The seller TD and possibly others appear to be setting up a short position in Louvem shares. It's not too difficult witnessing what is currently taking place. Keeping a close eye on the Gold/XAU ratio trading, it appears that gold will be outperforming the gold stocks for a short period of time ahead. The CDNX Index appears to be holding better than the major gold and silver indexes and may be indicating a temporary public froth in here which is spelling internal weakness for the whole group going forward.

Technically speaking, a rhino horn is when a stock basically makes near to a perpendicular up-move over a short period of time. Hedge funds and brokerage house trading departments usually supply shares on the short side when moves like these develop. Unfortunately for the short sellers, Louvem is closely held and there is always the possibility of a takeover offer by Richmont from minority shareholders lurking around the next corner.

The recent highs for Louvem above $0.80 may be difficult to hold with higher earning expected for the company today, as a contrarian factor, along with expected lower prices ahead for the group in general. If I were looking to acquire a big position in here, I would be looking to set-up my bids lower while the short sellers play with the stock.

The XAU and HUI Indexes are expected to retrace some over the weeks ahead while the metal outperforms them on a relative strength basis. I see a 10% to 15% reaction ahead for these indexes from where they will be doing some base building in preparation for a major advance. The advance will be aided by gold taking out the 1000 level concomitantly within a time span of, possibly, a few months.