We can’t believe our good fortune this summer, as so far we’ve been able to load up on not one, not two, not three, but four of our Vulture Bargain Hunter candidates. We are going to share one of them with all of you in this message. We will share others in the near future. And, with almost a full week before July to go, the summer Vulture season is only just now getting to the “good part!”

We Vultures typically love the next few weeks to a month or so. During the last two weeks of June and the first couple weeks of July it can be a target rich environment for stink bids on the tiny, low-volume small resource companies, especially the ones that saw less than exciting news this past resource company “season.”

We’re talking about companies that really do have the potential for something exciting ahead, they just didn’t deliver what the market was looking for in the 2009-2010 winter season and are now getting thrown out by disgruntled, overly fearful, impatient shareholders that have probably forgotten why they bought shares in the first place.

Proudly Vultures

The reason we call ourselves “Vultures” is because what we do is similar in many ways to what the carrion-eating birds do. To be a Vulture with the tiny resource companies requires a strong stomach, lots of vigilance, an enormous amount of tenacious patience and it requires the ability to act in the exact opposite of what most of the other players are doing.

Being a Vulture is not, repeat not, for everyone. Indeed our experience is that the vast majority of people who try to do what we do tire of it quickly and move on to one or another momentum-chasing game plan. There’s nothing wrong with momentum chasing, it just isn’t our way.

Done consistently and done well, Vulture Bargain Hunting can be enormously rewarding in proportion to the amount of capital deployed. This message won't cover all that much of the Vulture Way, but we will have more about our methods for readers and subscribers as we go forward.

As we look down the list of our preferred “favorites” there are at least another half dozen of the small resource companies that are getting closer to our Vulture stink bid targets. We see several now attempting to form bottom consolidations (BCs) on the charts. Bottom consolidations are our favorite time to attempt an entry with the VBH candidates.

For new readers, nearly all of the candidates on our list made it onto the list as the recommendation (or former recommendation) of some of the best “gurus” in the small resource company biz. We can’t follow all the recommendations of all the gurus. There are just too many of them. So, the ones on the list are the companies that we took a particular interest in along the way for one reason or another.

Either we particularly like the project(s) the company is involved with, or we know and respect management (or both), or maybe it was just that the particular guru that mentioned it was more motivated than usual. The list is constantly evolving, with some of the companies dropping off as others are added.

Some of the companies on our list we have traded in and out of several times over the years. They are like old friends. But in order to stay on the Vulture list, the individual companies need the potential to triple or more over the next two years. That is assuming that we are patient, wait like good Vultures and only add them in either a possible “bottom consolidation” or when the issue has been through bad, but non-life threatening (temporary) retail shareholder disappointing news – causing the share price to get knocked into what we call the Vulture Zone (or sometimes we call it “stupid cheap”).

For example, about a month ago we mentioned Bravo Gold as having moved into the “Stupid Cheap” (SC) range when it careened down to around C $0.205 on shareholder disappointment selling following a less-than-expected resource assessment of their Homestake Ridge gold/silver deposit in B.C.

We happen to think that there will be a lot more good news from Bravo over time, and it has the potential for some spectacular drill news at Homestake if it has some more luck in this summer’s drill program like it did over the past several years. Bravo also recently completed an important geophysical survey on the area surrounding Homestake Ridge, revealing some exciting potential exploration targets for this summer’s drill program in B.C.

Bravo said about that survey: The strong correlation of gold mineralization with potassic alteration suggests that radiometric geophysics could identify new target areas. Anomalously low Th/K ratios, which are indicative of elevated potassium, accurately correlate with the distribution of mineralization in the Main Homestake and Homestake Silver zones and identify a third more widespread potassic anomaly of equal size located to the east of the combine anomalies at Main Homestake and Homestake Silver deposits.

In Texas English we think that means that the survey revealed some previously unknown areas which contain the same good rocks as they found at Homestake Ridge. See the purple on the map. Purple is potentially the “good stuff.” Only the blob of it to the east is under more cover and is potentially larger than even Homestake. These VMS deposits can be quite large, but are often complex.

For all the details on this exciting airborne survey, please visit the Bravo web site at this link: http://www.bravoventuregroup.com/en/index.php?page=projects&projectid=13

Seller/Buyer Imbalances are Vulture Ops

When there are too many sellers and not enough buyers in the small resource companies we follow, especially when the selling is compressed into a small amount of time (just a few weeks in this case), we can see enormously high percentage drops in the price of the issue before it gets to a level that garners overwhelming support. These thinly traded juniors sometimes get sold down so far it is kind of embarrassing. People not familiar with the penny stock world cannot understand that this kind of action is actually common. It is what makes Vulture Bargain Hunting so darn much fun.

As a reminder "stupid cheap" doesn’t mean we think the sellers are stupid or in panic or anything like that. “SC” doesn’t mean the stock can’t get even cheaper, … they often do. It is difficult in the extreme to guess bottoms in advance in a negative liquidity environment. When there are more sellers than buyers the price will fall and keep falling until either the sellers give up, run out of shares or someone decides that the price is just too darn low and steps in to buy, and buy often and in size.

The term Stupid Cheap is a price that we think we will look at one year from that date and say to ourselves, “Man it was stupid not to buy some back then.” Stupid Cheap is different than a bottom consolidation, but they sometimes coincide. Stupid Cheap means there have been so many sellers into few or no buyers that the price has been crushed, smashed, obliterated, decimated (and so on).

At some point as these promising companies get pummeled, the price reaches the level at which some of the smartest money in the game decides that they can now accumulate the issue - in size. These bigger, smart-money players leave tracks in the data and on the tracking charts. We Vultures learn to read and to rely on those tracks over time.

Although the disappointment selling continues and volume stays elevated for a time we Vultures notice that the price suddenly has difficulty moving any lower. Then we notice larger than normal bidders camped out at and just underneath the bid. We notice other signs as well, such as consistent buying of the shares by insiders and frequent larger-than-normal block trades, often into the offer.

Sometimes a pattern emerges following a big smash down as the issue consolidates – often testing the low on multiple occasions, but not breeching it for more than a few days. When that kind of pattern emerges on an issue we have high hopes for in the future, that is when we say it is attempting to form a “bottom consolidation” or “BC.” The shares end up trading in a rectangular or triangular formation, with advances capped by the still anxious sellers, but with obvious and staunch support keeping the shares from moving any lower.

What is happening behind the scenes during that time is that some deep-pocketed, long-term minded investors/speculators have determined that the issue has been unreasonably sold down too far and they begin accumulating the stock at or just under the prevailing bid. Whenever a selling thrust knocks the price to the bottom of the BC, there is enough buying pressure to keep it there and/or to move it back up into the BC. We Vultures love that kind of action. We live for it!

As a prime example, back on May18 we disclosed we were buying BVG.V, we thought it had become Stupid Cheap then and had added a rare green box to the graph. We have since then added to our position in size. Speaking of the graph, here it is:

(If the image is too small click on it for a larger version.)

We use a purple box in our tracking graphs to denote where we think support has a good chance to form. We use that box a lot and that’s where we often end up taking some of our normal-sized trading positions.

Rare Green Boxes – Where We Add in Size

Every once in a while we will have a confluence of issues come together to drive one of our favorites way, way below where we think it ought to be. In those rare cases, … when we think that the issue has been unfairly sucked into a pure liquidity vacuum and unmercifully pummeled, … when we believe that the issue has become ridiculously, stupid cheap, then and only then will we use a rare green box for the target. Very often, but not always, that green box ends up being a bottom consolidation, which again is our favorite, potentially rewarding opportunity to add shares of these small resource companies.

Note several things about that graph just above. First note how oversold Bravo Gold became in late May and compare that to the volume for the period. Volume certainly was elevated then, but it was nowhere near the kind of volume that could justify such a horrendous drop in price on a percentage basis. What that means is that there was a selling/buying imbalance for shares of BVG, but there was not a wholesale shareholder exodus from the stock.

Notice also that Bravo is attempting to form overwhelming support in almost exactly the same region it did during the 2008 panic crash. Bravo has since distributed out to shareholders shares in a spin out called Bravada, which contains Bravos’s Nevada properties, but we think people have forgotten that Bravo still holds a good chunk of the capital stock of Bravada. We think based just on their Homestake Ridge property/prospect BVG is grossly undervalued and deserves a much higher price. Their 11-million share stake in Bravada is icing on the Bravo cake.

At any rate, we believe that the trading for Bravo rates a rare green box right here and right now. We have already accumulated all the shares we want in this green box, but we believe so strongly in Bravo’s management and in their Homestake Ridge prospects, that should the trading move even lower, even below our green box, we will be even more motivated to add to our just under 1% of the company stake in BVG.V.

Our good friend and exceptional small resource company guru Eric Coffin of Hard Rock Advisors fame said yesterday, June 24: “I’m probably going to put some bids in on Bravo myself. Two rigs are turning and I think if they can get some luck on the other targets they can get some market relief.”

According to Ink Research, BVG insider Bob Swenarchuk seems to agree with us on that. Since June 16th Bob has been adding to his own personal shares of the company as shown in the table just below.

We are glad to see that Swenarchuck was adding shares at the same time we were!

As with all these very small junior explorers and soon-to-be-producers, the shares are highly volatile, subject to wild swings in price and they are not for everyone. Please do not rely solely on our commentary and instead please take the time to do plenty of your own due diligence before even thinking about adding these risky, but promising shares to the high-risk portion of a portfolio. As with all small resource companies we hold, we think Bravo has an excellent shot at significant gains over time – if the world holds it together.

Having said that, we could be wrong and have been before, so caveat utilitor.

With those disclaimers we are calling Bravo Gold (TSX:BVG.V or BVGIF) our first official Vulture Bargain as of June 25, 2010 with BVG.V trading in Canada at 18 cents a copy. Bravo is no longer just a candidate, it's a bargain! We are long shares of Bravo and will likely add to our position in the near future opportunistically.

Vulture Bargains 2010

#1. Bravo Gold (TSX:BVG.V or BVGIF) at C$0.18 June 25. Possible bottom consolidation C $0.17 - $0.225. Summer drill program near-term catalyst.

That is all for now, have a great weekend. We will be scarce for a few days traveling, so hold down the fort!