Gold has pulled back this morning after touching $1,600 yesterday following strong gains late last week…as of 4:30 am Pacific, the yellow metal is down $11 an ounce at $1,581 after hitting a low of $1,571 overnight…Silver is 25 cents lower at $28.22…Copper is down a penny at $3.53…Crude Oil is off 47 cents at $92.10 while the U.S. Dollar Index has climbed one-quarter of a point to 81.25…
Today’s Markets
Canadian markets return to action after yesterday’s Victoria Day holiday…the long weekend for Canadian investors brought no negative surprises…the Dow reversed yesterday, gaining 135 points to close at 1205…markets are heavily oversold across the board other than the U.S. Dollar Index, and a recovery should gain some traction this week simply from a technical perspective…Asian markets were up overnight with China gaining 25 points to close at 2373…European shares are higher this morning by about 1%, in advance of an informal EU Summit tomorrow in Brussels, while stock index futures in New York as of 4:30 am Pacific are pointing to a flat open on Wall Street…
BMR Interviews Rainbow President
Jon conducted a very interesting interview last night with Rainbow Resources‘ (RBW, TSX-V) President David W. Johnston, and the audio file is expected to be uploaded to the BMR site later today…Johnston covered numerous topics from the company’s Big Strike Project to Jewel Ridge (assay results from a sampling program are expected very soon) to the flake graphite situation in the Slocan Valley…Johnston revealed the company is considering conducting a 10,000 tonne bulk sample at its promising Referendum Property, part of the Big Strike Project, while drilling is set to commence at Gold Viking as soon as drill permits – expected soon – are received…the snow is melting quickly now in the Kootenays which is allowing prospectors to cover a lot of ground at the moment…Johnston also outlined plans for a major market awareness campaign that Rainbow is preparing to launch…as John detailed yesterday, the Rainbow chart continues to look strong despite some late selling Friday that appeared to have everything to do with overall market nervousness entering the long weekend…
Growth Over Austerity & Massive Bailouts – Get Ready For The “Big Bazooka”
The “big picture” emerging on the global financial scene is a sharply increased likelihood of a tsunami of money printing by central banks and government growth measures in order to prevent an immediate meltdown in Europe, keep Greece in the euro zone, and jump-start global growth…concerns are also mounting in China about the economic slowdown there which is partly due to the troubles in Europe…a slow motion but dangerous bank run is underway in Greece and Spain with the underlying fear of depositors not simply, or even mainly, one of bank failure…instead, they likely fear the devaluation of their deposits relative to those in the core economies if the euro should break up…a European deposit protection scheme to stop a run on periphery banks, further European Central Bank support for the financial sector, and increased borrowing to fund investment are just some of the possible measures on the table for discussion…central banks will have no choice but to fire up the printing presses which could mean everything from massive bailouts in Europe to a third round of “quantitative easing” in the United States, all of which will be inflationary and will lift asset prices…the exact timing of all of this is uncertain but can’t be far off (by the summer at the latest)…
Meanwhile, as just one example of what’s beginning the unfold, the Financial Times reports this morning that there has been no official announcement, no terms or conditions have been disclosed, but Greece’s banking system is being propped up by an estimated 100 billion euros of emergency liquidity provided by the country’s central bank – approved secretly by the European Central Bank in Frankfurt…
In addition, the the OECD this morning has joined French and EU officials in calling for a move toward jointly-guaranteed euro bonds…OECD chief economist Pier Carlo Padoan said the euro zone is “close to” the possible scenario of a 2% economic contraction this year that the Paris-based think tank laid out as its worst-case scenario last November…
China To Speed Up Infrastructure Construction Projects
The Chinese government is hinting that it’s preparing measures to boost sagging growth in the world’s second largest economy…the China Securities Journal said yesterday the government plans to speed up approval of infrastructure construction projects to improve the economy…the report followed pro-growth comments from Premier Wen Jiabao on Sunday…the slowdown in China’s economy has weighed on the commodities market, particularly since dismal economic data for April suggested the economy was heading for a sixth straight quarter of slowing growth…
Chinese consumers of thermal coal and iron ore are asking traders to defer cargos and – in some cases – defaulting on their contracts, in the clearest sign yet of the impact of the country’s economic slowdown on the global raw materials markets according to the Financial Times…the deferrals and defaults have only emerged in the last few days, traders said, and have contributed to a drop in iron ore and coal prices…
Other key economic indicators followed by Chinese policy makers, including electricity consumption, rail cargo volumes and disbursement of bank loans, point to a weaker than expected economy which raises the risk of a hard landing…soft commodities such as soybeans and cotton have also seen Chinese customers default in the past two weeks…
Highlighting a “worrying” weakness in consumer spending inside China, Kim Youngha, the head of Samsung’s China operations, said he expected the domestic market for technology goods to grow 7% this year in China, down from 10% last year…
Silver Chart Update
Since early 2011, Silver has found consistent support just above $26 an ounce and at some point in the coming few months we expect the down trendline to be broken…last week’s hammer candle is a bullish sign for this week even though prices are down this morning…in John’s chart below, notice how the oversold SS is showing the %K with a hinge…
U.S. Dollar Index Chart
It’s important to keep a close eye on the direction of the greenback at the moment, as a “cooling off” of the U.S. Dollar would be a bullish factor for commodities and the equity markets…while it’s up this morning, the U.S. Dollar Index appears poised to consolidate and catch its breath after a recent impressive string of gains…there is a strong resistance band between 81.50 and 81.78…
GDX – Market Vectors Gold Miners ETF
John’s final chart this morning examines the GDX which follows the price and yield performance of the NYSE Arca Gold Miners Index (GDM)…it also correlates very highly with the TSX Gold Index…the GDX is showing fresh momentum which leads us to believe this should be a good week for Gold stocks after what may been an important bottom last Wednesday…
RBW Warrant Expiry / PP shares free trading –
BMR posted last week:
4.Just a couple of comments on that. Share structure is always critical, and RBW does have the benefit of a tight share structure. First, the latest PP was done through mostly management and close associates and original Braveheart shareholders – it was not a PP that brokers were flogging. So expect very, very little of that stock to come out into the market when it becomes free-trading. These are long-term holders.
The 15 cent warrants that are still left are apparently mostly in the hands of management and a few close associates, from the original financing of Rainbow. Again, I expect very little selling of stock to exercise these warrants – these individuals have ample resources and shouldn’t have to sell stock in order to exercise some 15 cent paper.
If 25 cent warrants are getting exercised, then we all can be happy because that will mean the stock is trading above that level. If those warrants aren’t exercised by the end of the June, I would hope the company would just let them expire and that would further tighten the share structure and bring down the number of fully diluted shares.
Comment by Jon – BMR — May 21, 2012 @ 6:31 am
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Two comments:
1. The 2012 PP WASN´T done through mostly management ! 2 of the 6 reported insiders just bought 250,000 shares / 125,000 warrants from the 2012 PP !
2. 15 cent warrants are mostly NOT in the hands of insiders: according to SEDI, all 6 registered insiders hold a total of 650,000 warrants, of which only 125,000 are from the 2012 PP !
So there must be quite a few non-reporting “associates” out there to cover the most part of the other 14,000,000 outstanding warrants !
As long as I have no other info, I go with the officially available info, which tells me that there are quite a few shares and warrants might be coming to the market shortly.
FANTOMAS
Comment by FANTOMAS — May 22, 2012 @ 5:27 am
Venture rebounding finally on a strong note! over 25 pts higher this morning! Any thoughts on support,etc. Is the bottom in?
Comment by STEVEN — May 22, 2012 @ 6:07 am
RBW – Warrant Expiry / PP shares free trading
Unfortunately, my last comment regarding the above issue has been deleted.
For people interested in a different opinion, just follow the link:
stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=31086922&l=0&r=0&s=RBW&t=LIST
FANTOMAS
Comment by FANTOMAS — May 22, 2012 @ 6:08 am
Sorry, must have been my PC ! Everything ok with BMR !
FANTOMAS
Comment by FANTOMAS — May 22, 2012 @ 6:09 am
BMR
Any comments on the following?
On Bullmarketrun there were arguments regarding the warrants expiry and PP free trading shares, that most of them were bought by insiders, who are not willing to sell shares in the short run.
When you check the SEDI insider filings, you´ll find that this is NOT the case !
the main insiders and their recent PP buy-ins / warrant holdings are as follows:
1. Alexander Falconer: bought 84,000 shares / 42,000 warrants in January PP / 242,000 warrants total
2. Robert Michael Libin: bought 166,000 shares / 83,000 warrants in February PP / 83,000 warrants total
3. Robert Brian Murray: had 225,000 warrants by end of Dec. 2011 , NO participation in 2012 PP
So, we are talking about 250,000 shares being bought by insiders in the 2012 PP´s out of 6,612,001 PP shares being issued !
That´s a tiny amount of just under 4% of the PP !
All 6 registered insiders hold a total of:
– 3,131,000 shares
– 1,250,000 options
– 650,000 warrants
Total: 5,031,000 = 10% of the fully diluted share count (50,359,138)
Conclusion: I would still expect some selling over the next 5 weeks, because insider participation in the 2012 PP´s seems not very high !
Maybe the BMR people have different information compared to the official SEDI reports. If that´s the case, I would appreciate full disclosure. Otherwise I go with the officially available infos which tell me that there might be selling pressure coming our way over the next 5 weeks.
FANTOMAS
Comment by Greg — May 22, 2012 @ 6:44 am
Greg, I was referring to the 15 cent warrants from 2011, not the 25 cents from the recent financing…..I’ve checked into this myself….all the 15 cent warrants are held by insiders or very close associates…….
The Sedar filings do not take into account shares under control of insiders. Johnston and his immediate family, for example, hold in excess of 2.5 million shares (from Braveheart)……
Comment by Jon - BMR — May 22, 2012 @ 6:58 am
SRK – Anyone have any thoughts on SRK at current SP. Chart shows RSI just turning up and still O/S, %K at 2.33 and will cross %D if reversal continues. May have touched bottom for now and offering an entry point?
Comment by Andrew — May 22, 2012 @ 8:31 am
I’m waiting for BMR’s take on the GBB N/R… or did I miss it alreaddy…??? just asking..
Comment by Jeremy — May 22, 2012 @ 9:51 am
Thanks Jon
Comment by Greg — May 22, 2012 @ 10:36 am
Sorry, Fantomas. a couple of your posts didn’t get posted right away because of the link – sometimes the system automatically reads that as possible spam which in this case of course it wasn’t. our apologies.
Comment by Terry - BMR — May 22, 2012 @ 6:19 pm