BCSC Issues Cease Trade Order for Barkerville

Wednesday August 15, 2012, 11:47am PDT

Barkerville Gold Mines Ltd. (TSXV:BGM) announced that after filing a technical report that does not meet NI 43-101 requirements, it received a cease trade order from the British Columbia Securities Commission that is effective from August 14.

As quoted in the press release:

The Company is advised that the cease trade order will remain in place until the Company files a technical report acceptable to the BCSC and addresses all technical disclosure concerns. The Company is working diligently to address the BCSC’s concerns and will file a revised technical report for the BCSC to review as soon as possible.

Our target was 15 cents, who knows what will happen next.

Bakerville is a small place in BC. Once upon a time, about 1860, it was the largest town north of San Francisco and west of Chicago. It was the focus of yet another gold rush  along the Western coast. This company has a big stake a little north of this particular spot, so one can say with absolute certainty that there is gold in them mountains but, and this is the question, how much? Well to start, 10.6 mln. indicated ounces at Cow Mountain, an Alpine setting  that would make Julie Andrews do one of her favourite things. Furthermore there was, according to a company statement, geological potential for , possible, 90 mln. ounces at the mountain. An absolutely huge amount. Some have expressed doubts about the methodology used and therefore the results but I am gullible to a fault and just look at the waves;

It is good to start off big as it puts things into perspective, especially if your newspaper only shows a chart the size of the little square in the bottom right-hand corner. There are a few points to wonder about. What happened during the 4 years the stock was AWOL? And then the last 6 years the stock shows no pulse at all. Needless to say, the stock was never really at 12000, that happens only due to reverse splits.A chart from the G&M reveals that there is life;

From the low of 15 cents in 2008 the stock moves up in a perfectly clear A-B-C, counter-trend, correction. Ergo the stock should trade below 15 cents someday soon. There is no plausible alternative count that I can see unless one assumes a “failure” in the latest leg down in which case we could conceivable have just started a new bull. I would tread carefully!

This is Barkerville Goldmines Ltd., a blue chip that trades on Vancouver and is, so at least the name suggests, active in digging gold, or, considering the length of its existence, trying to find it. This is how wealth is created or destroyed but EW works best with more participants, so the more the merrier certainly should apply.

One thing that is interesting about this chart is that both legs up are precisely equal in both magnitude and direction. This often happens when one is looking at a 1-2, 1-2 series of waves, more or less the way a duck or goose takes-off from water. If this pertains then the stock should, more or less follow the arrows as drawn (they too are drawn vector equal) , up nine blocks , down 5. Given the light grey lines that have till now defined the degree of freedom that the stock enjoys, a low of about $1.35 over the next month or two should hold the stock. It is already at the moving average and both the RSI and MACD have turned (hopefully).

The bearish case typically would be an A-B-C correction from the lows with the continuation of the bear starting from $2.20; this is not a believable scenario with a stock that already traded at pennies. Nor for that matter is any other bullish scenario as in 1-2,3,4,5. due to the overlap occurring at at least two different degrees. In short , expect wave 3 up to start soon . A stop at about $1.30 might be a sensible thing were it not that this is an all-or-nothing trade. You are, sort of, in the position that Watson found himself with this stock, on a rock and a hard place.