The following article has been republished with permission, for the benefit of BMR readers, from Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

My 13 Reasons Why Gold Still Has Further to Go

Claus Vogt | Wednesday, January 26, 2011 at 7:30 am

Financial history teaches that market prices are not just subject to cyclical fluctuations — mainly following the business cycle. They are also liable to much longer lasting secular trends, often spanning 15 years, 20 years or longer. These secular cycles are visible in stocks, commodities, bonds and precious metals. Take gold as an example … Gold experienced a secular bull market starting in the late 1960s and culminating in a spectacular high in 1980. What followed was a severe secular bear market lasting roughly 20 years. Then, around the turn of the millennium, another secular bull market got going. I believe gold’s current secular bull market probably has much further to go. And since bull market corrections are buying opportunities you should use them as such. That might sound easier than it is to do. Buying into nerve wrenching corrections can be a tough pill to swallow. But it’s much easier if you have some strong arguments at hand. Let me give you 13 of them:

Reason #1

A Global Debt Crisis Has Broken Out

No matter where you look — Europe, Japan, or the U.S. — the same dire picture shows up: Mountains of government debt plus larger mountains of unfunded liabilities. Many of the modern welfare state’s promises will be broken sooner or later. The easiest way to kick this can down the road is by printing money. The second option is outright default … In that case government bondholders would have to bear the losses. This is a much more honest and evenhanded way of dealing with the inevitable, because those who have willingly taken the risk of lending money to over-indebted governments and have received interest payments as long as the going was good should bear the losses if things turn sour. Unfortunately our political elite seem set on averting this outcome at any cost.

Reason #2

The Quest for a Weak Currency Has Become Respectable

Not too long ago most economists and even everyday people knew that economic development and the creation of wealth went hand-in-hand with a strong and strengthening currency. This knowledge seems to be lost. A global currency war has started; sabotaging thy neighbor’s policies via currency depreciation is common. Gold is insurance against this loss of relative wealth on an international scale.

Reason #3

Derivatives Are Hanging Like a “Sword of Damocles” over the Financial System

Derivatives have grown exponentially during the past 20 years. They have yet to withstand a real stress test. The panic after hedge fund LTCM went bust in 1998 or the case of AIG may be harbingers of what to expect.

Reason #4

U.S. Fed Chairman Bernanke Is a Stated Inflationist

Alan Greenspan, Ben Bernanke’s predecessor as Fed chairman, tried to cultivate an image of being a sound money advocate. Covertly he did the exact opposite! Not so Mr. Bernanke … From the beginning of his career as a central banker he has openly declared his clear convictions as an inflationist. For him the printing press is the universal remedy of each and every economic problem as he made clear in his famous November 2002 speech: “Deflation: Making Sure It Doesn’t Happen Here.”

Reason #5

The Current Monetary System Has Entered Its Endgame Phase

History shows that monetary systems are mortal. They come and they go. The current system of fiat money backed by government monopolies has been in existence since August 1971. And it’s a huge economic experiment, probably the largest since communists took over Russia in 1917. The weaknesses of this monetary system, especially the ease of government manipulation, are getting more obvious by the day.

Reason #6

Markets May Force the Return to a Sound Monetary System

When confidence in a monetary system is lost, it is very difficult to regain it. A disappointed and deceived population won’t fall for the same political promises that were just broken. They’ll insist on something reliable. If this were to happen, gold would naturally reemerge as the basis of a new and sound monetary order. This reasoning may actually explain why gold is still in the coffers of most central banks, even the Fed’s.

Reason #7

Gold Is Coming Back as an Asset Class

Globally, gold holdings make up only 1 percent of all financial assets. Not too long ago 5 percent to 10 percent was typical for conservative investors. And most institutional investors are totally out of gold. With the above mentioned problems gaining more and more publicity gold may see a revival as an asset class.

Rising gold prices have also sparked interest. And the introduction of ETFs has paved the way for individual investors to easily add gold to their portfolios … even their IRAs.

Reason #8

Growing Emerging Market Wealth Leads to an Increase in Gold Demand

China, India, Brazil — the largest emerging economies — are booming. And it looks like a durable long-term shift to more growth and wealth has emerged. Consequently, investment and jewelry demand for gold are also growing. Plus, China has step-by-step allowed its citizens to buy the precious metal.

Reason #9

Central Bank Bureaucrats Are Rethinking Their Stance

Global gold supply did not match demand in the recent past. Sales by central banks filled the gap. But now, with rising gold prices, central bank bureaucrats have started to rethink their stance … Most have actually stopped selling. And those of emerging economies — India, South Africa, China, Russia and Argentina — have started buying relatively huge amounts.

Reason #10

Gold Mining Production Is Stagnating at Best

Despite rising prices, gold mining supply has hardly budged during recent years. The easy to exploit mines — the huge deposits — are already in production. In short, it’s getting more and more difficult to find enough new gold.

Reason #11

Gold Mining Is Getting More and More Expensive

It’s not only getting harder to find new exploitable deposits, it’s also costing more to get the metal out of the earth. The most important factors of production are becoming more expensive, especially energy, the same for manpower in emerging countries. Environmental costs are also soaring. Plus miners have to use more expensive technology for extracting gold from difficult locations, since the easy ones, as noted above, are already in production.

Reason #12

Gold Is Still Cheap

The global money supply has increased dramatically during the past decade, especially since 2008. And if you use money supply as a reference to value gold, the precious metal is still very cheap. For example, if M1 were taken as the basis of a new 100 percent gold standard monetary system in the U.S., gold’s price would be anchored at $6,910 per ounce. The same reasoning for Euroland gets us to €13,628 per ounce using Europe’s M1 money supply. Relative to other asset classes gold is also cheap. The Dow to gold ratio is currently at 8.3. Historically it has been as low as 1 and even lower.

Reason #13

The Current Secular Up Trend Has More Leeway

During secular bull markets prices usually go up by a factor of at least 10 to 15. Just think, during the last secular bull market the Dow rose from 800 in 1982 to 12,000 in 2000. Same thing for gold during the 1970s: From $35 per ounce to $850. And based on all the reasons I’ve given you today, gold’s current bull market should achieve similar magnitude. Of course, there will be corrections along the way — even cruel ones. To give you an example: In 1974 gold declined more than 40 percent. But since the drivers of that bull market were still valid, even that slump turned out to be a buying opportunity. Make sure you don’t miss this one!

Best wishes, Claus

Precious metals are soft again this morning (everyone will be happy to get January out of the way) but the TSX Gold Index is slightly higher and the CDNX is also stronger…a turnaround in Gold appears to be close at hand based on numerous indicators…as of 8:45 am Pacific, the yellow metal is off $6 an ounce at $1,327 while Silver has declined 11 cents to $26.70…the U.S. Dollar index is essentially unchanged at 77.91…the Dow topped 12,000 this morning for the first time since 2008…the CDNX is 13 points higher at 2216 after yesterday’s nearly 50-point plunge to support at 2200…the U.S. budget deficit will hit 1.5 trillion in 2011, according to the Congressional Budget Office’s report this morning…in its economic outlook, the CBO predicts the U.S. economy will grow by 3.1% this year while unemployment will remain stubbornly high (above 9%)…Federal Reserve officials are wrapping up their two-day meeting…in a statement due at 11.15 am Pacific, they are expected to announce they will press on with their program to buy $600 billion in Treasury securities…the market of course will be paying close attention to the language in the Fed statement…there are many excellent opportunities in the group of companies we follow most closely at BMR, but one of the best near-term and longer-term situations is unquestionably GoldQuest Mining (GQC, TSX-V) which has been a market out-performer this month…technically, the stock is looking very strong with excellent support in the upper 30’s…a recent reversal in the 20-day moving average (SMA) is one of several bullish technical indicators with GQC…the fundamentals are impressive to say the least as this is a company with growing precious and base metal resources in the mineralization-rich Dominican Republic, and a zinc-lead-silver deposit in Spain…with Bill Fisher now Chairman of GoldQuest, we see an increased likelihood of a possible takeover of GoldQuest down the road as the company continues to develop its assets…GQC is currently off 3 cents at 39 cents…embracing any weakness in GQC recently has been a successful strategy…Richfield Ventures (RVC, TSX-V) reported more excellent drill results yesterday from its Blackwater Gold Project in central British Columbia…RVC is quieter this morning, up 2 pennies at $4.02…Richfield has more than tripled since we introduced it to BMR readers just over a year ago…Gold Bullion Development (GBB, TSX-V) has been trading between 74 and 77 cents this morning as it continues to hold up well during this turbulent market period…Cadillac Mining (CQX, TSX-V) is unchanged at 31 cents…we don’t often mention TSX companies but one silver play we have followed and continue to like is Great Panther Silver (GPR, TSX)…we brought GPR to the attention of our readers in November prior to a major upside move…there are few pure silver producers in the market but Great Panther is one of them…the weakness in silver recently has knocked more than $1 off the GPR share price which hit a high of $2.90 last month…yesterday, GPR traded as low as $1.79, just above its rising 100-day moving average (SMA) where there is strong support…this is definitely a company to keep an eye on with significantly expanding silver production out of its operations in Mexico…GPR is currently unchanged at $1.85…the extent of the weakness in Kent Exploration (KEX, TSX-V) this morning is a mystery, so we can only view it as a sale to take advantage of…Kent is off 3 cents at 13 cents…we find Kent very attractive at these levels where there is plenty of technical support…the primary trend with Kent is up as confirmed by its rising 50 and 100-day moving averages…shareholders in Kent through yesterday receive one share of the spin-off company Archean Star Resources for every four shares of Kent held…Kent will hold a significant percentage of Archean Star, allowing Kent shareholders to still participate in the development of the Gnaweeda Gold Project in Western Australia which Archean will hold…

Unlike most junior Gold stocks, GoldQuest Mining (GQC, TSX-V) is enjoying a strong month of January (up 15% through yesterday) and its chart is as bullish as ever.  This is particularly impressive considering the company announced December 24 that it was accelerating the warrant expiry date from a financing last April.  The new deadline to exercise those warrants was two days ago (9.5 million were outstanding as of Dec. 24 with each warrant exercisable into one common share at 20 cents).

GoldQuest’s fundamentals are exceptionally strong as we have stated many times.  This is a well-run company with a very real opportunity to make a major discovery in the mineralization-rich Dominican Republic where it has been exploring for a decade.  GoldQuest is currently drilling its La Escandalosa Project (formerly Las Tres Palmas) which has the potential to develop into a company-maker.  An initial NI-43-101 resource calculation, based on just 25 holes from one area of that property, revealed an inferred resource of 400,000 ounces of Gold as announced in November.  That figure could increase dramatically moving forward.  The 43-101 was done at an early stage.

La Escandalosa is an outstanding target.  Gold at this property 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 a pipeline of promising advanced and early stage properties in the DR, including more 43-101 resources, along with a significant zinc-lead-silver deposit in Spain.  As of 7 am Pacific today, GQC is trading at 39 cents – down 3 pennies.  It started weak yesterday and finished strong.  Embracing any weakness in this stock recently has been a winning strategy. Below, John updates the technical picture for GoldQuest:

John: Yesterday, GoldQuest Mining opened at 37 cents, its low, and then climbed and closed at its high of 42 cents for a gain of 3 pennies (7.69%) on CDNX volume of 558,000 shares. This indeed was the star yesterday in the BMR group, having a breakout above resistance on a day when the CDNX was down nearly 50 points.

Looking at the 4-month daily chart we first look at the most important part of any chart which is the trading pattern. We see that between November 23 and yesterday, the pattern is a bullish ascending triangle (blue line top, green sloping trendline and the vertical black dotted line). Yesterday’s trading saw GQC get through the horizontal blue resistance line at 40 cents with the stock closing strongly at 42 cents.  The candle is white and shaved,   also indicating trading was strong at the close. The volume of 558,000 was an increase over Monday’s 400,000, another bullish sign which also helps to validate the breakout. This breakout must be verified by a white candle and increased volume. The SMA(50) moving average is providing bullish support.

While the fundamentals suggest GoldQuest has an excellent chance of a major discovery in the Dominican Republic, which means the stock has good potential to ultimately soar to new all-time highs, where can we expect the price to go from here in the immediate future?  Technical analysis states that one can estimate the next major resistance level by adding the depth of the triangle (black dotted line) to the top of the triangle (blue resistance line).   Thus, resistance line @ 40 cents  +  depth of triangle (40c – 25c)  =  40 +15  =  55 cents.

There is, however, a support level at 32 cents which, with the blue resistance line, forms a horizontal trend channel within the triangle. This is not shown so as to avoid congestion. This too can be used to estimate a minor resistance level which could occur when the depth of the channel is added to the blue resistance line.   Thus, resistance line @ 40c  +  (40-32)  =  40 + 8  = 48 cents. This is in agreement with the Fibonacci target of 47 cents shown on the chart of Jan. 13.

In summary, we can expect this breakout, if confirmed, will initially climb to 48 cents and then to 55 cents (these are theoretical Fibonacci levels based on technical analysis and not BMR price targets as we don’t give price targets).

Looking at the indicators:

The RSI at 66% has has made a strong move up from a “W” formation – very bullish. The Chaikin Money Flow (CMF) indicator is very bullish as it shows buying pressure has increased in each of the last 4 sessions. The ADX trend indicator has the +DI (green line) at 26 and above the -DI (red line) at 17 and diverging. The ADX (black line) trend strength indicator is low at 17 and starting to turn up – this is a very bullish orientation.

Outlook: GoldQuest is in a very bullish state with chart patterns and indicators in agreement that this breakout is genuine.

Note:  Both Jon and John hold positions in GQC.

Welcome to our site, or at least the initial version of it!  BMR has been online for over a year now and strictly through word-of-mouth we have built a large and loyal following.  It helps when your model portfolio is up over 200%!

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.    An important component of this site will always be original research on small and undiscovered junior resource companies, mostly in the Gold exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely in order to make it work for us.  If it’s the other way around –  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly –  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com is completely independent from any companies it covers.  BMR accepts no compensation of any kind from the companies we cover in return for that coverage.   We accept no advertising either.  Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company.  We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions.  The stocks we cover, by definition, are highly speculative and potentially very volatile.  Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisors. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.  It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.

Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Precious metals are weak this morning but Gold is edging closer to a bottom in our view…as of 11:10 am Pacific, the yellow metal is down $8 an ounce at $1,326 after dropping to a three-month low of $1,321…Silver is off 18 cents at 26.77 while U.S. Dollar Index is up slightly at 78.05…a drop in the UK’s gross domestic product for the 4th quarter (a 0.5% contraction vs. an anticipated 0.5% expansion) took investors by surprise this morning…the UK is the first country in the G-7 to release economic growth figures for the final quarter of 2010…the weak number will limit the central bank’s ability to fight inflation…single-family home prices fell for the 5th straight month in the United States in November, and a double-dip in house prices there is a growing possibility…the American economic recovery is by no means on solid footing which is why we expect the Fed to be as accommodating as possible for as long as possible in terms of its monetary policy…this is bullish for Gold…today marks the start of the 2-day FOMC meeting…Obama delivers his State-of-the-Union address this evening and more U.S. economic data is coming out this week…with weakness in Gold and month-end upon us, the CDNX is off 36 points at 2213…very strong support exists at 2200…another indication that we’re very close to a bottom in Gold, if we haven’t hit it already this morning, is that the TSX Gold Index has touched its 300-day moving average (SMA) for only the third time in the past year…the other two occasions were in February and late July when Gold also bottomed out…this is the time to be very bullish on Gold, not bearish…Richfield Ventures (RVC, TSX-V) has delivered another outstanding drill result from its Blackwater Project in central British Columbia…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…Richfield is currently ahead 18 cents to $3.98…also out with news this morning is Currie Rose Resources (CUI, TSX-V)…CUI has optioned its Jubilee Reef Gold Project in northwest Tanzania to Australian-based Liontown Resources…the move makes sense as Currie Rose can focus on its high priority Sekenke and Mabale Hills Projects…the JV with Liontown will give Currie Rose a minimum of 23,000 metres of drilling on its properties this year which includes the 8,000 metres underway at the Scadding Gold Project near Sudbury through an option with Trueclaim Exploration (TRM, TSX-V)…Currie Rose is up a penny at 17 cents…Sidon International (SD, TSX-V) is weak this morning as it broke technical support at 16.5 cents…the stock is off 2 pennies to 14 cents…it fell as low as 13.5 cents, just slightly below its rising 100-day SMA…it’s important to point out that the last time Sidon broke below its 100-day in October, the stock held support at its 200-day and then more than doubled in value  by early December…the primary trend is still up with Sidon, based on all technical indicators, and that’s what’s important…Gold Bullion Development (GBB, TSX-V) is quiet, off a penny at 74 cents on relatively light volume…more results from the LONG Bars Zone are due soon but everything seems to be on track at Granada based on GBB’s news release last Friday…Abcourt Mines (ABI, TSX-V) is up half a penny at 17.5 cents…there is a very strong zone of technical support for ABI between 15.5 cents (the 100-day SMA) and 17 cents…ABI is also underpinned by very strong fundamentals with 43-101 resources and resources at two different properties…Cadillac Mining is up half a cent at 31 cents…it’s important to note that Richmont Mines (RIC, TSX-V) stated in a news release this morning that new drill results and an updated resource estimate for its Wasamac Property are expected by mid-February…this will have important ramifications for Cadillac as the principal structure hosting Gold mineralization at Wasamac plunges north onto CQX’s ground…we expect a major upward revision in Wasamac 43-101 resources after 20,000 metres of successful drilling by Richmont last year…GoldQuest Mining (GQC, TSX-V) is showing impressive strength and seems to be on the verge of a potential breakout…after opening down 2 pennies at 37 cents this morning, GQC is now ahead 1 penny at 40 cents, just 2.5 cents below its 52-week high…this has been the best performing stock in the BMR “group” this month…the fact GQC held its ground so well over the past month despite an acceleration in the warrant expiry date from a financing last April demonstrates perfectly the underlying fundamental and technical strength of this play…if it pushes through its 52-week high on strong volume, the next major resistance for GoldQuest will be in the low 50’s…this company has major discovery potential in the DR and a very promising Zinc-Lead-Silver project in Spain…we see big things in store for GQC in 2011…

Gold has traded in a range of $1,341 to $1,354 so far today…as of 11:30 am Pacific, the yellow metal is up $5 an ounce at $1,347…Silver has declined 11 cents to $27.46 while the greenback remains under some pressure…the U.S. Dollar Index has slipped another one-quarter of a point to 77.92…we believe the evidence supports a major reversal for Gold very soon…this possibly could be preceded by another dip and if that should occur, it would be a final “shakeout” prior to another major move to the upside…several indicators are telling us that Gold is almost ready to take off again…the action in the CDNX…the chart of the TSX Gold Index as outlined in our Week In Review (Part 1) Saturday as well as John’s recent “Big Golden Picture” chart…and the latest COT report (commerical traders) for Gold which shows the commercial traders have sharply scaled back their short positions…the commercial traders are hardly ever wrong…the fact they have reduced their short positions so sharply, to levels not seen since last July, is the final piece of evidence we need to see that Gold is about to head north…do not allow yourself to get fooled by a potential near-term final spike to the downside…February is likely to be a very different story for precious metals based on the above, so keep that in mind…this is a very bullish-looking set-up…physical demand continues to be strong and this we believe will help put a floor on Gold…lots of news coming out of the U.S. this week…Obama delivers his State of the Union address tomorrow night and is expected to focus on jobs and the economy…at some point in the future, a State of the Union address will focus on the crisis of debt in America and the urgent need to reduce it…this issue hasn’t quite crystallized yet in the United States…dozens of earnings reports are due this week as well as a slew of U.S. macroeconomic data and a FOMC statement as well…the CDNX is essentially unchanged at 2266…Gold Bullion Development (GBB, TSX-V) is off 1 penny at 74 cents…the chart for GBB is showing bullish new signs as John outlined this morning…Cadillac Mining (CQX, TSX-V) is on the rebound after hitting a low of 26 cents Friday…it got as high as 34.5 cents this morning but has since dropped back to 31 cents…we’re expecting news very soon out of Richmont Mines (RIC, TSX) regarding its Wasamac Property…the principal structure hosting Gold mineralization at Wasamac plunges to the north onto ground held by Cadillac…we’re expecting a sharp increase in the Wasamac resource calculation based on results and the amount of drilling since last May…Wasamac could very easily become Richmont’s #1 producing mine…Cadillac has a 100% interest in its 7 “Wasa” claims which are largely untested for Gold and base metal potential…Cadillac also holds more than 75 square kilometres of additional ground along the Cadillac Trend in partnership with Visible Gold (VGD, TSX-V) which is planning a very aggressive exploration program…Cadillac’s recent acquisition of an entire former mining camp in Utah (Goldstrike) near the Nevada border was an astute move that we firmly believe will drive this company forward in a huge way in 2011…Troymet Exploration (TYE, TSX-V) came out with news this morning as the company is mobilizing drills to its Key and McClarty Lake projects…Troymet is worth watching closely and performing due diligence on…Everton Resources (EVR, TSX-V) should be coming out with more results in the near future from drilling in the Dominican Republic…Everton has recently been trading between its 100 (30 cents) and 50-day (34 cents) moving averages (SMA)…in a situation like this, a convincing move on strong volume through the 50-day would be extremely bullish while a breakdown below the 100-day of course would be bearish…we’re counting on an upside move…we love the fundamentals of Everton and we believe its DR properties could generate explosive results…the same applies of course for GoldQuest Mining (GQC, TSX-V) which is developing a terrific pipeline of advanced and early stage projects in the mineralization-rich DR…GQC is off a penny at 36 cents…Kent Exploration (KEX, TSX-V) continues to be a brisk trader…the stock, which we were urging our readers to take a look at a couple weeks ago when it was sitting at 13 cents, is up another 2 pennies to 18 cents this morning…Kent has overcome resistance at 16.5 cents where new support should now exist…the date of record for the Archean Resources spin-off is this coming Friday…one Archean share for four Kent shares…we’ve made some adjustments to our model portfolio, taking out Excel Gold Mining (EGM, TSX-V) and Colombian Mines (CMJ, TSX-V)…we still very much like the potential for both, although they’ve been weak performers lately, and we’ll continue reporting on them but we wanted to make room for two new companies (still under consideration) without overloading the model portfolio…

6:30 am Pacific

Gold Bullion came out with news Friday and their booth at the Vancouver Resource Show yesterday was very busy.  The Granada Gold Property has delivered consistently solid results throughout the past year and we see no reason why that’s going to change, especially after Friday’s news that mineralization continues to remain open in all directions at Granada and new mineralized structures have been intersected throughout the Preliminary Block Model and the Eastern Extension.  New assay results are expected in the “very near future”.  Steady and consistent progress – that has been the GBB story for the past year as the company continues making progress toward its goal of outlining a potential multi-million ounce open-pit deposit at Granada.  This is very much reflected in GBB’s chart – John updates the bullish Gold Bullion picture below:

On Friday, Gold Bullion Development opened at 70 cents, its low, then climbed to a high of 77 cents before closing at 75 cents. It gained 1 penny on CDNX volume of 592,000 shares.

Looking at the 6-month daily chart we see solid support (green horizontal line) at 70 cents and two resistance levels at 78 cents and 87 cents.  From December 20 to now the trading has formed a downsloping flag (flag boundaries not shown) which has over the last 4 weeks retraced the price from a high of 93 cents to ann intra-day low of 67 cents.   Obviously the market was not ready to sustain such a powerful move in late December.   The volume is now starting to increase and the white candles in the last 2 days show an awakening of the bulls. This could be the base for the start of another move up. Keep an eye on the price possibly breaking and closing above the close supporting moving average EMA(20) which then could become support.

The Fibonacci set shows the next Fibonacci target is at the $1.08 level (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 is forming a bullish “W” formation at the 46% level. Look for the RSI to break above the 50% level this week.

The Slow Stochastics has the %K (black line) at 29% and above the %D (red line) at 25% after forming a bullish “W” formation.

The Chaikin Money Flow (CMF) shows the buying pressure is increasing, especially during the last 2 trading days.  It’s currently at the 0.242 level.

Outlook: The chart pattern and the indicators all point to a strong possibility that GBB has found a bottom at the strong support level of 70 cents.  GBB will be interesting to watch in the coming weeks.

Note: Jon holds a position in GBB while John currently does not.

Drilling by Gold Bullion (GBB, TSX-V) on Adventure Gold (AGE, TSX-V) property at Granada, AGE’s ongoing drill program at its promising Pascalis-Colombiere Property near Val d’Or, and continued deep drilling by Lake Shore Gold (LSG, TSX) at the Meunier-144 joint venture at Timmins West are just three reasons we see immediate potential for Adventure Gold which has a solid portfolio of properties and a terrific opportunity to enjoy a breakthrough year in 2011.  During my recent trip to Rouyn-Noranda I met with Jules Riopel (VP Exploration & Acquisitions), a seasoned and respected geologist who has a clear game plan and a high degree of confidence that AGE’s project strategy will succeed.  The company is in good financial shape and the odds of at least one of its properties “hitting the jackpot” has to be considered excellent.  We encourage readers to do their own due diligence on Adventure Gold.  We believe you’ll see a major opportunity here with a company very focused on the discovery potential of its properties.  Below, John examines the AGE chart and sees solid support levels and increasing buying pressure recently:

On Friday, Adventure Gold opened at 40 cents, its low, then climbed and closed at its high for the day of 42 cents – a gain of 2 pennies on relatively light CDNX volume of 55,000 shares.

Looking at the 6-month daily chart we see that since the first week of December, AGE has consolidated in a downsloping coil between a high of 56 cents and a low of 36 cents. During that time the volume has fallen substantially, thus validating the consolidation.

There are 2 levels of solid support (green horizontal lines) – 35 cents and 40 cents. Two main resistance levels (horizontal blue lines), 44 cents and 50 cents, are also shown. The close supporting moving average for an extended uptrend is the EMA (20). This is presently at 45 cents and has flattened out from its previous downward move, a bullish sign that perhaps a bottom has been reached. If and when the price breaks above this moving average it’ll be a very bullish sign, especially if accompanied by a large increase in volume. Watch for it.

The Fibonacci set shows the 100% level at 44 cents, coinciding with a resistance level.  The next Fibonacci target is shown at 63 cents (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 is low at 41% and may be forming a base “W” formation – very bullish.   Similarly, the Slow Stochastics has the %K (black line) at 29, pointing up and above the %D (red line) at 22. This may continue to go up or form a “W” formation. Either way it looks very bullish.

The Chaikin Money Flow (CMF) indicator shows the buying pressure is starting to pick up in the last 4 sessions, another bullish sign.

Outlook: On Friday, AGE bounced up off solid support at 40 cents and with the basing patterns of the indicators and higher volume (continued increased buying pressure) we could see a significant move.

Note:  Both writers (Jon and John) each hold a position in AGE.