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March 28, 2012

BMR Morning Market Musings…

Gold has traded in a range between $1,673 and $1,686 so far today…as of 6:05 am Pacific, the yellow metal is down $6 an ounce at $1,675…Silver is 24 cents lower at $32.29…Copper is 7 pennies lower at $3.80…Crude Oil is off $1.29 at $106.04 while the U.S. Dollar Index is up one-tenth of a point at 79.24…the market seems to be so fixated on every word spoken by Ben Bernanke…the Fed Chairman was on ABC News last night, following his speech to a group of economists earlier in the day that reversed the view of some traders that an improving economy makes it less likely that the Fed will engage in another round of quantitative easing…a look at stimulative measures introduced by central banks around the world in recent months clearly paints the picture of a global liquidity boom as we showed in Monday’s chart…”Fed speak” is back in force tomorrow when Bernanke lectures another class at George Washington University and several Fed presidents are speaking…

It’s budget day tomorrow in Ottawa and as investors in the resource sector, we can take comfort in the fact the Conservatives are likely to significantly streamline federal government regulation in the industry and quicken the project approval process…this, of course, is sure to draw of wrath of the environmentalists who have dangerously overdosed on all the green kool-aid served up by the likes of Obama, Gore, McGuinty and Suzuki…amazingly, the narrative in certain parts of Ontario and Quebec is that somehow Alberta and Saskatchewan  are responsible for the decline in their manufacturing industries because of Canada’s “petro dollar”…of course that completely ignores the fact that Ontario and Quebec have been damaged severely by their own fiscally incompetent tax-and-spend governments who wouldn’t know how to run a profitable lemonade stand let alone create the conditions necessary to attract investment and foster entrepreneurial growth…

The American public’s attitude toward the economy is broadly on the upswing, according to the latest CNBC All-America Economic Survey, but details show deep-seated concerns that present problems for both political parties going into the November presidential elections…the poll of 836 Americans across the country found that 36% believe the economy will improve over the next year, a nearly 10-point gain from November, and the highest level of optimism since 2010…Americans expect the biggest gains in their paychecks in nearly four years…they are also more upbeat about their homes: 22 percent expect their home’s value to increase in the next year, up from 15% last quarter and the highest level since December, 2010…more than 51% of the public own an Apple product, with one in three owning more than one…interestingly, Gold is seen by the American public as the best investment right now, chosen by 37% of respondents…real estate is a distant second with 24%, followed by stocks at 19%…one could make the argument that those numbers are potentially bearish for Gold and bullish for stocks, though those readings could hit more extreme levels in the months ahead…

The price of Gold, one of the most eagerly watched indicators of market confidence, is currently “too low” relative to real interest rates, according to commodities analysts at Goldman Sachs…they forecast that Gold will rise to $1,785 per ounce over the next three months, $1,840 over the next six, and $1,940 over the next year…what’s very strange, however, is their statement Gold remains a “compelling trade” at current levels but “not a long-term investment”…that could be how Gold is viewed in the United States but not in Asia or other parts of the world…

At BMR, we continue to be bullish on Gold and John’s chart yesterday showed the strong possibility of a move to the $2,000 level later this year…Silver, however, could very well prove to be the investment of the decade which is why investors should perform their due diligence on high quality Silver producers and Silver exploration companies…

John has a chart update this morning on Silver which, like Gold, appears to be forming a bullish inverted head-and-shoulders pattern….below is a 9-month weekly chart…


Rainbow Resources (RBW, TSX-V) Update

Rainbow Resources (RBW, TSX-V) is holding an event for investors in Calgary tomorrow which leads us to believe that significant news is on the way from the company by tomorrow morning…over the last several weeks, Rainbow has been gradually providing more details on its West Kootenay land package but we suspect the company may have saved its “best for last” as far as the month of March is concerned…President David Johnston has agreed to speak with BMR following tomorrow’s Calgary event…rumor has it, some major brokers will be in attendance which adds further credence to the theory that Rainbow is up to something…we doubt they will disappoint given how things have progressed with the company over the last couple of months…

Argex Mining (RGX, TSX-V)

At the request of some of our readers, below is a chart update on Argex Mining (RGX, TSX-V)…RGX has been a great performer so far this year, and we like what this company is doing, but from a technical perspective it appears we’re about to see the “handle” form on this very possible classic “cup with handle” pattern…a cleansing of the current overbought conditions could have started yesterday when the stock climbed as high as 90 cents and closed down 4 pennies at 80 cents on high volume…


Note: John, Jon and Terry do not hold positions in RGX.

Probe Mines (PRB, TSX-V)

Probe Mines (PRB, TSX-V) has been making great progress with its Borden Lake Gold Project in northern Ontario, even though this month’s drop in the share price wouldn’t suggest that…Probe fell as low as $1.22 this month on a sell-off that made little sense, but smart buyers stepped in as we suggested they would…PRB closed at $1.50 yesterday

Note: John, Jon and Terry do not hold positions in PRB.

10 Comments

  1. John – thanks for the second chart on RGX – much appreciated, it’s an interesting chart and I’ll watch to see if the handle does form. I think Jon was buying more RBW this morning! 🙂

    Comment by Andrew — March 28, 2012 @ 7:15 am

  2. I will be some RBW as well today. I think they will come with significant news before the Calgary event. Should pass through 30c tomorrow.

    Comment by Steve — March 28, 2012 @ 7:59 am

  3. I picked up what i could…then it dropped a cent and a half…jeez

    Comment by db — March 28, 2012 @ 8:33 am

  4. We’re back even. Good a day like this. With news tomorrow and probably rebound in markets RBW will pass 30c.

    Comment by Steve — March 28, 2012 @ 9:31 am

  5. Hi Andrew,

    Remember, few mounth ago we’ve spoke about Canaco at 0.75$ in some depressive market for gold stock, we are at 0.88$ now 🙁

    Bonne journée!

    Bought LSG yesterday at 1.25$ down 5.65% in a day! is there a bottom to these junior?

    Comment by Martin — March 28, 2012 @ 10:18 am

  6. Sold at 1.16$ look like it want to break down major support,

    Comment by Martin — March 28, 2012 @ 10:51 am

  7. Any comments on Fortuna Silver?

    Comment by Michael — March 28, 2012 @ 10:52 am

  8. Oui, Martin, je me souviens! RIC at 7.88! SRK was up 12% but is now giving up the gain. Gold seems to have bottomed for today? It gave up all of yesterday’s gain and more. UBS calling for 1550 so a lot of potential volatility and traders probably waiting it out now? Bonne journée!

    Comment by Andrew — March 28, 2012 @ 11:33 am

  9. Martin, excuse – je rappel! SPM & VGD hit hard today. AGE is struggling but I’ll stick it out as usual, some green paint on CEV! 🙂

    Comment by Andrew — March 28, 2012 @ 12:00 pm

  10. Rainbow Resources Inc. Announces International Property Returns Samples Of 1,148 g/t Ag and 68% Lead
    (via Thenewswire.ca)
    Mr. David W. Johnston reports:
    TORONTO, ONTARIO, March 29, 2012 — Rainbow Resources Inc. (TSX VENTURE: RBW) (“Rainbow” or the “Company”) is pleased to report that initial prospecting, rock and soil sampling carried out by Moose Mountain Technical Services, the Company’s resource consultants, and Moose Mountain’s extensive review of work completed by Braveheart Resources since 2006, has confirmed historical assay results and the potential for an epigenetic polymetallic deposit (silver, lead, zinc and possibly gold) at the Company’s 4,000-hectare International Property near Kaslo in southeast British Columbia.
    High-grade silver, lead and zinc, as well as traces of gold, were first discovered at the International in the early 1900’s (small-scale mining of high-grade near-surface material took place intermittently until the early 1940’s) but access issues have prevented any drilling from ever taking place. The first road into the property on the eastern shore of Duncan Lake was built in the 1970’s. Privately-held Braveheart Resources, which acquired the nine International crown grants and eight “cell” claims in 2006, upgraded road access, providing easy entry into the International. Rainbow holds a 100% interest in the property after its acquisition of Braveheart last fall.
    Historically, a northwest trending vein system at the International has been traced over a true strike length of more than 1.2 kilometres and has been tested with numerous adits confirmed by Moose Mountain. Mineralization consists of weak to massive galena, pyrite and sphalerite, and is hosted by black, carbonaceous, siliceous schist and decomposed mica schist. Continuity of the mineralization along strike and at depth, and possible expansion of this system along a 4-kilometre north-south structural corridor, needs to be verified through upcoming additional exploration including a comprehensive drill program with initial targets soon to be finalized. Results of a recent Fugro heli-borne electromagnetic survey over the entire property are expected sometime in April.
    “This project has been several years in the making and started with Braveheart strategically assembling a 40 square kilometre land package that included important crown grants,” stated President David Johnston. “The infrastructure dynamics around the International have changed remarkably since a discovery was first made at this property in the early 1900’s, so what’s possible now was not achievable historically. Given areas of impressive mineralization that have been identified at and near the surface, we’re evaluating all options and we’re eagerly anticipating an aggressive drill program to test this system for continuity and possible extensions in all directions. With our strong knowledge of the area and Rainbow’s focus on defining a deposit, this is going to be a very exciting spring and summer for us. We believe there is excellent potential to greatly expand the known area of mineralization throughout this land package, and we have an experienced prospecting and geological crew lined up to accomplish that goal. The Duncan Lake district has produced numerous silver-lead-zinc deposits and we believe the geological conditions are ideal for the discovery of a substantial deposit at the International.”
    Moose Mountain reports that 12 rock samples collected in 2008 by Braveheart Resources from two distinct crown granted claim areas – seven from the “Forgotten” package on the northern portion of the property, a highly prospective target given historical work by Omo Mines Corporation and Kaslo Mines Corporation from the late 1920’s to the early 1940’s – and five from the “Cabin Fraction” area approximately 1 kilometre south toward the central part of the property – returned high grades of silver and lead. The average grades of 562.3 g/t Ag (16.4 oz/ton) and 39.2% Pb are fairly typical of historical assays from old workings going back to the early 1900’s.
    Eight of the above samples exceeded 590 g/t Ag or 17 oz/ton and 47% Pb with the highest readings being 1,148 g/t Ag or 33.48 oz/ton Ag and 68% Pb. Moose Mountain recently took one rock sample from the Forgotten area and it assayed 300 g/t Ag (8.75 oz/ton) and 51.7% lead. Rainbow cautions that these grab samples, while encouraging, may not be representative of mineralization on the property.
    “Cabin Showing”
    As detailed in a National Instrument 43-101 technical report, initial prospecting by Moose Mountain has identified an exposed vein structure – the “Cabin Showing” – approximately 1 kilometre southeast of the Forgotten area. Mineralization within this vein structure, exposed for approximately 80 metres along strike by a road cut, and up to 2.5 metres thick, occurs as irregular massive sulphide bodies of galena, pyrite and rare sphalerite. It appears to be conformable to the layering of the host schists with a strike of approximately 290 degrees and dips ranging from 5 degrees to 20 degrees to the north. Three channel samples from this showing, across vein intervals between 0.6 m and 2m, returned an average assay of 10 g/t Ag and 0.85% lead. Below the exposed vein there is mineralized debris in the access road cut and distinctly gossanous soils that are highly anomalous in multiple elements. Drilling is proposed in this particular area in order to test strata below the showing and investigate the strong potential for multiple vein structures.
    Soil samples collected by Braveheart Resources and Moose Mountain, from the Cabin Showing to the Forgotten claims, are highly anomalous in lead, zinc, arsenic and boron, suggesting there are many more prospective areas of mineralization on the property.
    Geological Setting/Infrastructure
    The International Property, with elevations ranging from 576 metres to 2,133 metres, is situated in the Rocky Mountain Belt near its western edge in the Purcell Mountains, just north of the apex of regional deformation known as the Kootenay Arc. The Horsethief Creek Group, comprising highly deformed quartz mica shist, underlies the property.
    Local resources and infrastructure in the immediate vicinity of the International enhance the attractiveness of a potential mining project. The Glacier Hydroelectric Plant Project is just a few kilometres south of the crown grants while good paved highways, after a gravel road from Cooper Creek Junction, connect the property to Revelstoke and Nelson as well as the smelter facilities of Trail.
    The International is one of eight properties in the Company’s “Big Strike” Project covering a total of nearly 9,000 hectares in the prolific West Kootenay region of southeast British Columbia, an area that has accounted for a large proportion of the province’s silver, lead and zinc production as well as significant quantities of gold and copper. Rainbow has received a National Instrument 43-101 technical report on the Big Strike Project and the report is being filed imminently on Sedar.
    Tin City Property
    The southern portion of Rainbow’s 1,000-hectare Tin City Property is attached to the northern tip of the International and is viewed as being a potential extension of a deposit at the International. Historically, the Tin City area was first explored in the 1920’s when three short adits, an inclined shaft and some open cuts were driven into galena and sphalerite-bearing quartz veins. A tin showing, importantly also containing some beryllium and scheelite, was discovered in the 1940’s. Soil geochemistry outlined several copper, lead, zinc and tungsten anomalies. Exploration since then, including some limited drilling by Newmont, has focused on tungsten with most of that work carried out in the 1980’s. Rainbow believes the property warrants a fresh geological approach, especially considering its proximity to the International. Moose Mountain continues to review historical data from Tin City, and results from a recent Fugro heli-borne electromagnetic survey over the property are expected sometime in April.
    President Property
    The President claims are situated on the west side of Duncan Lake, approximately 13 kilometres southwest of the International, and considerable faulting on this under-explored property could have provided a conduit for mineralizing solutions. The Lardeau Group, comprising quartzite, argillites and altered sill material, underlies the property.
    The quartzites are brecciated and chloritic within north-trending shears near faults. An 8-kilometre long fault trends northwest through the property and follows the contact between the Upper Index and Sharon Creek Formations. There are some geological similarities between the President Property and the past producing Bluebell Mine (4.82 mllion tonnes grading 5.2% Pb, 6.3% Zn and 45 g/t Ag) approximately 90 kilometres south. Results are pending from a recently completed Fugro heli-borne electromagnetic survey at President.

    Comment by Andrew — March 29, 2012 @ 4:11 am

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