period of the year, so it’s reasonable to expect the downtrend line support and chart support at $15.66 to hold…

SILVER5(4)

Silver Long-Term Chart

An explosive push higher (eventually) – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that appears to be in the works here…

It seems quite possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce…RSI(14) has managed to hold support which goes back to 2001…

Sell pressure continues to remain strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which could continue for a while yet, should therefore be viewed in a larger context as a bullish contrarian indicator…

Several fundamental factors are currently in Silver’s favor…industrial demand for the metal is growing, and global supplies are poised for a deficit of 57.7 million ounces this year, according to Thomson Reuters…

SILVER7(4)

Note:  John and Jon both hold share positions in DBV.

 

18 Comments

  1. GGI – well, the bollinger bands pinched the middle of June and with those couple of doji’s, it should have broken up, but it broke down. RSI back under .30 and MACD took a sharp decline here. TA is looking like it will drop much further. I am wondering if .05 is even a good buy. I can only speculate JON that maybe the recent drilling in Mexico was not as good as hoped and they are trying to merge those results with future drilling to make it look better. I’m actually nervous having a bid at .05, and thats not good.

    Comment by dave — June 22, 2015 @ 8:58 am

  2. Any comments on WRR? They have seen visible gold but when will the actual drilling begin?

    Comment by Hugh — June 22, 2015 @ 9:25 am

  3. I don’t expect the drilling to begin, Hugh, until the paper from the first PP is free-trading, so that means a few weeks yet. That’s seems to be how this is proceeding.

    Comment by Jon - BMR — June 22, 2015 @ 9:31 am

  4. Hey all .. remember that most CEO’s when talking to guys like BMR will enrich the story… the reason we are all here is the expectation that Jon et al will be able to read thru the crap and report on the substance.
    but remember also that some of these guys are perfect yarn spinners… and it has already been painfully obvious (RBW anyone.. along with a laundry list of failed opportunities) that CEO’s regardless of who they are will only respond with yarns to guys like BMR as well as BS to their boards..
    we are in a very distinct disadvantageous position WRT the truth…

    I have also seen SP drop on purpose because of insider info to the brokerage side so they can be in before the big news…

    its really like we don’t stand a chance.. so we hold thru the crap and hope the sun rises another day.. respectfully submitted!!

    Comment by Jeremy — June 22, 2015 @ 12:08 pm

  5. Jeremy, you’re absolutely right. Keep in mind, as we have always stated, 80% of Venture companies aren’t worth even looking at, which is why our universe we focus on is pretty small. Many of those 80% are simply lifestyle companies, or they’re run in such a way that really limits their prospects. About 20% of Venture companies have good quality management people who generally know what they’re doing, and they’re developing decent to exceptionally good properties (DBV and GGI, for example, are in that category and – importantly – they have results to back that up. That doesn’t mean some of these top 20% can’t still screw up in one way or another as there are a lot of banana peels out there to slip on). Within that top 20%, you can narrow it down even more based on a variety of factors, fundamental and technical.

    There are many companies we research and CEO’s we talk to, but many of those companies never survive the vetting process.

    Comment by Jon - BMR — June 22, 2015 @ 2:08 pm

  6. Jon

    how did the meeting go today with Steve at GGI?
    Any thing you can share?
    thanks

    Comment by Greg — June 22, 2015 @ 3:41 pm

  7. Another 311,000 shares of GGI sold on TMX insider sells

    Crazy no end

    Comment by anon — June 22, 2015 @ 4:06 pm

  8. Thx Jon… and the vetting process is somewhat expected if you will… but RBW slipped by you yes?? just talks to the story that these guys can spin and spin well …

    I have almost finished a legal stance with 2 investment firms since their adviser took me for a retirements worth of dough due to stories and spin.. some of which he was not responsible for and some he was..

    during this process I can guarantee that there are some very very good tellers of tales… he was one of them.. as were others … ABR comes to mind as well .. but I am sure there are many …. SFF still bothers me tho… a 43-101 and just plain bad management.. and thus the tales of a public company … Jon I think I could write a book:)

    the value of BMR would be to separate the wheat from the chaff.. granted.. and how the chips fall from there .. well we would need a crystal ball or two for that one!!!!

    But I amongst others would like BMR to follow their stories til the bitter end… and when something doesnt look good, say so… we do our DD along with what you provide and seemingly in the last 4 years have paid dearly for the decisions made…

    so guidance on the other end.. BullMarket like really run would be helpful!!:) two sides to every coin yes??

    again respectfully submitted…

    Comment by Jeremy — June 22, 2015 @ 4:59 pm

  9. Hi Jeremy, in all fairness…RBW was a great grassroots speculative exploration play which we identified at a dime after proper due diligence in late 2011 and it had an impressive run, don’t forget…tripled in value in a sloppy market and they raised $2.5 million…they struck out on the drilling side at the International, but they drilled – they also got quite good early results from drilling at 2 other properties but unfortunately those came out right when the Gold market collapsed in early 2013…few companies drilled 3 properties like they did in late 2012….this was not a lifestyle company, it was an aggressive explorer…bad timing in early 2013 for the release of the Nevada and Gold Viking results…the rest is history, they got taken down with the bad market….they’re still around after a rollback and they’ll probably survive to fight another day…don’t compare RBW with DBV or GGI because the latter 2 are completely different creatures and at much more proven and advanced stages, DBV with a growing deposit after 23 drill holes, and GGI with growing deposits in Mexico and the biggest chunk of property in what’s a potential new mining camp in NW B.C.

    Comment by Jon - BMR — June 22, 2015 @ 6:46 pm

  10. Greg, it was rescheduled for tomorrow afternoon, immediately after our interview with Dr. Razique. We’ll let you know how both turn out tomorrow. We’ll also be checking in with Farshad. It’s time for everyone to get it together so if I have to personally read the riot act to GGI (and DBV) on behalf of BMR and our readers, that’s exactly what I’m going to do. If anyone has questions re: the Hat property for Dr. Razique, kindly let us know. Sorry if I sound a little irritated tonight but that’s because I am.

    Comment by Jon - BMR — June 22, 2015 @ 6:55 pm

  11. I think BMR needs to focus on stories that are hot and in play with volume. MZI, YFI, CRS come to mind. To just hand pick a couple stocks in one region of the world is not going to cut it. If non-mining plays are hot and mining is dead, shift to those plays. It takes years for a sentiment to change. The metals have been beaten down for 2 or more years. There are good stories out there with companies generating revenue and the volume to trade and be able to exit if need be. I remember when GGI was trading at .18 I said that it was going to drop and the chart was in a downtrend, only to have Jon disagree. Any Venture stock right now has a time frame on its life for success. If they don’t deliver in that time frame, its time to take profit and move on. I have a bid in on GGI at .05 and will probably remove it in case it comes down to .02.

    Comment by dave — June 22, 2015 @ 6:59 pm

  12. Dave, is NXE not hot and in play? DVN? TRX? Those are just 3 we’ve been following closely in recent weeks and all have done extremely well. You have to be careful about the “hot” plays because at some point they run out of steam, or blow up, like Visible Gold, and what a joke of a NR that was from them today. So the key is to focus on the “volume” plays, if you will, that have the best staying power and fundamentals, and the least risk.

    Comment by Jon - BMR — June 22, 2015 @ 7:21 pm

  13. Still, lots of volume in the past week, is that not a positive sign? When shares are trading hands from what it looks like for the most part. They have the money and 3 great looking property’s, couple of months back I gave them till the end of June to get their ducks in a row, goin to stick with that. Lots on the go here!

    Comment by Tombc — June 22, 2015 @ 7:22 pm

  14. Some great back and forth regarding GGI and speculative securities. I trust BMR does their diligence but investigating speculative companies is definitely hit and miss at the best of times and investors also have to do their own diligence, not just rely on BMR. I have become very cautious on GGI due to the lack of news. I assume there is always someone with better information than myself. Is the smart money buying or selling GGI right now? I guess time will tell. I thought I was smart buying GGI at .08, now I am not so sure. As always you should only invest money in these types of securities that you can afford to lose. If GGI doesn’t turn out, I can live with it as the majority of my portfolio is invested in blue chip dividend paying securities. This is just fun money in GGI as it should be for most people.

    Comment by Danny — June 22, 2015 @ 8:11 pm

  15. Danny, I can understand the rationale for GGI staying quiet until the fund selling has run its course. But they’re getting very close to when they have to show their cards, and that includes a Mexico update and action at the Grizzly. A total of 29 drill hole results released to date show that Rodadero and La Patilla are for real. You can hype high-grade boulder results like Martin Dallaire, but the drill rig is the truth machine. Remember that. We’ve seen excellent drill results from both La Patilla and Rodadero, and indeed some majors have visited Rodadero. They’re watching. Both properties could take GGI a long way, and this is a company that has already cashed in big on one Mexican play.

    As far as the Grizzly is concerned, there is no question it is hugely valuable as this is not only where the infrastructure will need to go for any future mining operation, but every geologist (from ALL companies) who has worked in the district is seeing the same thing – even Farshad himself agrees, Grizzly Central in particular is hot. There is just no denying that and we have reviewed ample geophysical and geochemical evidence ourselves backing that up 100%. If it was just GGI saying how good the Grizzly was, a skeptic could easily dismiss that. But that’s not the case – the opinions on the Grizzly are widespread and in agreement. That counts for a lot.

    What GGI needs to do is reassert its brand and use the expertise they have acquired over the years to make a drilling discovery at Grizzly Central this summer. That’s what could turn this into a 10-bagger from here over the next several months. But after this quiet period on the news front and the fund selling (unavoidable, understandable, and not related to company fundamentals), they need to show their resolve and come out swinging. If they don’t, they’re in trouble. With us and investors. There is no excuse to snatch defeat from the jaws of victory here.

    Comment by Jon - BMR — June 22, 2015 @ 8:37 pm

  16. DYG has been picking up lately. Have you guys heard anything from them?

    Comment by cam — June 22, 2015 @ 9:01 pm

  17. No, I haven’t Cam. And I have no confidence in Ivy Chong, quite frankly. They gave up their Stewart property at the end of last year. Volume and price have picked up the last 2 sessions. A saving grace might be if they get something for their Chinese assets.

    Comment by Jon - BMR — June 22, 2015 @ 9:10 pm

  18. I have been unhappy with the coverage on GBB. Bought 100,000 at .045 I don’t think it ever improved now holding and will be lucky to get .02 It seemed there was a lot of coverage at the start but never hear of it now. I regret now having placed a stop loss. I have given up on it coming back and will probably get worse with the share split. Meanwhile TKK did well. Not happy with the job Frank has done(or more appropriately hasn’t done) here.

    Comment by Hugh — June 23, 2015 @ 9:44 am

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