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Gold has given up some of its gains from Friday but that still doesn’t change our view that an important bottom was put in last week just above $1,300…as of 8:15 am Pacific, the yellow metal is down $6 an ounce at $1,332…Silver has been volatile, dropping just below $27.60 this morning before snapping back…it’s currently up 14 cents at $28.15…the greenback continues to show major weakness…the Dollar Index is off two-thirds of a point at 77.68…the unrest in Egypt introduces a new and unpredictable dynamic into the markets…this has to be considered bullish for Gold even though we’re seeing a pullback today from Friday’s nearly $40 an ounce intra-day jump…the situation in Egypt also brings into focus a major economic story that will likely continue to grow throughout the year – global food inflation…U.S. consumer spending rose more than expected in December to post the sixth straight month of gains (0.7% vs. 0.3% in November)…consumer spending grew at a brisk 4.4% pace in the fourth quarter of 2010, the fastest in more than four years…there are major threats to this consumer-led American economic recovery, however, namely the debt problem across all levels of government in the United States… the CDNX is off 1 point at 2267 after Friday’s 34-point advance…all things considered, this has been a very positive month for the CDNX which has held up extremely well in the face of weakness in Gold…the CDNX took a healthy breather in January after a 10.4% upside move in December…we expect a stronger February for the CDNX especially if we get the anticipated strength in precious metals…Richfield Ventures (RVC, TSX-V), which got a buy recommendation Friday from GMP Securities, is up another 31 cents at $5.01, just 9 cents shy of its all-time high…Richfield’s Blackwater Project in central British Columbia is advancing consistently and impressively, clearly demonstrating multi-million ounce potential…this company is a potential takeover candidate down the road…GoldQuest Mining (GQC, TSX-V) is in another “sweet spot” at the moment from a technical standpoint…the stock’s 20-day moving average (SMA) reversed to the upside last week, the third time this has occurred since early September…on the previous two occasions, respectively, the stock then proceeded to climb a whopping 170% and 70%, respectively…we know the fundamentals with GoldQuest are strong…spotting situations like this is how you make good money in the junior resource market…GoldQuest is currently down a penny at 37  cents…Seafield Resources (SFF, TSX-V) is off half a penny at 47.5 cents…we suggest investors watch this one closely as the weakness in Seafield recently is related only to a lack of news…assays on nine more holes are pending from the Miraflores deposit and some holes have already been drilled at Dos Quebradas…both are high quality targets and there’s every reason to believe results will be solid…technically, Seafield is in oversold territory and the downside potential from here appears very limited especially with former resistance around 40 cents becoming new support…Gold Bullion Development (GBB, TSX-V) is unchanged at 74 cents…exploration news is also pending with GBB but we’re very confident Granada will continue to deliver…Gold Bullion bounced back sharply Friday after touching its 100-day SMA at 67 cents…other stocks that are currently trading around favorable technical support areas include Sidon International (SD, TSX-V), Currie Rose Resources (CUI, TSX-V), Cadillac Mining (CQX, TSX-V), and Greencastle Resources (VGN, TSX-V)…they’ve all been a little weak recently but that’s perfectly okay…jumping in at favorable support levels is how money is made…another situation we like that has traded down to strong support is Visible Gold (VGD, TSX-V), an aggressive new up-and-comer with an attractive portfolio of properties along the Cadillac Trend…we suggest investors do their due diligence on this one…VGD is in a strong cash position and has started its 40,000 metre 2011 drill campaign…the stock is currently up 1.5 cents at 36.5 cents…

John: On Friday, Richfield Ventures (RVC, TSX-V) opened at $4.06, its low, then climbed to its high of $4.80 before closing at $4.70. It gained 65 cents or 16% on CDNX volume of 269,000 shares, a strong move up on  relatively light volume.  The stock, which BMR introduced to its readers just over a year ago at $1.20, got a well deserved buy recommendation Friday from GMP Securities which has a 12-month target price for RVC of $11.10.  GMP sees a 5+ million ounce Gold deposit taking shape at Richfield’s Blackwater Project in central British Columbia, something we’ve been speculating about for some time.  Friday’s closing price of $4.70 gives Richfield a market cap of $202 million.

Looking at the 6-month daily chart we see that in mid-November, RVC moved up from $3.00 to $5.00 in 6 sessions – an impressive move. Then over the past 2 months the stock has traded in a horizontal trend channel between $4.00 and $5.00. The base of the channel at $4.00 coincides with the Fibonacci 50% retracement level indicating this was a perfectly normal retracement. The $4.00 level (green horizontal line) provides strong support.

The surge on Friday was strong as Richfield plowed through its SMA(50) without any trouble.  Last Monday, January 24, there was an obvious shakeout. The price dropped to a low of $3.63 but the volume was only 100,000 shares, indicating how tightly this stock is held. On Tuesday there was a news release with more impressive drill results and on that day and Wednesday the volume rose to 361,000 and 378,000 shares, respectively, with the stock reaching a high of $4.19. Thursday was a quiet trading day due to the plunge in the Gold price with RVC closing down at $4.05.  As we have seen, Friday was a different story.

What did the volume tell us last week?   The first thing was the low down volume on the shakeout (Monday) showing very few shares available at the low price. Again this occurred on Thursday.  The next point to notice is the two high volume days Tuesday and Wednesday with little movement in the stock. Very often volume will increase 2 or 3 days in advance of a stock move – a good sign to watch for.  Another point to note is that the volume on Friday when the stock moved up over 16% was less than the high volume days. This indicates there are still very few shares floating at these levels. Yes, volume is a very informative indicator.

The measured near-term target  is estimated by adding the depth of the channel to the top level (1 + 5  = $6.00).   The next major Fibonacci target level (blue set) is shown at $6.25 (this is not a BMR price target as we don’t give price targets but a theoretical Fibonacci level based on technical analysis).

Looking at the indicators:

The RSI has completely unwound its previous overbought condition.  It’s currently at 62%, pointing up and looking very strong – bullish.

The Slow Stochastics has the %K (black line) at 59%, pointing up and above the %D (red line) which is also pointing up at 44%. This move was from a very bullish “W” formation at the 20% level.

The Chaikin Money Flow (CMF) shows that buying pressure is increasing – bullish.

Outlook: Richfield is looking very strong on relatively low volume. If volume increases, the stock will have no trouble breaking above the resistance at $5.00.

Note:  The writer does not hold a position in RVC.

GoldQuest Mining (GQC, TSX-V)

GoldQuest looks as healthy as ever technically and closed the week up a penny at 38 cents…the stock has been strongly supported by its rising 50-day moving average (SMA), currently at 35.5 cents, since its big run began from a dime in early September…in a significant development this past week, GQC’s 20-day SMA reversed to the upside…this also occurred in early September and again in mid-November…on both occasions this marked the start of a powerful uptrend that lasted several weeks…GoldQuest traded as high as 42 cents last Tuesday where there is clearly some resistance…however, given the strong underlying fundamentals of this company and the bullish overall technical trend of the stock, we believe a breakout through that low 40’s resistance will likely happen sooner rather than later…last Monday was the new accelerated deadline for the exercise of warrants from last April’s financing…this likely added close to $2 million to the company’s treasury… GoldQuest recently elevated director Bill Fisher to executive chairman…he has an impressive 30-year track record of accomplishments in the resource sector…most recently, he was former chairman of Aurelian Resources Inc. (taken over by Kinross) and from 2000 to 2008 he was the chief executive officer of GlobeStar Mining Corp. which, during his tenure, developed, financed and built the Dominican Republic’s first copper mine at Cerro de Maimon (it was also taken over)…with impressive precious and base metal exposure, along with major new discovery potential, we’re very excited about GoldQuest’s prospects for this year which is why it’s one of our favorites for 2011…drilling is in progress at the company’s promising La Esandalosa Project in the Dominican Republic and results could build significantly on the recently released 43-101 inferred resource for that project…all of GoldQuest’s properties in the Dominican Republic and its zinc-lead-silver deposit in Spain have us very bullish on GQC going forward…the company, whose largest shareholder is Gold Fields Ltd., is well established in the DR and its property package there is a geologist’s (and an investor’s) dream…they have spent nearly a decade identifying many highly prospective precious and base metal targets, one of them being La Escandalosa (formerly Las Tres Palmas) where an inferred resource of 400,000 ounces of Gold has already been outlined (announced Nov. 16) based on just 25 drill holes at Escandalosa Sur from 2006 through 2010…it’s important to stress the 43-101 was completed on La Escandalosa  at a very early stage and the possibility of a discovery well in excess of a million ounces is possible as this is such an attractive geological target…the deposit is open at depth as well as to both the south and the north toward another discovery of Gold mineralization by the company at Hondo Valle, approximately 1.2 kilometres away…Gold at La Escandalosa occurs as a flat-lying stratiform zone at shallow depth with mineralization interpreted to be part of a larger intermediate sulphidation replacement-style system which has now been defined intermittently over a strike length of 2,100 metres…the source of the mineralizing fluids remains unknown at La Escandalosa, leaving open the possibility of the discovery of mineralization in structural feeder zones or perhaps in a porphyry copper-Gold type system…GoldQuest has many other targets of considerable merit throughout its large DR land package including Las Animas which has a 43-101 inferred resource of 129,000 ounces of Gold, 2.5 million ounces of silver, 106 million pounds of copper and 130 million pounds of zinc…GQC has more drilling to do there as well…in Spain, Goldquest holds the Toral zinc-lead-silver deposit which has an historical (non-43-101 compliant) resource of 5.4 million tonnes grading 9% zinc, 6% lead and 45 g/t Ag…a 43-101 on Toral is currently being prepared…GoldQuest has also acquired a second polymetallic project in the area (Lago, just a 20-minute drive from Toral), and more details are expected upon approval from the Spanish government of a mineral rights application for the property… GoldQuest is up 95% since we added it to our readers near the end of September…

Greencastle Resources (VGN, TSX-V)

Greencastle has been a source of frustration recently with no news since the end of November…the stock is down 35% for the month of January after closing Friday at 23.5 cents…it has declined seven of the past 11 trading sessions while on the other four days it was unchanged…the good news is that Greencastle has become oversold technically and its market cap has dropped to only $10.5 million…with approximately $6 million in working capital, three Gold properties and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that VGN is a steal at current levels…volume has been low on the move down which confirms there’s nothing to be concerned about here…Greencastle will have its day in the sun again soon enough…the long-term chart remains very bullish with rising 100, 200 and 300-day moving averages (SMA) that are in no danger of reversing…it’s also interesting to note that President and CEO Tony Roodenburg, a large shareholder in VGN, has refrained from selling any of his holdings in recent months despite the fact the stock price more than tripled in value on high volume…this is different from past runs in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle – it’s poised for what we believe could be a massive breakout sometime during the first half of this year…Pinetree Capital has also accumulated more shares in Greencastle, so there’s every reason to be very optimistic regarding this company’s prospects in the days, weeks and months to come…Greencastle is up 68% since we added it back in to the BMR model portfolio three months ago…

Adventure Gold (AGE, TSX-V)

Adventure Gold woke up at the end of the week, climbing two pennies Thursday and another four cents Friday to close at 46 cents, a four-cent gain for the week and the highest closing price in 13 sessions…the 50-day moving average (SMA), which has flattened out at 47 cents, represents resistance…the stock has definitely gained some near-term momentum but will have to clear this hurdle on significant volume to confirm that a bigger move could be in the works here as February unfolds…AGE released significant news January 20…the company got some free drilling on its Granada Eastern Extension Property as it reported that one of Gold Bullion’s holes (#85) was drilled entirely on Adventure Gold land (just inside the boundary) while three other holes (#78, #83 and #98) were collared north of AGE’s property but finished within it…this didn’t surprise us and it’s not an unusual event in the industry…it worked out well for both parties in this case, however – all the core from those holes has been given to AGE who will share results with GBB…this represents at least $100,000 of drilling and all AGE has to do is pick up the assaying costs…given GBB’s “hit ratio” on holes, it’s reasonable to assume that at least one of the holes (or partial holes) on AGE’s property could be of the “stellar” variety…with more results coming from Gold Bullion, we expect Adventure Gold could continue to firm up…they do hold small but strategic parcels of land around Granada (immediately to the south and the west in addition to the east) that could become part of a large open-pit…their claims hold significant potential value and they have drill assay results coming in without even doing their own drilling which they plan to start upon completion of their program at Pascalis-Colombiere…that property in the eastern part of the Val d’Or mining camp is heavily underrated in our view…a 2,500 metre drill program started at Pascalis-Colombiere last month and is testing the former L.C. Beliveau Mine at depth (below 300 metres) as well as near-surface parallel Gold structures to the west…Pascalis-Colombiere is just 1.5 kilometres east of Richmont’s (RIC, TSX) operating Beaufor Gold Mine which has produced over one million ounces in its lifetime…it’s safe to assume Richmont will be watching developments at Pascalis-Colombiere with interest…Adventure Gold’s property has significant upside exploration potential…the geological setting is favorable for the identification of new high-grade Gold bearing veins and structures or bulk-style ore shoots…there are many untested areas and excellent potential at depth…L.C. Beliveau was a very profitable former producer…if AGE can prove up something significant through extensions to this deposit, we see a potential deal with Richmont which would be the natural choice to bring the mine back into production…we first mentioned Adventure Gold to our readers in an article September 29, just a couple of days following the company’s announcement that it had acquired land at Granada, when the stock was trading in the low 20′s…we officially added AGE to the BMR model portfolio at 34 cents October 28, so the gain since then is 35%…Adventure Gold has been around only since late 2007 and we are impressed by the company’s solid portfolio of properties (19 in six strategic areas in Quebec and Ontario)…also of immediate interest is AGE’s partnership with Lake Shore Gold (LSG, TSX) on the Meunier 144 Property where deep drilling is currently testing the down plunge extension of Gold zones located at the Timmins and Thunder Creek deposits…the current initial deep drill hole onto the Meunier JV property is continuing…when completed it’s estimated the hole will provide a deep cut on the projected target area at about a vertical depth of 2,600 metres…this will enable shallower wedge cuts to be considered if significant mineralization is found to be present in this area…the initial deep hole was collared on LSG’s Timmins mine property last August and has now likely passed the 2,000 metre mark in depth…if this deep hole succeeds, AGE could absolutely explode…

Sidon International (SD, TSX-V)

Sidon’s roller-coaster ride continues with the ride back up likely underway again…Sidon broke support at 16.5 cents last Monday and then proceeded to drop as low as 13 cents the following day when the CDNX plunged 46 points…these were “nervous nellies” – scared retail investors mostly, fearing the CDNX was about to fall off the cliff and take Sidon with it…this stock has shown clear trading patterns since last spring and has been quite volatile…however the primary trend is up and Sidon has consistently found support at or just above its rising 200-day moving average (SMA)…RSI(14) and Stochastics show a stock ready for a new move to the upside…BMR is looking forward to an interview soon with President and CEO Kamal Alawas – we’ll update investors on the exact timing of that as the week progresses…the first six holes have been completed over a strike length of 900 metres at Sidon’s Morogoro East Gold Property…the company reported zones of disseminated sulphides of pyrite and pyrrhotite as well as some chalcopyrite and arsenopyrite throughout all six holes over intervals of 30 to 70 metres…we caution that visuals are not always reliable but there’s reason to be optimistic that Sidon could be on to something…the company is also trying to develop a placer operation at Morogoro and has also acquired ground near Canaco’s discovery…Sidon remains locked in a very strong long-term uptrend as evidenced by the rising 100 and 200-day SMA’s…this company has come a long way since last March when we first introduced it to BMR readers at a nickel, and its new web site is just one more indication of how impressively Sidon has developed and matured…we see exciting possibilities for 2011…the company raised over $1 million through the exercise of options and warrants in November and December…

Seafield Resources (SFF, TSX-V)

For the first time since its big move at the beginning of December, Seafield closed below 50 cents last week and below its rising 50-day moving average (SMA)…the stock was off a nickel for the week, closing Friday at 48 cents, but volume on the fall below 50 cents was relatively light…we still view the overall trend since early December as very bullish and we’re expecting a significant turnaround in February…Seafield’s current market cap of approximately $70 million is very attractive as this company continues to work on building a substantial Gold resource at its Quinchia District properties in Colombia…on December 3, SFF announced a spectacular drill result from its Miraflores Property in Colombia and the stock rocketed to 77 cents…results are pending on nine more holes at Miraflores…given historical results, at least some of these holes should be very good…drilling now is taking place at Dos Quebradas, a property we believe gives Seafield its real “blue sky” potential at Quinchia… SFF reported December 8 that the first three holes had been completed at Dos Quebradas which is rich in porphyry targets over a wide area…DQ is just a few kilometres northwest of Miraflores…visual reports indicate that these three holes have similar styles of mineralization to an historical hole drilled by AngloGold that returned an interval of 39.5 metres grading 1.67 g/t Au…the potential of Dos Quebradas is evident from limited historical drilling and was confirmed by Seafield last year through soil geochemical surveys and magnetic surveys which are crucial to discovering hidden porphyries in areas of very little outcrop…Seafield also released results recently from trenching in one location from the southern end of the gold-in-soil anomaly that defines the northern extension of the Dos Quebradas porphyry…1.75 g/t Au was returned over 94 metres…Seafield has an excellent opportunity to develop a multi-million ounce Gold resource at its three major properties at Quinchia (Chuscal is the third property)…Seafield has in excess of $15 million in the bank to fund an aggressive program in Colombia…

Gold Bullion Development (GBB, TSX-V)

Gold Bullion staged an impressive reversal Friday as it closed at its high of the day at 74 cents after falling as low as 67 cents, its 100-day moving average (SMA), in early trading…for the week GBB was off just a penny…with Gold doing a turnaround, and new results expected soon from the LONG Bars Zone, February should be an interesting month for Gold Bullion whose chart continues to be a picture of beauty with a very consistent trading pattern…the RSI(14) appears to have bottomed out right near the lows of last February, early July and September, and the fact the stock has once again bounced off its 100-day SMA is additional evidence that a new uptrend is setting in…the updated drill map on the GBB web site shows GENIVAR has been busy recently drilling underneath the waste pile within the Preliminary Block Model…they’ve also been targeting the southwestern portion of the Block Model near Phase 1 hole #13 which returned a 28-metre interval grading 1.27 g/t Au…recent drilling has also occurred north of the Block Model and in the southern portion of the Eastern Extension in the vicinity of Phase 2 hole #86 which was an important discovery of near-surface mineralization…we know from Gold Bullion’s January 21 news release that mineralization remains open in all directions at Granada and that new mineralized structures have been intersected…the news has been consistently good from the LONG Bars Zone for just over a year now and there’s every reason to believe that’s going to continue…

Cadillac Mining (CQX, TSX-V)

Cadillac traded in a range of 27 to 34.5 cents last week, closing Friday at 28.5 cents for a loss of 3.5 pennies on the week…technically, the first sign to look for this coming week to suggest a new uptrend could be underway is a reversal in the 10-day moving average (SMA) which is starting to flatten out…this stock has had a huge run-up the past couple of months, surging from a low of 5.5 cents to a high of 50 cents…a pullback to the mid-20′s, in retrospect, was healthy and normal from a technical standpoint and has paved the way for another potential major surge…there are many reasons we like Cadillac so much and why we believe it has the potential to soar in 2011…the tight share structure (25 million outstanding and 27.5 million fully diluted) is highly attractive and the management team is focused and shrewd….Victor Erickson and Andre Audet also have a combined immense amount of geological and engineering expertise…all of this was clearly demonstrated when the company announced January 21 a very significant precious metals property acquisition in the Great Basin of southern Utah near the Nevada border…the market hasn’t quite caught on to this yet but that’s okay – we have and so have some of our readers…what Erickson and Audet skillfully pulled off, through negotiations with individual landholders, was the acquisition of an entire former mining camp (the “Goldstrike District”) with patented claims that cover a dozen former near-surface deposits…in addition, the company staked further ground, contiguous with the patented claims…those mined deposits very likely feature extensions…our research shows this area has been hugely under-explored despite the production of 200,000 ounces of Gold and nearly 200,000 ounces of silver between 1988 and 1996…not only could there be near-surface extensions but there are parallels here to Nevada where some major deposits have been discovered underneath old heap leach operations…Erickson has a lot of successful experience in the Great Basin and wants to aggressively explore this 15 square kilometre area at Goldstrike….we expect Cadillac will employ some sophisticated techniques to help unlock the potential of this mining camp…they have a wealth of historical data at their disposal which will lead directly to numerous drilling targets…the property acquisition came at minimal expense for Cadillac (no stock issued either) which demonstrates this group’s business savvy – you don’t always have to spend a small fortune and issue vast amounts of paper to acquire a quality project…some of the most successful properties were picked up for a song through careful research which is what Cadillac has pulled off with Goldstrike…as far as CQX’s Cadillac Trend presence is concerned, Richmont Mines (RIC, TSX) announced last week that new results and an updated resource estimate from Wasamac are expected by the middle of February…we’re expecting a major upward revision in resources…the principal structure hosting Gold mineralization at Wasamac plunges north onto claims held 100% by Cadillac…Visible Gold (VGD, TSX-V) has also announced an aggressive exploration program for 2011 over its Quebec properties which include 7,000+ hectares with Cadillac…

Abcourt Mines (ABI, TSX-V)

Abcourt was up a penny this past week, closing Friday at 19 cents after briefly touching major support at 16 cents Tuesday…the company came out with news Thursday, announcing it had intersected two new zones of high grade silver and zinc mineralization at its Abcourt-Barvue Property near Val d’Or…the first zone averaged 173.41 g/t Ag over 3.65 metres while the second zone averaged 179.43 g/t Ag over 2.78 metres…the 10,000 metre drill program continues with the goal of upgrading and augmenting existing 43-101 reserves and resources…the company is also trying to justify an expansion of the proposed mill from 650,000 tonnes to 1 million tonnes…Abcourt-Barvue is a former producer and one of the best silver assets in the country with nearly 20 million ounces in all-category reserves and resources (plus nearly 300,000 tonnes of zinc)…in addition, the company holds the former producing Elder Gold Mine near Rouyn-Noranda which it hopes to put back into production within 18-24 months (considerable infrastructure is already in place as we saw during our recent site visit)…drilling continues at both Elder and the adjacent Tagami Property where there is excellent potential for a significant discovery…technical analyst Clive Maund came out with a buy recommendation on Abcourt this past week…one of the things that caught his attention was exactly what caught our attention initially – the sudden spike in volume starting in December…there has been some major accumulation of this stock and for good reason – the value of this company’s Gold, silver and zinc assets…Abcourt recently raised $4 million…with 110 million shares outstanding, its market cap currently sits at just $20 million…continued drilling success and even higher prices for Gold, silver and zinc would be extremely bullish for this stock which has a history of major moves…from mid-2005 to early 2006, Abcourt rocketed from 15 cents to nearly $1.40…

Currie Rose Resources (CUI, TSX-V)

After a 15 trading session slide that took Currie Rose from a high of 39 cents to a low of 15 cents this past week, a turnaround appears to have started as CUI begins to come out of extremely oversold conditions based on RSI and Stochastics…the stock closed the week at 16 cents, down just half a penny from the previous Friday, and volume has subsided considerably which is typical at or near the end of a bottom…the low of 15 cents last week was the late October support price and just above the still-rising 200-day moving average (SMA)…the company came out with news Tuesday, announcing a joint-venture deal with Australian-based Liontown Resources for Currie’s Jubilee Reef Gold Project in Tanzania…CUI’s focus is on the Sekenke and Mabale Hills Projects, so finding a partner for Jubilee Reef made sense…the deal commits Liontown to at least 5,000 metres of drilling at the property this year which will give Currie Rose a minimum of 23,000 metres of drilling at all of its properties in 2011…an 8,000 metre program is now underway at its Scadding Gold Property near Sudbury which was optioned to Trueclaim Exploration (TRM, TSX-V)…while Currie Rose has had its market cap shaved considerably this month, from a high of $33.5 million to a low of $13 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as it ever was in our view…

Richfield Ventures (RVC, TSX-V)

We are very pleased to see that Richfield got a well-deserved buy recommendation Friday from GMP Securities which has initiated coverage on the stock with a 12-month target price of $11.10 per share…BMR introduced Richfield to its readers in December, 2009, when the stock was trading at only $1.20…GMP sees the potential for at least 5 million ounces of Gold at the company’s Blackwater Project in central British Columbia…Richfield jumped 65 cents Friday, closing the week at $4.70 for a weekly gain of 70 cents…the 20-day moving average (SMA) is just now reversing to the upside…other technical indicators also suggest a new uptrend is underway…a near-term challenge of the all-time high of $5.10 appears to be in the cards…the company released results on six more drill holes last Tuesday…BW-106 returned 205 metres grading 2.04 g/t Au including 81 metres of 4.33 g/t Au…this hole was was collared 70 metres northeast of previously reported BW-76 and 111 metres northeast of BW-78 which also returned excellent values over considerable widths…together the three holes outline an area of about 7,000 square metres of near-surface high grade which offers starter pit potential…another phase of drilling commences next week as Richfield continues to define a potential multi-million ounce Gold deposit at Blackwater with silver and copper values as well…the primary trend remains up with Richfield and there’s every reason to expect more excellent drill results throughout 2011…RVC is ahead 343% since we introduced it to BMR readers just over a year ago at $1.20…we believe the company’s ultimate objective is to find a buyer who can put Blackwater into production…if good drill results continue as we expect they will, we’re confident that objective will be met and the takeover price could be much higher than the company’s current market cap of approximately $200 million…

CDNX and Gold

It was a volatile and critically important week for the CDNX which held support at 2200 and gained 34 points Friday to close the week up 2 points at 2268.  The fact this market was able to hold its ground in the face of weakness in Gold throughout most of the week was impressive to say the least and strongly suggests we have indeed seen the bottom in Gold.   The out-performance of the CDNX vs. Gold and the TSX Gold Index since early December has been incredible.  The CDNX is actually up 7% since Gold’s Dec. 7 high of $1,425 while Gold is off 6% and the TSX Gold Index has declined 15%.  This has been one of the key factors in us being able to predict (correctly it appears) Gold was not about to fall off a cliff, $1,300 is the “line in the sand” and the next major move in the yellow metal would be to the upside.  We have seen no better indicator of the future direction of Gold prices than the CDNX.

After a successful test of 2200, is the CDNX now ready to finally bust through resistance (there were a few failed attempts this month) at the 2300 level?  We believe so.  Friday’s move was accompanied by “cautious” volume, however, and buying pressure as demonstrated by the CMF was weak – an indication that the 34-point gain had more to do with an absence of sellers than a stampede of buyers.  That could change of course Monday.  RSI and Stochastics indicators are bullish and the CDNX has managed to completely unwind its overbought condition that emerged after December’s 10% move to the upside.  If there was ever a time the CDNX could start a new up-leg, now is it, especially given how the Index held up so well given the pounding that Gold took last week until Friday’s important reversal in the yellow metal.

Last week in this space we predicted:  The reversal in Gold will come, in our view, when the TSX Gold Index actually touches its rising 300-day moving average (SMA) or actually drops below it (the bottom being in the range of 345-367 and this could be very brief) as has been the case repeatedly over the last two years.   This will be a classic and major buying opportunity, confirmed also by the CDNX which is giving us Gold’s primary direction.  If Gold was on the verge of a major collapse, the CDNX would simply not be performing as it is now – it would in fact be leading Gold to the downside, the opposite of which is occurring now.”

On Tuesday the TSX Gold Index actually did drop slightly below its 300-day SMA to 365.  It’s important to note it did not make a new low Thursday when Gold dived and hit its low for the week just under $1,310.  Below is the updated TSX Gold Index chart showing the 200 (light blue) and 300-day (dark blue) moving averages:

A chart worth looking at again is from John’s very astute article January 16 when he laid out the case for a $1,300 bottom in Gold this month:

So not only do the technicals show that Gold has likely found a bottom, but the main fundamental drivers for Gold remain solidly intact – currency instability, an extended period of negative real interest rates (inflation is greater than the nominal interest rate, even in China and India despite increasing rates there), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitcal conflicts, and the list goes on.

Yes, Gold is now reacting to the uprisings in Egypt and the uncertainty this potentially creates elsewhere in the Arab world.  This was a driving factor in Gold’s $40 intra-day reversal Friday.

In the U.S., some positive economic data came out last week but the Fed reaffirmed that its stimulative policies will remain in place.  The Congressional Budget Office (CBO) predicted the U.S. deficit will hit a staggering $1.5 trillion this year.  Many state and local governments across the U.S. are also crippled with debt.  These problems pose a significant threat to U.S. economic and employment growth.  As a result, we expect the Fed will be forced to remain as accommodating as possible in its monetary policy for even longer than most people think.  This is bullish for Gold.

The World Gold Council reported Wednesday that the surge in Gold prices during 2010 was driven not only by strong investment but a recovery in jewelry consumption and even industrial demand.  “The Gold story in 2010 was about growth in all sectors in demand and not just due to economic concerns,” said Juan Carlos Artigas, investment research manager with the World Gold Council.

Despite all of its volatility this past week, Gold finished Friday essentially unchanged from the previous Friday with a drop of just $4 for the week ($1,342 to $1,338).

An interesting bit of news we picked up:  The Wall St. Journal reported that a small hedge fund overleveraged itself to Gold futures last week (a small $10 million fund controlled the amount of Gold equal to South Africa’s annual production) and blew out its position, causing the biggest-ever one-day reduction in futures contracts for the Comex.

Gold dropped as low as $1,308 overnight but is now recovering…as of 7:40 am Pacific, the yellow metal  is up $12 an ounce at $1,327…Silver was down over 40 cents overnight but has also reversed and is now up 57 cents at $27.49…we remain convinced that $1,300 is “the line in the sand” on Gold as John’s recent “Big Golden Picture” chart outlined very effectively…the U.S. Dollar Index is up over one-quarter of a point at 78.05…the U.S. economy grew at a solid 3.2% annual rate in the final quarter of last year, slightly below expectations…this is after 2.6% growth in the third quarter…for all of 2010, the U.S. economy grew at a rate of 2.9%, its biggest gain since 2005…much stronger growth however will be required to put a dent in the high U.S. unemployment rate which is currently sitting (officially) at 9.4%…massive government deficits and debt at the federal, state and local levels is likely going to put a cap on U.S. growth in our view and force the Fed to maintain a very accommodating monetary policy for an extended period…the CDNX is ahead 13 points at 2247…the reason Gold is not about to fall off the cliff right now is because the action in the CDNX is clearly refuting that argument…also, while Gold made a new low yesterday, stocks did not…all signs point to a much better February as we believe Gold has found its bottom…Gold Bullion Development (GBB, TSX-V) touched its 100-day moving average (SMA) again this morning where there is exceptional support…this happened back in September, October and November, just prior to a major upside move…GBB’s chart continues to be a picture of beauty and based on the chart pattern we’ve seen over the past year, another important low has just been put in at 67 cents…GBB is recovering and is now up 2 pennies at 71 cents…Currie Rose Resources (CUI, TSX-V) is showing clear signs of bottoming out as well based on several indicators including heavily oversold RSI and Stochastics levels…CUI appears to have found strong support just above its still-rising 200-day moving average (SMA)…Currie Rose is currently off half a penny at 15.5 cents…Abcourt Mines (ABI, TSX-V), which got a buy recommendation yesterday from analyst Clive Maund, is ahead a penny at 19.5 cents…the ABI chart looks exceptionally strong going into February as Maund also pointed out…Adventure Gold (AGE, TSX-V) is showing renewed strength…it’s currently up 3 pennies at 45 cents…bargain hunters have stepped in on Seafield Resources (SFF, TSX-V) which dropped as low as 47 cents this morning…it’s currently unchanged at 49 cents…we remain very optimistic regarding Seafield and its trading action since early December has been bullish…GoldQuest Mining (GQC, TSX-V) out-performed the market in January which bodes extremely well for next month…it also has a great-looking chart and strong underlying fundamentals with a substantial deposit taking shape at its La Escandalosa Property in the DR…GQC is up half a penny at 38 cents…February is when GQC could finally bust through resistance in the low 40’s…Sidon International (SD, TSX-V) is unchanged at 13.5 cents, just above rock-solid technical support with a rising 200-day moving average (SMA)…Cadillac Mining (CQX, TSX-V) is up 2.5 cents at 29.5 cents…it had a strong but healthy pullback this month and a turnaround in February seems likely…

Markets are giving up some of yesterday’s big gains…after a bounce yesterday, Gold is getting is getting kicked this morning but we firmly believe there’s a high probability the yellow metal is making an important bottom…as of 8:55 am Pacific, Gold is off $26 an ounce at $1,320 (it fell as low as $1,315) while Silver has declined 68 cents to $26.93…this is the type of “shake out” action we love to see as a market looks for a bottom…the U.S. Dollar Index is up one-fifth of a point at 77.94…the CDNX’s powerful move yesterday, and the fact it’s holding up reasonably well this morning in the face of substantial weakness in Gold, is important evidence that the decline in precious metals is drawing to a  close…the CDNX is currently off 9 points at 2242…the CDNX refused to break down below 2200 when it had an opportunity to do so the other day…its strong out-performance vs. Gold and the TSX Gold Index since early December is no fluke and tells us what direction Gold’s next big move is going to be…commercial traders, who are almost never wrong, also agree as they have sharply curtailed their short positions to levels not seen since prior to Gold’s big push last year…it’s never wise to bet against the commercial traders…Abcourt Mines (ABI, TSX-V), which received a buy recommendation this morning from newsletter writer Clive Maund, is unchanged at 19 cents after climbing as high as 21 cents…Abcourt also came out with more drill results from its Silver-Zinc Property near Val d’Or…three holes intersected two zones of high silver and zinc values…the 10,000 metre program continues with the goal being to upgrade and augment existing 43-101 reserves and resources which, in all categories, total 19.6 million ounces of silver and nearly 300,000 tonnes of zinc as detailed in Abcourt’s news release this morning…GENIVAR completed a feasibility study in 2007, showing robust economics at baseline prices of $15 for silver and 88 cents for zinc with an 1,800 tonne per day operation…most of the silver and zinc can be mined as open-pit…this property was a producer back in the 1980’s until plunging silver and zinc prices shut it down…Abcourt is also developing another former producer, the Elder Gold Mine, near Rouyn-Noranda…a 10,000 metre drill program continues there with very encouraging results…we see the potential for about 30,000 ounces of production per year out of Elder as an underground operation…it’s Abcourt’s goal to put Elder into production by the end of next year…considerable infrastructure is already in place…given the resources and reserves this company is sitting on, Abcourt’s current valuation of $21 million has to be considered cheap…another company we’re watching closely along the Cadillac Trend is Visible Gold (VGD, TSX-V)…VGD has taken a beating for no fundamental reasons since hitting a 52-week high of 70 cents in early December…the company is in a strong cash position and yesterday announced a $6.5 million exploration budget for this year with a target of 40,000 metres of exploration and definition drilling at its various properties…VGD has a current market cap of $19 million…the stock has strong technical support at 36 cents, just above its rising 100 and 200-day moving averages…VGD is led by an energetic President and CEO, Martin Dallaire who lives in Rouyn-Noranda and knows the area like the back of his hand…we suggest readers perform some due diligence on Visible Gold…the stock is currently down a penny at 40 cents…Gold Bullion Development (GBB, TSX-V) is off a penny at 73 cents…the stock continues to look very healthy from a technical standpoint and we’re anticipating more very good results from Granada…Seafield Resources (SFF, TSX-V) continues to hold support around the 50 cent area…its 50-day moving average (SMA) is 49 cents…new results from Quinchia can’t be far off…SFF’s 20-day SMA has been in decline since early this month…watch for a reversal in this as a sign that Seafield is ready to make its next move…the overall trading action in SFF since early December is long-term bullish…the stock is down half a penny at 49.5 cents…

At BMR we closely track the CDNX and we use this Index, consisting mostly of speculative junior resource stocks, as our #1 leading indicator of the future direction of Gold prices and commodities in general.  By gauging the CDNX, we were able to correctly call important bottoms in the Gold market last February and July.  What the CDNX is telling us now, which other indicators are also showing, is that Gold is also bottoming out here in late January.

This morning John takes a look at Gold from a different angle as he analyzes the SPDR Gold Trust Shares ETF which trades on the NYSE:

John: The purpose of this article is to present graphically why I believe Gold has found a bottom this week or is in the process of doing so. I have chosen the SPDR Gold Trust Shares (GLD, NYSE) to represent Gold because being shares the chart shows the volume so the Chaikin Money Flow (CMF) indicator can be included to illustrate buying pressure.   Yesterday, GLD opened at 129.83, fell to a low of 129.28 and then climbed to a high of 131.17 before closing at 131.16 on volume of 21 million shares for a gain of 1.06 (0.81%).

Looking at the 3-year weekly chart we see that the price of the shares from July, 2009, to now has been a series of bounces on an upsloping trendline (green). We are only interested in the points at which the price touches the trendline. These points occurred in February and August of last year and again this week. By analyzing price behavior and indicators from those periods we should be able to deduce what the probable scenario is for the near future.

A vertical green line has been drawn through each of the points so it is easy to compare price and indicator reactions at those times.

February/10 and Aug/10

Price: In both cases the price made an immediate bullish reversal and continued to climb to a new high 4-5 months later.

RSI: In both cases the RSI bounced up off the support at 53% and continued to climb toward the 70% level.

Volume: In both cases the average volume turned bullish and over time tended to rise as the price rose.

Slow Stochastics: In both cases the %K (black line) bottomed and reversed upwards and crossed above the %D (red line) which also bottomed and reversed exactly at these price reversal points.

Chaikin Money Flow (CMF): In Feb/10 the CMF value was about zero and in Aug/10 the value was about .30, so the actual CMF level appears to have little bearing on price behavior but obviously a rising CMF value at a reversal point will have a positive effect.

Today

Price: This week’s candle so far is a doji, indicating indecision and is right on the trendline.

RSI: The RSI is sitting on the 53% level support and flat.

Volume: The volume is bullish and although this is showing only 3 days volume it’s almost equal to last week’s.

Slow Stochastics: The %K is starting to flatten and the %D is still pointing down.

Chaikin Money Flow (CMF): The CMF value at 0.102 is about twice that of last week.  

Outlook: The price pattern and the indicators replicate the two previous patterns after Feb/10 and Aug/10 and point to a probable and imminent share price reversal.