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TSX Venture Exchange and Gold

Note: We’ll now be covering individual stocks as part of our Week In Review every second week until further notice. 

The CDNX pulled back slightly last week, losing 25 points to close at 1533.  The Index found support at its 20-day moving average around 1500.

For the month of October, the CDNX is up 4.5% on unimpressive volume while the Dow Jones Industrial Average has climbed a whopping 8.2% which so far represents the second largest monthly gain by the Dow since 2003, eclipsed only by the July 2009 advance of 8.6% (historically, the average monthly gain for the Dow in October is 1.36%).  We would be much more impressed with the market over the last few weeks if the situation were reversed – the CDNX, as the ever-reliable leading indicator it is, led the markets higher in 2009 and 2010, and what it has been doing since March is leading the markets lower.  The rally in the Dow since October 4, fueled considerably by short-covering, cannot be trusted.  Bulls are being set up for a nasty surprise.

While the possibility of the CDNX rallying a little higher – perhaps even to 1700 – cannot be ruled out as John’s chart showed a few days ago, any such move should be viewed in the context of an overall bear market.  Those who are in the bull camp at the moment should consider a few important facts:

1. The CDNX’s 50, 100, 200 and 1,000-day moving averages (SMA) are all in decline with the important 300-day SMA flattening out and seemingly ready to reverse to the downside (the last time the 300-day turned negative was just prior to the 2008 Crash);

2. The Chaikin Money Flow (CMF-14) indicator is at buying pressure levels where the Index began to sell off in April, July and September;

3. RSI(14) is near resistance, just below 50, and the Slow Stochastics oscillator is in overbought territory, similar to levels in July.

The 33% decline in the CDNX this year, vs. a slightly positive 2011 for the Dow so far, is a huge red flag for the broader markets that there is serious trouble ahead in the global economy.  Ignore this warning at your peril. What’s even more disturbing is that this decline in the CDNX has occurred in the midst of record high Gold prices.

Gold

While Gold failed to push through resistance around $1,685 last week, and fell $43 to close Friday at $1,642, patience is the name of the game.  The yellow metal did find support at $1,600, as expected, and still looks very bullish as John’s latest chart shows:

Commercial short positions in both Gold and Silver are at very low levels – they have dropped dramatically – which is another bullish indicator.  The commercial traders are seldom wrong and it’s not simply wise to bet against them.

Silver was down 76 cents for the week to $31.40.  Copper fell 18 cents to $3.23.  Crude Oil gained 60 cents to $87.40 while the U.S. Dollar Index fell one-third of a point to 76.27.

The “Big Picture” View Of 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.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders 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.

What’s also driving Gold is the weakness of the United States, brought on in no small part by one of the most ineffectual Presidents the nation has ever been saddled with.  America has lost its way and the recent S&P downgrade is both a real and a symbolic reflection of that.  Since the summer of 2009, the U.S. economy has produced a net total of just two million jobs while federal spending has gone through the roof.  Throughout its incredible history, the United States has demonstrated an amazing resiliency and the ability to bounce back from major economic, social and political troubles.  It will do so again but this will take time and a real Commander-in-Chief in the White House by November, 2012.  By then Gold will have climbed another 50% or more.

The U.S. Dollar Index (76.61) has weakened, which is bullish for Gold, while there are encouraging signs in Silver as well which closed Friday at $32.16.  Copper finished the week at $3.41 while Crude Oil also firmed up, closing at $86.80.

A slightly abbreviated edition of Morning Musings but a positive day is shaping up on the markets…as of 5:50 am Pacific, Gold is up $23 an ounce at $1,643 after finding support yesterday as expected at $1,600…Silver is 72 cents higher at $31.30…Copper, after getting hit hard yesterday, has climbed 14 cents to $3.20…Crude Oil has is up $1.15 a barrel to $87.22 while the U.S. Dollar Index is off slightly at 76.75…futures are pointing toward strong openings for the Dow and the TSX…

The outlook for Gold continues to be bullish as John’s 2.5-year weekly chart shows below…

The Venture Exchange today will try to regain some of the 45 points it has lost so far this week…it fell another 13 points yesterday to close at 1513 but encouragingly bounced off a low of 1500, the 20-day moving average (SMA)…this market could certainly rally higher, as John’s charts have pointed out, but this is no longer a bull market correction but a bear market that is both difficult and dangerous to trade…

No major U.S. economic data is due for release today…

U.S. corporate earnings have been decent – 60% of companies that have reported earnings so far have beaten expectations – and the U.S. economy hasn’t yet slid back into an official recession, but Europe continues to be the focus of attention for traders and investors…the problem with the euro zone debt crisis is that there’s no quick or easy solution…it’s like a bad movie that keeps playing over and over again…despite this weekend’s meetings, and a second round of meetings next week that will deliver “progress”, this crisis is likely to continue for many more months at least with a serious risk of the situation becoming even worse…this provides a negative backdrop for the markets and really hurts a speculative exchange like the CDNX…

The Financial Times reported last night that Greece, while it will get its next tranche of international aid, has an economy that is deteriorating so rapidly that a second bail-out plan agreed just three months ago is no longer adequate to keep Athens afloat…the report by the so-called “troika” of lenders to Greece – the European Commission, International Monetary Fund, and European Central Bank – put the blame for Greece’s deteriorating fiscal outlook on both the broader recession and failures by the Greek government to implement reforms…tables included in the report show that Greece is expected to miss 2011 deficit targets set in July by 1.4 to 2 billion euros,  money that will have to be raised either through additional bail-out loans or further haircuts on private bondholders…in addition, it estimates Greek debt will balloon to 181% of gross domestic product next year, well above the 161% predicted in July…the troika report also acknowledged for the first time what has been insisted by Athens: the 50 billion euro privatization program, which was to contribute 28 billion euros towards Greece’s second 109 billion euro bail-out, cannot keep to its schedule and is already off course by at least three months…“There is no doubt that Greece is undergoing a recession that is deeper and longer than expected,” the report said…”The deterioration in the labour market, with employment falling much faster than expected, uncertainties of political and financial nature, and social unrest and industrial action have weighed on supply and on domestic demand”…of course Greece is not the only Euro country facing debt problems, so how this is all going to come out in the wash is anyone’s guess but the outcome is not likely to be pretty…

Standard & Poor’s will likely lower the credit standing of five European nations, including top-rated France, by one or two notches if the region slips into recession and government borrowings increase, the ratings agency stated in a report dated yesterday…the stress-test report assesses the capacity of the European Union and the IMF to support the euro zone under two possible scenarios – a double-dip recession and a recession with high interest rates…”Sovereign ratings on France, Spain, Italy, Ireland, and Portugal likely would be lowered by one or two notches under both scenarios,” S&P stated…a worst-case economic scenario would also likely prompt the recapitalization of numerous banks in Spain, Italy, and Portugal, S&P said, adding that current support mechanisms may not be sufficient if conditions deteriorate beyond expectations…”Looking ahead, we believe growth in the coming 18 months will be very weak, averaging between 1.0 percent and 1.5 percent for the euro zone next year,” S&P said under its base-case projections…

Gold has traded between $1,607 and $1,631 so far today…as of 8:20 am Pacific, the yellow metal is off $31 an ounce at $1,611…there is strong technical support at $1,600…Silver is 89 cents lower at $30.34…Copper has fallen 15 cents to $3.10…Crude Oil is 94 cents lower at $85.17 while the U.S. Dollar Index is up more than one-third of a point to 77.44…

Markets are nervous ahead of Sunday’s EU summit on the euro zone debt crisis and so they should be…the level of coordination that is required by the euro zone to fix this problem is extraordinary and quite possibly not within the grasp of these 17 nations…

Angry protesters vowed to bring Greece to a standstill on the second day of a general strike today while disgruntled lawmakers vote on the details of a deeply unpopular austerity package needed to stave off bankruptcy…Parliament is expected to give a final green light late in the day to the belt-tightening plan required by the EU and the IMF, after backing it in principle in a first reading on Wednesday despite the country’s biggest labor action in years…given how economic conditions are deteriorating in Greece, it’s very difficult to imagine how this economic basket case is going to be able to stave off bankruptcy…

Existing U.S. home sales in the U.S. fell 3% in September, more than expected, but a handful of encouraging economic reports, including the Philly Fed Index, point to an American economy that’s still moving forward, albeit very slowly…

Weekly jobless claims in the U.S. fell slightly more than expected, slipping 6,000 to a seasonally adjusted 403,000, according to the Labor Department this morning…economists surveyed by Reuters had expected a drop of 4,000…the important and less volatile four-week average fell for the fourth straight week to 403,000…that number, however, has to fall even more and stay consistently below 375,000 to signal sustainable job growth…

According to a report from Credit Suisse, wealth in Canada has rebounded from the erosion of the recession…”While wealth per adult in the United States is still 8% below the 2007 level, Canada’s wealth in domestic currency is now 3% above the 2007 figure,” the global wealth report stated…”This reflects the fact that Canada’s financial institutions and housing market did not suffer a collapse during the global financial crisis”…according to the report released yesterday, Canada is eighth in the world in a ranking of aggregate household wealth, and 13th in terms of wealth per adult, at $245,000 (U.S.), compared to $248,000 in the United States…that’s a sharp reversal from 2000, when Canadian mean wealth was just 56 per cent of the U.S. figure when expressed in U.S. dollar terms…

The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the U.S. government began recording this statistic five decades ago…the average individual now has $1,315 less in disposable income than he or she did three years ago at the onset of the Great Recession – even though the recession ended, technically speaking, in mid-2009…stagnant incomes, falling net worth and inflation are all contributing to a falling standard of living…

The CDNX is down 17 points at 1509…the risks in this market continue to be very high even though a rally higher is still possible…

The surprising news yesterday that Agnico-Eagle Mines (AEM, TSX) is halting production at its very profitable Goldex Mine, and writing off its investment in Goldex due to poor rock stability above mining activities, sent AEM shares tumbling to their lowest level since 2008…markets don’t like negative surprises and this unfortunately is not helpful, from an investor confidence perspective, to TSX Gold producers in general…the Gold Index fell 5.4% yesterday and is weak again this morning…Goldex, which was expected to produce nearly 200,000 ounces in 2011, represented 15% of AEM’s production and was one of the lowest-cost underground operations in the industry…AEM says it can follow its current growth plan without Goldex by expanding existing operations and building a new mine in Nunavut…Visible Gold Mines‘ (VGD, TSX-V) exploration at the former producing Joutel Project will take on even more importance for AEM given the unexpected blow at Goldex…

One look at the chart for Richmont Mines (RIC, TSX) tells us there is more trouble ahead for the markets…Richmont has been one of the top performing Gold stocks on the TSX this year but the chart is now showing weakness and that’s not an encouraging development…

Gold has traded between $1,643 and $1,665 so far today…as of 8:30 am Pacific, the yellow metal is down $8 an ounce at $1,647…Silver is off 61 cents at $31.43…Copper has declined 8 cents to $3.29…Crude Oil is up 11 cents at $88.45 while the U.S. Dollar Index is off one-quarter of a point at 76.88…

Markets remain focused on the euro zone debt crisis ahead of this weekend’s EU summit in Brussels…as we’ve seen in the United States, it’s hard enough for just one government to get its act together…in the case of the euro zone, there are 17 individual governments at the table which is why there has been a history of disappointments regarding the handling of this problem…the bar has likely been set too high for a “solution” this weekend and markets could easily react to the downside Monday morning…

Demonstrators today threw stones and gasoline bombs at police outside parliament in Athens, Greece, during a two-day general strike that unions have described as the largest in years…the protest, which has grounded flights, disrupted public transport and shut down shops to schools in Greece, comes ahead of a parliamentary vote on a fresh package of tax increases and spending cuts required by international creditors in return for crucial bailout cash…deputies are due to vote tonight after a first reading of the austerity package, which has to be legislated before Greece can draw down the next tranche of its current EU-IMF bailout loan…a second vote is set for tomorrow, after a clause-by-clause discussion…the governing socialists are still expected to secure a narrow majority to push the legislation through…

U.S. consumer prices outside food and energy rose at their slowest pace in six months in September as the cost of apparel and used vehicles fell, suggesting inflation pressures remained contained…another report today showed groundbreaking on new homes rose at the fastest rate in 1-1/2 years, though most of the gains came from the often volatile multi-family construction…

In some surprising news that has put considerable pressure on the TSX Gold Index today, Agnico-Eagle Mines Ltd. (AEM, TSX) is suspending mining operations and Gold production at its Goldex mine near Val-d’Or effective immediately…this decision follows the receipt of an opinion from a second rock mechanics consulting firm which recommended that underground mining operations be halted until the situation is investigated further…it appears that a weak volcanic rock unit in the hangingwall of the Goldex deposit has failed…this rock failure is thought to extend between the top of the deposit and surface…as a result, this structure has allowed groundwater to flow into the mine…this water flow has likely contributed to further weakening and movement of the rock mass…the company will assess the potential for restarting the mining operations next year on the western side of the deposit where the ore zone is narrower and still considered to be relatively stable; however, there is no guarantee that this will occur…as a result, Agnico-Eagle is writing off its investment in Goldex which has been one of the lowest cost producers in the industry…it’s expected that this will total approximately $260-million (or approximately $170-million after tax, or $1 per share) and will occur in the third-quarter 2011 financial results, scheduled for release October 26…AEM is getting hammered today, down nearly 20% to around $47 a share…meanwhile, Osisko Mining (OSK, TSX) has been halted pending news…

The CDNX is off 6 points at 1546…John’s 10-year chart below shows how the Index sits today – at support and the support is holding so far…hammers are prominent on this monthly chart, and the case for additional strength/ bullishness this quarter following the October 4 low is strong…however, our “big picture” interpretation is that the CDNX has shifted from a bull market to a bear market phase though the Index hasn’t yet received a final knockout punch…throughout this year the CDNX has significantly under-performed both the broader markets and Gold, a worrisome sign going into 2012 (the situation was reversed last year)…traders/investors need to use their own judgement in terms of how to handle any potential additional gains or an uptrend in the coming weeks with the CDNX, but our stance remains very cautious…this is not an easy market to trade at the moment and liquidity just isn’t what it was earlier this year and throughout 2010…bear markets are notoriously deceptive, so be careful…cash is probably King and political dynamics around the world are not supportive of a bull market environment for equities at the moment and going into 2012…

Gold’s immediate inability to push through resistance around $1,685 has put downward pressure on the yellow metal this morning…as of 8:05 am Pacific, Gold is off $32 an ounce at $1,639…Silver has lost 64 cents to  $31.16…Copper is down 4 cents to $3.33…Crude Oil is flat at $86.72 while the U.S. Dollar Index has climbed one-quarter of a point to 77.40…

A slew of economic data and corporate earnings came out this morning and markets have been somewhat volatile as a result but the Dow is now in positive territory…China’s annual GDP growth eased to 9.1% in the third quarter, slightly below expectations, after a 9.5% increase in the previous quarter as tight monetary policy and softening foreign demand crimped activity…another important point regarding China is that implied oil demand in that country, as calculated by Reuters, rose just 1% in September from a year earlier to about 8.9 million barrels per day, its slowest rate of growth so far this year…clearly, statistics show that growth is easing in China (the overall economy has now slowed for three consecutive quarters after hitting 9.8% in the fourth quarter of last year)…growth is still robust and most economists are expecting a “soft landing” but an unexpected GDP drop from current levels to, say, 6% or 7% would have a major negative impact on the global economy and stock markets…the biggest risks to the Chinese economy are a steep fall in global demand for exports or a collapse in the overheated Chinese real estate market…the action in the CDNX since the spring suggests to us that the risks with regard to China (as well as the euro zone, the United States and the global economy in general) are greater than most investors perceive…

A Nanos Research poll released this morning shows that Canadians’ confidence level in the economy has hit its lowest level in two years…in 2009, Canadians were climbing out of the market crash and were still quite pessimistic – but not as pessimistic as in this most recent economic-mood index…it shows that only 16% of those surveyed felt the economy will become stronger in the next six months compared to 29.2% who felt the same way in the second quarter of this year…38.9% of respondents said they felt the economy would be weaker compared to 23.6% in the second quarter…the problem, of course, is that this can become a self-fulfilling prophecy as individuals begin to cut back on spending…

The CDNX is off 15 points at 1527 after touching a low of 1517 in early trading…whether the Index rallies another 100 or 200 points from here, which is possible, is largely irrelevant at this point as we believe the bull market is over for now…there is a high degree of risk in the Venture Exchange at the moment given the overall negative technical outlook…an anticipated reversal to the downside in the 300-day moving average (SMA) sometime during this fourth quarter will add to the technical woes…this paints a bleak picture of what our world could look like six months from now…

Producers are faring better, of course, and there is safety in them, but they’re still not keeping up with the rate of change in Gold as everyone knows…below is an interesting 8-year monthly chart from John on the TSX Gold Index which as of 8:05 am Pacific is down 10 points at 384…the Gold Index, as you can see, has been under-performing with respect to Gold since late 2006 – sooner or later that should change…

Gold has traded between $1,677 and $1,696 so far today…as of 8:25 am Pacific, the yellow metal is up $2 an ounce at $1,681…Silver is 11 cents lower at $32.05…Copper is off 2 pennies at $3.39…Crude Oil is down 58 cents at $86.22 while the U.S. Dollar Index has jumped nearly half a point to 77.04…

Silver Quest Resources (SQI, TSX-V) and Geo Minerals (GM, TSX-V) are each being acquired by New Gold Inc. (NGD, TSX) which reflects the growing trend of acquisitions and consolidation in this industry (much more of that is coming)…it was announced this morning that Silver Quest shareholders will receive 0.09 of a New Gold share for each Silver Quest share held and one common share in a new Yukon-focused precious metals exploration company, McIntyre Minerals Inc. for every three Silver Quest shares held…the proposed all-stock transaction values Silver Quest at $1.32 per share, implying an equity offer value of approximately $131 million on a fully diluted basis…SQI closed at 87 cents Friday and is currently up 28 cents at $1.15…with regard to Geo, NGD is acquiring GM (which holds strategic claims in the Blackwater District) for 16 cents per share in cash while Geo shareholders will also receive one common share of a new exploration company for every 15 Geo common shares held…

The companies that will be successful in the difficult months ahead on the Venture are those like Silver Quest and Geo that hold either significant 43-101 resources and/or highly strategic claims…companies with strong cash positions and 43-101 resources are the best bets…that’s why it’s so important for Gold Bullion Development (GBB, TSX-V) to release a 43-101 on the LONG Bars Zone…other examples of that nature – companies that will be reporting important resource estimates when they’re ready –  include Gold Canyon Resources (GCU, TSX-V) and of course Canaco Resources (CAN, TSX-V)…

The CDNX is off 12 points at 1546 while the broader markets are pulling back after strong gains since the October 4 lows…comments from  Wolfgang Schaeuble, the German finance minister, didn’t help the markets this morning…Schaeuble said that an ultimate solution to the euro zone debt crisis would not be presented at the upcoming European Union summit…

The U.S. and much of Europe may already be in recession while demand is dropping in emerging markets, according to the head of one of America’s biggest manufacturers…in an interview with the Financial Times, Tom Linebarger, who will take over in January as chief executive of Cummins, one of the world’s biggest engine-makers, said he expects the next six to nine months to be a highly uncertain time for the global economy…“The U.S. is much in the same spot,” Linebarger added…”We’ll find out in three or four months if we’re already in recession but it wouldn’t surprise me to find out that the U.S. is already in negative growth, once all the figures are adjusted, or we’re very close to that…“We’re seeing the effect in Europe on our business, though what worries me the most is the effect European problems will have on the rest of the world…the U.S. is already weak…if Europe gets a bad cold, the U.S. will get much sicker”…the Cummins chief said he’s also worried about emerging markets, whose growth has boosted the manufacturer’s bottom line and is expected to make up an increasingly important part of its revenues in coming years…three-fifths of the company’s revenues come from outside the United States…“Europe could drive another global recession pretty easily,” he said…”Some of the countries in Europe are already in a second recession or will be shortly… That could get a lot worse”…

Amid all the noise surrounding the “Occupy Wall Street” movement at the moment, there are two words we aren’t hearing from any of those individuals or from virtually any politicians these days:  “Personal Responsibility”…we live at a time when governments at local, provincial, state and federal levels simply don’t have the resources to solve every problem…we have to expect less, not more, from government, and more from ourselves as individuals….unfortunately, few politicians have the guts to actually come out and say that…as individuals, each of us must take greater responsibility for our overall health – financial and physical – and each of us has to manage our finances better…many of those involved in the Occupy Wall Street movement simply have no appreciation for the value of money or how to handle money which is why they don’t have it…rather than taking a good look in the mirror, they’re blaming other people for their problems…they’re rallying against “corporate greed” when greed is a problem throughout society, even in their own lives…their focus is on redistribution of wealth as opposed to income mobility…they’re engaged in class warfare and the politics of envy…they correctly understand there are problems in the “system” but their diagnosis is completely off the mark…Obama is feeding into that class warfare sentiment (“blame the banks”, “tax the rich”) which is a highly dangerous and irresponsible thing for a President to do…he views it as his only way to gain re-election, so a President who came into office with a promise to “unite” is now dividing the United States like never before…

The Occupy Wall Street Movement also reflects a serious lack of financial education prevalent throughout society…Canadian and American schools teach our children history, math, science, etc., but almost nothing about basic financial management and how to handle money (unfortunately, parents aren’t doing that either)…students know they need to earn money but aren’t taught how to keep it when they do earn it…former U.S. House Speaker Newt Gingrich touched on this issue of financial illiteracy in one of his recent comments regarding the Occupy Wall Street movement…“The sad thing is, this (the OWS movement) is a natural product of Obama’s class warfare,” Gingrich said…“We have had a strain of hostility to free enterprise and, frankly, a strain of hostility to classic America starting in our academic institutions…I regard the Wall Street protesters as a natural outcome of a bad education system teaching them really dumb ideas”…

While we have no great desire to defend the banks (nor to demonize them), Andreas Schmitz, head of the German banking federation and chief executive of HSBC Trinkaus, made a very true statement in an interview with the Financial Times yesterday…he said the protests against banks were “a diversion from the fundamental problem: that we can no longer finance our welfare states”…politicians, he warned, should not try to make the banks the “fall guys” for their mistakes…

On a final note this morning, the CRB chart below from John is in reply to Bruce’s comment yesterday re:  “The Week in Review Part 1″…

Welcome to our site, or at least the initial version of it!  BMR has been online for two years and strictly through word-of-mouth we have built a loyal following. 

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.  While we focus very much on the Gold market and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on undiscovered junior exploration companies or small producers, 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.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. Always perform your own due diligence and please read our disclaimer at the bottom.

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.  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 (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment 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 Advisers. 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 Adviser 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.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

Visible Gold Mines (VGD, TSX-V)

Visible Gold Mines fell a penny-and-a-half last week, closing at 24.5 cents Friday, despite the 6% climb in the CDNX…technical resistance is now in the 30 to 33 cent range, between the 100 and 50-day moving averages (SMA), while there is very strong support around the 20-cent area…the recent technical damage the stock has endured is unfortunate given the many positive developments on the ground for this company in northwest Quebec…investors in our view likely read too much into selling of more than 300,000 shares by Pinetree Capital’s (PNP, TSX) Sheldon Inwentash, but that’s what started the nosedive the week of September 19 which stopped the stock’s momentum and rattled some nerves…the overall market’s plunge then accelerated the selling along with a weakening of VGD’s technicals…as everyone knows, and has been painfully reminded, junior exploration stocks can be extremely volatile and aren’t for the faint of heart…but the rewards can be big…VGD is no exception- there are risks with this but the company is well positioned for success at two major projects…its Wasamac-area land package is in the heart of a promising new mining camp that is beginning to emerge west of Rouyn-Noranda…what’s highly significant for Visible Gold Mines is that much of the area around Wasamac has been under-explored and has obvious potential for additional deposits…VGD controls a large land position there and is also the most aggressive driller besides Richmont…in addition, VGD has some early results to prove it’s not drilling into cow pasture…VGD hit several zones of Gold mineralization on its very first hole at Wasa Creek (LBWC-11-3) as announced August 11…12 other holes (some with quite encouraging visuals) were completed in Phase 1 and assays are pending on all of those…what impresses us the most about LBWC-11-03 is that it was essentially a “blind hole” – this property has been virtually ignored in terms of any previous exploration and on the very first hole, VGD hits Gold…of particular curiosity is the 16.4-metre section that shows the same style of mineralization as the Wasamac deposit – close co-existence of Gold and pyrite disseminated in an altered shear zone…it’s still very early in the game for VGD at Wasa Creek but the right geological structures appear to exist and the company has made rapid progress with this project in just three months…as well, VGD geologists believe they may have discovered some sort of connection between the Wasa Shear and the Cadillac Fault at Wasa East with that property right in between those two Gold-bearing systems…given developments at Wasa Creek and Wasa East, along with the Joutel Project of course, news flow should be strong with VGD and some drama could quickly build…a 7,500-metre, Phase 1 drill program at Joutel has started and a second drill rig has been added…we love this property because three former Gold mines (one open-pit, two underground) and two former copper mines are within the immediate vicinity of where VGD will be drilling, just a few kilometres to the northwest and the southwest, respectively…it’s hard to imagine there aren’t more deposits in the area, ones that simply weren’t discovered in the 70′s, 80′s and 90′s…and we can’t think of a better geologist to find one or more new deposits there than Robert Sansfacon whose re-interpretation of Canadian Malartic helped Osisko (OSK, TSX) nail down a 10 million+ ounce monster…Sansfacon is challenging some previous geological assumptions concerning Joutel and he’s applying a new model, taking a structural approach rather than a stratigraphic one as Agnico-Eagle (AEM, TSX) did previously…two-thirds of the Phase 1 drilling will test the extension of a northwest-southeast mineralized structural pattern that based on geophysical surveys appears to strike directly southeast of Agnico-Eagle’s past-producing Telbel, Eagle and Eagle West mines for two kilometres and may extend farther to the former village of Joutel and beyond…the Joutel mines gave birth to Agnico-Eagle, and the major would love nothing more than to see this old mining camp come back to life…if anyone can make that happen, it’s Sansfacon who’s highly regarded in Quebec mining circles…Visible Gold Mines has $4 million in working capital and is being driven by some exploration stories that appear to have serious “legs”…given this company’s aggressiveness and the quality of its geological team, all the ingredients are there to make VGD the next potential big play in northwest Quebec…with a current market cap of $11.6 million, the risk-reward ratio is certainly attractive for long-term investors…

Cadillac Mining (CQX, TSX-V)

With a market cap of just $2.4 million, CQX certainly offers strong upside potential simply given its current deal with VGD which allows CQX to retain a 40% interest in Wasa Creek, Wasa East and the entire Lucky Break/Cadillac Break Projects…what continues to hurt the company, however, is its poor cash position ($265,000 as of May 31) which it unfortunately has not addressed so far this year – and cash is king in this market right now…the company had a glorious opportunity to raise cash and build shareholder value earlier this year because of Wasamac (CQX also holds a 100% interest in 7 claims that adjoin the northern boundary of Richmont’s Wasamac deposit) and failed to do so…we give CQX credit for securing an excellent project (Goldstrike) in Utah on fabulous terms but several million dollars is going to be required to explore Goldstrike in the right way…Victor Erickson and Andre Audet are smart mining people and have done an admirable job protecting the company’s tight share structure…where they have made mistakes, though, is in the market as they have not shown the ability to seize opportunities that have come their way…CQX came out with news September 12 that it intends to conduct a Phase 1 drill program at Goldstrike (contingent on financing) starting in November…the time to raise money for Goldstrike, however, was earlier this year, not now…CQX closed at 9 cents Friday, off a penny for the week…

Abcourt Mines (ABI, TSX-V)

Patience continues to be the name of the game here and will be for quite a while yet…Abcourt was up half a penny last week to 8 cents…it faces very stiff overhead resistance with a declining 100-day moving average (SMA) at 11 cents and a falling 200-day SMA at 14 cents…if you’re bullish on long-term Silver and zinc prices, however, which we are, you have to love this play as the current market cap ($11.9 million) really doesn’t take into account the value of the company’s Abcourt-Barvue Silver-Zinc deposit near Val d’Or…ABI is ripe for an eventual takeover given the value of its assets and management’s obvious inability to unlock that value which is why we still view this company with considerable interest…we love the assets…ABI’s decline from a 52-week high of 25.5 cents in late March was brought on by the closing of a financing (35 million units at 18 cents), a sharp drop in Silver, overall CDNX weakness, and selling by MineralFields Group…the company released more results from Abcourt-Barvue August 2 including 2.1 metres grading 422.35 g/t Ag…drill results to date should significantly upgrade and increase all-category reserves and resources, most of which can be mined by open-pit…four years ago, GENIVAR produced a very positive feasibility report for the project which showed robust economics…more drilling is expected to take place at the property during the fourth quarter…more results were released July 5 from the company’s Elder-Tagami Gold Property near Rouyn-Noranda including 8.50 metres grading 3.71 g/t Au…that was from the Tagami area to the north which has untapped potential including some higher grades…the latest NI-43-101 resource estimate of 216,000 ounces was released in the summer of 2009…the possibility of Abcourt expanding that resource beyond 500,000 ounces certainly exists given the encouraging results to date (look what Richmont has done at Wasamac)…the heavy accumulation that began in Abcourt last December was no fluke in our view…this is a company with significant assets that could justify a substantially higher valuation in a better market…nearly 60 million shares of ABI changed hands on the CDNX in December and January – record volume for this stock, accompanied by a price jump from 14.5 cents…while the stock price is now below that level, the record volume in ABI since late last year (take a look at a 10-year chart) is still a very bullish sign…Abcourt has been under significant accumulation and our best guess is that some savvy players like the assets in the ground…continued drilling success and higher prices for Gold, Silver and zinc would be exciting developments 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…

Greencastle Resources (VGN, TSX-V)

All remains quiet on the Greencastle front…the stock was down 2 pennies last week to 12.5 cents on very low volume…there is exceptional technical support for this stock between 9 and 12 cents…the declining 20 and 50-day moving averages (SMA) at 14 and 15.5 cents, respectively, will provide stiff technical resistance until news or a dramatic change in the markets alter the dynamics…the company released its June 30th financials August 25 which show working capital of $7.3 million or 16 cents per share…President and CEO Tony Roodenburg has been quiet for too long, but knowing the conservative Roodenburg he will likely wait until the markets reverse before he launches into anything in a major way…the fact Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…he had been trying to ease his way out of Seafield since 2009 without much success until several months ago…he’s now able to focus almost exclusively on Greencastle which has been a favorite project of his for many years…we suspect he’s going to take a serious look at spinning out the oil assets or the Gold assets into a separate company…something needs to happen here to move VGN forward and boost shareholder value and we’re confident Roodenburg will do it, sooner or later…Greencastle’s market cap of $5.7 million means the stock is now trading essentially at cash value…history shows that whenever VGN is trading at cash value, a great buying opportunity has opened up though investors must be patient…Greencastle tripled over a six-week period from late October to early December…since the beginning of January, though, the stock has struggled due mostly to impatient investors frustrated with the lack of news…patience is definitely required with VGN or one shouldn’t invest in it…over the years the successful strategy with Greencastle has been to accumulate on weakness when the stock is near cash value, like now, and then sell into strength when something develops (sometimes a year or more later)…with strong working capital, three Gold properties (including land near the Blackwater Project and a couple of very good Nevada properties) and monthly (albeit very modest) cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that Greencastle does offer excellent value for long-term investors at current levels…the stock is essentially unchanged since we added it back in to the BMR model portfolio a year ago…

Sidon International (SD, TSX-V)

We’re all entitled to have one dog in our portfolio and Sidon is that dog for us at the moment, though it did increase five-fold for us last year…there was finally some news from Sidon recently but not the news investors were hoping for as the company announced it will be late in filing its year-end (April 30th) financials…the same thing happened earlier this year with a related company, Kokanee Exploration (KOK, TSX), and the matter was resolved and Kokanee is back on track with some apparent new players…Sidon hasn’t been able to recover yet from its fall in March, one day after the CDNX correction or bear market began, on poor drill results from its Morogoro East Gold Property in Tanzania…the 6 shallow holes drilled in December at Morogoro East failed to produce significant results, the best hole showing 3 metres grading 1.7 g/t Au…the company apparently drilled some deeper holes but investors haven’t seen results yet…what the initial 6 holes have given Sidon, however, is a better understanding of the Morogoro geological structure which could aid in any future drilling…exploration, especially at such an early stage, is never easy and disappointing early results don’t necessarily mean a property doesn’t hold potential…the company is also trying to develop a placer operation at Morogoro…there is certainly the possibility of better days ahead for Sidon but lack of good news is not encouraging…the climb back up won’t be easy and the company will almost certainly have to look at a consolidation of its capital or even a new group to come in and take things over…Sidon ran as high as 26.5 cents last winter but is now off 3.5 pennies since we introduced it to BMR readers in the spring of last year at a nickel…it closed unchanged at 1.5 cents last week…the company currently has 137 million shares outstanding for a market cap of $2 million…