TSX Venture Exchange and Gold
After closing at resistance at the end of February, the Venture declined each day last week (18 points overall) and closed at 689, 3 points above its still-rising 50-day moving average (SMA). The Venture has been tracking Oil more closely than Gold, but Friday’s biggest drop in bullion in more than a year didn’t help plus the broader markets were under pressure as well.
Very slowly, the Venture has been recovering from its December record low of 637. Since breaking above a downtrend line in late January, as seen on today’s 6-month daily chart, the Venture has found strong support around 660. Buy pressure has turned into sell pressure (CMF), but we also saw that briefly near the end of January before the Index reversed higher.
On the ground, more success stories are always helpful. Garibaldi Resources (GGI, TSX-V) bucked the trend Friday, thanks to stellar results from its Rodadero high-grade Silver-Gold Project. It’s a selective market but excellent opportunities exist among the small percentage of companies who are pushing hard and delivering superior results.
Venture 2-Month Daily Chart
This 2-month daily chart shows the Fib. and chart resistance at 707, plus a cluster of Fib. support between 654 and 680. The Index has fallen below its 20-day SMA for the first time since January. However, that technical weakness was an accumulation opportunity back then. The same could be true now.
The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks
There’s no better cure for low prices than low prices. The great benefit of the collapse in Gold prices in 2013 is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations. Exploration budgets among both producers and juniors have also been cut sharply. In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to carry out exploration or put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe). Ultimately, all of these factors are going to eventually create a supply problem and therefore great opportunities in Gold and quality Gold stocks. Think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.
Gold
Gold erased its 2015 gains after Friday’s $29 an ounce setback (its worst single day since December 2013) which extended bullion’s weekly loss to $45 an ounce or 3.7%. Markets viewed the U.S. jobs report as stronger-than-expected, increasing the possibility of a Fed rate hike as early as June. This sparked a surge in the Dollar Index and the sell-off in bullion. An over-reaction? Quite possibly.
A Fed rate hike in June is far from a certainty, and behind the headline jobs numbers there were some weaknesses in the report including virtually no wage inflation. A day earlier, the Labor Department revealed that 4th quarter productivity – the amount of goods and services that each worker producers – didn’t grow at all from the year-earlier period. The U.S. economy isn’t exactly on fire and economic growth has been stuck between 2% and 2.5% since the expansion began.
What will be interesting this coming week is if this drop in Gold encourages emerging market buying, in particular from China and India. Demand in China was reported to be solid on Friday with prices on the Shanghai Gold Exchange at a $4 to $5 premium to the global benchmark.
Technically, Gold started showing some weakness at the beginning of February after touching a January high of $1,308, the top of a downsloping flag in place since the spring of 2013. Strong support exists at different levels from the bottom of that flag, $1,110, all the way to the $1,180 area. Monday’s action will confirm if there’s a breakdown below $1,180.
Silver fell 64 cents last week to close at $15.93. Copper slid 7 cents to $2.62. Crude Oil was essentially unchanged at $49.61 while the Dollar Index jumped by more than 2 points to finish at 97.72.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade. The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices. Despite Gold’s largest annual drop in three decades in 2013, the fundamental long-term case for the metal remains solidly intact based on the following factors:
- Growing geopolitical tensions, fueled in part by the ISIS and al Qaeda, and a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
- Weak leadership in the United States and Europe is emboldening enemies of the West;
- Currency instability and an overall lack of confidence in fiat currencies;
- Historically low interest rates;
- Continued strong accumulation of Gold by China which intends to back up its currency with bullion;
- Massive government debt from the United States to Europe – a “day of reckoning” will come;
- Continued net buying of Gold by central banks around the world;
- Mine closings, a sharp reduction in exploration and a lack of major new discoveries – this these factors should contribute to a noticeable tightening of supply over the next couple of years.
Although in this market, i consider myself a trader, there are
2 stocks, that i will be hanging on to for, hopefully an extended
period of time, giving it a chance to expand it’s resource. One
being GGI, the other i will not reveal, as i made a promise to
the board last year, that i would not divulge the name, until
they are taken over, i am still waiting & it seems it may take
sometime yet. Not that i wouldn’t trade it in & out & vice versa,
but it has been trading within such a narrow range, not giving
me much of a chance to trade. Gold/Silver is in the green today,
which should help us. Good luck !
Comment by Bert — March 9, 2015 @ 3:57 am
Back again, my thoughts must be written. Regarding GGI, i have
been looking for a possible winner since i traded ATC at something
over $4.00 & profited by $50,000.00, but the part that hurt is,
it stayed at that price for a period of time & i felt like the
perfect trader, but hold on folks, it took off again & went to
over $10.00. Bert could have rich & just to beat Dave, i would
have bought everyone 2 bottles of beer instead of 1. Back to GGI.,
the records will show when PGX was a possible winner, in particular,
it was stated, because of their winning team.. At that time, i stated
i preferred GGI., because they had two projects & i may end up being
correct, although i certainty am not giving up on Prosper Gold,
especially since i have spoken to the main man several times & i
certainly believe he is on a mission. So let the BMR records show
that i am predicting GGI to be a winner… Have a good day..
Comment by Bert — March 9, 2015 @ 4:43 am
Bert, Who do you consider the “main man” at PGX, Peter or Dirk?
Comment by Robert — March 9, 2015 @ 5:23 am
Robert
First one must consider the role each plays. My contact is Peter..
Comment by Bert — March 9, 2015 @ 5:42 am
I sold NPH today. As they say in deal or no deal, lets see what is in my case at the end of the day. I’m guessing she going to correct.
Keep an eye on SLC
Comment by dave — March 9, 2015 @ 6:05 am
Instanet and anon buying a lot of SLC this morning. If the .72’s get taken out, she gonna run.
Comment by dave — March 9, 2015 @ 6:13 am
anybody have contact information for WRR??
Comment by STEVEN1 — March 9, 2015 @ 6:21 am
Steven1 – Go to thier website, click on contacts and then info@ – send an email. Michal is very good with getting back with me the same day.
Comment by dave — March 9, 2015 @ 6:41 am
Dave, I have been watching WRR for a while now, and I know you are quite bullish on it. I am looking for a good entry point – hoping to get in at .04 – what are your thoughts as to how much time I might have to try get in at that level? Have you been speaking to management? Just looking for a realistic point of view here – BMR has suggested March could be big – what in your opinion will start the drive? Drilling announcement? When are you anticipating them to begin?
Cheers, I appreciate your, and others’ opinions…
Comment by Paul — March 9, 2015 @ 7:06 am
Looks like I sold to early on NPH. Green is green I always say. They have warrants at .40 so I will watch and see what she corrects to eventually.
Comment by dave — March 9, 2015 @ 7:06 am
It appears that in this market, traders are inclined to
sleep in. The volume will increase this afternoon & by
the way, i don’t like Monday trading anyway.
Comment by Bert — March 9, 2015 @ 7:17 am
Paul – .04, possibly .035 if your lucky. I would split your buy at half for each price point. Thats just my opinion though. You do what you feel is comfortable. They just closed the pp, I think you have time. I think the drilling will start later this month. Its at that time, I expect like Jon does also that we will see a rise in price. The speculation will kick in at that point. If they hit big (Jon and I think they will), it could be a “BLO” type parabolic run. They should hit much bigger than PGLC because PGLC is not in the Shamrock mining district. PGLC is to the north and not directly in the best shear zone area. WRR is right there so I am expecting much better grades than PGLC. The kinda grades that stand up and get noticed despite market conditions. Cheers
Comment by dave — March 9, 2015 @ 7:25 am
To my buddy Bert – your right, I hate mondays too, always slow movement.
Comment by dave — March 9, 2015 @ 7:26 am
IMT begin to drill very soon !
Comment by guy delisle — March 9, 2015 @ 7:30 am
Thanks Dave, I appreciate your opinion. I will see what I can get!!
Comment by Paul — March 9, 2015 @ 7:52 am
exclusive interview with BMR, hay Jon is there a video of this with Steve. Sure would like to see it.
Comment by freddy — March 9, 2015 @ 9:21 am
Stay tuned, Freddy.
Comment by Jon - BMR — March 9, 2015 @ 10:16 am