Gold has traded between $1,206 and $1,215 so far today after yesterday’s confirmed breakout above $1,200 resistance…as of 8:40 am Pacific, bullion is down $3 an ounce at $1,211 (see updated chart below)…Silver is off 14 cents at $16.82…Copper is up 4 cents at $2.77…Crude Oil has reversed higher, up nearly $1 a barrel at $53.05 while the U.S. Dollar Index has rallied two-thirds of a point to 97.72…
Bullion hit a 7-week high yesterday and is clearly benefiting from the fact that the U.S. Dollar Index is now in the midst of its most significant correction since its huge move began last summer…with yesterday’s rally, Gold is now up 2.5% this year, outpacing the S&P 500‘s modest 1% gain…the last time Gold beat the S&P’s price appreciation in a full year was in 2011, when Gold rose 16% while stocks were flat…
HSBS analysts believe that with a Fed rate hike off the table until probably September, and a cooling off of the dollar, “There may be more scope for bullion to rally. Gold’s break over the technical 50-day moving average of $1,209 and the 100-day moving average of $1,212 may have invited buying from momentum investors,” they stated in their assessment of yesterday’s activity…
Gold Chart Update
Friday’s bleak U.S. non-farm payrolls data has fueled expectations that the Federal Reserve will delay an anticipated rate increase this year, boosting Gold’s safe-haven appeal…New York Fed President William Dudley said the timing of the U.S. rate hike, which would be the first in nearly a decade, is unclear and policymakers must watch that the U.S. economy’s surprising 1st quarter recent weakness does not signal a more substantial slowdown…
Gold is poised to move higher this month, and a contributing factor could be a “short squeeze” as we pointed out yesterday (some short covering has already occurred over the last week, and more will likely kick in if Gold starts accelerating through the $1,220’s)…support should hold at $1,200…resistance areas to watch now are $1,217, $1,240 and $1,264 – those are all Fib. levels as per John’s 6-month daily chart…$1,240 come could rather quickly on a climb through $1,217 and yesterday’s intra-day high of $1,224…
This chart shows how the “turning point” for Gold came late last month as RSI(14) emerged out of oversold conditions from support and broke above a downtrend in place since late January…a bullish +DI/-DI crossover also occurred as the RSI(14) pushed higher…
U.S. Dollar Index Updated Chart
The Dollar Index clearly hit an important temporary top in mid-March at 100.71, a 12-year high…this pullback is different in its character than the ones witnessed during October, December, and late January into February as shown in this morning’s 1-year daily chart…
For the first time since the dollar surge began, RSI(14) has fallen below 50% while the ADX indicator confirms a bearish trend has materialized…keep in mind, it’s wise to assume at this point that the weakness in the dollar – which will give commodities and the Venture some much needed breathing room – is likely only a healthy correction within a primary bull market…King Dollar could certainly reassert itself at a later point, depending on a variety of factors…
A break below the 50-day SMA and support at 96 could scare away some speculators and cause a further drop into the low 90’s or possibly even to the 200-day SMA…
Copper Update
Supply disruptions have been benefiting Copper recently…unforeseen events, ranging from flooding and mudslides in northern Chile (described as the worst rain disaster in 80 years) to an electrical failure in Australia, have caused significant disruptions to supply…many experts were predicting that Copper output from mines would exceed demand in 2015 for the first time in 6 years…some are now forecasting a deficit…
After betting against Copper for 23 weeks in a row, money managers as a group turned bullish on Copper futures and options in early March, according to the U.S. Commodity Futures Trading Commission…
The demand side of the equation for Copper is less clear given the uncertain state of the global economy…according to CRU Group, a London-based metals consultancy, China’s Copper usage is set to expand at the slowest pace in 9 years as the biggest industrial-metals user cuts spending on everything from housing to washing machines…however, CRU Group still expects global Copper demand to exceed supply this year with balances tightening because of supply disruptions as opposed to a burst in demand…
The outlook for consumption will be one of the key topics discussed by miners, consumers and traders gathering at CRU’s 14th World Copper Conference that starts next Monday in Santiago, Chile…
CRB Index Updated Chart
The current pattern in the CRB Index supports the case for additional weakness in the greenback…the CRB certainly has room to rally higher this quarter…
A few key “takeaways” with this chart…
1. A bullish “W” has formed in the RSI(14) after extreme oversold conditions persisted from near the end of Q4 last year through late last month
2. Critical support held during the 1st quarter above the 2009 low
3. The -DI indicator, which has formed a bearish “M”, may have peaked at the beginning of this year as it did near the end of 2008
Today’s Markets
Asia
China’s Shanghai Composite surged nearly 100 points or 2.5% overnight to a fresh 7-year high, closing at 3961…Japan’s Nikkei average was also strong as it climbed more than 1% to finish at 19641…the Bank of Japan began its 2-day policy meeting today…
Europe
European markets, closed Good Friday and Easter Monday, were up significantly today…on the data front, a second reading of March euro zone composite PMI came in at 54.0…while this was slightly below expectations, it was above the 53.3 seen in February…the trend of improving PMI numbers in the euro zone is a positive sign…
North America
The Dow is up 88 points as of 8:40 am Pacific…
Merrill Lynch analysts say big dollar moves of the kind we’ve seen since last summer have historically caused “earnings recessions” because foreign sales and earnings are worth less when translated back into dollars…as of last month, nearly one in five S&P 500 companies had warned of weaker earnings, many of them citing the strong dollar as the culprit…for the first time in 3 years, analysts project earnings per share for the S&P 500 will decline – by 3% in the first quarter, according to S&P Capital IQ, with only a 0.3% expected gain for the year…while the Oil sector does make up a major component of the S&P, other sectors are facing earnings declines as well…
In Toronto, the TSX is up 139 points through the first 2 hours of trading…the Venture (see updated chart below) has added 2 points to 691…
Due to unexpected travel, this is a slightly abbreviated edition of Morning Musings…tomorrow we’ll be following up on the fascinating Ni-Cu-PGE target (Pecors) that International Montoro Resources (IMT, TSX-V) is currently drilling in the Elliot Lake area west of Sudbury, while we’ll also expand on what could be unfolding at Garibaldi Resources‘ (GGI, TSX-V) Rodadero discovery in central Sonora State, Mexico…
Venture 6-Month Daily Chart
The Venture confirmed a breakout yesterday above the 680 resistance area…this coincides with a rapid increase in buy pressure as demonstrated by the CMF…the Index can now be expected to take another run at the 707 resistance encountered January 2 and February 28…
Keep an eye on the Dollar Index – if it breaks below 96, the Venture will surely blast through the 707 area given the exceedingly strong inverse relationship between the two…
Copper Fox Minerals Minerals Inc. (CUU, TSX-V) Update
Copper Fox (CUU, TSX-V) nearly doubled in the month of March, posting a gain of 86%, as Teck Resources (TCK.B, TSX) committed to a significant increase in program expenditures this year ($4.8 million vs. $2.2 million in 2014) at the Schaft Creek Cu-Au-Mo-Ag Project in northwest British Columbia (proven and probable reserves are 940.8 million tonnes grading 0.27% Cu, 0.19 g/t Au, 0.018% Mo and 1.72 g/t Ag)…
Wouldn’t it be interesting if Teck starts seeing higher grades and large tonnages developing 100 km to the north in the Sheslay district where it holds a large chunk of ground contiguous to the southern border of the Grizzly (that’s for a later analysis)…
In the meantime, the Schaft Creek JV is focusing on geotechnical/geometallurgical modelling and domain definition, evaluation of key economic drivers, and exploration of the LaCasse Zone – a new zone of Copper and Gold mineralization discovered in field work last year north of the main discovery area…
Fib. resistance levels are important to understand…CUU reacted last month at the 35-cent Fib. level as expected following a breakout above the 200-day SMA…CUU has since fallen back in a healthy manner toward strong support at 19 cents, just a penny above the 200-day which has flattened out and appears poised to reverse to the upside this quarter…
CUU is up 1.5 cents at 22.5 cents as of 8:40 am Pacific…
Cannabix Technologies Inc. (BLO, CSE) Update
What an interesting chart this is – Cannabix Technologies (BLO, CSE, BLOZF, OTC), our favorite non-resource play since last summer, closed near the apex of a bullish pennant yesterday that started forming following the dramatic surge in February…remember, pennants are continuation patterns that usually break out in the direction of the previous trend that started…
What this chart is telling us is that BLO is well-positioned for another important move, probably to the upside, sometime this month…the potential catalyst for that is anyone’s guess but the company continues to make progress with its marijuana breathalyzer prototype and seems to have little trouble attracting positive media attention…
Below is a chart based on BLO’s OTC listing (CSE charts still not available)…RSI(14) has found strong support around the 50% level…
BLO is off half a penny at 44.5 cents on the CSE as of 8:40 am Pacific…
Note: John and Jon hold hold share positions in IMT, GGI and BLO.
nice bounce for the venture. will finish in green again today 🙂
Comment by Tony T — April 7, 2015 @ 11:51 am
IMT should really be in the sweet zone now. Thinking at least 800 meters deep. What does the core look like I wonder. GGI, nothing from them yet again and tomorrow is Wednesday.
Comment by Dan — April 7, 2015 @ 4:53 pm
It is tough to stay patient with GGI, even though they are very systematically moving Rodadero forward. What really bugs me though is the length of time to drill Grizzly.
Comment by Dan — April 7, 2015 @ 4:55 pm
Dan, the IMT target is looking really interesting and we’ve completed some additional research we’ll share in the morning…meanwhile, the strategy GGI is following at the Grizzly is the right one if you want them to make an instant discovery…they were first on the ground in the district this winter…they are narrowing down their targets, and because of the way they’ve gone about this, the odds of a new discovery in the district when they start drilling are going to be exceptionally high…
Comment by Jon - BMR — April 7, 2015 @ 7:00 pm
GGI have set aside around $1m to drill the Grizzly. That should get them around 5,000m which is probably 12 holes or so. They have the biggest area in the Sheslay so probably have more targets than DBV, who have taken 23 holes to find a reasonable grade. I’m happy to wait for GGI, if it means they are more likely to hit good sooner rather than later with their drill holes.
Comment by Tom UK — April 7, 2015 @ 11:24 pm
Yes, target selection is key, Tom. Much more is known about the district in general now than even just 6 months ago. With efficient and effective target definition, they should be able to hone in on exactly the right signatures and hit in the first 3 holes IMHO. That saves a lot of wasted money and unnecessary dilution. They hit on the first hole at Silver Eagle which is also part of a large land package, though still one-fifth the size of the Grizzly. So they know how to attack these things.
Comment by Jon - BMR — April 8, 2015 @ 1:34 am
ANYBODY WANT A TSX VENTURE DIVIDEND PAYING STOCK IN 3 MORE CO’S? Alchemist Mining to spin out three finance subsidiaries
Ticker Symbol: C:AMS
Alchemist Mining to spin out three finance subsidiaries
Alchemist Mining Inc (2) (C:AMS)
Shares Issued 10,221,400
Last Close 3/31/2015 $0.055
Tuesday April 07 2015 – News Release
Mr. Keith Anderson reports
ALCHEMIST MINING INCORPORATED ANNOUNCES PLAN OF ARRANGEMENT
Alchemist Mining Inc. has entered into an arrangement agreement with Alexis Financial Inc. (Spinco1), Chichi Financial Inc. (Spinco2) and SYD Financial Inc. (Spinco3), each a private British Columbia company and wholly owned subsidiary of the company.
Pursuant to the Arrangement Agreement, the Company has agreed to transfer $15,000 cash and a promissory note in the principal amount of $29,000 to each of Spinco1, Spinco2 and Spinco3 in consideration for the issuance of 2,200,000 common shares of each Spinco1, Spinco2 and Spinco3 (or 100%) and to distribute these common shares to the Company’s shareholders on a pro-rata basis pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Plan of Arrangement”).
The Company will seek approval of the Plan of Arrangement at a special meeting of its shareholders to be held on May 13, 2015 (the “Meeting”). Further information regarding the Arrangement Agreement and the Plan of Arrangement will be set forth in the notice of meeting and information circular to be prepared in connection with the Meeting. A copy of the Arrangement Agreement will also be filed on SEDAR.
Should the Plan of Arrangement receive approval at the Meeting, it is anticipated that the Plan of Arrangement will be made effective shortly thereafter. Upon completion of the Plan of Arrangement, each of Spinco1, Spinco2 and Spinco3 will become a reporting issuer in British Columbia and Alberta. Upon completion of the Plan of Arrangement, it is intended that each of Spinco1, Spinco2 and Spinco3 will enter into a definitive agreement to acquire a business. Completion of the Plan of Arrangement is subject to certain conditions, including shareholder approval, the approval of the Supreme Court of British Columbia and the Canadian Securities Exchange.
Should the Plan of Arrangement be implemented, it is anticipated that shareholders of the Company will:
Retain their current interest in the Company; and
Obtain a 100% interest in each of Spinco1, Spinco2 and Spinco3, each of which will be a reporting issuer in British Columbia and Alberta and each of which will have approximately $44,000 in working capital to acquire a business.
The directors of the Company have unanimously concluded that the Arrangement is in the best interests of the Company and fair to all shareholders of the Company. They believe this will be beneficial to the shareholders of the Company, as it is intended that each of Spinco1, Spinco2 and Spinco3 will enter into a definitive agreement to acquire a business upon completion of the Arrangement.
Comment by STEVEN1 — April 8, 2015 @ 5:35 am