Volatility continues in the markets…Gold, though technically very overbought as John’s charts have shown, continues to surge higher given the “Perfect Storm” that seems to have formed around the yellow metal…as of 9:15 am Pacific, Gold is up a whopping $48 an ounce at $1,792…it has been as high as $1,799 over the last few minutes, breaking yesterday’s all-time high of $1,781…Silver has climbed $1.62 to $39.33, Crude Oil is up 79 cents at $80.09…Copper is off 6 pennies to $3.91 while the U.S. Dollar Index is up three-quarters of a point to 74.74…the Dow is down 350 points but the TSX and the Venture Exchange are in positive territory…the CDNX has gained 21 points to 1733…yesterday’s statement by the Fed that it will keep interest rates near zero until mid-2013 was yet another boost for Gold to go along with a host of other reasons for owning the precious metal at this time…”When you have a metal that has three or four distinct reasons why it has headed higher, it is very difficult not to be bullish in that environment,” stated Mitsui Precious Metals analyst David Jollie this morning…”Given how far and how quickly we’ve run up, the move seems somewhat overextended…But this is a market where people are worried, they’re concerned about risk, and Gold has certainly benefited strongly from its safe-haven status”…while it’s starting to become a “focal point” in the minds of many investors, Gold is still far from being in a “bubble stage” – the percentage of world assets invested in Gold is still miniscule…the average person on the street just doesn’t have exposure to it at the moment…at some point, Gold is going to go parabolic and quality Gold stocks are going to go along for the ride just like the “dot com” plays in the late 1990’s…what’s particularly interesting right now is that if the U.S. and euro zone economies slow even more than expected, and global growth overall pulls back, the cost “inputs” for producers in particular are going to come down rather significantly at the same time that the Gold price remains strong and perhaps shoots much higher…we’re beginning to see that now with the drop in oil prices to $80 a barrel…these cost inputs have been suppressing interest in Gold stocks but that could dramatically change….we’ll see what happens…investors would be wise, therefore, to hold positions in certain quality producers with growing production profiles and strong earnings momentum, in addition of course to advanced-staged exploration plays with strong upside potential…on the producer side, New Gold Inc. (NGD, TSX) which recently swallowed up Richfield Ventures and its Blackwater deposit in central British Columbia, is one of our favorites…New Gold is an aggressive company that’s consistently beating analysts’ expectations and keeping costs down…it should really shine in an even higher Gold price environment…the New Gold chart is incredible when you look at it from a multi-year perspective, and it’s also looking very favorable over the immediate term as John outlines…as of 9:15 am Pacific, NGD is up 69 cents to $11.44…
Richmont Mines (RIC, TSX) came out with solid earnings yesterday, as we expected, and July-August-September will be an even more profitable quarter for the company…Richmont, by our calculations, is likely on pace to earn at least 90 cents per share this year (44 cents per share for the first half of 2011) and it’s currently trading at only about 9 times that figure at $8.41 per share (up 57 cents and threatening to break out on the charts)…monthly production of approximately 7,000 ounces of Gold is expected to increase by 40% early next year to 10,000 ounces per month once the Francoeur Mine reaches full commercial production…in addition, the company is enjoying major exploration success with its Wasamac and Monique properties…five rigs are currently drilling at Wasamac which has multi-million ounce potential in our view…the market hasn’t yet caught on to the significance of Wasamac and how it will transform Richmont into a 250,000 ounce per-year producer…Richmont has been one of the best-performing stocks on the TSX this year and we expect that trend to continue…what’s quite amazing is that there are now eight drill rigs in operation at Wasamac or in the immediate vicinity – Visible Gold Mines (VGD, TSX-V) announced July 21 it has three rigs at its Lucky Break Project, concentrating on its Wasa Creek Property which adjoins part of Richmont’s Wasamac Property to the south and west…so Wasamac is definitely emerging as a major exploration area with Richmont focusing on growing its 1.4 million ounce deposit (NI-43-101, all-category resources) and Visible Gold Mines sniffing around the perimeter…VGD is up half a penny at 29 cents with a solid-looking chart…Wasamac is right off the main highway, about 15 kilometres west of Rouyn-Noranda, and was a producer in the 1960’s…Probe Mines (PRB, TSX-V) came out with more solid drill results from its Borden Lake Project near Chapleau, Ontario, including 77 metres (near-surface, 10 to 87 metres) in hole #66…Borden remains open in all directions and a 43-101 resource calculation is being prepared…PRB is a dime higher at $1.50…keep a close eye on developments in the Yukon…Kaminak Gold (KAM, TSX-V) is very strong this morning after releasing some results from its Coffee Project…the stock dropped as low as $3.25 during Monday’s panic selling and is currently up 46 cents at $3.88…Golden Predator (GPD, TSX) could bed a gem with its Brewery Creek Project in the Yukon and is off a penny at the moment at $1.18…Pacific Ridge Exploration (PEX, TSX-V), drilling its Mariposa Project in the Yukon, is strongly supported by its rising 50-day SMA at 42 cents…it’s currently off a penny-and-a-half at 45.5 cents, well down from its recent 52-week high of 68 cents…Canaco Resources (CAN, TSX-V), developing its Handeni Project in Tanzania, touched its rising 500-day moving average (SMA) this morning…Canaco expects to release an initial NI-43-101 resource estimate for Handeni early next year…while the company continues to deliver encouraging results from Handeni (seven rigs are currently drilling Magambazi), the stock price has been hit hard with the recent sell-off in equities…Canaco slid to $2.50 in early trading but is currently up 16 cents at $2.76…John “kicked the CAN” around this morning, producing a chart that shows a very strong support band between $2 and $2.50 with CAN bouncing off the top end of that band in trading today…
BMR – Investors would be wise, therefore, to hold positions in certain quality producers with growing production profiles and strong earnings momentum, in addition of course to advanced-staged exploration plays with strong upside potential…
Bert – Difficult says we, the BMR followers, especially, when we have placed
our cash in your highly touted speculative stocks & others. The above advice
would have been appreciated as a reminder, right from the beginning. Only so
much cash to go around…… Now for something positive, we can always depend on
your letter, through all the different market moods, you show up every day. Thank you for that. R !
Comment by Bert — August 10, 2011 @ 8:49 am
Jon, would you include SQI as a potential “cash cow” because of its jv with NGD? Thanks
Comment by Andrew — August 10, 2011 @ 9:33 am
BMR
You say that RIC is only trading at 9 times earnings, what is a reasonable or average for a company like RIC to be trading at. It has a ton of cash which I think is going to be king going forward.
thanks
Comment by GREG — August 10, 2011 @ 9:44 am
With luck, ABI will have the Elder mine back in production at a “timely” point. 🙂
Comment by Andrew — August 10, 2011 @ 10:15 am
Who’s the fool dumping vgd like that..
Comment by Kalkan — August 10, 2011 @ 11:53 am
Just house manipulation with VGD in past 20 minutes
Comment by Andrew — August 10, 2011 @ 11:57 am
GBB again in very low volume… meaning people not interested to look at it at this point. There are quite a number of small investors who bought them at 55 – 70 cents range plus the private placing shares at 50s…. Therefore, I will not bother to look at it now but I have put a buy order at 32 cents… and sell order for 45 cents. SD … as usual trading at 3.5 cents…. It does not matter BUY or SELL… 3.5 cents will be a deal. I am looking forward to 8 cents or more. BER closed at 10 cents and the mathematical error in the announcement killed the price. However, it will go back up gradually to 15 cents… that is my sixth sense. SFF has support but the price is still in adjustment … it may touch 20 cents level and it is another chance to scoop some at this price. Today closed at 21.5 cents. AGE closed at 43 cents and it appears that there are some upward movements soon… NAR very little volume and I intend to scoop more around at 16 -17 cents level…. . My target price is about 45 cents. I am holding a portfolio in GBB, SD, NAR, BER and AGE.
Comment by Theodore — August 10, 2011 @ 12:51 pm
LYD which I recommended yesterday, is up 20% in these last 2 days. Price will be even higher soon, but don’t get greedy, buy on dips which are inevitable.
Comment by George — August 10, 2011 @ 2:10 pm
Happy to see the Venture close up 40.90 & Toronto up 89.63, but what about the Dow.,
erasing almost all yesterday’s gains & the sad thing, the European & Asian markets
are watching & more than likely, willing to follow. It reminds everyone, that there
is something drastically wrong in the U.S. & Europe. Another disappointment for me
was VGD, which let me down at the end, closing down, i actually thought we were on
our way, i feel it may bounce back tomorrow. Another bright story was SQI, closing
only a penny off it’s high for the day. Up .07 is good for a speculative stock in
this environment, because i actually feel, most of the money went into the producers
today, but mark my word, with time, this will change & trickle down to the
speculative stocks. Overall i am retiring fairly happy tonight. R !
Comment by Bert — August 10, 2011 @ 2:40 pm
NES, GBB, PRU, GPD – best levergaged with low risk way to play the gold price.
NES – Highest grade explorer not taken over yet by majors.
GBB – Low grade bulk tonnage opportunity in Quebec for over 3 million ounces at Granada. Silver share spin-off and 43-101 on the way. Take-over target for gold producers in the area like OSK and only 5 km south of Rouyn-Noranda.
PRU – Gold producer, 200k ounces / year at cash costs of $500 / oz. High grade gold of 3 + g/t au average at Africa deposits with potential for ramp of another 100k at their Tengrela deposit by Q4 2012. 300k oz producer by 2013 for $1.3 billion market cap. $1300 margin X 200,000 ounces starting production in September – PRU trading at 5 X earnings with $250 million in revenues by next year.
GPD – New high-grade Yukon play with massive potential. 3 Different 43-101’s this year and huge potential with most of land package unexplored. 1/6 the market cap of ATAC Resources with comparable drill results like 196 m @ 1.43 g/t au, 74 m @ 7.08 g/t au and more.
Comment by Taylor — August 10, 2011 @ 3:19 pm
Although the European, Asian markets are trading down this evening, the Dow futures are up.
Gold is having quite the run & is up again tonight. It has been too expensive for me, since
it traded at around $100.00/oz. I know what i would do if i had bought it cheaper, i would
be very, very cautious, because it can’t last forever. Once we get the first good news story,
down it goes, mark my word. This is not directed at BMR, but there are some out there, who
are touting gold for their own greedy reasons. Once again, i am showing my mistrust in the
system, it stinks. If we only knew with certainty what really goes on out there, no doubt,
some of us would not participate. As i mentioned before, i am high on SQI, they do have
100 million shares outstanding, but they are a company on the move & having a 25% ownership
in the Davidson property, makes it worth well over a dollar. Also, they have other excellent
properties in Canada, including being one of the largest landowners in the Yukon, where they
are presently drilling. SQI’s chart looks good this evening, all indicators have turned up, in
particular, the stochastic which crossed up, while under 20. I have a strong feeling that SQI
will be taken out by NGD & may i add, the time is ripe for other takeovers. The seniors have
to move soon, it’s time & it’s the way the system works. Good luck & good night. R !
Comment by Bert — August 10, 2011 @ 6:15 pm
WOW!! gold passed $1800……where’s the end to this rise??!
Comment by M. — August 10, 2011 @ 6:44 pm
The Asain markets have rebounded, some in the green with 21/2 hours before open. The Dow, Nas & S&P
futures are all up, something looks positive because, as mentioned last night, gold is down. Lots of
time for things to change one way or another, but the question remains, if gold continues down
will the Venture follow a positive opening for the other indices. Yesterday my portfolio increased
by 6K, & because i am gambling with all speculative stocks, the increase was spread marginally over
most, except of course SQI, my leader. Good luck ! R !
them
Comment by Bert — August 11, 2011 @ 3:07 am
I give up !
In the space of 30 minutes the futures have turned down & gold back up. Still very volatile, so i must
refrain from jumping to conclusions. I will wait. R !
Comment by Bert — August 11, 2011 @ 3:48 am
France appears to be the problem. Weren’t they assisting in the bailout of other European countries,
recently, now their banks may need to be bailed out. Whatever, it’s all beyond me, but it will
get built into the market & we will proceed from there. One thing i noticed yesterday, Toronto &
the Dow opened down, but the Venture bucked the trend & stayed up & as the day progressed, added to
it’s gains. We are oversold so best of luck. R !
Comment by Bert — August 11, 2011 @ 4:45 am
The volatility is causing me to post more than i want to, but i have to state that, with less
than 1/2 hour left the futures & some European markets have turned up again & gold is heading
lower. Apparently there was an unfounded rumor, but i did notice some French bank are trading
down, so we wait & see. I am posting this information because everything seems to have a
positive or negative influence on everything these days. R !
Comment by Bert — August 11, 2011 @ 5:07 am
Hello Bert, there was a rumour that the French bank Societe Generale was in trouble and this resulted in a huge sell off yesterday – the bank lost 15%, I think, its rebounded today. Here’s a link to one story: tmxmoney.com/en/cpnews/f16649.html
FTSE and DAX are down again but an improvement from yesterday and hopefully are moving up off their day lows.
Comment by Andrew — August 11, 2011 @ 5:10 am