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TSX Venture Exchange and Gold

The CDNX is behaving almost precisely in the manner we predicted in our July 9 alert when we stated the Index was in the beginning stages of a powerful new move to the upside that could result in a gain of at least 30% from the 1862 June 28 low by year-end.

The CDNX posted its third consecutive weekly advance, gaining 53 points to close at 2060.  The Venture was the star of the week with its rise of 2.6% – the Dow was up 1.6%, the Nasdaq climbed 2.5% while the TSX jumped 1.5%.  Gold was relatively flat.  Since its correction ended June 28 when it bottomed out at 1862, the CDNX has gained 198 points or 11%.  The 50-day moving average (SMA) has reversed to the upside, a very bullish sign, and the 10 and 20-day SMA’s should provide strong support during this new upleg that could really begin to accelerate next month and into September.

Not only are there technical factors in favor of the CDNX at the moment, but a tsunami of drill results/exploration news is now beginning to hit this market.  In the non-Gold space, BE Resources Inc. (BER, TSX-V) was a beneficiary of this Friday as the stock rocked from a dime to 75 cents on rare earth assay results from its Warm Springs Project in New Mexico.  That kind of a gain by one play on huge volume is what helps add fuel to the fire as far as the overall market is concerned.

The next major area of resistance on the CDNX is 2100.  A minor reaction or brief pause around that level should be expected but as John’s recent CDNX chart outlined, this market should have no problem clearing 2100 next month.

Gold

Gold hit a new record high, above $1,610, before pulling back slightly and finishing the week up $6 an ounce at an even $1,600.  Volatility can be expected in this market in the coming week with the U.S. debt talks at a critical stage.  Few observers expect the U.S. to actually go into default by August 2, but what’s key to watch for is whether or not Congress can work out more than just a patchwork agreement on a deficit and debt reduction plan.  Battle lines are being drawn for the 2012 elections so we’re not hopeful that major progress will occur right now in terms of cleaning up Washington’s fiscal mess.  That would definitely be bullish for Gold.

Technically, Gold has superb support around $1,550 so the downside from current levels is quite limited.  Physical buying is coming in on the dips and that can be expected to continue which should keep prices strong.  John’s next major target for Gold remains at $1,675.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies and governments in general, an environment of historically low interest rates and negative real interest rates (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  It’s hard to imagine Gold not performing well in this environment.  The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.

China, which became the world’s largest Gold producer in 2007, retained its position again in 2010 by mining 340.88 tonnes, up 8.57% year on year, according to the China Gold Association in a report released today.

Increases in Gold output will help China hedge against financial risks and inflation, as well as maintain economic security, the association stated.

While China is producing more Gold, the demand for Gold in that country continues to increase at a rapid pace.

Silver was up 80 cents for the week, closing at $40,07.  Copper was off a penny at $4.38 a pound, Crude Oil climbed to $99.87 while the U.S. Dollar Index fell nearly a full point to 74.25.

Visible Gold Mines (VGD, TSX-V) is rapidly gaining momentum in terms of both its drill programs in northwest Quebec and its share price.  The stock has gained 79% over the last 18 trading sessions since hitting a yearly low of 19.5 cents June 28.  Today, on its best volume in nearly three months, VGD closed 4 cents higher at 35 cents.  It busted through its 100-day moving average (SMA) and the 50-day SMA has swung decidedly positive for the first time this year.  This is a classic example of a stock on the move.

With four major projects on the go and 40,000 metres of drilling this year, Visible Gold Mines is a strong candidate for a significant discovery and it’s still very much a hidden gem.  Despite a top-notch geological crew, led by Robert Sansfacon who was involved in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit, VGD has been flying under the radar of most investors who simply don’t understand that this is a company with one of the best land packages in one of the most prolific areas of the world for mining and exploration.  From Joutel to Lucky Break, VGD is extremely well positioned for exploration success.

We will update the fundamental case for Visible Gold Mines over the next few days.  Tonight, John examines the technical side of the equation and sees some extremely bullish chart patterns.  When we find a situation we like, we definitely get excited and this is indeed a play that could be a barnburner during a sizzlin’ summer and early fall for the CDNX.

Note: Both Jon and John hold positions in VGD.

Gold is powering higher today…as of 8:55 am Pacific, the yellow metal is up $15 an ounce at $1,605…Silver has gained 81 cents to $40.13, Crude Oil is up 33 cents to $99.46 while the U.S. Dollar Index is up nearly one-fifth of a point at 74.20…Copper has gained a penny at $4.37 a pound…after weeks of uncertainty that revived fears about the foundations of the euro, European leaders yesterday clinched a new rescue plan for Greece that could push the country into default on some of its debt for a short period but would also give Europe’s bailout fund sweeping new powers to shore up struggling economies…Greece (and the perilous debt situation with some other countries in the euro zone) is a big problem that’s not going away anytime soon, however, which is bullish for Gold…Morgan Stanley stated, “Our estimates suggest that Greek debt/GDP ratios will fall around 25 percentage points over five years as a result of these measures but will still be a whopping 120 per cent in 2016 even assuming that the full €50-billion of privatization measures are implemented…we therefore believe that (bond) spreads will widen again as short covering dissipates and reality sinks in”…sobering words from analysts at Morgan Stanley…as far as the U.S. is concerned, it’s likely the Americans will avoid a default with a creative agreement to raise the debt ceiling or some sort of patchwork deficit/debt reduction plan but the bottom line is that given political dynamics in Washington, it seems highly unlikely the U.S. will have a credible plan to attack its debt woes until after the 2012 elections…amazingly, since 2007, the U.S. deficit has swelled from $161 billion to about $1.6 trillion as this money-sucking monster was allowed to get out of control…the problem has been many years in the making, however, thanks to an overall lack of fiscal discipline in Washington and a growing role for government that’s just not realistic…elect a president who believes government is the answer to everything and then you have an even worse problem on your hands…the CDNX enjoyed its biggest volume day in over two months yesterday and what this market is telling us right now is that August and September are likely going to be very robust as we have been predicting…historically, 30% moves in the Index within just a few months after the end of a major correction are not uncommon…the CDNX bottomed out at 1862 June 28, so a run to 2400 by the end of September can’t be ruled out…the Index is another 13 points higher this morning at 2052…Visible Gold Mines (VGD, TSX-V) is  breaking through resistance at its 100-day moving average (SMA)…John’s 1-year weekly VGD chart that was posted July 7 when this stock was trading at 24 cents gave us plenty of reason for optimism and we have not been disappointed…VGD is up another penny-and-a-half at 32.5 cents after news yesterday that three drill rigs are now on its Wasa Creek Property adjacent to Richmont’s Wasamac Property 15 kilometres west of Rouyn-Noranda…a push through resistance at 32 cents is technically significant…as regular readers know, we are very bullish on the entire Wasamac area for its Gold as well as base metal potential…the fact VGD has put three rigs at Wasa Creek raises speculation they may believe they are onto something based on initial holes drilled to date…this is an aggressive company with a top-notch geological staff drilling 40,000 metres this year in one of the best areas in the world to search for a deposit – hence we are extremely excited with the possibilities for VGD…the company will also soon be drilling its Joutel Project about 150 kilometres to the north of Rouyn-Noranda…there are five significant former deposits (three Gold, two Copper) in the immediate area where VGD will be drilling at Joutel, so they will be exploring in a prolific geological environment…VGD’s 50-day SMA is now reversing to the upside after being in decline since the beginning of the year, so right now is a “sweet spot” entry point…Richmont (RIC, TSX) is roaring this morning – it’s up 32 cents at $8.16 but the market has still not woken yet to this company’s growing production profile, its robust earnings, and developments at Wasamac which is shaping up to be a company-changing major find for RIC…we suggest readers who haven’t yet performed due diligence on Probe Mines (PRB, TSX-V) do so as quickly as possible…Probe came out with more stellar results yesterday from its Borden Lake Gold Property near Timmins plus new information that an initial 43-101 resource estimate for Borden will be completed as early as the end of next month…from a technical standpoint, Probe is looking very bullish as John outlines below in a 1-year weekly chart…PRB got as high as $1.74 in early trading today but has since backed off to $1.61…

Currie Rose Resources (CUI, TSX-V) continues to be under accumulation as its drill program in Tanzania progresses…technically, CUI’s 100-day moving average (SMA) has started to reverse to the upside and that’s a bullish signal for sure…CUI has the potential to accelerate rapidly on a breakout through resistance between 22 and 23 cents…it’s currently off a penny at 19.5 cents…Silver Quest Resources (SQI, TSX-V) is up a nickel to $1.12…check out the Slow Stochastics and RSI(14) on SQI – it appears ready to run…keep a close eye also on Golden Predator (GPD, TSX-V) which is up 6 pennies at $1.07…Galway Resources (GWY, TSX-V), after a huge volume day yesterday following release of assay results from its California Gold-Silver Project in Colombia, is up another 9 cents this morning to $1.09…the stock has broken above its 100 and 200-day day SMA’s and appears to have momentum on its side, so it will be interesting to watch but we wouldn’t suggest chasing it…also in Colombia we see a good opportunity in Seafield Resources (SFF, TSX-V) at the moment as it trades in the upper 20’s…Spanish Mountain Gold (SPA, TSX-V), which just recently raised $20 million, is up a penny at 66 cents this morning…

On July 7, with the stock trading at 24 cents, we wrote that a turnaround was in the works with Visible Gold Mines (VGD, TSX-V).  This interpretation was based on John’s very revealing 1-year VGD chart, which was (and still is) giving very bullish technical signs, as well as our assessment of fundamental factors driving this company – namely, an outstanding geological team headed by the highly respected Robert Sansfacon, strong overall management, a healthy financial position, and an impressive property package in northwest Quebec that offers a real chance for discovery.

In this business, there’s nothing more exciting (and potentially profitable) than a Gold discovery and Sansfacon knows all about that – he’s a genius at understanding structure, and it was his expertise that helped Osisko (OSK, TSX) make the largest Gold find in the country at Malartic.

We first brought VGD to our readers’ attention more than six months ago and in April we added the company to the BMR model portfolio at 40 cents.  This is exactly the kind of situation we search for – “undiscovered home run opportunities in the junior resource sector”.  And we’re more confident than ever that Visible Gold Mines is on track for something big.

Which brings us to the company’s news release yesterday.  We see two important triggers that have the potential of sending VGD much, much higher:  Joutel and Lucky Break.

Visible Gold Mines came out with a no-nonsense, very matter-of-the-fact news release yesterday that contained some nuggets of information that have raised our curiosity level even higher with VGD.   Why has this company put three drill rigs on some land in its “Lucky Break” package that now suddenly also has a property name, Wasa Creek?  Part of the property is quite close (within 1200 metres) of Richmont’s (RIC, TSX) growing Wasamac deposit and includes claims immediately to the south of west of Wasamac.  Yes, this is ground south of the north-dipping Wasa Shear but the prolific Cadillac Fault runs right through the area as well.  Geologically, VGD has some prime real estate in this option deal with Cadillac Mining (CQX, TSX-V).

And at Joutel, a project that Sansfacon is very eager to tackle, Visible Gold Mines has identified “several promising targets” over an “Eastern Extension” that features a six kilometre strike length and “exhibits similar lithologies” to the previously mined Joutel deposits – Telbel, Eagle and Eagle West.  Sansfacon believes a deposit, or even a series of deposits, may have been overlooked at Joutel two decades ago.  Just like he thought a major deposit was overlooked at Malartic.  And he was proven correct on that.

Technically, what also has us really excited about Visible Gold Mines at the moment is that the stock’s 50-day moving average (SMA) is just now beginning to reverse to the upside.  This ends a long decline that started in January.  A chart can speak volumes and right now the VGD chart is telling us loud and clear that an exciting summer could be at hand for this company.

Note: Jon and John both hold positions in Visible Gold Mines (Terry does not).

Gold has hovered between $1,592 and $1,606 so far today…as of 8:45 am Pacific, the yellow metal is off $4 an ounce at $1,598…Silver has retreated 46 cents to $39.65…Crude Oil is closing in on $100 again…it’s up $1.38 to $99.78 after a draft EU summit conclusion eased anxiety about the European debt crisis and offset the negative impact of some weak manufacturing data out of China…the U.S. Dollar Index is down half a point to 74.17…new U.S. claims for unemployment benefits rose more than expected last week, the Labor Department reported this morning, pointing to a labor market that is struggling to regain momentum after job growth faltered in the last two months…initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 418,000, the Labor Department said…economists polled by Reuters had forecast claims rising to 410,000…Copper has pulled back 3 cents to $4.38 but Copper’s strength recently is a very positive sign for the global economy…in fact, all base metals are up 13% to 15% from their May lows…the CDNX appears determined to test resistance at 2050 rather quickly…the Index is currently up 15 points at 2033 after a strong day yesterday…a powerful move is clearly underway in our view and it should gain momentum next month and into September…look for the 10 and 20-day moving averages to provide support on any pullbacks…Galway Resources (GWY, TSX-V) is the volume leader so far this morning after releasing drill results from its California Gold-Silver Property in Colombia…a 26-metre section grading 129 g/t and 22.3 g/t Ag Au included 1-metre of 3,310 g/t Au and 454 g/t Ag…Galway gapped up this morning and the stock has strengthened technically…GWY got as high as $1.12 in early trading but has since backed off somewhat…it’s now up 11 cents at 99 cents…also in Colombia, of course, is Seafield Resources (SFF, TSX-V) which has fallen back down to very attractive area at 26 cents…Visible Gold Mines (VGD, TSX-V) fell 2.5 cents yesterday to 29 cents but its chart is looking very positive…the overbought RSI(14) condition has unwound significantly over the past few days, setting the stage for a potential move through resistance at 32 cents in the near future…this is a good looking situation going into the end of the month and August, especially with the amount of drilling VGD is doing and the fact the company will soon be tackling its highly prospective Joutel Project…Currie Rose Resources (CUI, TSX-V) is unchanged at 19.5 cents…we’re expecting an exciting summer for CUI given the extent of its drilling at Mabale Hills and Sekenke in Tanzania…Greencastle Resources (VGN, TSX-V) has been showing a little strength recently and is currently up another half penny at 20.5 cents…our expectation is that President and CEO Tony Roodenburg will get things going with Greencastle on the Gold front over the summer and may spin out the company’s oil assets...Probe Mines (PRB, TSX-V) continues to get solid results from its Borden Lake Gold Project  near Timmins which is showing excellent potential for developing into a large-tonnage, low-grade, open-pit deposit given the consistency, continuity and extent of mineralization…results released this morning include 140 .8 metres grading 0.80 g/t Au in BL-11-58…an initial 43-101 resource estimate is currently being prepared by Micon International and is expected later this summer…the Gold zone at Borden Lake has been identified along approximately 1,700 metres of strike length from surface to vertical depths of up to 340 metres and contains intersections up to 200 metres wide…drilling continues and is focused on expanding the limits of mineralization along strike and at depth as well as infilling the current 100-metre-spaced drill sections…Probe completed a $25 million financing in April and has approximately 57 million shares outstanding for a market cap of just under $100 million…PRB is currently up 14 cents at $1.61 – keep a close watch on PRB…Silver Quest Resources (SQI, TSX-V) has closed the first tranche of a private placement for $9.8 million…SQI is currently up a penny at $1.12…Golden Predator (GPD, TSX-V) is beefing up up its already strong cash reserves by selling its interest in the Tonkin Springs Project, a non-core asset, to U.S. Gold Corp. (UXG, TSX) for $5.85 million…Golden Predator will retain a 1.4% net smelter return royalty on all production from the claims sold in excess of the previously reported resources…GPD is quiet so far this morning, up a penny at $1.02…Kaminak Gold Corp. (KAM, TSX-V) continues to look strong and is up another 25 cents at $4.62…

It’s an abbreviated and early edition of Morning Musings today (pre-market open) due to travel commitments…Gold got smacked a bit yesterday, not surprisingly given its record 11-session winning streak…traders were looking for any reason to lock in some profits and they got it when President Obama started talking optimistically about a potential debt reduction deal after a bi-partisan group in the Senate put forth a debt plan…with elections just over a year away, and the debt ceiling issue front and centre at the moment with an early August deadline for action, what we’re seeing in Washington right now is political gamesmanship at its finest…the U.S. will find a way, and perhaps a very creative one, to avoid a default but a “big deal” on debt reduction is about as likely as a late July snowstorm in New York, especially with Obama insisting on revenue increases…House Republicans who agree to raise taxes of any sort will have a tough time with their base in 2012 – the Tea Party will make sure of it…Gold, which has been holding steady in the early overnight hours around $1,590, is in a Perfect Storm because there are so many factors supporting it, fundamentally and technically…physical buying remains strong and we’re about to enter the time of year when that buying begins to intensify, beginning with the Muslim holy month of Ramadan which starts in August and ends with generous gift-giving in September…some Gold stocks have made a nice run recently (the TSX Gold Index is up 8% over the last three weeks even after yesterday’s drop) but the reality is, Gold stocks in general are still ridiculously cheap relative to the underlying metal…just one classic example is one of our favorite smaller producers, Richmont Mines (RIC, TSX), which is trading at just eight to 10 times anticipated 2011 earnings after closing yesterday at $7.80…any weakness in the CDNX has to be viewed as an early Christmas gift…the Index got as high as 2010 yesterday on relatively light volume but weakened throughout the day as Gold took a $20 hit…the Index closed at 1993, slightly above its 10-day moving average (SMA), for a loss of 11 points…our view is that we’re in the early stages of a major upside move in the CDNX and John’s updated chart re-confirms that…check it out carefully…

In major uptrends, the CDNX will typically find support at its rising 10 and 20-day moving averages, so those are also important areas to keep an eye on – we saw an excellent example of that last week…the 50-day SMA appears poised to reverse to the upside by late next week or very early August, providing additional confirmation that a bullish new move in the Index is underway…one of our favorite plays under 25 cents is Currie Rose Resources (CUI, TSX-V) which is currently three weeks into a 10,000-metre drill campaign in the prolific Lake Victoria Greenstone Belt of Tanzania…the other day we had a brief conversation with Mike Griffiths, CUI’s senior geologist, who was just at Mabale Hills where drilling is proceeding on schedule…Currie Rose is drilling deeper at Sisu River than it did late last year, underneath encouraging intercepts that were discovered in Phase 1…so the RC rig is testing for the potential of wider zones and higher grade material at vertical depths up to 150 metres…other deposits in Tanzania have shown similar near-surface expressions as Sisu River, so there is certainly reason for optimism…Currie Rose is going after targets at three properties at Mabale Hills – Sisu River, Mwamazengo and Dhahabu – and we can’t help but think the odds of a hit at one of those areas at least is very good…then of course there’s the Sekenke Project, about 200 kilometres to the southeast, and Griffiths is very excited about the possibilities there…Sekenke is a large land package that surrounds and runs in between two former high grade mines (from the first half of the 20th century), a recipe for a discovery as a lot was probably overlooked in the area…Currie Rose has never drilled Sekenke before…they have so many potential drill targets at this property, they have the pleasant problem of trying to prioritize them…they can do that while drilling continues at Mabale Hills…we’re hoping to do an interview with Griffiths sometime next week…technically, Currie Rose is looking solid and the stock was definitely under accumulation yesterday as over a million shares traded on the Venture and Alpha markets combined…a breakout this summer through resistance at 22.5 cents seems inevitable just given the fact that interest and speculation should build regarding the drill program, the most ambitious ever for CUI in Tanzania…below, John updates the CUI chart which shows the stock is trading in a bullish ascending triangle…the weekly(50) has also crossed above the weekly(200) which is also bullish…

Note: Both Jon and John continue to hold positions in Currie Rose Resources…

Some minor profit-taking in Gold has pushed the yellow metal down slightly this morning…as of 7:30 am Pacific, Gold is off $6 an ounce at $1,599 after hitting a new all-time high of $1,611 overnight…it has dipped as low as $1,597…Silver has declined 36 cents to $40.19, Copper, now at a three-month high, is up 6 cents to $4.45, Crude Oil has gained $2.13 to $98.06 while the U.S. Dollar Index is off more than one-third of a point at 74.95…Copper’s strength continues to be a very positive sign for the global economy as well as the Venture Exchange…Bank of Canada Governor Mark Carney held his benchmark interest rate at 1% this morning, pointing to global threats on both sides of the Atlantic and weaker-than-expected exports, while also signalling that the domestic economy’s strength will lead to higher rates beginning in the near future…Carney and his rate-setting panel said financial conditions in Canada “remain very stimulative” and the growth of private credit is strong despite global developments…U.S. housing starts rose more than expected in June to touch a six-month high and permits for future construction unexpectedly increased, according to figures released this morning by the Commerce Department…housing starts jumped 14.6% to a seasonally adjusted annual rate of 629,000 units, the highest level since January…European leaders will meet this week for the second time in a month as they strive to agree on funding a second Greek bailout and step up their efforts to stem rising bond yields in the region…all is quiet in the United States today but talks continue in an attempt to avoid a debt default and create a deficit and debt reduction plan by early next month…the CDNX is  down 6 points at 1999…Wildcat Silver, now trading on the TSX but under the same symbol (WS), reported more encouraging drill results this morning from its Hermosa Property in Arizona…five rigs are operating at the property and a new resource estimate is expected during the fourth quarter…23 new holes were reported this morning, 21 of which were step-outs, and included 51.8 metres of 368.6 g/t Ag, 6.32% manganese, 2.89% lead and 1.37% zinc in Hole #162, drilled in a sparsely drilled area at the edge of the current resource…Wildcat, which we first mentioned several months ago when it was trading around $1.35, continues to look strong and has a good chance at breaking out to a new high over the second half of the year if strong results from Hermosa continue…WS has pulled back 21 cents to $2.19 through the first hour of trading after posting strong gains in recent days…GoldQuest Mining (GQC, TSX-V) has been granted the Lago exploration concession in the eastern part of Galicia, Spain…the Lago property is the first permit granted of three applications by GoldQuest…the Lago permit is located approximately 50 kilometers to the northeast of the Toral Lead-Zinc-Silver Property where a significant 43-101 resource estimate was outlined by GQC four months ago…Toral is a valuable property and securing an exploration concession for Lago, where mineralization is similar to that of Toral, is another important step for GoldQuest in building its assets in that region…a comprehensive mapping, geochemical sampling and ground geophysical program will be initiated at Lago to define both infill drilling and new targets that may warrant drilling in the vicinity of the known hydrothermal lead and zinc mineralization that remains open along strike and at depth…GQC is off a penny at 18 cents…Trueclaim Exploration (TRM, TSX-V) released more results this morning from the North Zone (one of five zones) at its Scadding Gold Property near Sudbury…nothing eye-popping in terms of numbers (the best intercept was 3.3 metres grading 5.81 g/t Au), but drilling in the North Zone has been successful in defining the geometry of the mineralization and has extended the modeled envelope in the direction of the southeast and at depth…tighter-spaced drilling in the area is the next step…Trueclaim has earned a 51% working interest in Scadding from Currie Rose Resources (CUI, TSX-V) and holds an option to earn a 100% interest…TRM is unchanged at 13 cents this morning…the company also holds a Silver project in Arizona that is becoming more interesting…Seafield Resources (SFF, TSX-V) has shown great liquidity in a slow market these last few months…the stock has run into resistance at 35 cents but a recent reversal to the upside in the 50-day moving average (SMA) is a sign that SFF could gain momentum in the weeks ahead…new President and CEO Carlos Lopez has purchased 750,000 shares in the open market over the last two months according to insider trading reports…there is no doubting the potential of Seafield’s Quinchia District properties in Colombia, so we will continue to keep a close eye on this one…the company is also in a strong cash position with nearly $20 million in the bank…John updates the SFF chart below – investors need to watch for a potential move above resistance which does appear likely – the only question is when…SFF is unchanged as of 7:30 am Pacific at 29 cents…

Pacific Ridge Exploration (PEX, TSX-V), which John highlighted in a chart last Friday when it was trading below 40 cents, rocketed as high as 55 cents yesterday, closing up a dime at 54 cents on its highest volume of the year (1.5 million shares on all exchanges)…John correctly called a move to the top of a weekly trading channel (mid-50’s) where resistance can be expected…the company, which had $4.5 million in working capital at the end of March, is in the midst of a 4,000 metre drill program at its Mariposa Property in the White Gold District…the program is testing the Skookum Jim and Hackly zones, two of five gold-in-soils geochemical anomalies defined last year within the 262-square-kilometre property…PEX is currently off a penny at 53 cents…Golden Predator (GPD, TSX-V) has pulled back to $1.03 after climbing as high as $1.13 yesterday…there is strong techncial support for GPD at $1.00 which is also where its 20-day SMA is at…

Gold has cracked the $1,600 level this morning, hitting another new all-time high…as of 9:00 am Pacific, the yellow metal is up $10 an ounce to $1,604 after hitting a high of $1,608…Gold is shooting for a record 11 straight daily advances…Silver, trying to push through resistance at $40 an ounce, is $1.10 higher at $40.37…Copper is unchanged at $4.39 a pound, Crude Oil is off $1.70 to $95.54 while the U.S. Dollar Index has gained one-half of a point to 75.66…U.S. Treasury Secretary Tim Geithner told CNBC this morning that he is certain that congressional leaders will strike a deal to raise the federal debt ceiling prior to the August deadline to avoid default…he’s likely correct but the political dynamics in Washington right now are such that that the U.S. deficit and debt problems are probably not going to be effectively addressed (bullish for Gold) until after the 2012 elections when the American electorate will hopefully come to its senses and toss President Obama out of office for being the most incompetent President since Jimmy Carter…first and foremost, the U.S. has a spending problem…in fact, never before has the U.S. government consumed so much of the private sector’s wealth creation…this is what needs to be addressed but it’s unlikely to happen under the current President who is a self-described “community organizer” with a seemingly limited understanding of how a properly functioning free enterprise economy needs to operate…according to the U.S. Chamber of Commerce, 64% of small businesses will not hire any new employees over the next year while 79% state that taxation, regulation and legislation make it harder for them to hire more employees…as far as potential budget cuts are concerned, the Heritage Foundation has identified about 90 programs that can be reduced or eliminated entirely at a savings of $343 billion annually…Obama’s insistence on raising taxes on the “wealthiest” of Americans ignores the truism that higher taxes kill jobs, investment and wealth creation, not to mention the fact that Washington’s problem right now is not a revenue issue but a spending disease…starving this money-sucking monster of its food supply – taxes – is the only way to address the deficit and debt and create a smaller, leaner and more efficient government that does less and spends less…that’s not an ideological position, it’s a statement of fact…Obama came into office with the goal of increasing the role of government in American society…ironically, his actions have built an even stronger case for the biggest “sizing down” of government in American history and that will be his legacy…in all fairness, Obama is obviously not the only one at fault here…every member of Congress, Democrat and Republican, needs to understand that Americans and the world can no longer afford the current size and scope of the U.S. government and a revolutionary shift is required…action will come but not likely for another year-and-a-half when the U.S. is even deeper in debt…aided by Gold’s move to $1,600, the CDNX climbed as high as 2019 in early trading but has since pulled back in sympathy with the broader markets as the Dow is down over 1%…as of 9:00 am Pacific, the Venture is off 1 point at 2006…there is resistance around 2050, so the CDNX may not push through that area on its first attempt…there’s strong support at 1980 where the 10-day and 50-day SMA’s converge…the TSX Gold Index is on the move this morning…it has broken out above 400 and its 200-day moving average (SMA)…while it could still run a little higher over the immediate future, technical indicators show the Index is in overbought territory at the moment and some consolidation can be expected before another potential big push to the upside as John outlines in the chart below…

Back to the CDNX…Silver Quest Resources (SQI, TSX-V) continues to look very strong from a technical perspective and it’s underpinned by powerful fundamentals…SQI got as high as $1.19 in early trading…it’s currently unchanged at $1.14…RSI(14) and Slow Stochastics are nicely positioned to allow SQI to move higher immediately or over the near-term…Golden Predator (GPD, TSX-V), with the advantage of considerable infrastructure at its Brewery Creek Project, is another Yukon play we like a lot…the technicals with GPD are also very favorable at the moment…the company announced this morning that it has commenced sonic drilling into the existing heap leach pad at Brewery Creek…this program is in addition to GPD’s aggressive ongoing exploration program at Brewery Creek which is delineating the recently discovered Bohemian-Schooner Zone as well as exploring other high priority targets across the expansive project area…Brewery Creek was the site of a heap-leach Gold mine that operated from 1996 to 2002 and produced 279,541 ounces of Gold…recovery rates were approximately 65%, leaving a significant amount of Gold in the reclaimed heap leach pad…the Company has started testing the viability of recovering contained Gold in the heap…GPD is currently up a penny at $1.11…Kaminak Gold (KAM, TSX-V) is off a nickel at $4.32, Ethos Capital (ECC, TSX-V) is down 2 pennies at $1.27 while Pacific Ridge Exploration (PEX, TSX-V), which John highlighted in a chart Friday morning, is looking good and is unchanged at 44 cents after a 6.5-cent jump Friday…across the country, in northwest Quebec, we’re keeping close watch on a number of plays…Richmont Mines (RIC, TSX), which should report absolutely stellar second quarter earnings in a few weeks, is up 19 cents at $8.23…we’re of the opinion the company’s growing Wasamac deposit, 15 kilometres west of Rouyn-Noranda, has the potential to develop into a much bigger resource than what has already been outlined in the measured, indicated and inferred categories (1.4 million ounces)…we’ll be exploring Wasamac in more detail in the coming weeks…Visible Gold Mines (VGD, TSX-V), which is working on claims in the immediate vicinityof Wasamac, is up 2 pennies at 31 cents…VGD’s 10 and 20-day moving averages (SMA) are rising sharply together for the first time this year…the company is aggressively exploring the Wild West of the Cadillac Trend (ground to the west of Rouyn-Noranda, parts of which have never been drilled before) and will also be launching a major drill program at its highly prospective Joutel Project 150 kilometres north of Rouyn-Noranda…the eastern leg of the Joutel property has geological signatures similar to Agnico-Eagle’s (AEM, TSX) previously mined deposits (Telbel, Eagle and Eagle West) a few kilometres to the west-northwest…Adventure Gold (AGE, TSX-V) is unchanged at 56 cents…AGE is advancing several quality projects at the moment and the one we believe has the most potential to drive shareholder value over the summer is Pascalis-Colombiere, site of the former L.C. Beliveau Mine operated by Cambior…drilling continues at the property as AGE attempts to confirm the continuity of grade and structure, but Pascalis-Colombiere is looking extremely promising given results to date…this could truly be a company-building project that has the potential of taking AGE to a whole new level…Gold Bullion Development (GBB, TSX-V) is unchanged at 42 cents…other situations to be watching closely include Currie Rose Resources (CUI, TSX-V), which is a penny at 18 cents this morning, and Seafield Resources (SFF, TSX-V) which has been moving higher on increased volume over the last five weeks…