Gold has fallen from an overnight high of nearly $1,500 to $1,475 as of 8:55 am Pacific…Silver was above $34 but is now at $33.29, off 31 cents for the day…crude oil has dropped another $2.09 a barrel to $95.28 while the U.S. Dollar Index is up slightly at 75.73…U.S. housing starts and permits for future home construction fell in April as an overhang of homes on the market is discouraging builders from taking on new projects, pointing to prolonged weakness in the housing sector…quite simply, the U.S. housing crisis is deepening and that’s a troubling sign…the U.S. is caught in a vicious financial circle…federal, state and local governments must dramatically reduce spending and imminently – these are difficult decisions that cannot be put off indefinitely…deep cuts are coming over the second half of the year…they will be painful and they will also be a drag on economic growth for a period of time…Fed Chairman Ben Bernanke is going to have his work cut out for him and indeed he may have to implement some form of QE3 to support the system…the behavior of the speculative Venture Exchange over the last five weeks in particular suggests corrections in the Dow and the TSX are on the way but expect the Fed to do everything in its power to prevent the markets from crashing…that is consistent with how the Fed has acted over the past two years…the CDNX is now trading below 2000 for the first time since last November when it plunged to 1900 before moving on to new highs…there’s no reason to panic at the moment with regard to the CDNX – the sky is not falling but this market is certainly in the midst of a major correction that could end soon or may stretch out into the summer…for the moment the trading range appears to be 1900 to 2000 as John outlines in this updated chart…
As of 8:55 am Pacific, the CDNX is off 35 more points to 1961…we’re currently in the process of putting together a “shopping list” of beaten-down opportunities that are not part of the BMR group of companies we regularly follow…we’ll be unveiling that before month-end…we’re long-term bullish on Silver and one of our favorite Silver stocks continues to be Great Panther Silver (GPR, TSX) which is starting to become quite oversold, so this is one opportunity investors should be keeping on their radar screens…a “capitulation” moment hasn’t yet occurred with GPR or the market as a whole…GPR is off another 20 cents this morning to $2.52…Visible Gold Mines (VGD, TSX-V) is up half a penny at 27 cents after dropping as low as 25 cents this morning…VGD has hit extreme oversold levels this month and RSI and Stochastics may have bottomed out…the Chaikin Money Flow (CMF) indicator is now showing an increase in buying pressure, so a turnaround in VGD, which has dropped for six consecutive weeks, appears close at hand…the company has approximately 17 cents per share in working capital and is currently carrying out two separate drill programs with exploration expected to begin soon on its flagship Joutel Project which is a former significant producer of Gold and Silver…we expect to visit that property next month…Currie Rose Resources (CUI, TSX-V) is gearing up for a major exploration program at its Sekenke Project in Tanzania which is also a property of considerable merit…Sekenke has the potential to drive CUI much higher over the second half of this year…CUI is currently down a penny at 16 cents…bargain hunters should be keeping a close eye on Adventure Gold (AGE, TSX-V) which has been weakening as expected with its 50-day moving average (SMA) rolling over…there is strong technical support for AGE from the mid-30’s through the mid-40’s…it’s off 3 pennies at the moment to 49 cents…CNBC “fast money” trader Stephen Weiss (Partner, Short Hills Capital) wrote an excellent piece this morning on the China/copper “carry trade”…Weiss’s source for his information is Michael Pettis who lives in China and is the Senior Associate at the Carnegie Endowment for International Peace’s Asia Program…he’s also a finance professor at Peking University’s Guanghua School of Management as well as a former member of the faculty at Columbia University’s Business School….Pettis’ claim is that Chinese demand for copper has been significantly inflated by its use as a financing mechanism (in fact, the article states one legitimate source estimates that these warehouse stashes are equivalent to 11% of refined copper consumption and up to 40% of demand – perhaps as much as 700,000 metric tons according to some estimates)…traders and businessmen have been buying copper using a 180-day letter of credit which is extremely cheap financing…they then turn around and use the copper, which is being stored in a bonded warehouse in China, as collateral for a bank loan at rates much lower than they otherwise would receive…the banks have no problem with these technically legal and off-balance sheet transactions and the loan officer of course gets a juicy commission…sometime last month, Pettis says, the government got wind of these transactions and tightened the rules that led to demand falling and copper coming back on the market, suppressing prices as other commodities rose…Pettis is unsure how effective these new regulations will be but this goes to show there’s always more behind the scenes going on to influence these markets than meets the eye…
Jon, any comment on the v.ABI news release yesterday?
Comment by Steve — May 17, 2011 @ 8:39 am
John and Jon,
Thank you for the chart update and for your daily market musings which have been very informative.
Thanks again for quick response.
Comment by Charles — May 17, 2011 @ 9:06 am
Nothing spectacular yesterday obviously but they are consistently hitting mineralization at Elder…results yesterday were from the eastern side which is very promising and requires a lot more investigation….mineralization is actually open in all directions……Abcourt has a great chance to outline at least half a million ounces at Elder…….that’s more than triple the previous resource estimate…..
Comment by Jon - BMR — May 17, 2011 @ 10:15 am
VGD traded at .23. The chart is awful and its been in a decline since its high on 2 December 2010. There’s nothing that I can see from a technical point that this stock has going for it. Next week it will likely be trading in the teens. If there is a major correction it will virtually disappear – from that point perhaps it would be a 10-bagger but no way from 41 cents – >$4 🙂
Comment by Andrew — May 17, 2011 @ 11:49 am
BMR
do you know what the 120 moving average is for the CDNX I do not see it on the chart above
Thx
Comment by GREG H — May 18, 2011 @ 6:37 am
Hi Greg
Daily SMA(120) = 2243.89
Weekly SMA(120) = 1560.95
Is this what you need?
Comment by John - BMR — May 18, 2011 @ 6:46 am
Any comments as to what Tony Roodenburg is up to with Zoolander zoo.h – thanks!
Comment by Hugh — May 18, 2011 @ 7:12 am
BMR, what happening to EGM? as a shareholder it feels like chinese drip torture!!! any updates or views would be greatly appreciated!!
Comment by marc — May 18, 2011 @ 7:35 am
Hugh, let me help you out with what Rottenburg is doing at Zoolander. he is doing the same thing he does with all his companies A B S O L U T E L Y NOTHING!! Perhaps he knows that people in the North American investing circles are FED UP with his LACK of vision or LACK of enthusiasm to ACTUALLY do any work, so now he’s trying to screw over some African investors?? LOL.. Really?? Doing business with Zimbabweans?? I would not be surprised if SOME of those people are on the United Nations Embargo because of Mugabe.Think about it Hugh, IF thats a BIG if, IF VGN is supposed to be Tony’s baby, his REAL PASSION, the 1 company that will put him on the map, why would he be messing around in Africa, when he has SUPPOSED high quality assets in North America?? What happened to Nevada? What happened with Evrim? Where is the SUPPOSED acquisition of the ADVANCED stage Gold Property with PROVEN ounces in the ground, ” Somewhere in the Americas”?? I would NOT believe a word that Rottenburg says, NEVER!!!! Tony will NOT act on ANYTHING as long as VGN is getting the monthly royalties from the oil wells, I mean, why would he?? He has a cash cow for life there, no need to even get out of bed in the morning, except on Fridays, when he goes in to the office to collect his pay cheque. Maybe after BMR selects it as a holding, and they remind you that it has gone up 300% since they 1st introduced it to you, you might hear something…LOL
Comment by john — May 18, 2011 @ 8:20 am
EGM has certainly been struggling and we warned about that possibility last fall when we removed it from our model portfolio, soon after Basa reversed course and stepped aside…I believe they have a great project at Montauban and Basa would have moved it forward…unfortunately, I don’t see the current management being able to unlock the value of Montauban…just a personal opinion…there are lots of companies out there with great projects but they lack the skills and the know-how at the top to build value…
Comment by Jon - BMR — May 18, 2011 @ 8:28 am
No idea, but does it really matter? Looks like he has come on board as a director…Tony’s not an idiot…he’s a sharp business guy and he does have a game plan for VGN…
Comment by Jon - BMR — May 18, 2011 @ 8:30 am
And what might the GAME PLAN for VGN be??? Sit around and collect his pay without doing any actual work?? Sounds like Tony Rottenburg was schooled in the ways of a government employee..LOL I know, I know, VGN is STILL up ( slightly) since BMR introduced it to it’s readers… If Tony is NOT an idiot( which I disagree with, I think he’s a BIG idiot) WHY has he waited SO LONG to ” unlock” the value of VGN?? Let’s see: Coal in Manitoba?? Shale gas in Quebec?? High quality gold assets in Nevada??? Smart investments in other public companies??? An imminent Advanced gold acquisition ” somwhere in the Americas”????? Sounds like Tony can spin a good story, but Im not holding my breath. Thank God for the monthly oil royalties or Tony might have to find a REAL job, but with his track record, who would hire him??? And his giving employment to Ian Park, ya thats not an idiot move…LOL So, lets see now, Rottenburg most likely was FORCED to remove himself from SFF because of his INABILITY to produce RESULTS ( from a large institutional share holder, maybe the last guys who financed him with SFF at .60) And now people have faith and trust in him to make something happen at VGN??? LAUGHABLE! Sure he may be a sharp business guy, but he only looks out for himself and NOT the share holders. I will re-enter VGN WHEN, not if, but WHEN VGN is back under .10.
Comment by john — May 18, 2011 @ 8:49 am
Thanks John that is what I needed, I wanted to see where the daily 120day ma as one of the newsletter writers I follow says that will be the time to get back in the jr’s when the CDNX breaks above the 120 day ma, 2243, is a ways to go from here. thx
Comment by GREG — May 18, 2011 @ 10:42 am
It’s the duo Roodenburg and Pirie. If he/they had been trying to extricate themselves from SFF to concentarte on VGN why the immediate move to ZOO.H. Doesn’t look good and doesn’t smell good. With this pair’s antics last December they wreak of being scam artists. You mention to read your disclaimer every now and then – I haven’t found it yet. There must be many investors that follow your inexhaustible supply of stocks to watch and the ones that are going to be home runs in the BMT portfolio. Only a few weeks ago Greg asked if GCU would trade under $3.00 again – not a hope was his answer, well its traded under $3.00 several times since then. I think you need to word your recommendations and interpretations in a mannner that they don’t unintentionally mislead and give false hope. Some followers of BMR haven’t sold as the portfolio has crashed because you continually state that this is not a time to panic or be fearful. It was a time to go to cash last February early March after the poor results in PM juniors since the turn of the year. A little more background to managing the BMR portfolio would be a help to many who believe you have “the portfolio” to make their investments pay off. Thanks 🙂
Comment by Andrew — May 18, 2011 @ 2:06 pm