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March 25, 2011

BMR Morning Market Musings…

Gold has traded in a range of $1,430 to $1,439 so far today while Silver is 48 cents higher at $37.65…Gold retreated yesterday after climbing to a new all-time high of nearly $1,450 while Silver reached a new 31-year high of $38.18…Silver has enjoyed a spectacular run recently, and one thing that concerns us is that steep rises like we’ve seen in Silver and such out-performance against Gold have often occurred before corrections in precious metals…in addition, the action in the CDNX this month suggests an increased probability of either a near-term correction in precious metals or the broader markets in general…so we continue to remain cautious and we’ll be looking for the CDNX to give us more definitive answers in the days ahead…a clear short-term signal, one way or the other, bullish or bearish, is what we’re imminently expecting…as of 8:00 am Pacific, Gold is $5 higher at $1,436…the U.S. Dollar Index is up over one-tenth of a point to 75.86 while crude oil is 41 cents lower at $105.19…U.S. consumer sentiment in March fell to its lowest level in more than a year as gasoline and food prices rose, according to a survey released this morning…the index was slightly lower than March’s preliminary reading while inflation expectations remained elevated…even so, the survey from Thomson Reuters and the University of Michigan said there was no decline in buying plans which is important…the U.S. economy grew more quickly (3.1%) than previously estimated in the fourth quarter as businesses maintained fairly solid spending and restocked shelves to meet rising demand, while corporate profits increased 3.3 percent, a government report showed today…consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a revised 4% rate in the final three months of 2010 instead of the previously announced 4.1%…New York and Toronto markets are both higher this morning while the CDNX has gained 8 points to 2312…Abcourt Mines (ABI, TSX-V) enjoyed a powerful move yesterday, getting through resistance at 23 cents and climbing to a new 52-week high of 25.5 cents, but the stock has backed off this morning after the company announced plans to raise up to $5.5 million at an undetermined price…ABI is currently down 3 pennies at 20 cents…financings always make investors a little nervous which is why the stock has weakened this morning but we have long-term faith in this situation as Abcourt is developing assets that we believe, by any reasonable measure, are undervalued by the market…Archean Star Resources (ASP, TSX-V) has finally started trading on the Venture Exchange…Archean Star of course is a spin-off from Kent Exploration (KEX, TSX-V) and is exploring the large Gnaweeda Gold Project in western Australia…Kent holds approximately 40% of Archean’s 28 million outstanding shares…new drill results are pending from Gnaweeda so we’ll be keeping a close eye on that situation…Kent, which has a current market cap of just $6 million, is drilling its Alexander River Property and we expect the company will also start generating cash flow this summer from its Flagstaff Barite Project in Washington State…Seafield Resources (SFF, TSX-V) continues to languish in the low-to-mid-30’s…technically, however, Seafield’s long-term uptrend remains intact with rising 200 and 300-day moving averages…the stock bounced off its 300-day SMA March 15 and 16…Seafield has been in a consistent decline during the first quarter of this year but we anticipate Q2 will be a lot kinder with improving short-term technicals and more results from Quinchia…Seafield is currently off half a penny at 34 cents…Richfield Ventures (RVC, TSX-V) has been holding steady in the $6.50 range for the past couple of weeks, a positive trading pattern that we’ve seen prior to strong upside moves in this stock since the summer of last year…while it’s still facing some technical headwinds, Gold Bullion Development (GBB, TSX-V) is looking stronger and has moved above its 20-day SMA for the first time since the stock suddenly plunged in mid-February…GBB is up a penny-and-a-half at 48 cents…from a fundamental standpoint, there’s no question in our mind that the LONG Bars Zone is as attractive as ever…we’ll be posting a detailed CDNX analysis Sunday in Part 1 of our Week In Review with Parts 2 and 3 updating GBB, CQX, ABI, CUI, RVC, GQC, VGN, AGE, SD and SFF…depending on market conditions, we may highlight some additional situations as well…

15 Comments

  1. ABI Net House Summaries suggest to me more dumping today. The share price was down before the news release came out. Consolidated/JDM have warrants at .13 and I’m guessing they dumped a bunch yesterday at .23? This created the temporary momentum in my opinion.

    Comment by Andrew — March 25, 2011 @ 7:22 am

  2. BMR
    Any thoughts on ABI’S financing and on what price it will be at
    thx

    Comment by GREG H — March 25, 2011 @ 7:33 am

  3. I don’t think it’s a bad idea for them to raise cash…..the price of course will be in the context of the market…I really like the ABI story because what I see here is a very attractive exploration dynamic….yes, they have 43-101 resources and the potential to go into development at two projects…..but I think a lot of investors are missing the exploration angle here…….huge opportunity to uncover significant NEW resources at both Elder-Tagami and Abcourt…I view any weakness as an opportunity with this situation…

    Comment by Jon - BMR — March 25, 2011 @ 8:05 am

  4. I like the action at ABI and am very hopeful its going to be a big winner. One thing I have noticed this year is how much the Silver Juniors are outperforming the Gold ones. If you contrast ABI with CQX both have extremely promising properties in great locations with good share structures and good management. Yet ABI has totally outperformed CQX in shareprice and I see this right across my portfolio. Silver juniors like TK, ATX, IPT and GPR are going well this year despite two downturns. Hard to find a Gold Junior that is significantly up so far this year. Any thoughts on this one?

    Comment by Patrick — March 25, 2011 @ 8:26 am

  5. Well, I have given this some thought and I dont think its a bad idea to raise cash at this juncture, however I think some of the action in the share price in the lead up to this NR is questionable to say the least. But then again how often do we see what looks like insider action in penny shares, I think they get away with a lot in these markets. The retail guy doesn’t see the deals behind the scenes between paid agencies and the companies and then add MMs into equation. Still I think the future is very bright for ABI and I am staying put 20mil oz of silver and likely 500oz upwards in Gold, this share can only head up over the next few months as silver breaks out.

    Comment by Herb — March 25, 2011 @ 8:33 am

  6. Hello Jon, In your interview with CQX you asked about insider selling and there had been none. You’ve mentioned several times that you view the fact that Tony Roodenburg has not sold any of his shares in VGN as very positive. Is there a reason why you do not seem to be concerned with regular insider selling in ABI? Thanks 🙂

    Comment by Andrew — March 25, 2011 @ 8:46 am

  7. Anyone looking for a gold junior with great prospects should check out PEM. It just broke out of a long and tight trading range today. This has multi multi million ounce potential written all over it

    Comment by Seamus — March 25, 2011 @ 2:49 pm

  8. Thanks Seamus, I’ll check it out over the weekend. 🙂

    Comment by Andrew — March 25, 2011 @ 3:17 pm

  9. sorry it should bmr not bbr walter

    Comment by walter emond — March 26, 2011 @ 2:43 am

  10. again i bring to bbr attention the stock triorigin toe you should interview theses guys walter

    Comment by walter emond — March 26, 2011 @ 2:40 am

  11. Hi guys, I see that VGN has released their 2010 audited financials on sedar this weekend.When you do your weekend review, will/can you comment on these results please. They seem stellar, but the stock still languishes. Seems VGN is not getting the respect it deserves. It has a market cap of 10 million, but has cash and investments worth 8 million? No credit being given for the value of the oil, or the Gold properties.I look forward to seeing your weekend review and any comments you may have.
    John.

    Comment by john — March 26, 2011 @ 8:10 am

  12. Just a thought guys, but a silver chart would be nice under the gold chart. Its a big silver year.
    Thanks for the interview with Trueclaim, and the passionate mining man John Carter. In my opinion
    the Black Diamond Silver, which they are getting ready to work is a real ” wildcard ” in the Trueclaim
    stable. There are 5 big producing majors in a 20 mile radius of this property! There will be a steady
    stream of results from the Scadding Property the next 3 months. I don’t know if you touched on this fact
    in the inteviews, John Carter in his company MPE International installed the fabrication equipment for
    200 + Mines around the globe in a 32 year period. I know of no junior company that has that experience
    on there side.

    Comment by George Pesut — March 26, 2011 @ 8:36 am

  13. I have difficulty agreeing to be in cash right now due to “low volumes” on the Venture. The move from 2800 to 3160 was on 2.5 Billion in Volume for the month in October ’07. Last month the Venture did 3.8 Billion in Volume. The average price in the month of October ’07 for the Venture was 2950 with 2.5 billion in volume or $7.37 B dollars into the Venture that month. Last month we experienced 3.8 B in volume for the month with an avg price of 2300 for the month or 8.74 B…
    Just some thoughts

    Comment by Don — March 26, 2011 @ 10:41 am

  14. I dont own GQC, but I’m sure lots of people reading here do so: ????… (The video was removed from the Au Report site)…
    I hope it’s okey to post links, if not I apologize.

    Comment by J.C. — March 26, 2011 @ 11:50 am

  15. Thanks, Don…you bring up some interesting numbers and I think what they certainly help demonstrate is that we’re clearly in a new long-term bull market, without question. That’s the macro picture. On a micro level, at this immediate point in time, the recent drop-off in volume since the rally began is troubling because what it does show is that buying pressure for the moment is faltering. Other indicators as well suggest an increased risk of a sell-off. So it is a good time, I believe, to be more cautious and to hold higher levels of cash to take advantage of opportunities that could arise in the near future. That’s more for traders or short-term investors than those who take a longer-term view, as the long-term bull market is fully intact.

    Comment by Jon - BMR — March 27, 2011 @ 6:02 pm

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