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March 5, 2012

BMR Morning Market Musings From PDAC…

Gold is slightly weaker this morning but important support levels are still holding…as of 5:30 am Pacific, the yellow metal is off its low ($1,694) but down $7 an ounce at $1,704…physical buying typically becomes a factor during any periods of short-term technical weakness in Gold, and that trend is likely to come into play again as Chinese and Indian buyers in particular step up to the plate…investors purchased some 350,000 ounces of ETF held Gold (now 78 million+ ounces total holdings) on the worst trading day of the year last Wednesday which bodes well for the “big picture” outlook…Silver is down 30 cents to $34.43…Copper is 3 cents lower at $3.85…Crude Oil is relatively unchanged at $106.63 while the U.S. Dollar Index is down just over one-tenth of a point at 79.31…

Stock index futures as of 5:30 am Pacific are pointing toward a rather boring start to the week, at least at the open…

China To Stimulate Domestic Demand

China’s premier has warned that growth will slow this year in the world’s second-largest economy as the government seeks to overhaul the country’s “unbalanced, uncoordinated and unsustainable” development model…Wen Jiabao, who is scheduled to step down as premier during this year’s Chinese leadership transition, said the government had set a target for GDP growth this year of 7.5%, the first time since 2004 that the annual target has dropped below 8%…however, targets set by the government each year are usually very conservative, allowing them to be exceeded comfortably, but they are regarded as a useful indicator of Beijing’s economic intentions…as China gears up for a once-in-a-decade leadership transition later this year, when most of the ruling Communist party’s top officials will be replaced, the government has made structural reforms its #1 priority…“Expanding domestic demand, particularly consumer demand, which is essential to ensuring China’s long-term, steady and robust economic development, is the focus of our economic work this year,” Wen stated…that marked a distinct shift in emphasis from last year when the Chinese premier said curbing persistently high inflation was the key economic policy for 2011…this is market-bullish in our view and should help Gold as well…

PDAC In Toronto

It’s Day 2 at a busy and successful PDAC in Toronto…as an investor in the junior resource sector, if you’ve never attended the PDAC show we would highly recommend that you do as it is very educational…the gentleman below is one who would benefit greatly from time spent inside the Convention Centre as opposed to on the sidewalk across the street…

What can we say...it's a free country and no matter how wrong a person's opinion may be, this protestor outside PDAC Saturday was exercising his right of free speech.

Inside the Convention Centre, there are a multitude of seminars and workshops in addition of course to company booths and special gatherings where investors can hook up with management…it is indeed the world’s premier event for people, companies and organizations connected with mineral exploration…nearly 30,000 attendees from over 100 countries are expected during the four days…

There is no shortage of publicly-traded companies and industry-related companies and organizations to check out at PDAC 2012 with a total of about 1,000 exhibitors.

The “Core Shack” is always an interesting place to hang out and below is a picture of the very high-grade Gold that Manitou Gold (MTU, TSX-V) intersected at its Kenwest Property early last year, which reminded us that MTU in the low 40’s is looking quite attractive as it continues to develop Kenwest and the Gaffney Extension…

This core sample is from hole KW-11-26 that Manitou reported almost exactly a year ago (1,566 ounces per tonne over 0.55 metres near-surface) at the company's Kenwest Property near Kenora in northwestern Ontario.

Newsletter Writers Speak Out

Below are comments from various newsletter writers/analysts yesterday at PDAC on the state of the markets:

John Kaiser (www.Kaiserbottomfish.com)

“Silver is becoming revived again as an asset class…it had become an industrial metal but at current prices it’s going to shift out of its industrial uses and be accumulated…so I see something like a $40 to $60 range as the new norm for Silver.”

Jeb Handwerger (www.goldstocktrades.com)

“The risk-on rally began in early October due to record breaking stimulative measures, measures from the ECB, China, the U.S. and Japan…it’s very hard to fight the Federal Reserve which is constantly pushing money into the system…this run into cash and treasuries, this irrational run in 2011, was really a very dangerous move and there are a lot of investors still on the sidelines, a lot of capital that’s going to come back into the market…we’re seeing that in one sector that I’m really excited about, the uranium sector.”

Lawrence Roulston (www.resourceopportunities.com)

“The key point right now is that we haven’t had a big run-up in the markets…when the market pulls back in May, it’s after there has been a run-up…if it does run between now and May, lock in some profits in May…but if it just kind of goes sideways like this, focus on building positions in high quality select companies…and then look for news to keep driving the markets.”

Greg McCoach (www.miningspeculator.com)

“Have confidence in your investments…get ready because the precious metals mining stocks, because of QE3, are about ready to run to their next new highs…we’re going to have a big, big run here…take your positions now…as we have a good profitable run, make sure you take some profits”…

“In my opinion, governments and their central banks can’t prevent what’s coming…they cannot stop what’s coming…all they can do at this point, all they have in their political and financial tool bag, is their QE to infinity, like Jim Sinclair talks about, lying, deceiving and criminal behavior…so that’s basically what you’re going to see…that’s all they can use as tools…

“Let’s just take this past Wednesday…we had a criminal event that just took place…the media makes Mr. Bernanke look like he’s some God…I call him Ben ‘The Deceiver’ Bernanke…he used this testimony before Congress as a platform…it was an orchestrated event in my opinion to knock Gold and Silver down which has very little effect…this to me shows you that Gold and Silver prices are getting ready to really rock ‘n roll…and our junior mining stocks, when you see QE3 unfolding as it has already started to, this is making QE1 and QE2 look like child’s play…we are going to see a big bull run I think in our junior mining shares again as precious metals prices reach new highs”…

Rainbow Resources (RBW, TSX-V)

As we mentioned Friday, Rainbow Resources’ (RBW, TSX-V) chart is looking phenomenal and we believe that speaks to the potential of this situation which should become much more apparent in the coming days and weeks as President David Johnston has promised steady news flow…Rainbow, like quite a few other companies during PDAC, will be holding an “event” tomorrow night at a popular Bay Street restaurant…below is John’s latest RBW chart which shows a potential near-term Fibonacci level of 37 cents…that’s not a price target, just a theoretical level based on technical analysis that RBW could attain over the near-term…RSI has unwound somewhat, and a bullish ascending triangle has formed…

Note: John and Jon both hold positions in RBW (Terry does not).

RJK Explorations (RJX.A, TSX-V)

A company on one of our “Watch” lists that we’re keeping a close eye on is RJK Explorations (RJX.A, TSX-V) which has started a 2000-metre Phase 1 drill program at its Blackwater East Gold Property in central British Columbia…this property is contiguous to New Gold Inc.’s (NGD, TSX) Blackwater-Davidson multi-million ounce Gold deposit…RJK has been strong recently and closed Friday at 21 cents, just a penny below resistance as John outlines in the chart below…waiting for a pullback of a few pennies probably makes sense as RJK is likely not ready just yet for a major breakout, though that scenario could unfold after an unwinding of the current overbought condition…

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

Golden Predator (GPD, TSX)

Golden Predator (GPD, TSX), with a strong presence in the Yukon, is a company we expect to perform very well in 2012…GPD announced a $17 million financing last week though we are disappointed most of the those dollars being raised are from flow-through shares…nonetheless, GPD will be well-positioned financially to advance its flagship Brewery Creek Project…below is John’s chart update on GPD

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


  1. Canaco’s time to take a hit!

    Comment by Martin — March 5, 2012 @ 6:51 am

  2. I would suggest that investors may be listening to the Varmints with the signs,
    rather than the folks inside the pdac., according to how we are trading down today.

    Comment by Bert — March 5, 2012 @ 7:54 am

  3. GALE:US was the stock to be in!

    Comment by Andrew — March 5, 2012 @ 9:31 am

  4. RBW

    This will unwind the RBW indicators from overbought.

    Comment by Bert — March 5, 2012 @ 10:06 am

  5. buy gold for 10 dollars a ounce in the ground take a look at fdn

    Comment by gil — March 5, 2012 @ 10:42 am

  6. RBW.v has to hold this level or (imho) down she goes
    a lot of indicators are turning negatory
    that would suggest careful /w finger on the trigger

    Comment by ChartTrader — March 5, 2012 @ 10:52 am

  7. I agree with the people with the signs. Some Canadian companies ARE profiting from human and more specifically child exploitation in the Congo. Varmints? Really??


    Comment by Hugh — March 5, 2012 @ 12:05 pm

  8. Thank you,Hugh – I agree with you. The people with the signs are perhaps originally from the Congo too? There are some sectors and some companies that I don’t invest in even if the potential returns are attractive.

    Comment by Andrew — March 5, 2012 @ 12:13 pm

  9. Couldnt agree more Hugh. For a so site who approach the handling of money from a biblical perspective, there does seem to a be an attitude of looking down there nose at those less fortunate.
    Lets hope there isnt reincarnation, as Karma may just turn the tables and see them on the other side of the coin. If people believe there isnt corruption and brown paper bags changing hands between public companies listed on Canada,London etc in countries like the DRC then they need to open there eyes.

    Comment by Mark — March 5, 2012 @ 1:06 pm

  10. The caption under the photo is a little troublesome: “What can we say…it’s a free country and no matter how wrong a person’s opinion may be, this protestor outside PDAC Saturday was exercising his right of free speech.” It’s almost a fait accompli, and unfair to say that the person’s opinion is wrong – he probably has more knowledge of what’s happening in Congo than any of us. I think the statement is too extreme it could even be said to be fascist. It would be fair to the protestors to retract the statement in my opinion and take some time to understand what hardships there are in third world countries that we are often ignorant of.

    Comment by Andrew — March 5, 2012 @ 1:34 pm

  11. Did you know that there’s a curse surrounding the PDAC & today believers of that curse were
    saying, we told you so !!!

    Comment by Bert — March 5, 2012 @ 4:06 pm

  12. For CQX holders,


    Comment by Martin — March 6, 2012 @ 5:40 am

  13. […] year I spoke at PDAC in March of 2012 and was quoted in Bull Market Run as saying, ““The risk-on rally began in early October due to record breaking stimulative measures, […]

    Pingback by Be Confident When Others Are Fearful of Precious Metals | Gold Stock Trades — February 21, 2013 @ 11:09 am

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