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Gold Bullion Development (GBB, TSX-V)

GBB hit a new 52-week low of 31.5 cents Thursday and Friday before staging a powerful reversal Friday to close up a nickel for the day and a penny for the week at 39 cents, 1 cent below the declining 20-day moving average (SMA)…despite the encouraging move Friday, GBB faces some technical headwinds with declining 10, 20, 50, 100 and 200-day moving averages…the latest news from GBB came out July 27 when the company announced it has applied to the Venture Exchange to lower the exercise price of a total of nearly 8 million share purchase warrants to 58 cents (7.4 million from last October’s financing were priced at 75 cents)…these warrants expire October 27, 2011, so we’re certain the GBB game plan is to have the 43-101 out before the end of the summer in hopes of getting those warrants exercised which would bring another $5 million or so into the treasury…a move through the mid-50′s would constitute a major technical breakout for the stock but that’s going to require a strong 43-101…GBB’s last drill results were released July 13…there was nothing spectacular in those numbers but hole #165, collared approximately 50 metres northeast of hole #108, offered encouragement with regard to the very promising northern portion of the Eastern Extension…#165 returned 141.5 metres grading 0.31 g/t Au (from 155 to 296.50 metres) with no high-grade spikes, showing an apparent consistency of mineralization…it included a 20.5-metre section grading 1.2 g/t Au…assays have yet to be reported on 8 more important holes drilled in this general area (168, 178, 183, 241, 243, 246, 254, 257) according to GBB’s most recent drill map…along with additional results, GBB’s 43-101 resource estimate is going to be critical along with the Castle spin-off and potential discoveries in LONG Bars Zone 2…infill drilling is GBB’s focus at the moment with drill hole spacing tightening (which could help to improve grade) in preparation for a resource calculation…the company’s current market cap of $65 million puts a value of just $22 an ounce on Gold in the ground at Granada if one were to assume the 43-101 will outline approximately 3 million ounces in the measured, indicated and inferred categories…that’s just a hypothetical number on our part at the moment but whatever number GENIVAR comes up with, we believe it should exceed the 2.4 to 2.6 million ounce conceptual figure that Gold Bullion gave in April of last year…based on all the drill results to date, this appears to be shaping up as a half-gram deposit with a higher grade starter pit and massive volume…it’s all about volume at Granada which is why the drills have to keep turning and why we want to see more than just two rigs in the LONG Bars Zone which has such incredible potential…the company provided an update on its Castle Silver Mine Project June 8…the 6,000 metre Phase 1 drill program is nearing completion and a strong new vein structure was intersected at the first IP target…a 43-101 technical report on the property has also been released…assay results from the 10 holes drilled so far are still pending…GBB plans to spin-off this asset into a separate publicly traded entity…GBB is up 457% since we introduced it to BMR readers in late December, 2009…

Currie Rose Resources (CUI, TSX-V)

Currie Rose fell in sympathy with the overall market last week though volume was relatively light, so there was no panic selling…the stock closed Friday at 16 cents where it’s sitting in zone of strong technical support…a move through resistance in the low 20’s will require a stronger overall market or some stellar results from Tanzania, and either scenario is certainly possible…the Currie Rose drill continues to turn at Mabale Hills, so a summer of interesting action in CUI is likely…three properties are being drilled at Mabale (Mwamazengo, Dhahabu and Sisu River) before the rig shifts to the flagship Sekenke Project about 200 kilometres to the southeast…CUI‘s first-ever drill program at Sisu River late last year gave reason for encouragement but this time around the plan is to push the holes a little deeper (150 metres or more) in hopes of cutting wider intersections and higher grade…reading between the lines of the July 5 news release, it’s possible the geologists liked what they saw in the first 3 holes as 506 samples were delivered to a nearby lab for assaying and drilling continued…after more holes are completed at Sisu River, the rig will test targets at Dhahabu and Mwamaznego…geochemical analysis has outlined a continuous anomaly over a few hundred metres that runs parallel to the west of a previously reported discovery at Mwamazengo where drill results included notable high-grade intercepts such as 34 metres grading 3.60 grams per tonne gold, 12 metres grading 9.11 g/t Au, 63 metres grading 2.59 g/t Au and 31 metres grading 5.97 g/t Au…we’re most excited, however, about the Sekenke Project which has “blue sky” written all over it…Sekenke is why we decided to start following CUI when it was trading around a dime last fall…results from satellite imagery provide additional evidence that Sekenke is a highly intriguing geological target and part of the same northwest trending structure that hosts Canaco’s (CAN, TSX-V) Handeni Project…satellite imagery has also shown that the structures at Sekenke are coincident with a strong alteration envelope…what’s unique about this project is that it surrounds and runs in between two former high grade Gold mines including Tanzania’s original producer…this greatly increases the chances of a discovery as it’s unlikely the former mines were fully exploited or explored as techniques a century ago in this industry obviously weren’t what they are today…CUI has a terrific chance to hit it big at Sekenke and we also wouldn’t be surprised if the company takes a shot at acquiring the former Sekenke Mine…that’s speculation on our part but it makes sense from a strategic point of view…pre-drilling exploration work continues at Sekenke to pinpoint the best targets…while its Tanzanian properties are the market’s major focus, Currie Rose could also benefit over the summer from continued good exploration news out of Trueclaim Exploration (TRM, TSX-V) which is currently conducting an 8,000 metre drill program at the Scadding Gold Property near Sudbury…Trueclaim, which continues to release decent assay results, has earned a 51% interest in Scadding and can acquire a full 100% interest by completing a feasibility study, paying $2 million to Currie Rose, and giving Currie Rose a 3% net smelter royalty…TRM announced last Tuesday that it has intersected a previously unknown area of Gold mineralization at Scadding with hole #48 assaying 5 metres grading 4.54 g/t Au (from 98 to 103 metres, assumed to be true width)…about 25 metres below that interval was a 10.25-metre section grading 1.37 g/t Au…TRM has drilled the North Zone, the South Zone and the Currie Rose Zone with promising results (the Central Zone, which could get really interesting, has yet to be drilled)…CUI announced a joint-venture deal January 25 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…while Currie Rose has had its market cap shaved by more than half, from a high of nearly $40 million late last year to the current $14 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as ever…Currie Rose has all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) in Tanzania this summer, so there will not be any dilution of the stock at current levels as confirmed by President and CEO Harold Smith…

Adventure Gold (AGE, TSX-V)

Last week’s big drop in the CDNX has opened up some very interesting opportunities and Adventure Gold is certainly one of them…the stock closed Friday at 45 cents, a drop of 7 cents for the week despite the fact this company appears to be developing a significant Gold deposit at its Pascalis-Colombiere Property near Val d”or…AGE remains one of our favorites this summer with several exciting projects on the go…our theory is that there’s a very good chance at least one of those projects will “hit” and our prediction is that it will be Pascalis-Colombiere…we recently spoke with President and CEO Marco Gagnon and we’re continuing to perform some additional research on AGE in advance of some postings in the near future…Gagnon is a sharp operator who knows how to maximize every dollar spent…he also has the strong backing of Montreal investment firm Windermere Capital which holds just under 20% of AGE as disclosed January 21…the company has five active key projects, two of which are in the hands of joint venture partners Lake Shore Gold (LSG, TSX) and Agnico-Eagle Mines (AEM, TSX)…AGE is currently conducting a 5,000 metre Phase 2 program at its very promising Pascalis-Colombiere Property near Val d’Or…at the end of May the company reported highly encouraging drill results from this former producer including 4.8 g/t Au over 33.1 metres in hole #20 (plus lower grade halos over significant widths)…the Phase 2 program is designed to further define the Gold system, leading to a resource calculation which is already being worked on…Pascalis-Colombiere encompasses the past producing L.C. Beliveau Mine (Richmont’s Beaufor Mine is nearby)…we found a comment from Gagnon in AGE’s June 2 news release quite interesting…“Following positive drill results and the permitting process, an open-pit or an underground operation could be producing in the near future”…we believe Richmont Mines (RIC, TSX) may have interest in this project…earlier this year we met with AGE’s Jules Riopel, VP Exploration, regarding the company’s strong portfolio of properties…he was very keen at that time on Pascalis-Colombiere and given the drill results, his bullishness on this property appears to have been justified…the former L.C. Beliveau Mine was a very profitable operation between 1989 and 1993, producing nearly 170,000 ounces of Gold for Cambior…we believe a lot of Gold was overlooked in that area…in addition, the geometry of the deposit is such that mining costs should be relatively low…considerable infrastructure is also in place…meanwhile, Agnico-Eagle has completed its 4,000 metre drill program at AGE’s Dubuisson Property near Val d’or…Dubuisson is contiguous to the Goldex Mine Property and also straddles a 5-kilometre segment of the prolific Cadillac-Larder Lake Gold break…also of immediate interest is AGE’s partnership with Lake Shore Gold on the Meunier 144 Property where deep drilling is still 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 and had reached a core length of 2500 metres as of mid-June with another 500 metres to go…if a discovery is made, AGE will instantly explode higher…AGE has completed an 8-hole Phase 1 program at the Lapaska Property near Val D’Or…results released July 21 for the remaining 6 holes at Lapaska were very mediocre compared to the first 2 holes (MZO-TSX-V has an option to earn up to a 70% interest in the property) but Lapaska still holds good potential…the Granada Extension Property will be worked on later this year…AGE’s latest financials, released June 29, show the company with $3.3 million in working capital as of April 30, a $300,000 improvement in working capital over the quarter ending January 31…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 just 34 cents October 28…Adventure Gold has been around only since late 2007…AGE is clearly a keeper for the long haul and we wouldn’t be surprised to see a major breakout in this play over the summer…

GoldQuest Mining (GQX, TSX-V)

GoldQuest was down 2.5 cents last week, closing Friday at 17.5 cents….the 200-day moving average (SMA), currently at 29 cents, has now started to decline but the 300-day (SMA) at 25 cents continues to rise…support for the stock has proven to be very strong in the high teens…there’s no question in our view that GQC presents a great opportunity for patient and long-term investors…Chairman Bill Fisher has been buying GQC stock on the open market, his latest purchase being 20,000 shares July 12…he has bought nearly 250,000 shares over the past couple of months between 18 and 20.5 cents according to insider trading reports…GQC’s prospects remain solid as the company has an outstanding portfolio of projects in the Dominican Republic and Spain…the substantial drop in the share price from a high of 48.5 cents in early February was due to general market weakness and selling from speculators whose expectations may have been too high regarding initial drill results from the company’s La Escandalosa Project in the Dominican Republic…in addition, the company has stopped all drilling in the DR for the time being in order to conduct extensive IP surveys over Escandalosa and other properties…overall assay results from Escandalosa were decent though far from spectacular…the final set of assays for 7 holes came out May 16…the best intersection from Escandalosa Sur, where an initial 43-101 inferred resource of 400,000 ounces was outlined last fall, was 20 meters grading 1.32 g/t Au…results from this area overall (21 holes) were somewhat disappointing though more drilling is required and will take place later this year…however, the company drilled 3 holes at the Hondo Valle target 1.6 kilometres to the north (outside the resource area) and all 3 intersected significant mineralization including 29 metres grading 2.18 g/t Au in hole #65…that’s the thickest and highest grade mineralized section drilled to date at Hondo Valle…the theory is that mineralization trends north from Escandalosa Sur to Hondo Valle…GoldQuest has been carrying out a 16-square kilometre IP survey and magnetic ground geophysical survey from 2 kilometres north of Hondo Valle to 2.2 kilometres south of Escandalosa Sur…GQC will use the data to pinpoint key targets for an additional 3,000 metres of drilling…GoldQuest also has other promising projects in the DR (in particular, Loma Oculta – formerly Las Animas – where an exploration program aimed at identifying new drill targets is now underway) in addition to its lead-zinc-silver deposit in Spain…GoldQuest’s potential has not diminished whatsoever yet the share price has dropped by more than 60% from its early February high…the company released a 43-101 resource estimate March 2 on its Toral zinc-lead-Silver deposit in Spain…it showed slightly lower grades but much higher overall tonnage than the previous historical non-compliant estimate…as a result, total resources came out 15% higher…resources in the indicated category are 4.04 million tonnes grading 11.8% lead and zinc (5.3% lead, 6.5% zinc) as well as 41 g/t Ag and 0.11% Cu… inferred resources are 4.67 million tonnes grading 9.8% lead and zinc (4.44% lead, 5.4% zinc), 32 g/t Ag and 0.14 Cu…Toral has significant exploration and development upside as a majority of the historical drilling (40,000+ metres) was conducted over one relatively small part of the property…the zone of sulphide mineralization is open along strike to the northwest toward a known lead deposit as well as along strike to the southeast and downdip…the project is also an ideal candidate for a fast-track to production…the deposit is close to a power line, highway and rail line…a large smelter is located just 300 kilometers away by rail…meanwhile, GQC has been granted the Lago exploration concession, as reported last July 19, which is only a 30-minute drive northeast of Toral…the Lago property is the first permit granted of three applications by GoldQuest…securing an exploration concession for Lago, where mineralization is similar to that of Toral, is another important step for GoldQuest in building its assets in that region…a comprehensive mapping, geochemical sampling and ground geophysical program will be initiated at Lago to define both infill drilling and new targets that may warrant drilling in the vicinity of the known hydrothermal lead and zinc mineralization that remains open along strike and at depth…GQC is down 2 pennies since we added it to the BMR model portfolio last fall…

Seafield Resources (SFF, TSX-V)

Seafield was dragged down by the overall market and declined 3.5 cents last week to close at 23.5 cents…it fell as low as 22 cents where there is strong technical support….insiders continue to put their money where their mouths are…President and CEO Cesar Lopez bought another 400,000 shares July 29, according to insider trading reports, while another director scooped up 100,000 shares that day…heavy selling came into the SFF market July 25 when the company announced drill results from Dos Quebradas which were disappointing, though we caution it’s still early in the game for that property…Seafield is currently drilling a promising area at Dos Quebradas approximately 250 metres wide (east to west) and more than 300 metres long (north to south)…the zone is open at depth and is interpreted to plunge to the north…meanwhile, Seafield has added a second drill rig at Miraflores in order to expedite a Phase 2 program there which is designed to better define the shape of the orebody, increase the resource confidence and extend mineralization…a total of 10 holes or 6,200 metres is expected to be completed by November (the rock is hard at Miraflores, so the drilling is slow which is why a second rig has been added)…the company announced July 5 that it has hired SRK Consulting for a preliminary economic assessment or scoping level study on Miraflores for completion by the first quarter of next year…SRK will evaluate the potential positive economics of developing an open-pit and underground operation at the property…it will also provide recommendations to advance the project to prefeasibility…Seafield released an updated 43-101 resource estimate for Miraflores May 26…the project has gone from an inferred resource of 776,000 ounces (at a cut-off grade of 0.5 g/t Au) to a measured and indicated resource of 1.2 million ounces and an inferred resource of 354,000 ounces (at a cut-off grade of 0.3 g/t Au)…there was big news out of Seafield May 9 with a change in management which has to be considered a bullish development…Lopez, who has a strong background in South American exploration management and development, is the company’s new President and CEO…he replaced Tony Roodenburg who remains a director…since taking control, Lopez has purchased over a million shares on the open market…Tom Henricksen, meanwhile, has taken over as Vice-President, Exploration, from James Pirie who also has stayed on as a director…Henricksen has over 35 years of mineral exploration experience and has spent the last 15 years on projects in South America…Seafield exploded from the low 20′s to an all-time high of 77 cents in just one day last December but then proceeded to give up all of those gains…the company’s Quinchia land package in Colombia has a great deal of untapped potential and Seafield is also sitting on nearly $20 million in cash…patient investors have an opportunity to do extremely well with this play given the geological merits of Quinchia and the real potential for 5 million+ ounces from several potential deposits…we have confidence the new management group will unlock value by bringing fresh insight and new energy to this play along with a more aggressive exploration approach…Seafield has gained nearly 300% since we made it the first company in the BMR model portfolio in the summer of 2009…its current market cap is $39 million, about twice the company’s current cash value…

TSX Venture Exchange and Gold

There’s no way to “sugar coat” this – it was an ugly week in the markets and the Venture Exchange got whacked hard as the Dow suffered its worst week since March, 2009, on global economic growth concerns and U.S. and euro zone debt problems.   We simply didn’t see this coming as the CDNX fell through important technical support and closed the week down 8.5% at 1,811.  The Index dropped as low as 1,778 Friday before rebounding marginally near the end of the session.

The Dow declined 5.8% for the week, the Nasdaq fell 7%, the S&P 500 was off 7.2% while the TSX tanked 8.9%.

Depending on who you listen to, the U.S. is headed for either something worse than the Great Depression or will manage to maneuver through the troubled waters of a jobs and growth deficit as well as an enormous fiscal debt that has been allowed to pile up and get worse in recent years, forcing Standard & Poor’s to downgrade U.S. debt for the first time ever Friday after the markets closed.  Canada had that happen in 1992 and it was actually a blessing – the country proceeded to get its fiscal house in order and a decade later regained its “AAA” status.  And if you recall, 1992 was a great time to invest in Canadian stocks.

Last week’s market turmoil was not comfortable for anyone unless you were positioned in a bear ETF.  The market clearly expressed concerns about the health of the global economy and the debt problems plaguing the United States, Italy, Spain, Greece and other countries.  Those concerns cannot be easily dismissed and while the emerging market growth story continues, which is positive, how economic and political events unfold in the U.S. and the euro zone over the coming days, weeks and months will really be under investors’ microscopes.

The herd moved aggressively in one direction last week but following the herd is not usually a wise strategy.  The best way to make money in the markets, of course, is to sell when the herd is buying and to buy when the herd is selling.  So dumping stocks into this market right now out of fear is, in our view, a foolish move.  Technicals show the CDNX, for example, is in heavily oversold territory though a final “capitulation” could still be in the cards.  One has to brace for that possibility as John’s chart shows:

Overall, there are still strong arguments to be bullish regarding the CDNX and even the overall markets:

• The 28% drop in the CDNX this year (from an early March high of 2465 to Friday’s low of 1778) is still within the “normal” range for CDNX corrections.  What is somewhat unusual is the duration (five months) of this correction, though one could argue we’ve witnessed two separate pullbacks – the initial 17% drop over just 7 trading sessions in March, and then a 26% correction from early April to early August;
• The CDNX 300 and 500-day moving averages are still rising and are in no danger of reversing anytime soon.  What this confirms in our view is an ongoing bull market;
• The steep plunge last week is typically the sort of trading action that does occur at the end of a major CDNX correction – there are many examples going back over the last decade;
• Since the end of June, the CDNX has actually out-performed both the Dow and the TSX – the reverse of what occurred at the beginning of the ’08 Market Crash.  The CDNX is an extremely reliable leading indicator.  Its plunge in March – its severe under-performance vs. the broader markets – was a warning sign of trouble ahead which we stated at the time.   The fact the CDNX is not leading other markets down at the moment is encouraging.

Other important points to keep in mind:

DO NOT FIGHT the Fed.  Investors should have learned that by now.  We do expect action from the Fed this coming week.

According to Stock Trader’s Almanac, August has been the second worst month of the year for the Dow Jones and the S&P 500 since the ’87 Crash.  The 7.2% decline for the S&P was the worst week ever recorded during the month of August, beating out 1974.

Earnings do matter.  Second quarter earnings for S&P 500 companies are up over 17% on a year-over-year basis.  Many North American companies are sitting on a lot of cash and earnings growth has been impressive.

There are 7 billion people fueling the global economy.  American media have a narrow focus and tend to forget that.

The United States, while it may be handicapped at the moment with one of its worst Presidents in history, is a resilient, entrepreneurial nation with a capacity for accomplishing great things and recovering from economic, social and political difficulties.

Gold

Gold was volatile last week, surging to a new all-time high of just over $1,680 an ounce before closing Friday at $1,664 for an increase of $37 for the week.

Gold hit and slightly surpassed John’s summer (June, July, August) target of $1,675 last week, so the possibility of a corrective pullback is significant.  However, potential Fed intervention (“QE3”) could have very bullish implications for Gold, so even though the yellow metal has reached the top end of its trading channel (as John’s chart from Wednesday illustrates) and is technically overbought, it could still break out from that channel in the immediate future on new dynamics.

Investors should stay focused on the “big picture” which remains very bullish long-term for Gold.  As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.  September is also the beginning of the gift-giving season for the yellow metal which drives up demand.  It’s really now becoming just a question of when, not if, Gold hits $2,000 an ounce. Ultimately, $3,000 or more is very possible.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies and governments in general, an environment of historically low interest rates and negative real interest rates (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  It’s hard to imagine Gold not performing well in this environment.  The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.

Silver was down $1.58 or the week, closing at $38.32.  Copper got hit hard, dropping 32 cents to $4.13.  Crude Oil got slammed, falling $8.82 a barrel to $86.88, while the U.S. Dollar Index gained three-quarters of a point to 74.52.

Stock markets are still shaky this morning, despite a better-than-expected U.S. jobs report, after yesterday’s huge sell-off…Gold has been erratic, climbing as high as $1,671, dropping as low as $1,648, and then running higher again…as of 8:00 am Pacific, the yellow metal is up $15 an ounce at $1,664…Silver is up 45 cents at $39.33, Copper has hit a two-month low at $4.17 (down 7 cents), Crude Oil is down 20 cents at $86.43 while the U.S. Dollar Index has dropped by more than half a point to 74.81…more than $2.5-trillion has been wiped off the value of world stocks this week on mounting concerns the global economy is heading towards another recession and Italy and Spain are being engulfed by the euro zone sovereign debt crisis…is this a prelude of things to come (just a “hint” of future turmoil as one reader commented this morning), or merely an over-reaction, a normal correction and an incredible buying opportunity?…there’s no question markets have suffered some technical damage, including the CDNX which has hit a new 52-week low after showing such positive signs since the end of June…we will explore different scenarios in our Week In Review which will be posted Sunday afternoon…with the CDNX, it’s important to point out that the 300 and 500-day moving averages continue to rise and are in no danger of going into decline anytime soon – that’s encouraging along with the fact the CDNX has outperformed the broader markets since the end of June…yesterday’s drop, however, through key support raises the prospect of a “capitulation” before a final bottom is put in…we’ll have to wait and see…much could depend on what the Fed decides to do in the coming days (it meets next week)…the U.S. jobs report this morning was not as bad as some had feared…hiring picked up slightly in July and the unemployment rate dipped to 9.1%, an optimistic sign after the worst day on Wall Street in nearly three years…employers added 117,000 jobs last month (above market expectations of a gain of 85,000), the Labor Department stated this morning…that’s better than the past two months which were also revised higher…still, the economy needs twice as many net jobs per month to rapidly reduce unemployment…the rate has topped 9% in every month except two since the recession officially ended in June, 2009…businesses added 154,000 jobs across many industries…governments cut 37,000 jobs last month, most of that largely due to the shutdown of Minnesota’s state government…Stats Canada reported this morning that the Canadian economy created just 7,100 jobs in July while the jobless rate slipped to 7.2%, the lowest since late 2008 and down from 7.4% a month earlier…gains in full-time jobs offset the losses in part-time unemployment…and on an optimistic note, the private sector created 95,000 positions…the public sector lost 72,000 jobs…the TSX is now below its rising 500-day SMA for the first time since early 2010 with very oversold technical conditions based on RSI(14) and Stochastics, so a rebound appears imminent…as of 8:00 am Pacific it’s off 156 points at 12,225…the CDNX is down another 34 points at 1819, still 83 points above its 500-day SMA…John’s 6-month daily chart shows the RSI(2) is at an extreme value which usually comes at a turnaround point…

A major discovery can turn the Venture around instantly and we have seen that happen on other occasions, particularly over the summer when exploration programs are in full swing and results start coming out…a classic example was back in 2007 when the Venture got hammered in early-to-mid August, along with the broader markets, and then swung violently to the upside thanks to Noront’s (NOT, TSX-V) McFauld’s Lake discovery…the Yukon, northern B.C., northwest Quebec and the Western U.S. are among the areas to watch closely for a potential major discovery through August and September…it’s also important not to lose sight of basic fundamentals when the market is acting on emotion and fear…earnings and fundamentals at some point will take over…a classic example of that is Richmont Mines (RIC, TSX), one of our favorite small producers, which could report stellar second quarter earnings as early as next week…Richmont climbed as high as $8.46 in early trading yesterday and hit an intra-day low of $7.02…after closing 79 cents lower yesterday, it is off another 18 cents at the moment to $7.31 despite the fact this company has a rapidly growing production profile, more than $50 million in cash, no debt, and potential earnings of $1.00 per share this year…John updates the Richmont chart below…

Given the situation at Wasamac, a growing deposit 15 kilometres west of Rouyn-Noranda, it’s important in our view to keep a close eye on Richmont neighbors Visible Gold Mines (VGD, TSX-V) and Cadillac Mining (CQX, TSX-V)…the market hasn’t caught on yet to how significant the Wasamac deposit is becoming, and Visible Gold Mines is also drilling aggressively in the immediate area with an indication, based on their latest news release, that they could be on to something with three rigs at their Lucky Break Project and drilling focusing on the Wasa Creek Property, parts of which are within 1200 metres of the Wasamac Main Zone to the south and west…a company doesn’t put three rigs on a property for no reason…there is also strong fundamental value in our view in Gold Bullion Development (GBB, TSX-V) and Adventure Gold (AGE, TSX-V) who of course are working on significant deposits south and east, respectively, of Rouyn-Noranda…in the Yukon, there are many exciting quality plays and one that has been knocked down in value in this sell-off is Kaminak Gold (KAM, TSX-V)…John updates the chart for KAM which should find support around the $4 level…it’s currently off 24 cents at $3.83, a drop off 85 cents from its all-time high of $4.71 July 27…

Elsewhere in the Yukon, we see value in such explorers as Golden Predator (GPD, TSX), Pacific Ridge Exploration (PEX, TSX-V), Northern Tiger (NTR, TSX-V), Ethos Capital (ECC, TSX-V) and of course Silver Quest Resources (SQI, TSX-V) which also holds a strategic 25% interest in the northern portion of New Gold’s (NGD, TSX) rich Blackwater deposit in central British Columbia…incredible opportunities could open up in some of those situations on any significant additional CDNX weakness…

It has been a wild and crazy day with stock markets plummeting and Gold hitting another new all-time high before pulling back…as of 9:30 am Pacific, the yellow metal is off $10 an ounce to $1,651…it had been as high as $1,683 today, surpassing yesterday’s new record of $1,674…Silver is off $2.27 to $39.46, Copper is down 10 cents to $4.24, Crude Oil has weakened further to $88.90 (good for Gold producers) while the U.S. Dollar Index has surged over a point to 75.04…one must have nerves of steel in these current volatile market and economic conditions…the perception is that global economic growth is slowing and that the United States could be moving toward a double-dip recession…the European Central Bank left interest rates unchanged today amid a slowdown in economic growth and as the region’s debt crisis spreads to Italy and Spain, increasing pressure on policy makers to resume bond purchases…ECB President Jean-Claude Trichet has announced a six-month operation to inject liquidity in the markets…JP Morgan lowered its U.S. economic growth forecast by 1% for the third quarter today, blaming recent developments in the American economy for the downward revision…it also said it now expects the Federal Reserve not to raise interest rates until the middle of 2013 at the earliest…the bank says it expects gross domestic product growth to be no higher than 1.5% rather than 2.5% previously forecast for the quarter…however, it suggested growth in the fourth quarter of the year could be slightly better at 2.5%, though that number was revised down from a previous forecast of 3%… JP Morgan also revised down its forecast for first-half growth next year to 2% from 2.5%, blaming the impact of higher taxes and lower federal government spending…the Labor Department reports U.S. job numbers for July tomorrow…non-farm payrolls are expected to increase by 85,000 with the unemployment rate expected to hold at 9.2%…the Fed meets next week when Bernanke may try to give the markets a boost…the Dow has resumed its downward spiral and is searching for a bottom…important lows last year occurred slightly below the 300-day moving average (SMA) where it’s close to now…the CDNX is being pulled down by the broader markets again this morning, though it has still performed quite a bit better than the Dow for example since the end of June (down 1% vs. a 6.5 % drop in the Dow)…as of 9:30 am Pacific, the Venture is off a whopping 87 points at 1879, falling through an important support level at 1940 as John’s chart illustrates…the June low was 1862 and that’s now the next support level…

If this is a “capitulation” moment, or if we’re approaching one, it’s important to stay focused on the big picture and avoid falling victim to fear…the CDNX‘s 300 and 500-day moving averages continue to rise, and that provides confirmation in our view that the long-term bull market remains intact…there are many quality exploration plays on the Venture at the moment, and Gold producers on the big board, that offer tremendous upside potential and we’ve mentioned quite a few of them in this space over the last several weeks…quite often in moments like this when many investors are ready to throw in the towel, a turning point soon occurs…just a couple of notes on individual plays this morning but much more tomorrow…Gold Canyon Resources (GCU, TSX-V), which continues to develop its very promising Springpole Property 110 kilometres northeast of the Red Lake Mining Camp in Ontario, released more positive results this morning including 24 metres (shallow depth, from 16 to 40 metres) grading 17.48 g/t Au in hole #66…at a cut-off of 34.29 g/t Au, this intersection was actually 10.31 g/t Au…it was drilled in the East Extension Zone which the company might ultimately be able to connect with the Portage Zone…the high-grade, near-surface mineralization in the East Extension could potentially make this zone a good starter-pit area…four rigs are currently drilling at Springpole…an updated 43-101 resource estimate is expected by year-end…GCU‘s 300-day moving average (SMA) is just below $2.00, an area it may wish to test before ultimately pushing higher again…the stock climbed as high as $2.45 on the news this morning but has since backed off to $2.20, down a nickel for the day…Gold Bullion Development (GBB, TSX-V) has fallen through support (intra-day at least) at 35 cents to a new 52-week low…it’s off 4 pennies at 32.5 cents on relatively low volume…there is strong technical support around the 30-cent area…in the non-resource sector, a bottom-fishing opportunity may exist with iSign Media Solutions (ISD, TSX-V) which has dropped by more than half over the last couple of months…it’s down 3 pennies this morning to 28 cents and John’s chart shows strong support at 27.5 cents…

Note:  Both John and Jon continue to hold positions in ISD…

After surging nearly $40 an ounce yesterday, Gold has hit another new all-time high today of $1,674.10 on the Spot Market…as of 8:45 am Pacific, the yellow metal is up $9 an ounce at $1,669…some analysts are suggesting Gold might be ready now to go “parabolic”…eventually we believe Gold will go parabolic but we don’t believe that time has arrived just yet…at the moment Gold is still trading within its upsloping trendline…however, it’s now testing resistance near the top of that trendline as John’s updated one-year weekly chart shows below…a sustained move through that resistance in the immediate future appears highly unlikely given the current overbought conditions (RSI and Stochastics), so a corrective pullback shortly is what we’re expecting…that would certainly not change the very bullish overall outlook for Gold…

There is not one easy answer as to why Gold is performing as well as it is…this is truly a “Perfect Storm” for Gold bugs with a wide range of factors (the “Fear Trade” and the “Love Trade” as Frank Holmes has so eloquently written about) pushing Gold higher…U.S. debt ceiling/debt reduction legislation yesterday didn’t fool the markets – the Americans have a major problem on their hands which they may have to “grow” themselves out of which has inflationary implications…worries about euro zone fiscal difficulties continue….Italian and Spanish politicians are rushing to formulate a response to the growing debt problems engulfing those two countries….Italian/Spanish bond yields are now at euro-era record highs…there appeared to be a bit of a “short squeeze” in the Gold market yesterday as well – some traders expecting Gold to go down on a U.S. debt deal were caught off guard…and this morning, news that central banks of emerging market countries such as Korea and Thailand have added more than $10 billion of Gold to their reserves this year is yet another sign of waning faith in fiat currencies, “toilet paper” money…International Monetary Fund data for June today showed that Thailand bought Gold for the second time this year, raising its reserves by nearly 19 tonnes to over 127 tonnes…Russia, meanwhile, bought another 5.85 tonnes, bringing its reserves to 836.7 tonnes, the world’s eighth largest official stash of the metal…so far in 2011, emerging market central banks have bought nearly 180 tonnes of Gold, more than double the roughly 73 tonnes purchased by central banks globally in all of 2010….that speaks volumes about where Gold‘s “big picture” direction…Mexico has been the largest buyer of Gold this year with $5.3 billion worth of purchases or 98 tonnes, followed by Russia which has bought 48 tonnes…earlier this week, South Korea confirmed it had bought 25 tonnes of Gold in June and July, its first foray into the Gold market in more than a decade…the trend of central banks in the developing world buying Gold really got started in 2009 when China bought 454 tonnes in April that year and India purchased 200 tonnes in November, 2009…these purchases were viewed as adding to the bullish case for the metal, especially if China wished to increase the percentage of Gold in its total reserves, currently just 1.6% compared to almost 75 percent for the United States…China’s reserves total 1,054.1 tonnes, making it the sixth largest holder, but still well behind the 8,133.5 tonnes held by the top-ranked United States…we should certainly expect China to increase its Gold reserves and the government is also encouraging its own citizens to purchase Gold…

The Dow is in danger of posting its ninth consecutive losing session today, thanks to more gloomy economic data…how long will it take for Fed Chairman Ben Bernanke to try to pull another rabbit out of the hat?…it doesn’t take a rocket scientist to figure out the Dow and the TSX have each become quite oversold and are probably close to reversing…the HIX (Horizons BetaPro S&P/TSX 60 Inverse ETF) shot up to $11.37 this morning and is clearly technically overbought based on RSI(14) and Stochastics…the pace of growth in the U.S. services sector ticked down unexpectedly in July to the lowest level since February of last year as new orders received by U.S. factories also fell in June, according to reports released this morning…in addition, while private sector payrolls in the U.S. rose at a faster pace than expected in July, a surprising increase in layoffs in the sector helped push the number of announced U.S. jobs cuts to a 16-month high, according to separate reports released today…an important July jobs report from the Labor Department is due Friday…the market is anticipating non-farm payrolls of 85,000 and a 9.2% unemployment rate…the U.S. has to find an effective way to tackle its jobs and growth deficit but that’s difficult to do when there’s no leadership on this issue from the top – President Obama is a “community organizer” who lacks an entrepreneurial mindset or vision…he is of the same mold as Pierre Trudeau or Jimmy Carter, a Prime Minister and a President whose policies were economically disastrous for their respective countries in the 1970’s…one major advantage for the United States right now is that the emerging market growth story continues…China, India and other countries are still galloping along and there are no reasons to believe that’s going to change anytime soon…that’s why Copper has been such a stellar performer…it’s looking healthy from a technical standpoint though it’s down a nickel at the moment to $4.34 a pound…

Despite Gold’s new record high today, the CDNX is being dragged down by the drop in the broader markets…as of 8:45 am Pacific, the CDNX is off 20 points at 1959…as we mentioned last week, this market has strong support in the 1930 to 1960 area…our overall bullish stance continues as we firmly believe the CDNX has started a new uptrend though not without some choppiness…the strong exploration stories are continuing to do well and those are the companies investors should be focusing on…we believe we have highlighted many of them in recent weeks, leaders within the BMR “model portfolio” group as well as companies outside of that group such as Silver Quest Resources (SQI, TSX-V), Kaminak Gold (KAM, TSX-V), Pacific Ridge Exploration (PEX, TSX-V), Northern Tiger (NTR, TSX-V), and Ethos Capital (ECC, TSX-V) in the Yukon…two British Columbia plays we like a lot are Spanish Mountain Gold (SPA, TSX-V) and Romios Gold (RG, TSX-V), and both have performed well recently…on the TSX, Golden Predator (GPD, TSX) is finding success with its Brewery Creek Project in the Yukon and Richmont Mines (RIC, TSX) has powerful earnings momentum (Q2 financials should be coming out very soon) and one of the next major deposits in northwest Quebec at Wasamac…RIC is up another 35 cents this morning to $8.32 – it has tremendous potential in our view…within the BMR “model portfolio”, the best-looking plays at the moment (based on technicals and fundamentals) appear to be Currie Rose Resources (CUI, TSX-V), Visible Gold Mines (VGD, TSX-V), Adventure Gold (AGE, TSX-V), Gold Bullion Development (GBB, TSX-V) and Seafield Resources (SFF, TSX-V)…Cadillac Mining (CQX, TSX-V), with a JV with VGD and 100% ownership of strategic claims adjoining Wasamac to the north, appears to be stirring along with Greencastle Resources (VGN, TSX-V)…GoldQuest Mining (GQC, TSX-V) and Abcourt Mines (ABI, TSX-V) both have strong fundamental value but are suffering technically…Sidon (SD, TSX-V) is hurting and very quiet…

It has been an eventful 24 hours…Gold has surged to a new record high this morning despite the fact the possibility of a U.S. debt default has all but vanished following the approval of the debt ceiling legislation by the House of Representatives last night…the legislation is expected to easily sail through the Senate today before it’s signed into law by President Carter (oops, meant Obama of course)…the market’s attention has turned to the soft U.S. economy and perhaps Gold’s strength today is due in part to an expectation that the Federal Reserve is about to enter the picture again with some creative form of “QE3″…Gold bulls were also emboldened by reports overnight that South Korea’s central bank bought 25 tons of Gold while Greece’s central bank added 1,000 ounces to its reserves…in addition, holdings of the metal in exchange-traded products rose for a sixth day yesterday, climbing 1.4 metric tons to a record 2,153.6 tons according to data compiled by Bloomberg…we’re also approaching that time of year when the “Love Trade”, as Frank Holmes calls it, begins to kick in…September is the beginning of the gift-giving season for the yellow metal which helps drives up demand…the transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, continues to have a huge impact on Gold…it’s really now becoming just a question of when, not if, Gold hits $2,000 an ounce…ultimately, $3,000 or more is very possible…for now Gold continues to trade in a predictable bullish upsloping trend channel, as John’s chart below illustrates, and what we have to watch for is resistance at the top of that channel or even a potential breakout from it…John’s estimate has been for Gold over the near-term to get as high as $1,675…as of 7:45 am Pacific, the yellow metal is up $17 an ounce at $1,637 after touching a new all-time high of $1,642…John’s chart is based on Friday’s closing price of $1,627 but one gets the picture…

As of 7:45 am Pacific, Silver has gained 90 cents to $40.14, Copper is unchanged at $4.40, Crude Oil is 33 cents higher at $95.22 while the U.S. Dollar Index is unchanged at 74.29…Canadian markets of course were closed yesterday…the Dow went on a wild ride (3% intra-day reversal) thanks to the debate in Congress and weak economic data (the ISM Manufacturing Index showed new orders slipped to their lowest levels in two years while overseas, the latest HSBC’s China Purchasing Managers Index fell below 50 in July for the first time in a year)…yes, the economy looks rather ugly in the U.S. but that’s not necessarily a reason to sell stocks…what it does say is that America, which has lost its way, needs a President who understands how a properly functioning economy is supposed to work – not a President who’s a “community organizer” with no experience at running a business and just wants to tax the “wealthy” and take shots at “Big Oil” and Wall Street…America needs to get back to its roots, downsize government, overhaul and simplify the tax system, reduce job and investment-killing taxes and other burdens that businesses both small and big are facing, and unleash the incredible entrepreneurial spirit of its citizens…that’s a big part of the recipe for a financial Revival of America and that revival will be the major theme of the 2012 presidential elections…okay, that’s our speech for today, let’s now take a look at how the Gold stocks and the Venture Exchange are performing as a new month begins…the CDNX, which recovered nicely Friday after hitting an intra-day low of 1963, is up 7 points at 1986…the TSX Gold Index, which fell more than 5% last week, is up 9 points in early trading at 385…John spent the long weekend reviewing some company charts and has updates this morning on two situations that readers should watch closely…Silver Quest Resources (SQI, TSX-V), which just completed a $12 million financing, has a very interesting chart with the stock up 3 pennies at the moment at $1.05…

(Both John and Jon continue to hold positions in SQI, Terry does not hold a position)…Silver Quest, of course, has a 25% interest in the northern portion of New Gold Inc.’s (NGD, TSX) very attractive Blackwater deposit in central British Columbia…Blackwater is a project that BMR has closely followed since late 2009 with NGD officially closing its acquisition of Richfield Ventures‘ a couple of months ago…NGD continues a major drill program at Blackwater…Silver Quest also has a strong presence in the Yukon’s White Gold District and increased its summer exploration budget for that area last month to $7 million…the Yukon is hot, as our readers know, and we’re also watching with great interest the progress of such companies as Golden Predator (GPD, TSX), Kaminak Gold (KAM, TSX-V), Pacific Ridge Exploration (PEX, TSX-V), Northern Tiger (NTR, TSX-V), Ethos Capital (ECC, TSX-V) and a 10-cent “sleeper” we mentioned last week that readers should perform due diligence on, Dawson Gold (DYU, TSX-V)…in northwest Quebec, an exciting month of August is likely shaping up for Richmont Mines (RIC, TSX) which has tremendous earnings momentum right now with Q2 financials expected soon…folks, the street has not yet discovered Richmont and what’s developing at its Wasamac Property west of Rouyn-Noranda which is why it’s so important to investigate this opportunity and understand the RIC “big picture”…Richmont appears to be keeping its costs under control and is benefiting hugely from the increase in the price of Gold…the company is expected to produce between 80,000 and 85,000 ounces this year and should be able to increase that total by 40% next year with commercial production scheduled to begin at the Francoeur Mine by Q1 2012…Wasamac has the potential to add another 100,000 ounces or more per year to Richmont’s production…RIC is currently up 35 cents to $7.81…earnings of $1 per share this year are very possible for this company which has no debt, approximately $50 million in cash and a market cap of only $250 million….drilling aggressively around Wasamac and about to launch a major exploration campaign at the Joutel Project 150 kilometres north of Rouyn-Noranda is Visible Gold Mines (VGD, TSX-V) which also has a very bullish-looking chart as August gets underway…VGD was up 49% in July after struggling from April through June during the CDNX correction…this company is in the process of drilling 40,000 metres this year over some very prospective ground, so we like VGD a lot for its discovery potential…the fact it’s positioned around Wasamac is an advantage while at Joutel, VGD‘s Eastern Extension has excellent potential to host a deposit (or even a series of deposits) similar to Agnico-Eagle’s (AEM, TSX) past producing Telbel, Eagle and Eagle West mines just a few kilometres to the northwest…VGD’s senior geologist is Robert Sansfacon who is highly respected in mining and geological circles in Quebec – he was involved in the discovery of Osisko’s (OSK, TSX) giant Canadian Malartic deposit…VGD is quiet so far this morning after closing Friday and the month of July at 33.5 cents…

Both John and Jon hold positions in Visible Gold Mines (Terry does not)…