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The following article has been republished with permission, for the benefit of BMR readers, from Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

By Bryan Rich

Next month, the Fed will be winding down its second round of quantitative easing. But will it be for good?

Back in August, at a meeting of global finance officials in Jackson Hole, Wyoming, Fed Chairman Bernanke planted the first seed that QE2 was coming.

At that point, all of the hopes of a sharp 2010 economic recovery evaporated, as the economic data from mid-summer forward had signaled another bout of deflation and recession were coming.

The Fed’s antidote?

Tell the world you’re willing to do whatever is necessary to manufacture growth, period. And then promote higher stock prices to make people and companies feel a little more financially stable and wealthy. Consequently, consumer spending will go up and unemployment will go down.

Well, the perception of “easy money” was enough to induce speculators to make leveraged bets on both stocks and commodities. As such, stocks went higher and commodities went higher. And the jobs data improved a little bit.

Now, QE2 is coming to an end. And this time, as with 2010, so is the perception of a strong 2011 recovery. At the opening of the year, many economists were projecting growth in the U.S. to be as high as 5 percent. And the Fed was thinking 3.4 percent to 3.9 percent — an above average year of economic expansion.

Now the private forecasters polled by Bloomberg are saying 2.7 percent. And the Fed just downgraded its forecast to closer to 3 percent. But as you’ll see below, both of those are likely way too optimistic, again.

After the massive response given to the global financial crisis by all central banks and governments, the world still remains on unstable footing. And that’s exactly how another presenter at the Jackson Hole conference last August saw it then — and foresees it well into the future.

Back then Carmen Reinhart (University of Maryland), a co-author to Kenneth Rogoff (Harvard University) on the most extensive study done on historical global financial crises, presented some very sobering facts.

“We are already three years into this post-crisis window. The clock starts ticking in the summer of 2007.” —Carmen Reinhart, economist

Her research showed that historically …

Credit Buildups and Deleveraging
of Debt Are Long Cycles

Severe financial crises, like we experienced in 2007-2008, are usually characterized by a buildup of credit for a decade, according to Reinhart. And the unwinding of all of the debt tends to take a decade following the crisis.

Reinhart’s research further suggested that throughout this 10-year deleveraging period …

Economic growth will trend at lower levels than pre-crisis growth.

How it’s playing out: The U.S. has grown at a historical average of 3 percent per year. Even with unprecedented stimulus it’s been growing below trend since 2006. And recent data suggests another dip into recession is coming …

A Bloomberg study shows that since 1948 whenever GDP falls below 2 percent, it normally predicts recession for the U.S. economy. In April, the Bureau of Economic Analysis (BEA) gave their advanced estimate for Q1 2011 growth at 1.8 percent!

Unemployment will hover around 5 percent higher than pre-crisis levels.

How it’s playing out: Even after two rounds of quantitative easing by the Fed and two rounds of fiscal stimulus by the U.S. government, employment still sits about 5 percent over the long run “natural rate” of unemployment.

And housing prices will remain anywhere from 20 percent to 50 percent below peak levels.

How it’s playing out: The government has recapitalized the banks, the Fed has kept mortgage rates historically low, and various failed mortgage programs have been floated. Yet the Case-Schiller housing data shows housing still 32 percent off of 2006 highs.

As for the deleveraging phase: If the credit boom took at least a decade to build and will take as long to unwind, this chart of U.S. consumer credit puts it all in perspective for the world economy.

As you can see, consumer credit peaked in 2008 when Lehman Brothers failed. Given the studies I’ve outlined, it likely means the world is in for another seven years of economic malaise.

With all of this in mind, even though the persistent easy money policies of the Fed have been highly scrutinized, it’s this analysis that exposes a scenario that the Fed fears, yet many others have chosen to ignore: Another violent downturn for the global economy.

Regards,

Bryan

Bryan Rich began his currency trading career with a $600 million family office hedge fund in London. Later, he was a senior trader for a $750 million leading global hedge fund in South Florida. There, he helped manage and trade a multi-billion dollar foreign exchange options portfolio. Today, Bryan is the editor of World Currency Trader, a service designed to give you everything you need to trade currencies that offer the greatest profit potential with the least amount of risk.

Welcome to our site, or at least the initial version of it!  BMR has been online for over a year now and strictly through word-of-mouth we have built a large and loyal following. 

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.    An important component of this site will always be original research on small and undiscovered junior resource companies, mostly in the Gold exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely in order to make it work for us.  If it’s the other way around –  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly –  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

We’re posting very early today due to travel commitments…Gold is trading in positive territory overnight…as of 3:30 am Pacific, the yellow metal is up $8 an ounce at $1,502…Silver is 8 cents higher at $35.02 while crude oil has climbed 64 cents to 99.08…the U.S. Dollar Index is up one-tenth of a point at 75.17…the CDNX managed to close above 2000 yesterday though not with a great deal of conviction (it climbed 10 points to 2002)…today’s trading will be important to watch to see if there is any follow-through buying and a pick-up in volume (we’re heading into a long weekend in Canada, however, as Monday is a holiday with no trading activity) that will push the Index more comfortably above 2000…the Venture is off 250 points this month or 11%…the Dow is off 1.6%, the Nasdaq is down 1.8% while the TSX has declined 2.3%…this extent of this divergence between the CDNX, a very reliable leading indicator, and the broader markets is certainly disturbing…Bank of Canada Governor Mark Carney made some candid remarks at a private dinner Wednesday night that were meant to be “off the record” but got circulated nonetheless, the Globe and Mail reported this morning…“He doesn’t see the U.S. as addressing its fiscal issues until after 2012, and is concerned that the bond market isn’t sending America the signal that it needs to act due in part to huge central bank holdings of Treasuries,” Avery Shenfeld, the chief economist at CIBC World Markets, said in a widely circulated note…”the tone was generally pessimistic on developed economy prospects, saying that we are still in the financial crisis (likely alluding to the hangover from fiscal stimulus in terms of sovereign debt, and the U.S. housing mess), and that judgments on how well Canada came through it should probably not be made until we can look back five years from now”…John has two chart updates this morning – one on Levon Resources (LVN, TSX-V) which just completed a $40 million financing at $1.95, and the other on Great Panther Silver (GPR, TSX) which has declined 42% since its $4.90 high March 7…Levon is actually up since March 7, the day the CDNX began to reverse course and the correction set in…Levon is developing a very promising Silver-Gold-lead-zinc project (Cordero) in northwest Mexico…it jumped 16 cents yesterday to $1.95, just 3 pennies below its 20-day moving average (SMA)…the stock appears to have hit an important low of $1.71 this week and John likes what he sees…

The very volatile Great Panther has not performed nearly as well as Levon over the past couple of months and may need to consolidate further between $2.50 and $3.00 as John outlines below…

Barring an overall market meltdown, we have a sense that Gold Bullion Development (GBB, TSX-V) may have bottomed out in the mid-30’s this week…GBB jumped 4 pennies yesterday to close at 41.5 cents…Currie Rose Resources (CUI, TSX-V) is getting very close to commencing a drill program in Tanzania and we like that story a lot given the truly exciting potential of the Sekenke Gold Project…CUI closed up half a penny at 17 cents yesterday…it has held up extremely well during the market weakness of the past month and may finally be ready to break out by late this month or early June…Gold Canyon Resources (GCU, TSX-V), which has climbed 26 cents to $3.20 the past two days, could be gearing up for another major run to the upside…technically, what we’re looking for in GCU is a reversal in its 20-day SMA which could be just a few days away…

Gold has traded in a range of $1,487 to $1,500 so far today…as of 7:25 am Pacific, the yellow metal is off $4 an ounce at $1,493…Silver is up 35 cents at $35.37…crude oil is up slightly at $100.13 a barrel while the U.S. Dollar is flat at 75.30…Gold demand continues to be strong…first quarter world Gold demand grew 11% from the same period a year ago to 981.3 metric tons, though there was a 2% decline from the fourth quarter of last year, according to the World Gold Council (WGC) in its quarterly supply/demand trends report released yesterday…much of the increase was due to investment demand with a 52% increase in purchases of bars and coins more than offsetting a decline in holdings of exchange-traded funds …jewelry interest also rose with China and India collectively accounting for nearly two-thirds of the global jewelry demand…the WGC issued a included a separate section on China in the quarterly supply/demand trends report…data was compiled by the consultancy GFMS…in the spring of last year the WGC issued a report stating it expected Chinese Gold demand could double over the next decade…”With the sustained momentum in Chinese Gold demand, this target will probably be achieved in a shorter time scale,” according to Eily Ong, investment research manager with the WGC…Gold demand grew by a whopping 32% in China last year despite a concurrent 25% rise in the average local currency Gold price…the CDNX, trying to reverse a nearly 20% slide since April 11, is up another 11 points to 2003 after 50 minutes of trading this morning…a close above 2000 would certainly be encouraging…one company that has held up very well recently despite the market weakness (it’s unchanged over the past month) is Currie Rose Resources (CUI, TSX-V)…one of the major reasons we added CUI to the BMR model portfolio in late October last year (at 16 cents) was because of the potential of the company’s Sekenke Gold Project in the prolific Lake Victoria Greenstone Belt of Tanzania…Currie Rose rocketed to a high of 47.5 cents in December, thanks to a buoyant overall market and a drill program at the company’s Mabale Hills Project which is approximately 200 kilometres northwest of Sekenke…CUI is now gearing up for its first-ever drill program at Sekenke and this is going to be a situation to watch very closely…the company’s large land package (nearly 300 square kilometres) runs in between and surrounds two former producing high-grade Gold mines…that’s sweet music to any geologist’s ears…extensive ground work along with airborne geophysics have given Currie Rose quality drill targets for a 5,000 metre Phase 1 program expected to commence shortly…a picture tells a thousand words and the map below, from Currie Rose, shows a highly prospective structure (12 km x 800 metres) within a shear zone on the margins of a large granite intrusion that hosts numerous quartz reefs (broken yellow line) of the same type and even larger than those that developed at the nearby historic mines…

While Currie Rose is targeting a Gold discovery, we would be amiss in not pointing out that some surprises are possible given the geological make-up of this area…the Archean greenstones also have potential for the discovery of rare earths, copper, uranium and much more…little exploration has been carried out for these commodities (the Sekenke camp has certainly been under-explored) and it’s only in the past decade that the potential for these type of discoveries through Tanzania has been recognized…Currie Rose has a major land package in a proven Gold camp…of course there are never any guarantees in the exploration business but one has to like the risk-reward ratio here…the stock has clearly found support at its rising 300-day moving average (SMA), currently at 14.5 cents, and at 12 cents is a rising 500-day SMA…as of 7:25 am Pacific, CUI is unchanged at 16.5 cents…Gold Bullion Development’s (GBB, TSX-V) 50-day moving average (SMA) is beginning to flatten out and that’s a positive technical sign…the 50-day has been in a sharp decline since the last half of February and a reversal to the upside in this moving average would be a very bullish signal…fundamentally, with an initial 43-101 on the way that should be very reassuring to investors, it doesn’t take a rocket scientist to figure out where GBB could go from here given its current market cap of only $60 million…John’s chart below shows support needs to hold at 35 cents which is just slightly below the current 500-day rising SMA…

GBB is currently up a penny at 38.5 cents…Osisko Mining Corp. (OSK, TSX) has purchased 8.6 million common shares of Threegold Resources Inc. (THG, TSX-V) on the open market which now gives Osisko a 9.2% stake in Threegold along with the option agreement announced earlier this year to acquire up to a 70% interest in the Standard Gold Property…Levon Resources (LVN, TSX-V) has announced the closing of a $40 million financing with the issuance of 20.6 million shares at $1.95…Levon‘s Cordero Project in northwest Mexico (porphyry Silver, Gold, zinc and lead) is looking very promising and the company now has plenty of capital behind it…LVN is up 2 pennies at the moment at $1.81…Gold Canyon Resources (GCU, TSX-V) has recovered to $3.20 after hitting a low of $2.84 on Tuesday…traders/investors should be watching this one closely for a possible reversal soon in the 20-day SMA which would likely signal the beginning of a new uptrend…

Gold is enjoying a positive day…through the recent turbulence, Gold has managed to hold support at its 30-day moving average which it has held since the beginning of February…as of 8:50 am Pacific, the yellow metal is up $11 an ounce at $1,498…Silver has jumped $1.36 to $35.27 while crude oil has firmed up to $99.25, a gain of $2.34…the U.S. Dollar Index is flat at 75.27…the latest Bank of America Merrill Lynch Fund Manager Survey shows there is real concern about the possibility of a slowdown in global economic growth, and we believe that’s also the message the CDNX has been giving over the past couple of months…the survey found just 41% of managers believe the global economy will expand while 31% see a pullback…the remaining 28% are either unsure or see little growth…that’s a huge drop from earlier this year…the results also show less confidence among institutional investors in corporate profits…though some 69% of companies in the S & P 500 have posted better than expected earnings from the first quarter, the stock market has sputtered and investor confidence appears to have waned significantly…since touching 2400 April 11, the Venture Exchange has dropped a whopping 18% over 26 trading sessions…interestingly, over the same period, the Dow has actually gained a few points, the TSX is off 6% while Gold is essentially unchanged…this kind of unusual divergence between the CDNX and the broader markets is a warning that investors need to pay attention to…the overall CDNX bull market remains intact but what the Index is telling us – remember, the Venture Exchange is an extremely reliable leading indicator of future activity in the markets and even the global economy – is that there’s trouble ahead in the broader markets, perhaps not immediately but within a month or two…our theory is that this will be related to debt issues and an economic slowdown…Gold should continue to perform well in that environment…there will certainly be trading opportunities in the market and we’ll be focusing more than ever on companies with strong balance sheets, outstanding discovery potential, and quality management determined to aggressively build shareholder value…markets are in the green today with the CDNX up 24 points to 1993…one of the volume leaders on the Venture so far today is iSign Media Solutions (ISD, TSX-V) which is up 5.5 pennies to 49.5 cents…our focus of course at BMR is almost exclusively on speculative junior Gold stocks but we believe ISD, a company specializing in interactive marketing technologies and strategies, is worthy of our readers’ due diligence and consideration…ISD is certainly in a sphere that’s attracting significant and growing investor interest…technically, the stock is looking strong as outlined in John’s chart…

Back to the Gold plays…Prodigy Gold (PDG, TSX-V), formerly Kodiak Exploration, continues to deliver solid results from its 100% owned Magino Mine Gold Project in Ontario…results released this morning included 471 metres grading 0.71 g/t Au…PDG, which is up 4 pennies at the moment at 63 cents, has been trading this month between its declining 20-day SMA, currently 67 cents, and its rising 50-day SMA which is currently 56 cents…it’s off from its high of 81 cents May 2…indicated and inferred resources at Magino total approximately 2.5 million ounces…PDG’s market cap is $119 million…that’s about double the market cap of Gold Bullion Development (GBB, TSX-V) which is in the process of completing its initial 43-101 for the LONG Bars Zone of the Granada Gold Property…that 43-101 could turn out to be very comparable to the resources outlined so far at Magino…GBB is unchanged this morning at 37 cents…Gold Canyon Resources (GCU, TSX-V), which appears to be developing a 5 million+ ounce deposit at its Springpole Project in Ontario, is up 11 cents at $3.05…it appears to have solid support around the $3 level…Currie Rose Resources (CUI, TSX-V) is quiet so far today, down half a penny at 15.5 cents…we expect some fireworks out of Currie Rose’s Sekenke Project in the prolific Lake Victoria Greenstone Belt of Tanzania…drilling is expected to commence there in the near future as the rainy season there draws to a close…Adventure Gold (AGE, TSX-V) touched its 200-day rising SMA this morning at 45 cents for the first time since its big move began last fall…AGE is off 3 pennies at 46 cents on nearly 500,000 shares…

Gold has fallen from an overnight high of nearly $1,500 to $1,475 as of 8:55 am Pacific…Silver was above $34 but is now at $33.29, off 31 cents for the day…crude oil has dropped another $2.09 a barrel to $95.28 while the U.S. Dollar Index is up slightly at  75.73…U.S. housing starts and permits for future home construction fell in April as an overhang of homes on the market is discouraging builders from taking on new projects, pointing to prolonged weakness in the housing sector…quite simply, the U.S. housing crisis is deepening and that’s a troubling sign…the U.S. is caught in a vicious financial circle…federal, state and local governments must dramatically reduce spending and imminently – these are difficult decisions that cannot be put off indefinitely…deep cuts are coming over the second half of the year…they will be painful and they will also be a drag on economic growth for a period of time…Fed Chairman Ben Bernanke is going to have his work cut out for him and indeed he may have to implement some form of QE3 to support the system…the behavior of the speculative Venture Exchange over the last five weeks in particular suggests corrections in the Dow and the TSX are on the way but expect the Fed to do everything in its power to prevent the markets from crashing…that is consistent with how the Fed has acted over the past two years…the CDNX is now trading below 2000 for the first time since last November when it plunged to 1900 before moving on to new highs…there’s no reason to panic at the moment with regard to the CDNX – the sky is not falling but this market is certainly in the midst of a major correction that could end soon or may stretch out into the summer…for the moment the trading range appears to be 1900 to 2000 as John outlines in this updated chart…

As of 8:55 am Pacific, the CDNX is off 35 more points to 1961…we’re currently in the process of putting together a “shopping list” of beaten-down opportunities that are not part of the BMR group of companies we regularly follow…we’ll be unveiling that before month-end…we’re long-term bullish on Silver and one of our favorite Silver stocks continues to be Great Panther Silver (GPR, TSX) which is starting to become quite oversold, so this is one opportunity investors should be keeping on their radar screens…a “capitulation” moment hasn’t yet occurred with GPR or the market as a whole…GPR is off another 20 cents this morning to $2.52…Visible Gold Mines (VGD, TSX-V) is up half a penny at 27 cents after dropping as low as 25 cents this morning…VGD has hit extreme oversold levels this month and RSI and Stochastics may have bottomed out…the Chaikin Money Flow (CMF) indicator is now showing an increase in buying pressure, so a turnaround in VGD, which has dropped for six consecutive weeks, appears close at hand…the company has approximately 17 cents per share in working capital and is currently carrying out two separate drill programs with exploration expected to begin soon on its flagship Joutel Project which is a former significant producer of Gold and Silver…we expect to visit that property next month…Currie Rose Resources (CUI, TSX-V) is gearing up for a major exploration program at its Sekenke Project in Tanzania which is also a property of considerable merit…Sekenke has the potential to drive CUI much higher over the second half of this year…CUI is currently down a penny at 16 cents…bargain hunters should be keeping a close eye on Adventure Gold (AGE, TSX-V) which has been weakening as expected with its 50-day moving average (SMA) rolling over…there is strong technical support for AGE from the mid-30’s through the mid-40’s…it’s off 3 pennies at the moment to 49 cents…CNBC “fast money” trader Stephen Weiss (Partner, Short Hills Capital) wrote an excellent piece this morning on the China/copper “carry trade”…Weiss’s source for his information is Michael Pettis who lives in China and is the Senior Associate at the Carnegie Endowment for International Peace’s Asia Program…he’s also a finance professor at Peking University’s Guanghua School of Management as well as a former member of the faculty at Columbia University’s Business School….Pettis’ claim is that Chinese demand for copper has been significantly inflated by its use as a financing mechanism (in fact, the article states one legitimate source estimates that these warehouse stashes are equivalent to 11% of refined copper consumption and up to 40% of demand – perhaps as much as 700,000 metric tons according to some estimates)…traders and businessmen have been buying copper using a 180-day letter of credit which is extremely cheap financing…they then turn around and use the copper, which is being stored in a bonded warehouse in China, as collateral for a bank loan at rates much lower than they otherwise would receive…the banks have no problem with these technically legal and off-balance sheet transactions and the loan officer of course gets a juicy commission…sometime last month, Pettis says, the government got wind of these transactions and tightened the rules that led to demand falling and copper coming back on the market, suppressing prices as other commodities rose…Pettis is unsure how effective these new regulations will be but this goes to show there’s always more behind the scenes going on to influence these markets than meets the eye…

Gold was mostly lower overnight but has turned positive this morning…as of 8:05 am Pacific, the yellow metal is up $8 an ounce at $1,503…physical demand for Gold reportedly remains strong…sales of Gold coins, for example, are on track for the best month in a year, according to CNBC, amid the worst commodities rout since 2008 – another sign that Gold’s longest bull market in nine decades is far from over…Silver touched nearly $34 an ounce this morning but is trying to rebound…it’s currently at $34.91, down 39 cents for the day…the slump in Silver prices has raised demand for Silver in India where companies are handing out Silver coins as part of employee bonus packages and jewelry stores are promoting Silver as an affordable alternative to Gold…crude oil is down $1.03 to $98.62 while the U.S. Dollar Index is off over half a point to 75.29…a gauge of manufacturing in New York State tumbled much more than expected in May to its lowest level in five months…the New York Fed’s “Empire State” general business conditions index fell to 11.88 from 21.70 in April…that’s the lowest level since December of last year and well below economists’ expectations of 19.85…the survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions…the legally set $14.3 trillion U.S. debt limit  is expected to be reached today (www.usdebtclock.org), preventing the U.S. from accessing bond markets again until the debt ceiling is raised…it’s believed the Fed can maneuver until August…Congressional wrangling continues with Republicans and Democrats far apart on any agreement to raise the debt ceiling with Republicans wanting to go much further on spending cuts than Democrats…ultimately, deep spending cuts will have to be implemented in the U.S. and not just at the federal level but at state and local levels as well…this will take the U.S. from a period of record stimulus spending to record cuts and unquestionably that could have an immediate negative impact on economic growth…investors focused on the fundamentals behind crude oil’s recent sell-off argue that the catalyst for the drop was less optimism about the strength of the U.S. economic recovery…margin hikes imposed on crude oil and gasoline served to aggravate the wave of selling…traders are also watching the euro zone where finance ministers are meeting today to discuss the region’s debt crisis amid new worries about developments in Greece…the CDNX is down 2 points as of 8:05 am Pacific to 2036…the fact the CDNX is significantly underperforming Gold and the broader stock markets in New York and Toronto is cause for serious concern…GoldQuest Mining (GQC, TSX-V) released results this morning from the final seven holes of a 24-hole program at its La Escandalosa Property in the Dominican Republic…the best intersection from Escandalosa Sur, where an initial 43-101 inferred resource of 400,000 ounces was outlined last fall, was 20 meters grading 1.32 g/t Au…results from this area overall (21 holes) were somewhat disappointing though more drilling is required and will take place later this year…however, the company drilled three holes at the Hondo Valle target 1.6 kilometres to the north (outside the resource area) and all three intersected significant mineralization including 29 metres grading 2.18 g/t Au in hole #65…that’s the thickest and highest grade mineralized section drilled to date at Hondo Valle…the theory is that mineralization trends north from Escandalosa Sur to Hondo Valle…GoldQuest is carrying out a 16-square kilometre IP survey and magnetic ground geophysical survey from 2 kilometres north of Hondo Valle to 2.2 kilometres south of Escandalosa Sur…this will be completed by the end of July and GQC will use the data to pinpoint key targets for an additional 3,000 metres of drilling…GoldQuest also has other promising projects in the DR it’s working on in addition to its lead-zinc-silver deposit in Spain…GQC is down 3 pennies at the moment to 20.5 cents on relatively light volume…we suggest investors perform due diligence on Brazilian Gold (BGC, TSX-V)…the BGC chart has held up extremely well during this period of CDNX weakness as the company continues to develop a number of promising Gold projects in northern Brazil…BGC is up slightly this morning to $1.43 after releasing results from the first two holes at its Rio Novo Property, 50 kilometres southwest of the company’s flagship Sao Jorge Gold deposit…Richmont Mines (RIC, TSX), which reported stellar first quarter results last Thursday, is up another 19 cents to $7.77…Richmont has been one of the top-performing Gold stocks on the TSX this year due in part to the growing size of its Wasamac deposit just west of Rouyn-Noranda…Cadillac Mining (CQX, TSX-V) has reversed course and won’t be drilling its strategically located “Wasa” claims anytime soon as revealed in a news release this morning…this company has missed a Golden opportunity over the last several months to raise money and generate investor excitement over Richmont’s success at Wasamac…the principal structure hosting Gold mineralization at Wasamac dips northerly onto Cadillac’s 100% owned seven claims…failure to take advantage of the Wasamac situation up to this point gives us little confidence Cadillac will be able to exploit the opportunity it has with its Goldstrike Project in Utah…CQX is currently down half a penny at 11.5 cents…

John: Tonight we’re taking a look at the chart for Copper, specifically because it has a close relationship with the CDNX and of course the CRB Commodity Index.  Copper is also a good indicator of the state of the global economy.

On Friday, May 13, Copper opened at 397.15, climbed to a high of 397.70, fell to a low of 395.30 and then closed at 395.45, down 1.60 (-0.40%) on the day and 2.10 (-0.53%) on the week.

Looking at the 30-month weekly chart, we see that from the bottom after the crash in 2008 Copper consolidated during January and February, 2009, before starting a flagpole.  From the beginning of March, 2009, to August that year, it doubled in price from 150 to 300 ($1.50 to $3.00 a pound) in a matter of 6 months.  Then it consolidated in a horizontal trend channel until the beginning of November, 2009, when it broke out to the upside and started to form a distribution dome which lasted until the end of May, 2010. Copper then consolidated until a breakout to the upside in mid-July (corresponding with the start of a major CDNX run).   It then climbed from 285 to a high of 400 in November, 2010.

Copper consolidated again for about 2 months before breaking out to the upside in January of this year.  Since then it has formed another distribution dome. At the moment it appears to be starting a horizontal consolidation which is expected to last about 2 months. This is a realistic assumption, not only because of the previous chart pattern but the positions of the Slow Stochastics (SS) and RSI indicators are such that they can fall further from their present positions during the expected consolidation period before becoming extremely oversold or reaching a previous support level.

Outlook: I expect Copper to continue to consolidate in a range between 375 and 400 over the next 2 months.