Gold traded as low as $1,495 this morning but is now strengthening…as of 8:00 am Pacific, the yellow metal is up $7 an ounce at $1,504…Silver is 34 cents higher at $33.92…Crude Oil has climbed $1.40 to $92.01 while the U.S. Dollar Index has reversed and is now down one-fifth of a point at 74.99…investors are watching to see if Greece’s Parliament will approve austerity steps that are a precondition for international aid that the country needs to avoid a default…thousands of Greeks are protesting the cuts and privatization measures in the streets of Athens – too bad they didn’t keep their government in check years ago when spending was growing wildly out of control…the population needs to buy into the plan, however, or it’s going to be very difficult to implement whatever the Greek Parliament approves going forward…below is an interesting chart from comparing the performance of Gold vs. Oil over the last decade…
Gold has obviously outperformed Oil significantly since the 2008 Market Crash…in fact, since July 2008, Gold has gained 50% while Oil has fallen nearly 40% from its $147 peak…as the chart above illustrates, Oil appears to be trading in an upsloping channel which is approximately parallel to the gradient of Gold…it’s clear that Oil has a definite demand destruction problem if the price climbs too fast while Gold has a totally different demand dynamic…that’s why we’re not too concerned if Oil were to fall another 10% or so from current levels which is possible given the apparent desire of the White House to use strategic reserves as a short-term economic stimulus tool, sort of Obama’s version of QE3…the growing view of Gold as an alternative currency is a demand enhancer for the yellow metal…there are so many fundamental factors driving Gold that physical buying, much of it from emerging countries as part of the “love trade” that Frank Holmes has so effectively analyzed, will continue to give strong support during periods of temporary short-term technical weakness…total Gold ownership as a percentage of global financial assets is still trivial – less than 1% according to some reports which is well below the historical norm…that percentage can be expected to increase in the years ahead…the U.S. Dollar continues to lose its status as the world’s “reserve currency”…holders of large reserves, most notably China, have been gradually diversifying away from the Dollar…in the first four months of this year, for example, no less than 75% of the $200 billion expansion on China’s foreign reserves was invested in non-U.S. Dollar assets according to a report this morning in the Financial Times…as of 8:00 am Pacific, the CDNX is up 2 points at 1870…Silver Quest Resources (SQI, TSX-V) has announced a $10 million financing in a hard cash ($1.00) and flow-through ($1.15) combination…the stock fell by as much as 9 cents on the news this morning to 98 cents…it’s now trading at 99 cents…we view any weakness in SQI as an opportunity for long-term investors given the growing resource at the Blackwater Project where SQI holds a 25% interest in the Davidson (northern) portion…New Gold Inc. (NGD, TSX) is drilling Blackwater aggressively and results from 22 holes from SQI‘s section were reported yesterday, several of which were outstanding including 318 metres grading 1.39 g/t Au in BW-162…Blackwater is a terrific asset for New Gold which is a producer we like a lot…a smaller producer that has strong upside potential is Richmont Mines (RIC, TSX) which is 14 cents higher at the moment at $6.81…many producers, including Richmont, are trading at very attractive price-earnings multiples and it’s important to point out as well that a drop or leveling off in Oil prices will help their bottom lines…Oil is a significant component of the cost structure for a producer…iSign Media Solutions (ISD, TSX-V) continues to be very volatile but this morning it found support at its rising 100-day moving average (SMA) at 36.5 cents after dropping for the seventh consecutive session…buying into weakness and selling into strength has certainly been the successful trading strategy with ISD which has excellent liquidity…the stock is now up a penny at 40 cents…a very promising summer is shaping up for Adventure Gold (TSX-V) which is up a penny this morning at 55 cents…we’ll be explaining in greater detail later this week why we believe AGE is such a gem…
The Venture’s bottom is going to be sore, trying to find it’s bottom.
Comment by Bert — June 28, 2011 @ 7:42 am
haha!
Comment by Hugh — June 28, 2011 @ 7:55 am
What we must realize is that the Venture is the riskiest Canadian exchange, therefore the companies
& there are many, whose year ends June 30th, are selling their riskiest stocks, to firm up their books
before their year end. I’m not right all the time, but i am right some of the time. Look for better
days starting July & improving during August.
R !
Bert
Comment by Bert — June 28, 2011 @ 8:11 am
Hi Jon,
Do you think Richmont could be a take-over target?
Thanks
Martin
Comment by Martin — June 28, 2011 @ 8:35 am
Hope so, Bert. July trading starts on Monday!
Comment by Andrew — June 28, 2011 @ 8:39 am
No way do i want to be negative towards BMR, but referring to charting in general. there’s no way
to use a chart to put forward precise predictions. When one compares a 500/400/300/200/100 day m/a
to today’s trading, my question is, what the heck do today’s trading have to do with what happened
500/400/300/200/100 days ago. The circumstances are not the same, we live in a different world,
where one country is connected by the hip to every other country. Trying to predict the market is
like a weatherman predicting rain, because his arthritis is acting up. Although we are gambling,
i am willing to gamble on SQI, it’s presently trading at around $1.00, but i am willing to bet,
those with patience will with time, sell for $1.50. Good luck !
R !
Bert
Comment by Bert — June 28, 2011 @ 9:39 am
Bert, your commentary is useless i could provide better and more accurate analysis of my shoelaces then you can about BMR’s charting. The 500/400 and so on moving averages provide trends and trading patters which are to be combined with company fundamentals and macroeconomics to arrive to an investment decision. These moving averages are important as they are one of the great tools used in spotting patters. Maybe you should read about it in a book and not on Stockhouse.
Comment by Yuri — June 28, 2011 @ 9:51 am
Yuri
You have your opinion my buddy & i have mine. With all the predictions, we are still going down, so i rest my
case your honor. May i add, i have read & i have read, but i have yet to come across a case, where shoelaces
can accurately predict the market. I stand by my postings.
R !
Bert
Comment by Bert — June 28, 2011 @ 10:03 am
Bert, I always enjoy your comments and am glad you came back to BMR after a very brief absence! Good luck with SQI, I recall that you mentioned it a long time ago. I’m sure it will do well. Normally I would be in a cash position in current market conditions but I kept buying while it seemed certain stocks were a bargain. So, I have no cash at present to acquire SQI. I wouldn’t mind rolling over holdings in ABI and VGD but there is no liquidity or the bid is too low. So, I’ll be patient and hope it pays off. Should be an interesting Summer with exploration and results from GCU, CUI, AGE, EVR
Comment by Andrew — June 28, 2011 @ 10:32 am
Why thank you Andrew ! A person’s comments are not necessarily meant to be demeaning, instead
an honest opinion & a response to what one reads. I have have an opinion about charts & i have
an opinion. If today, a stock closes at it’s high, i feel it’s a buy tomorrow, that is, if it
trades up after about 15 minutes of trading tomorrow. There are so many factors which can throw
a stock off, i realize BMR are good chart readers, but one chart vs thousands of us out here &
there’s no way that one can predict with certainty, what the thousands of us are going to do
tomorrow, in particular, in this environment. We are going through troubling times, there’s so
much negativity out there & then it’s the time of year, so we have to be patient & when the
markets breathe life again, charts will become dominant . July should show an improvement &
i look forward to August, when Yuri’s shoe laces become the talk of the board. Good luck !
R !
Bert
Comment by Bert — June 28, 2011 @ 10:59 am
Hi Jon
In your opinion do you think Visible Gold and Cadillac Mining will be waiting till all holes are drilled to be releasing assay results or do you believe that we could be seeing drill results from the first 4 holes any day now?.
Comment by Ed — June 28, 2011 @ 7:40 pm
The simple answer is, I don’t know, Ed…….it seems logical though to me that about halfway thru their drill program they would provide an update………with Visible Gold I would keep focused on Joutel – that’s a huge project and I’m anticipating major news on that very soon…from my interview with Martin, you’ll recall he said they’ve spent weeks pouring through data from Joutel, about two pick-up trucks’ worth…..I suspect you’re going to see VGD put out some impressive historical info on Joutel and details on the targets they’ve identified….they are going to push that project very hard with preparations for the drill program now underway…
Comment by Jon - BMR — June 29, 2011 @ 3:11 am
thanks Jon
I’ve listen to the interview with Martin and looked though alot of info on Visible Gold on their web site and am impressed with what they are trying to do with these two major projects ( especially Joutel ). Not sure why so many people are down on VGD and why the price is dropping with so much going for it. I like it and think this could make me a bundle and CQX too by the way (just alittle farther down the road).
Comment by Ed — June 29, 2011 @ 3:32 am
Hello Ed, I’m holding VGD too, have been for some time. I’m guessing the drop in sp is just the trend it has had this year (along with many juniors) and more recently looks like some manipulation but volume is very low. I think the same is happening to ABI but both seem to be at a low with solid support. CQX look as though they’ll option Cadillac and perhaps concentrate on Nevada? Just curious – do you think there is a benefit in holding both VGD and CQX if VGD is doing the work at Cadillac? Why not just hold VGD? Thanks!
Comment by Andrew — June 29, 2011 @ 5:31 am
Forget about the chart for the time being, i would expect an up today on the Venture, mainly
because the Greek situation found a way to give themselves some temporary relief & because
the European markets are all up.
R !
Bert
Comment by Bert — June 29, 2011 @ 5:31 am
hi Andrew, i think that the wasa property will be to CQX what Joutel will be for VGD. I also think that some time down the road as Richmont (RIC) continues to find more proven reserves at their wasa property they will look to cadillac as a joint venture or try to buy the properties from Cadillac for hopefully many millions of dollars to expand that area. You can tell that Richmont is kind of blocked in by Cadillac’s properties on all sides. However i do believe that we will see some interesting numbers coming from the Break properties as well. CQX’s float of just 27 million fully diluted shares is another reason. When CQX gets moving up she will move quickly i believe into the 50+ cent range and beyond.
Comment by Ed — July 1, 2011 @ 10:36 am
Hello Ed, thank your for your response and thoughts. Some drill results from CQX Wasa property would be nice but I don’t see it happening without optioning to another junior – they don’t have the funds and seem to lack the energy to advance the prospects and potential. So, I think you may be proved correct that RIC will take an interest. Not much downside at the current sp but it would be great if they had an aggressive plan of action!
Comment by Andrew — July 5, 2011 @ 6:48 am