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November 9, 2012

BMR Morning Market Musings…

Gold has traded between $1,728 and $1,740 so far today…as of 4:40 am Pacific, the yellow metal is down $1 an ounce at $1,731…Silver has lost 19 cents to $32.12…Copper is down 4 pennies at $3.42…Crude Oil is 27 cents lower at $84.82 while the U.S. Dollar Index is up more than one-tenth of a point to 80.97…the fact Gold is higher this week (up more than $50 an ounce) despite a stronger greenback is interesting indeed…the Dollar Index is now touching a major resistance band between 81 and 81.50…

China Releases Positive Economic Data

Some widely watched economic indicators showed today that the world’s second largest economy was on a path to recovery…October retail sales rose 14.5% last month from a year ago, compared to forecasts of 14%industrial growth output quickened to 9.6% year on year, beating market expectations for a 9.4% rise…China’s fixed asset investment also rose 20.7% in the first 10 months from a year earlier, higher than expectations for a rise of 20.6%…Haibin Zhu, chief China economist at JPMorgan, told CNBC that the latest round of data point to further “upside surprises” out of the mainland economy going forward, adding that growth in the fourth quarter may outpace his current expectations of 7.4%…“Overall, this data shows a broad-based improvement…the recovery is gaining traction,” he stated…meanwhile, less-cited indicators such as electricity consumption – seen as a proxy for growth – also mounted a significant recovery last month, rising 6.4% from a year earlier, its best performance since March…in addition, China’s annual consumer inflation eased to 1.7% in October from September’s 1.9%, leaving policymakers with some scope to tweak monetary policy if necessary to shore up growth…

Consumption is becoming an increasingly important component of the Chinese economy, accounting for 55 percent of GDP growth in the first nine months of the year, outpacing the share of investment, which contributed 50.5%…continued financial reforms by the Chinese in the years ahead are expected to help facilitate the trend away from an export-led economy to a more consumption-focused economy…

China, India Economic Output To Exceed Entire OECD Output By 2060

The combined economic output of China and India will exceed that of the entire 34-nation OECD bloc (Organization for Economic Cooperation and Development) by 2060, the group said in a report published this morning…China, currently the world’s second biggest economy, is forecast to grow at an average pace of 6.6% from now till 2030, and 2.3% from 2030 to 2060…the projections for India, the 10th largest, are 6.7% and 4%, respectively, the OECD said…in comparison, the 34 OECD nations are projected to grow an average of 2.3% per year from now till 2030 and 1.7% from 2030 to 2060…

Today’s Markets

Asian markets were down slightly to moderately overnight with China’s Shanghai Composite shedding 2 points to 2069 despite a slew of positive economic data…European shares are off marginally this morning while stock index futures in New York as of 4:30 am Pacific are pointing toward a slightly negative open on Wall Street…the Dow has suffered 7 triple digit losses over the last 21 sessions…the Dow and the Nasdaq are both closing in on their 300-day rising moving averages (SMA’s) which have provided strong support over the past year…the Venture Exchange, buoyed by another friendly takeover yesterday, gained 8 points to 1299…the Venture is showing terrific support in the immediate vicinity of its 50-day SMA, and the 20-day SMA is now reversing to the upside after trending down for the past month…

Huldra Silver (HDA, TSX-V)

One of our favorite Silver plays hit a new 50-week high yesterday as Huldra Silver (HDA, TSX-V), which has started production from its high-grade Treasure Mountain Property near Hope, British Columbia, climbed 19 cents yesterday to close at $1.69…Huldra is guided by a smart and aggressive management team that has fast-tracked this property into production, and Treasure Mountain also has strong upside exploration potential which we expect the company to test through a major drill program next year…the story is not well known yet in the general retail community with the stock held mostly by institutions…below is an updated chart from John which shows a breakout above the top of a symmetrical triangle…one can only imagine how HDA (and other Silver situations) may perform next year if the metal were to really bust loose as we believe it will…

Rainbow Resources (RBW, TSX-V) – Moving Fast On The Discovery Trail

We do have some astute readers at BMR, and sometimes they can sum things up better than we can…Rick posted last night, “This news has done for me what Obama did for Chris Matthews a few years ago…a thrill up my leg”…all kidding aside, Rainbow Resources (RBW, TSX-V) has been busy drilling holes into the ground in southeast British Columbia and Nevada, when far too many Venture companies have been too afraid to do much of anything in this market, and the first fruits of that labor are beginning to appear based on news that came out shortly after yesterday’s close…what we’re going to do this morning is walk our readers quickly through what we consider to be some very significant information that was revealed yesterday, beyond the fact we all have to wait a little longer for International assays…

Rainbow is certainly not a one-trick pony which is a major reason we’re so excited about this opportunity…this is a company that quietly assembled some of the best prospective Gold-Silver properties in the West Kootenays, 13,000 hectares in total plus a flake graphite package in the immediate vicinity of western North America’s only producing flake graphite mine, and cut a deal to earn a controlling interest in a Gold property with one of the hottest addresses in all of Nevada…

Jewel Ridge – Nevada

Some companies on the Venture this year have seen their share prices double, triple or quadruple simply by being able to replicate historical drill results in Nevada and reinterpreting past producing situations given a much more favorable Gold price environment vs. five or 10 years ago…that’s exactly what Rainbow has a great chance of doing prior to expanding its drilling strategy at the Jewel Ridge Property…yesterday, Rainbow announced that it has hit the contact zone between the Hamburg Dolomite and the Dunderberg Shale with “intense silicification” observed throughout each hole…this is important because a) intense silicification is one of the very encouraging clues from RC drilling in that area as it’s an important characteristic of Carlin-type disseminated sediment-hosted deposits; and b) the 2004 hole that intersected 2.1 g/t Au over 39.6 metres near-surface was drilled “sub-parallel to and within 15 metres of the Hamburg-Dunderberg contact” according to the news release at the time…in addition, “High-grade zones typically occur at and near the contact between the Dunderberg Shale and the Hamburg Dolomite” as reported by Timberline Resources (TBR, TSX-V) on page 49 of its April, 2012, NI-43-101 technical report on the Lookout Mountain deposit which is immediately adjacent to Jewel Ridge…so Rainbow appears to be intersecting the right structures so far, and they’ve already stated their initial holes are targeting the best historical drill results at the Hamburg Pit…Rainbow is also going a little deeper than previous drilling (still at open-pit depths but 1 g/t Au below 100 metres works great with $1,700 Gold now but didn’t back in 2004 or earlier)…Barrick Gold’s 3.5 million ounce Ruby Hill mine is contiguous to the northern border of Jewel Ridge while Timberline’s growing 600,000 ounce deposit is just a couple of kilometres to the south…it’s all the same geological structure with past producing open-pits lined up on a north-south basis…a few run right through Jewel Ridge including the Hamburg Pit…it’s one thing to drill previously undrilled ground (the risks are higher) – it’s quite another to be drilling into an area where there have been previous holes, and ones that assayed very well…

Gold Viking – RBW’s West Kootenay Sleeper?

Rainbow has obviously hit some very interesting core with what appears to be a lot of pyrite in two separate areas on the Gold Viking property, 1,000 metres apartGold deposits in this region are typically rich in pyrite but you’ll hardly ever see any visible Gold – it’s disseminated throughout the host rock, and the values can add up in a hurry…on our trip to the West Kootenays this past spring, an experienced prospector told us he found a rock in the Slocan area that most people would have simply tossed away…there was no visible Gold but a couple of features caught the oldtimer’s eye…he sent it to the lab and it came back with an assay of 28 g/t Au…what we know from yesterday’s news from Rainbow is that the company has intersected a potential stockwork vein system (that’s very good) with plenty of pyrite (disseminated to coarse or intense), breccia zones and mafic dikes…while it’s still very, very early in the game, the clues are all there that RBW is at least on the edges of a possible discovery if they haven’t made one already…they were also drilling into a prominent and coincident geophysical and geochemical anomaly, and there are historical adits throughout the property (we counted at least 10 on our visit) which is another positive indication of the current Gold potential…keep in mind, as Discovery Ventures (DVN, TSX-V) pointed out just recently, the Slocan Valley is one of the most highly mineralized regions of B.C. for both precious and base metals…since the late 19th century, the Slocan mining region has hosted more than 20 mining/milling operations and about 200 additional mines that have shipped ore to custom mills and smelters…Discovery’s plan is to put the Willa deposit, just 8 miles north of Gold Viking, into production as quickly as possible and that would obviously open up some interesting opportunities for Rainbow if a deposit can be found at Gold Viking…the fact Rainbow is already considering a Phase 2 step-out drill program over the winter, as announced yesterday, is a pleasant surprise as previously it was felt that there would be no drilling of any of Rainbow’s West Kootenay properties over the winter…

Gold Viking is on the outskirts of the high-grade Silver-lead-zinc areas of the Slocan Valley and that’s an important point…”On the outskirts of the Silver-lead-zinc areas, generally in or approaching granitic bodies, deposits essentially barren of lead-zinc values carry important values in gold,” stated W.H. Matthews in a 1944 B.C. Department of Mines Bulletin (No. 20, Part 2) that we discovered on the Internet yesterday as part of our research for this morning’s report…”It may be that prospecting in or near these or similar sections will reveal the presence of other lode-Gold deposits,” concluded Matthews…

International Silver Property

Rainbow’s International Silver Property is a terrific prospect given its multiple high-grade showings over a wide area and an important discovery that was made in the early 1900’s, about a kilometre to the north of where RBW was drilling in August and September…there’s an old adage in this business that good news travels by Fed-Ex while bad news travels by carrier pigeon…while there’s never a “sure thing” in the exploration business – initial International results, like Gold Viking, Jewel Ridge or any property – could turn out great or not so great – we caution investors not to jump to any conclusions simply because no assay results for the International have been released six weeks or so after drilling ended there…just one classic example of investor impatience that cost some of our readers an opportunity to make huge profits occurred in 2010 when assay results were very slow in coming in for Seafield Resources (SFF, TSX-V) which was a one-trick pony at that time with its Colombian project…a lot of investors gave up on Seafield but we didn’t…finally, in early December of that year, Seafield finally came out with numbers and they included a monster hole from the Miraflores deposit that sent the stock through the roof from the low 20’s to nearly 80 cents in a single day on incredible total volume of 100 million shares…

Rainbow – Only Needs To Go 1-For-3

In baseball, you’re an all-star and a batting leader with a .333 average…all Rainbow needs to do is hit at either the International, Gold Viking or Jewel Ridge in the days and weeks ahead, and investors should be handsomely rewarded…this was Rainbow’s strategy from the beginning as they made it very clear these were the three properties they would focus their drilling and discovery efforts on in 2012…they have honored that commitment, even in the face of one of the worst bear markets we’ve ever seen…some investors have under-estimated RBW all along, even suggesting over the summer that they wouldn’t be able to secure all their drill permits or even raise the capital necessary to forge ahead…aggressive juniors with exciting early-stage plays like Rainbow offer investors the kind of leverage they simply can’t find anywhere else…in May, we were writing about GoldQuest Mining (GQC, TSX-V) when it was trading at just 6 cents…within a couple of weeks it turned into a 10-bagger…the real success stories are certainly the exception, but to enhance your chances you look for companies that are working hard and working smart with high quality properties and RBW certainly fits that description…we encourage investors to say focused on the “Big Picture” with Rainbow as it has a lot of irons in the fire and a real opportunity at an exploration breakthrough before the end of the calendar year…

Discovery Ventures (DVN, TSX-V)

Discovery Ventures (DVN, TSX-V) continues to perform exceptionally well as it works toward completing an LOI to acquire an 80% interest in the Willa deposit north of Gold Viking…if DVN is successful is putting the Willa into production, this will certainly have a major impact on exploration and development in the immediate area…at yesterday’s 30 cent close, DVN’s market cap is approximately $7.2 million…below is a 2.5-year weekly chart from John…the first big clue that something was up with DVN was when it broke through its down trendline that had been in place since early 2011…this has occurred in many other stocks as well which supports a bullish case for the Venture in the months ahead…

Gold Bullion Development (GBB, TSX-V)

Gold Bullion Development (GBB, TSX-V) released a series of assay results from backlogged core yesterday that we will be reviewing in more detail over the weekend, but in general the results appear consistent with previously reported holes that support a growing resource at the property over a wide area…this will put a floor of value underneath GBB…our contention all along has been that the LONG Bars Zone has multi-million ounce open-pit potential but it has to be drilled aggressively…hopefully that’s the direction GBB can take things in 2013…we have no doubt Osisko Mining (OSK, TSX) is watching developments closely at Granada with an updated NI-43-101 resource estimate update from GBB expected by year-end…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) continues to recover after finding strong support at its 200-day moving average (SMA) around 70 cents…over the last 7 sessions the stock has climbed by 50% after touching a low of 67 cents…GQC has advanced for 6 straight trading days and closed yesterday at $1…key short-term resistance at the moment is $1.05…the 50 and 100-day SMA’s are currently just above $1.20…John’s 6-month weekly chart shows how RSI(14), after being overbought from mid-May through the middle of September, likely recently found a bottom just above 40%…keep focused on the “Big Picture” with GoldQuest as Romero is a major discovery that could yet deliver more outstanding results…

Continental Gold (CNL, TSX) Chart Update

Continental Gold (CNL, TSX) is making terrific progress with its Buritica Project in Colombia and the stock hit a new 52-week high yesterday of $10.02…below is an updated 2.5-year weekly chart from John…notice the breakout from the downsloping flag, a throwback to the top of that flag to test new support, and then a strong push higher…

Note: John and Jon hold share positions in RBW while Jon also holds positions in HDA and GQC.  Terry holds a share position in GBB.


  1. Do you see a cup and handle formation on the 1 year chart of HDA with the bottom of the cup at $1 and the top at $1.50 with a breakout that just occurred? As I understand, the short term price target would be the difference (1.5 – 1 = .50) + the breakout point (1.50) which would give a target of around $2. Is this correct?


    Comment by Radu — November 9, 2012 @ 5:51 am

  2. Excellent reports on RBW !!! It will be HUGE return for the patient investors.

    Comment by Dan — November 9, 2012 @ 6:05 am

  3. Awesome work bmr.appreciate the DD you guys do.

    Comment by Greg j — November 9, 2012 @ 6:09 am

  4. Good Job BMR.
    I think those who are on board will definately get the rewards of RBW and those who sold their portion will regret.

    Comment by Eric Benson — November 9, 2012 @ 6:37 am

  5. After checking the stock price this morning the thrill is gone but gee it was good while it lasted.

    Comment by Rick — November 9, 2012 @ 7:08 am

  6. I think it is time to stop dreaming about RBW now unfortunately.

    Comment by Don — November 9, 2012 @ 7:18 am

  7. Hi Radu

    Yes, you could be right. There is also chart resistance at 2.00.

    good luck.

    Comment by John - BMR — November 9, 2012 @ 7:48 am

  8. Any holders of CEV? These look like bottom of the barrel prices. Cant go wrong at 25 cents

    Comment by OldMan — November 9, 2012 @ 7:49 am

  9. @ don. Do you care to elaborate on thst claim with some or any sort of intelligent dd or are you happy leaving everyone to think you are indeed as empty as your post!!!! I won’t expect a response as I see you avoided my questions yesterday as well.

    Comment by Heath stockford — November 9, 2012 @ 7:59 am

  10. Don,

    Save your dumb comments to yourself – clearly there are a lot of people relying and/or hoping something happens with it.

    If you don’t like it, or you think it is unrealistic for it to do well, then sell your position and move on you twit. The guys from BMR clearly put in a lot of work here trying to do research for us (call it pumping or not).

    I’m holding more shares in RBW right now, then 3 generations of your family could probably afford, so turn your ass around and leave please, before i send for backup (Jon lol).

    Terry, if you actually post this i’d appreciate it….

    GO RBW GO!! Alex and I are going to be rich! lol

    Comment by Avo — November 9, 2012 @ 8:23 am

  11. Thanks BMR for the RBW update, patience is the key, after holding both GQC and CQX for over a yr I ended up selling them and missed their spectacular runs. Not going to do that with RBW hopefully it will not disappoint….

    Comment by Greg — November 9, 2012 @ 8:31 am

  12. anyone have any TA thoughts on HRN. Horn Petroleum?

    Comment by George — November 9, 2012 @ 8:50 am

  13. Same here, I also hold a sizeable position of GQC at one time and sold because I got tired of waiting. Missed out on that runs as well.

    Comment by Jason — November 9, 2012 @ 8:57 am

  14. Avo, your attack on Don is pretty sad. I’m sure you are very wealthy. If you are that unsure of your investment that someone questioning it can generate that kind of ire, you should find another hobby. I’ve got a lot of RBW, but clearly not nearly as much as you, but to attack someone shows no class.

    Comment by Mike — November 9, 2012 @ 9:01 am

  15. OldMan- Just started picking away at some shares below 25c this week. I agree that this is could be the bottom. i feel they will start walking this up in the new yr… PEA expected around spring…

    Comment by db — November 9, 2012 @ 9:12 am

  16. BMR – are you picking any RBW shares up or do you think we’ll have a chance to scoop some cheapies at 14-15? Do you think it will go there assuming no unfavorable news? Or do you think this will creep back up to the high teens into 20 again once all the weak share positions exchange hands?

    Comment by alex — November 9, 2012 @ 9:14 am

  17. RBW 286,000 shares on ask .18

    Comment by robert — November 9, 2012 @ 9:32 am

  18. robert you’re way off with that pal

    time to update your brokerage account.

    Comment by alex — November 9, 2012 @ 9:59 am

  19. Mike, do not make me buy you too. Lol rbw go go go !!

    Comment by Avo — November 9, 2012 @ 10:00 am

  20. Alex, yes, I picked up some more this morning and yesterday between .16 and .17 (35,000). I can’t speak for Terry or John.

    Comment by Jon - BMR — November 9, 2012 @ 10:48 am

  21. BMR thanks for all the good work you guys do

    I see no mention though of the GRAPHITE projects that RBW.v have

    It might be worth a mention

    Comment by ChartTrader — November 9, 2012 @ 11:14 am

  22. Thank u, I thought I made a brief mention of that this morning. That’s a nice asset for the company which, depending on developments in that area and in the flake graphite market, could allow for a potential spin-out as a dividend to shareholders. Right now the market is focused on the gold and silver plays.

    Comment by Jon - BMR — November 9, 2012 @ 11:39 am

  23. Did RBW ever do the interview with Stanlie Hunt from Smartstox? Also would the drill result analysis at Gold Viking and Jewel Ridge be a faster process if it wasn’t doing as wide an analysis of different minerals as International?

    Comment by Justin — November 9, 2012 @ 12:10 pm

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