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September 23, 2011

BMR Morning Market Musings…

Gold is under pressure again today and losses accelerated once it dropped below the August spike low of just above $1,700…as of 11:45 am Eastern, the yellow metal is down $64 an ounce at $1,672…while some near-term chart damage has been done, Gold’s longer-term technical health is not affected…in fact, as we mentioned yesterday, even a drop to the $1,600 area wouldn’t put a dent into the long-term bullish picture – in fact, that would just set the stage for an eventual dramatic push through the $2,000 level…Silver is getting whacked again today, too, as it’s off $3.39 an ounce to $32.45…Copper’s weakness (it has suffered its worst weekly decline since 2008) definitely signals trouble ahead for the global economy…it hit a low of $3.23 this morning and is currently down a dime at $3.35…Crude Oil is 15 cents lower at $80.36 while the U.S. Dollar Index is flat at 78.30…

It’s important to keep an eye on the CRB (RJ) Index which, like the CDNX, has been in a general decline over the past six months…below is a CRB 2.5-year weekly chart from John that shows the Index is currently in a support band that may or may not hold…as of 11:45 am Eastern, it’s down 2 points at 305…

The CDNX is off another 36 points to 1562…the Index is clearly in oversold territory and the “Stochastics Hinge” that John identified on the chart last night is an indication that this latest move to the downside is very close to reversing and a bounce can be expected…however, it does not appear that a “capitulation” has occurred yet and that’s just one reason for the strong possibility of more downside action during the final quarter of the year…it’s hard to imagine at this point that the Index’s 300-day and 500-day moving averages, currently still rising, won’t go into decline in the coming months which will put additional pressure on this market…there will be plenty of trading opportunities and interest will continue in the strongest exploration plays, but this could be a very difficult market to navigate going forward…small, medium and large producers who are sitting on impressive amounts of cash are already targeting acquisition opportunities, so the best plays will be those companies that are possible takeover candidates or have properties that producers would be interested in acquiring…

Yukon stocks, which played a huge role in the CDNX bull market, have really suffered recently with ATAC Resources (ATC, TSX-V) entering today’s trading having declined for 10 consecutive sessions…technically, it has become severely oversold which is why it has bounced to the upside this morning…ATC is currently up 13 cents to $4.33…ATC holds great potential, in our view, as it continues to explore for Carlin-type deposits in the Yukon but overall market weakness could still take it lower…Kaminak Gold (KAM, TSX-V) is in the same position with its Coffee Project…

We’re wrapped up our visit to northwest Quebec but we have more stories to share over the next week…it takes some time to put things together…most investors right now are so focused on the current volatility and the world’s financial problems, they aren’t paying attention to some of the great exploration stories and opportunities that are unfolding in northwest Quebec and elsewhere for that matter – Wasamac being one of them, though Richmont Mines (RIC, TSX) has been performing very well…more deposits are likely in that area where no company is better positioned for exploration success than Visible Gold Mines (VGD, TSX-V)…the plunge in the CDNX has taken VGD down to a strong zone of technical support at 29 cents as John pointed out on his most recent VGD chart…

12 Comments

  1. I have scooped all the selling of BER at 16.5 cents and I am waiting for the big chief to buy the big lot 17 cents…. This lot used to be in 32 cents… 30 cents, 26 cents, 23 cents, 21 cents and now 17 cents…. It will go….

    Comment by Theodore — September 23, 2011 @ 8:06 am

  2. VGD drill results are taking a little to long.
    Maybe investors are thinking no news is not always good news.

    Comment by mar — September 23, 2011 @ 8:52 am

  3. Someone is picking up lots of VGN again today, mysterious Tony might be doing something 🙂

    Comment by Hugh — September 23, 2011 @ 9:11 am

  4. No ceo in his right mind would release gold drill results the last 3 days. The board would fire him immediately. Markets need some green days before that happens

    Comment by dave — September 23, 2011 @ 9:30 am

  5. Silver taking it hard man!! 28 next stop down.

    Comment by Hugh — September 23, 2011 @ 9:53 am

  6. BER closed at 17 cents and last trade was 1,000 shares to make the closing at 17. I was thinking why the big lot 1 million shares were asked at 17 cents. My sixth sense logic told me… someone wanted to block this price. If the smaller investors wanted to sell, they must list at a lower price… In fact, this person wanted to buy at a lower price… not really wanted to sell at 17 cents. In this bad stock market atmosphere, who will go out to buy a million shares …. at least not now. Other investors may want to see a lower price…. therefore, that person can scoop some…. I scooped some also… hopefully, I am not talking something, it does not make sense. GBB today traded below 30 cents and closed at 29. It may drop further to my buying point 26 cents. SFF has gone down to 20 cents with more active volume. I do not worry about this one… this one can jump. All other shares VGD, VGN and CQX are trading low volume. My TYP – one word – wait. Next week will be an interesting thing for BER and SFF…. I am expecting some movements on the positive side…. they will rebound fast….

    Comment by Theodore — September 23, 2011 @ 1:07 pm

  7. FROM JAMES SINCLAIR TODAY

    My Dear Extended Family:

    A quote from CIGA Eric today completely encapsulates what we are experiencing in the gold market:

    “This is a repeat of 2009 – actually even more extreme readings than 2009. We are severely oversold today. Anyone not buying here does not believe in the fundamental story. In my opinion, this will be a huge entry point by 2012.”

    In conversations with Kenny we examined the worst case scenario in terms of the correctness of Eric’s comment with which we both totally agree.

    Our conclusion is:

    Market situations like this will be found to have held and created bear traps in several instances of similar pattern action over the past 30 years WITHOUT having continued further down to first major support. The current corrective pattern over the past 23 trading days strongly implies that the move below $1690 would continue on down to the core at $1665 at minimum as first bottom, and in the extreme to $1615, but not below $1584. This will happen prior to exhaustion and a return to the full bull trend.

    So far the remaining successive levels of $2450/$2510; $2850/$2900, and $3280/$3330 are not affected.

    Gold shares are being impacted by a field of problems as a result of the large short positions held in almost all. They are being taken advantage of today by pressuring the entities in hopes of causing long term holders to collapse in their commitments.

    Respectfully,
    Jim

    Comment by GREG — September 23, 2011 @ 1:19 pm

  8. It is tragic to see vgd get slaughtered like this! Especially when you know the potential of this stock…

    Comment by Kalkan - Sweden — September 23, 2011 @ 1:53 pm

  9. Dave:
    VGD reported results of the 1st of 7 holes on Aug.11……..the stock price has been going down since the Sept 14, more than one month after the 1st hole result.
    BMR, when will you be posting the second interview with the CEO of VGD?

    Thanks.

    Mar

    Comment by Mar — September 24, 2011 @ 2:12 pm

  10. Mar, thanks for your post – a few things here. First off, VGD reported results from 7 holes in total August 11. One was from Wasa Creek – the first hole drilled there. The other 6 were from different areas – three at the Cadillac Break Project further west, and three others on the Lucky Break Project but south of Wasa Creek. It makes sense to me that they are probably waiting for another batch of holes before putting out news. Companies don’t report hole-by-hole. Labs of course are busy and VGD drilled nearly 9,000 metres there in Phase 1. A lot of core to log and a lot of core to get assayed.

    Second, yes, the stock price has taken a hit since Sept. 14 – in particular the last few days. Two reasons for this and two reasons only – both very unfortunate. #1, Sheldon Intenwash’s sales were not helpful. Why he may have sold, no one seems to know, but it’s certainly not related to any knowledge of assays IMHO – that is conspiracy theory, garbage stuff and an individual of Sheldon’s stature would not put himself at risk like that. He sold about 350,000 shares from Sept. 14 through the 19th. That has spooked some investors, for sure. During the same period he also bought shares in GCU at $3.03 and they have since dropped to $2.45. Rumor has it, Inwentash was away on holidays for a month from mid-August to almost mid-September. It’s quite possible he just wasn’t up to speed on developments at and around Wasamac and there were a lot of important developments there during that period, with both Richmont and VGD. #2, of course the market took a huge hit – the biggest weekly loss since ’08. So you combine Inwentash’s sales with a substantial market drop and then technical selling and you have VGD tumbling from .435 to .265. This is the junior resource market, it’s very volatile and definitely not for the faint of heart. The situation around Wasamac looks very promising, so the long-term big picture here remains exciting. I was planning on doing a second interview with Dallaire strictly on Joutel but given recent developments with VGD and the market, that interview can be more broad-based in nature and we’ll do it in the near future at a time when we think it’ll be the most helpful for everyone.

    Comment by Jon - BMR — September 24, 2011 @ 4:52 pm

  11. Thanks Jon for the update on VGD

    always amazes when the market overall takes a big hit and people just seem to look at one stock that went down and think there is something wrong, there are some incredible opportunities out there right now, Golden predator is one, it is down to 85 cents, Kaminack at 2.78 is another one did not think I would see those prices again, and many others as well.

    Comment by GREG H — September 24, 2011 @ 6:18 pm

  12. Thanks Jon.

    Long term, I know there is money to be made is VGD (thats why I will always hold a position in it).
    But short term we have to play it as we see it.

    Thank you.

    Mar

    Comment by Mar — September 24, 2011 @ 8:09 pm

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