For example we have this chart of SVM. You can see that SVM powered through the almost 4 month resistance of 13.60, and did so on heavy volume. It is always a good sign to see stocks break resistance on heavy volume. It means they are serious, and are very likely to keep going. Now, will it drop below 13.60? Maybe, but don't worry. Even if it does, it will probably just hit the ascending trendline and find support there.
Now, what is the stock du jour? Today, I am continuing on with the silver juniors. This one is not a producer, but rather an exciting explorer. They have properties in mining friendly countries such as the US and Canada. Specifically, British Columbia, Ontario, and the Yukon. Today they came out with a 43-101's for one property today which is Caboose in BC:
Indicated Resources:
383K of gold ounces, 26.5 million silver ounces, 137 million lbs of zinc
Inferred Resources:
443K of gold ounces, 29.5 million silver ounces, 219 million lbs of zinc
So, they have established that there is something there. Without further ado, I give you the chart.
The reason I like Silver Quest Resources is that they are in mining friendly countries, the outstanding shares are around 82 million, it's price will track silver over the long run, and the chart is spectacular. We have a descending wedge which has formed since last September, and just broke out of the wedge 2 days ago on GINORMOUS volume. So, we got some interested parties once again taking an interest in this stock.
Now, here's an interesting twist. Let me set this up with a quick example. I've got a small liquor store on the corner, and you are a customer who is throwing a blow out party next week. So, you approach me and say, if you give me a decent discount, I'll buy out half your stock. Ok, I take less margin, but I make it up on some nice volume. "OK, it's a deal", I say.
Well, from the website of Silver Quest comes this:
Silver Quest Closes Private Placement
The Company has paid cash finders' fees totaling $137,670 and issued an aggregate of 137,670 compensation warrants entitling the holders thereof to purchase such number of common shares for a period of 12 months from closing at an exercise price of $0.75 per share.
The proceeds of the Offering will be used for general exploration expenditures, which will constitute qualified Canadian exploration expenditures, as defined in the Income Tax Act (Canada) and flow-through mining expenditures on the Company's prospects.
All securities issued or issuable in connection with the Offering are subject to a four-month hold period expiring April 21, 2011.
In case you don't like math, here it is. $1,907,124 divided by 2,542,832 is 75 cents. It was trading for less than 75 cents on December 9th (date of private placement), and still is. Do you think someone is going to give 75 cents a share for a stock, when it is trading below that in the market (paying a premium), and not know that this is going to pan out? I highly doubt this investor is looking to take a loss on his investment. When do you pay a premium for something? When you know it's worth more than what it is selling for, that's when. That huge volume pop that we had two day ago, tells me they are probably right.
Buy this before she breaks the 75 cents level. I think I'll be holding this for awhile.
FD - I bought this stock yesterday, so you can get in even lower tomorrow if the price stays the same.
Silver Quest Resources
http://www.silverquest.ca/s/Home.asp
Until the next time...
Fiat Doubter
VHGI could be the next SQI
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