April 30, 2010

Gold Bullion Development Updated Chart

Gold Bullion Development (GBB, TSX-V) enjoyed a strong day today, closing up 2 pennies to 40 cents on nearly 2 million shares. The stock was up 2 cents for the week and has traded a whopping 20 million shares over the last 6 sessions since the company’s Preliminary Block Model was released.

The interest in Gold Bullion is intense, and for good reason: Investors can clearly see the possibility of a multi-million ounce deposit at Granada with drilling set to resume at the LONG Bars Zone sometime next week.

Quite simply, Gold Bullion’s 20,000 metre drill program is going to generate – pardon the pun – MAJOR interest (we don’t just mean a lot of interest, but this will no doubt also grab the attention of the Osiskos and the Aurizons and probably a few others in the neighborhood). Hmmm. Might be a good time, pretty soon, for BMR to head back out to the LONG Bars Zone and camp out for a while, don’t you think? Maybe the Coffin Brothers and a few others will join us…

We know this is serious business but we can’t help but think the coming weeks and months are going to be an incredible amount of fun, especially of course if you’re a Gold Bullion shareholder. Maybe not so much fun if you’re having to split 20,000 metres of core!

So how do things look technically with the stock right now? We called on our expert, Peterborough John, to give us his updated analysis (see below). John remains bullish (“GBB is in a very strong uptrend and it’s only a matter of time before we see the next move up”) but the stock seems locked in a consolidation phase at the moment. Will the start of drilling produce the anticipated breakout? Quite possibly – we’ll have to wait and see. An important point about the high volume over the last 6 trading days – analyzing the action, the stock seems to have “tightened up” which means much of the 7-cent private placement shares that became free trading April 23 have likely mostly been absorbed by the market. That does have bullish implications moving forward.

GBB remains in a very strong uptrend and it's only a matter of time before we see the next move up.

John: Over the last 16 trading days Gold Bullion has moved up from 25 cents to a new all-time high of 42.5 cents in a very orderly manner. For the past 5 days the stock has been consolidating.

Looking at the chart, we can see that the trading formed an upsloping wedge (blue lines), indicating an imminent pullback. On April 23 we saw a doji candle formed which was the first indication that the move might be weakening. On April 26 the stock gapped up to 42 cents at the open, briefly traded at 42.5 cents, then proceeded to gradually weaken – this particular move had run out of steam.

This certainly does not mean the uptrend is finished – far from it. The stock needed to pause to catch its breath, so to speak. If we look at the ADX trend indicator, we see the trend strength line ADX (black) is quite high, over 40 and steady, while the +DI (green line) is above the -DI (red line). This shows the uptrend is still intact and very strong.

For the past 5 days the stock has traded in the range of 36 cents to 42 cents (horizontal green parallel lines). There is no way to tell at the moment how long this consolidation will take. But if the stock price breaks above the 42 cent level on a lot higher volume than normal, then we’ll know the next major move up is likely underway.

Outlook: GBB is in a very strong uptrend and it’s only a matter of time before we see another major advance. The next Fibonacci target level is 62 cents.