BullMarketRun.com

11:35 am Pacific

John has updated charts this morning on Copper, the U.S. Dollar Index and the Canadian Dollar to give us some additional technical perspectives on the “big picture” at the moment.

Copper, which is currently at $3.86 after falling as low as $3.825 earlier today, is underpinned by very strong support at $3.60.  It also faces considerable resistance at $4, a level it will likely test in the near future though a real breakout probably isn’t in the cards just yet.  So Copper looks like it will strengthen some more before consolidating again for a period of time.  The second half of the year could be very robust for Copper – based on both fundamentals and technicals.

Copper

The U.S. Dollar Index, trading just under 79 this morning, has been weak lately but does have excellent support at the 78 level.  It has been in a tight trading range between 78 and 80 since mid-March and that could continue for a while yet.

The Canadian Dollar has been interesting.  There’s no way this commodity-sensitive currency would be as strong as it is if the global economy were about to fall off the cliff.  The rising 100-day moving average (SMA), not shown in John’s chart below, is just a hair under the $1 level.

Gold held steady overnight but has dipped during the last half hour…as of 5:50 am Pacific, bullion is down $13 an ounce at $1,650 after climbing as high as $1,667 overnight…Silver is 50 cents lower at $30.77…Copper is off 2 pennies at $3.84…Crude Oil is down 77 cents at $104.16 while the U.S. Dollar Index is up slightly at 78.86…

Central banks continue to be strong buyers of Gold…they purchased no less than 49.8 metric tons in March according to statistics released by the International Monetary Fund…the three largest buyers were Mexico, Russia and Turkey…the total for the first quarter was 55.1 tons…last year, central banks bought 439.7 tonnes of Gold, the largest annual increase in almost five decades, and this doesn’t count significant purchases that remain unreported…a recent survey of central-bank reserve managers predicted that the most significant change in their official reserve holdings over the next 10 years will be their intentional accumulation of Gold…net official Gold accumulation should not only continue but will likely expand in 2012 and for years to come…with China and Russia leading the pack, a growing number of central banks, under-weighted in Gold and over-weighted in dollars and euros, will join the line to buy Gold…

Bob Hoye of Institutional Advisor published a report Friday titled “Gold Consolidation Approaching an End“…the report shows that the relative strength of mining shares to the price of Gold bullion is at extremes only seen five times in the past 100 years…the report also notes that, historically, investors should look to the junior tier names to exhibit the greater price action relative to their senior peers…

John has two very interesting 10-year weekly charts charts this morning showing Gold‘s performance relative to both the TSX Gold Index and the Venture Exchange…what these charts tell us is that the gap between the stocks and Gold is indeed at historic levels – so something has to give…

Gold vs. TSX Gold Index

Gold vs. Venture Exchange

At the moment, Gold appears to be gearing up, in the near future, to bust through resistance as shown on the chart below…a reverse head-and-shoulders pattern is quite obvious on the Gold chart as John has been pointing out in recent weeks…going back over the last decade, Gold has also consistently found support at its 300-day moving average (SMA) which also happens to be the right shoulder low…Gold‘s March-April swoon could indeed be over, and the oversold Gold stocks, which almost seem to have been factoring in a major breakdown in the Gold price, could be in for a spectacular rise as the year progresses…

Prodigy Gold (PDG, TSX-V)

Prodigy Gold Inc. (PDG, TSX-V) released results this morning from just over 11,000 metres of diamond drilling completed at its Magino Mine Gold Project since March…highlights from the 43 holes, part of a 60,000 metre drill campaign, include 261.2 metres grading 1.19 g/t Au in drill hole MA12-290 (including 67 metres grading 1.84 g/t Au), 125 metres grading 1.37 g/t Au in drill hole MA12-264 and 109 metres grading 1.48 g/t Au drill hole MA12-257…nearly all the results are in-fill and resource expansion drill holes within and below the main portion of the Magino Gold deposit…they confirm continuity within previously drilled Gold mineralization at both shallow and deeper portions of the deposit and also expand the known Gold system to depth…Prodigy plans on releasing an updated 43-101 resource estimate for Magino in June…

IAMGOLD’S (IMG, TSX) proposed acquisition of Trelawney (TRR, TSX-V) was an important development Friday and underscores how undervalued some of the juniors are…interestingly, IAMGOLD was one of the few companies to make an acquisition when Gold stocks plummeted in late 2008 through early 2009…many producers are now sitting on record cash levels and this should result in more takeovers as the year unfolds…

Gold Canyon Resources (GCU, TSX-V), developing a multi-million ounce resource at its Springpole Project in Ontario, is another great example of a solid junior whose share price hit ridiculous levels last week when the Venture Exchange fell as low as 1363 – a 20% correction from the February 29 2012 high of 1696…recent extreme RSI levels suggest an important low for GCU was put in last week…

Note: John, Jon and Terry do not hold positions in GCU.

Welcome to our site, or at least the initial version of it!  BMR has been online for more than two years and strictly through word-of-mouth we have built a 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.  While we focus very much on the Gold and Silver markets and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on undiscovered junior exploration companies or small producers, mostly in the Gold and Silver 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.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. Always perform your own due diligence and please read our disclaimer at the bottom.

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.  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

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

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TSX Venture Exchange and Gold

The CDNX ended an 8-week slide that has the signature of a classic major correction bottom marked by extreme levels of pessimism.  Last Monday, when all markets plunged, we speculated in a special mid-day chart that the “capitulation moment” may have arrived, and indeed it did.  The CDNX hit a low of 1363 – a 333-point or 20% pullback from the February 29 2012 high of 1696 – and successfully re-tested that level over the next couple of days before taking off to the upside. Still, some investors panicked last week and likely threw some stocks overboard at precisely the wrong time – what a shame.

This does not have the feel of a mere bounce out of oversold conditions.  Iamgold’s (IMG, TSX) takeover of Trelawney (TRR, TSX-V), announced Friday morning, could be just the beginning of a series of takeovers as majors – many of them sitting on record amounts of cash – scramble to add ounces to the ground and scoop up undervalued juniors.  This will help put a “floor” under the CDNX and, combined with some good discoveries and the strong potential for rising Gold and Silver prices, this market could really light up through the remainder of the year – the final six months, in particular, we believe, could be quite explosive.

Historically, the CDNX in 2012 is so far following the 2005 pattern when the Index moved strongly higher during January and February, corrected sharply (22%) from early March to mid-May, and then powered higher (a 40% move) through the remainder of the year.

On the exploration front, some success stories are starting to emerge.  On Thursday, Gold Standard Ventures (GV, TSX-V), a company we put on our “Watch” list a couple of months ago, reported two stellar holes from its Railroad Project in Nevada.  Drill hole 12-1 cut 164 metres grading 3.38 g/t Au while the second one, about 100 metres to the south, graded 4.29 g/t au over 56 metres.  GV jumped nearly 60%, hitting a high of $2.80, and closed the week at $2.74.  This is great news for the market and more outstanding results like those from other companies will bring a lot of confidence and spark back into the Venture Exchange.

The CDNX finished the week up 15 points, on rising volume each day, to close at 1412.  It has broken above its 10-day moving average (SMA) which has provided stiff resistance since early March.  Look for the 10-day SMA to reverse to the upside by the end of the coming week which will add more fuel to the fire.  There are also several more important technical indicators that are flashing “bullish” at the moment as John details below:

Gold

Gold had an encouraging week, testing strong support once again in the low $1,600’s and then strengthening to close Friday at $1,663 for a weekly gain of $4.  As John’s chart shows, the yellow metal is now at a critical point where it could soon bust loose and turn sharply higher:

As we mentioned in yesterday’s Morning Musings, a reverse head-and-shoulders pattern is quite obvious on the Gold chart as John has been pointing out in recent weeks.  Going back over the last decade, Gold has also consistently found support at its 300-day moving average (SMA) which also happens to be the right shoulder low.  Gold‘s March-April swoon could indeed be over, and the oversold Gold stocks, which almost seem to have been factoring in a major breakdown in the Gold price, could be in for a spectacular rise as the year progresses.

The rate-setting Federal Open Market Committee (FMOC) left benchmark borrowing costs unchanged Wednesday but chairman Ben Bernanke said economic conditions were likely to warrant exceptionally low interest rates until at least late 2014 – bullish for Gold.  He added at a news conference that the Fed believed monetary policy was “in the right place, but being in the right place doesn’t mean we won’t take further action.”   So Bernanke is keeping all options open for possible additional stimulus which should help keep a solid floor under the Gold price.  The $1,600 area has held up extremely well as support.  Barclays Capital said in a note to clients: “Policy accommodation remains in place and will continue to support higher-beta risky assets.”

Silver for the week was off 43 cents, closing at $31.27.  Copper, thanks in part to tight supplies, has hit a three-week high and finished Friday at $3.86 (John will have an updated Copper chart Monday morning).  Crude Oil climbed $2.10 to $104.93 while the struggling U.S. Dollar Index fell to 78.71.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being 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, is having a huge impact on Gold.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, 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.

Gold was down slightly earlier this morning after yesterday’s strong move, but reversed to the upside following a weaker-than-expected U.S. GDP report…as of 6:00 am Pacific, the yellow metal is now up $6 an ounce to $1,663…Silver is 16 cents higher at $31.26…Copper is up 2 pennies at $3.84…Crude Oil is 22 cents lower at $104.33 while the U.S. Dollar Index is down more than one-third of a point at 78.75…

The fact that Gold held important support around $1,600 in recent weeks is a very bullish sign…a reverse head-and-shoulders pattern is quite obvious on the charts as John has pointed out…going back over the last decade, Gold has also consistently found support at its 300-day moving average (SMA) which also happens to be the right shoulder low…Gold‘s March-April swoon appears to be over, and the very oversold Gold stocks, which almost seem to have been factoring in a major breakdown in the Gold price, could be in for a spectacular rise as the year progresses…

Today’s Markets

European markets are higher, reversing earlier losses this morning, while stock index futures in New York are pointing to a positive open on Wall Street…

U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a moderate pace, but stronger demand for automobiles softened the blow…GDP expanded at a 2.2% annual rate, the Commerce Department just reported in its advance estimate, moderating from the fourth quarter’s 3%…while Q1 was below economists’ expectations for a 2.5% pace, a surge in consumer spending is encouraging and took some of the string out of the report…

Spain’s Downturn Deeper And Longer Than Assumed

Spain’s unemployment rate rose to almost one in four, according to data released this morning, amid a deepening economic crisis marked by another sovereign credit downgrade from Standard & Poor’s…the number of Spaniards without jobs rose by almost 367,000 people in the first quarter of the year to reach 5.64 m, or 24.4% of the workforce, the National Statistics Institute said…

Iamgold To Take Over Trelawney

We’ve been waiting for some acquisitions by cash-rich producers to help give the junior market a lift, and Iamgold (IMG, TSX) announced this morning that it has entered into a definitive agreement whereby it will acquire, through a plan of arrangement, all of the issued and outstanding shares of Trelawney Mining and Exploration (TRR, TSX-V) for $3.30 in cash…Trelawney closed yesterday at $2.32, though it was high as $3.84 in January after an all-time high of $5.91 last July…the $3.30 cash offer represents a 36.6% premium based on TRR‘s 20-day volume weighted average price…Trelawney’s Cote Lake deposit, located halfway between Timmins and Sudbury, hosts an NI-43-101 indicated resource of 35 million tonnes averaging 0.82 g/t Au and an inferred resource of 204 million tonnes averaging 0.91 g/t Au, for total contained gold of 6.87 million ounces…the Iamgold acquisition values each ounce in the ground at approximately $85…

The Trelawney buy-out should certainly give the Venture Exchange another jolt to the upside today after yesterday’s 22-point gain to 1393…as we speculated Monday, this market appears to have bottomed out in the 1360’s…the Index should finally bust through its 10-day moving average (SMA) today which has provided resistance since early March…

Rainbow Resources (RBW, TSX-V)

Jon was in Calgary for the day yesterday and met with RBW President David W. Johnston…here’s his summary from that meeting…

1. Rainbow is coming out next week with a short but powerful corporate video – the reason I know is  that I was asked by company President David W. Johnston yesterday to handle the voice-over…I told him I would be honored to do so;

2. Everything is on track and going exactly as planned in terms of upcoming exploration and drilling at RBW’s flagship Big Strike Project in the Kootenays…there aren’t many companies who can claim they have three past high-grade producers that have never been previously drilled but Rainbow can (International, Gold Viking, Ottawa);

3.  Gold Viking will be drilled first, followed by the very promising International which is at higher elevations with slower snow melt as a result…other major priorities are Ottawa and the Referendum (the Referendum could be a “sleeper” in the Rainbow package)…an intense prospecting campaign will commence throughout the Big Strike Project as soon as weather conditions allow – this will contribute a lot to news flow;

4. Johnston loves the chances for a potential major discovery in the Kootenays…he was also very encouraged with his visit to Nevada a couple of weeks ago and the company’s recently-optioned Jewel Ridge Property…”It’s a dandy“, Johnston told me…former open-pits…near-surface mineralization…along strike and contiguous to Barrick’s Ruby Hill Mine to the north and Timberline’s advanced-staged Lookout Mountain Project to the south…great former drill result to follow up on – 2.1 g/t Au over 39.6 metres…Jewel Ridge has all the ingredients to deliver some big-time exploration results for Rainbow…news coming out soon regarding Jewel Ridge I suspect – early field exploration results?…exact timing for the start of drilling at Jewel Ridge in 2012 is uncertain but the company is trying hard to fast-track the process;

5.  Rainbow has been consistent, accurate and timely in meeting all of its stated objectives so far in 2012…given that, plus the “blue sky” potential of the Big Strike and Jewel Ridge Projects, I’ve taken advantage of the recent pullback in the share price to add significantly to my already substantial position (as a matter of disclosure) including 30,000+ more shares Thursday…I’m not in this for pennies;

6. The Rainbow chart is still very strong and the pullback has come on relatively low volume in a typical consolidation pattern;

7. The CDNX has corrected a whopping 20% since the end of February…this is not a time to panic or worry about a stock retracing – a correction like we’ve just seen in the overall market opens up huge money-making opportunities for those investors who are patient and jump in at the right time on quality plays…understanding and managing volatility is not always easy but it’s one of the tricks of being a successful investor…Rainbow has made truly impressive steps in its development over the last few months – this is a young company with a very bright future…

Chart Update – ATAC Resources (ATC, TSX-V)

Storm Resources (SRX, TSX-V)

Storm Resources (SRX, TSX-V) is an oil and natural gas play with an interesting chart as it took one year to go from overbought to very oversold…as always, perform your own due diligence…for investors interested in this sector, SRX is certainly worth a close look…

Note: John, Jon and Terry do not hold positions in ATC or SRX.

Gold is firmer this morning…as of 5:50 am Pacific, the yellow metal is up $10 an ounce at $1,654 with the greenback hitting a three-week low…Silver is 14 cents higher at $30.85…Copper is up 3 pennies to $3.79…Crude Oil is flat at $104.15 while the U.S. Dollar Index is essentially unchanged at 79.03 after dipping briefly below 78.90…

Markets are inferring from the Fed’s latest comments yesterday that it stands ready to provide muscle if required…the rate-setting Federal Open Market Committee (FMOC) left benchmark borrowing costs unchanged yesterday but chairman Ben Bernanke said economic conditions were likely to warrant exceptionally low interest rates until at least late 2014…he added at a news conference that the Fed believed monetary policy was “in the right place, but being in the right place doesn’t mean we won’t take further action”…so Bernanke is keeping all options open for possible additional stimulus which should help keep a solid floor under the Gold price…the $1,600 area has held up extremely well as support…Barclays Capital said in a note to clients: “Policy accommodation remains in place and will continue to support higher-beta risky assets”…

European markets are down marginally this morning while U.S. stock index futures are pointing toward a slightly negative open on Wall Street…a flood of corporate earnings are coming in today, while new U.S. claims for unemployment benefits fell slightly last week but a trend reading rose to its highest level since January – the latest sign of a weaker pace of healing in the still-struggling labor market…

TSX Gold Index

Gold mining stocks have taken a beating over the past 8 weeks but bargain hunters have started to step up to the plate, as witnessed yesterday, and that means we could be in for a much better month of May…John’s latest TSX Gold Index chart shows what to initially look for – a break above the recent downsloping wedge…

HGD (TSX)

The HGD on the TSX, the Gold Index double reverse ETF, rocketed from just under $8 at the end of February to a high of $12.76 Monday, a gain of over 50%…however, Monday may have been a last-gasp surge for a while as there was a classic divergence between price and RSI(14) on the daily chart that signals a possible reversal to the downside…yesterday’s candle was at support, so confirmation is required that the downtrend will continue…the HGD needs to be watched closely as its action in the coming days will give important clues as to the direction of the Gold Index…it appears the HGD is ready to correct some of its recent gains…

Relative to the broad market, the TSX Gold Index is at bargain levels not seen the 2008 Crash…some investors are certainly beginning to take notice which is why CGA Mining (CGA, TSX) jumped 26 cents yesterday to $2.24…the company’s 200,000+ ounce Masbate Gold Mine in the Philippines is the largest operating Gold project in that country…as always, perform your own due diligence, but below are some encouraging technical signs for this stock in John’s 8-month daily chart…

Venture Exchange

The Venture Exchange, which closed yesterday at 1371, may have found a bottom this week as well at 1363….that remains to be seen but the Index, which is clearly oversold, is showing signs of stabilizing…a close above the 10-day moving average (SMA) and a reversal to the upside in that SMA would be a strong indication that this market is turning around after a nasty 20% correction…

Probe Mines (PRB, TSX-V)

Earlier this month, Probe announced an updated resource estimate for its Borden Lake Gold deposit which is characterized by a persistent higher-grade core surrounded by lower-grade mineralization…the indicated resource is 4,051,000 ounces of Gold averaging 0.71 g/t Au while the inferred resource stands at 1,796,000 ounces averaging 0.62 g/t Au, at a 0.3 g/t Au cut-off grade…Probe has fallen sharply from an all-time high of nearly $3 per share near the end of January to a low of 92 cents Monday…it climbed 13 cents yesterday to finish at $1.10 for a total market cap of $71.5 million ($12.33 per ounce of indicated and inferred resources)…John updates the chart below…

Note: John, Jon and Terry do not hold positions in CGA or PRB.

Gold is trading in a narrow band ahead of today’s Fed Statement and Bernanke news conference…as of 5:45 am Pacific, the yellow metal is unchanged at $1,641…Silver is a nickel higher at $30.90…Copper is up 3 pennies at $3.75…Crude Oil is ahead 79 cents to $104.34 while the U.S. Dollar Index continues to show some weakness, down slightly to 79.15…

The current disparity between the price of Gold and Gold mining stocks is clearly evident in this 4-year monthly comparative chart below from John…an encouraging fact, however, is that the stocks have landed on support…

Today’s markets

A decent day is shaping up in the markets and hopefully Bernanke will throw some fuel on the fire later this morning…European markets, with the exception of the FTSE, are significantly higher while China’s Shanghai Composite climbed nearly 1% overnight to close at 2407…technically, this Index is looking quite strong and is poised for a potential breakout…stock index futures in New York are pointing toward a positive opening on Wall Street, buoyed by better than expected quarterly earnings from Apple after yesterday’s closing bell…Apple is simply amazing – its quarterly profit almost doubled, blowing past Wall Street estimates after a jump in iPhone sales, particularly in the greater China region, soothing fears that the iPhone was past its best days for sharp growth…this also underscores how the Chinese economy, driven more than ever by consumer spending, is so potentially lucrative for foreign companies that can gain a foothold there…the Chinese, of course, also love Gold and the story is the same in India…

A weaker-than-expected U.S. durable goods number, just released in the last 15 minutes, has trimmed early gains in stock index futures…

Figuring Out The ECB

The ECB’s government bond-buying program (LTRO) has essentially been inactive for the past 10 weeks, and it’s likely no coincidence that Gold and the Venture Exchange have struggled during most of that time…

European Central Bank President Mario Draghi gave no indication on Wednesday that the ECB was poised to provide more support for banks or governments but also said the time was not right to consider rolling back its crisis-fighting measures…there are growing expectations in financial markets that the ECB will have to ride to the rescue again with Spain under intense pressure, the Dutch government having collapsed over budget plans and recent data showing the euro zone is being driven back into recession…

The message from the currency bloc’s central bankers is very different – having created more than a trillion euros of low-cost, three-year money via so-called LTROs to avert a credit crunch, time has been bought for governments and banks to cut debt and clean up balance sheets…Draghi rammed home that message in an address to the European Parliament’s economic committee…”Now, the ball is entirely, squarely in the court of governments and banks,” he said…however, he added that any “exit strategy” from the ECB’s emergency measures, something Bundesbank chief Jens Weidmann and others have said should be discussed, was premature given weak economic conditions…Draghi said banks must strengthen their finances further, including by retaining earning and bonus payments, while governments must stick with fiscal austerity drives which in some cases are driving countries deep into recession…”We are just in the middle of the river that we are crossing,” he said…”The only answer is to persevere”…

The ECB has played its part in buying governments time…”Our LTROs have been quite timely and successful,” said Draghi…”If the only thing we had achieved is to buy time, which by the way is not the only thing we achieved, we would have been successful…I think buying time is not a minor achievement”…

Britain In First Double-Dip Since 1970’s

Britain’s economy slid into its second recession since the financial crisis – its first “double dip” since the 1970’s – after official data released this morning unexpectedly showed a fall in output in the first three months of 2012…this will pile pressure on Prime Minister David Cameron’s embattled coalition government…the Office for National Statistics said Britain’s GDP fell 0.2% in the first quarter of 2012 after contracting by 0.3% at the end of 2011, confounding forecasts for 0.1% growth…

Great Panther Silver (GPR, TSX)

One of our favorite Silver producers is Great Panther (GPR, TSX) which has been trading in a long downsloping channel (or a flag formation?) for the past year…it’s now back to important support after dropping as low as $1.81 Monday…it closed at $1.88 yesterday…below is a very interesting 2.5-year weekly GPR chart from John…

John has two other company charts this morning – Hulda Silver (HDA, TSX-V), and Sandstorm Gold (SSL, TSX-V) which has recently proposed up to a 1-for-5 share rollback in an attempt to pursue a dual listing on a U.S. stock exchange…

Huldra Silver (HDA, TSX-V)

Sandstorm Gold (SSL, TSX-V)

Note: John, Jon and Terry do not hold positions in GPR, HDA or SSL.

This is an early edition of Morning Musings due to travel commitments today…as of 1:30 am Pacific, Gold is down $1 an ounce at $1,637…Silver is off a nickel at $30.81…Copper is up 2 pennies at $3.70…Crude Oil is essentially unchanged at $103.07 while the U.S. Dollar Index has retreated just over one-tenth of a point to 79.25…

Copper Chart Indicates Turnaround

Copper is a very reliable leading indicator for global markets and the economy which is why it’s important to examine the Copper chart and fundamentals on a regular basis…John’s 6-month daily chart below is encouraging as it shows the RSI bouncing off previous support, Slow Stochastics at very oversold levels but beginning to rebound, and declining selling pressure as indicated by the Chaikin Money Flow (CMF-20)…in addition, a strong support band has been tested and is holding…

Analysts with Barclays Capital say their visit to the CESCO/CRU copper conference in Chile last week confirmed their view that the near-term fundamental outlook offers downside risks to Copper prices…they cite soft Chinese demand and imports and subsequent rises in London Metal Exchange inventories…still, Barclays says this is likely to be limited by higher contracted tonnage that China has booked for 2012, to the tune of 200,000 to 250,000 metric tons a month, plus a tightening global mine supply picture…

Six months ago, expectations had been for 2012 to be a “bumper year” for copper-mine production…however, Barclays says, feedback from producers suggests that moderate growth is more likely…further growth had been expected in 2013-14, and while increases are still likely, this also may be more constrained than once thought, Barclays stated…“People, power and permitting are the key challenges for mining companies, and with an increasingly hostile geopolitical environmental, capital costs for projects are rising and leading to miners acknowledging the need to work with higher long-term price assumptions for future projects to be realized”…

Today’s Markets

European markets are higher after yesterday’s sell-off while Asia was mixed overnight with China’s Shanghai Composite Index holding steady at 2388…stock index futures in New York suggest a slightly positive open on Wall Street…the FMOC meeting begins today and ends tomorrow with a Bernanke news conference which may help lift the markets out of their doldrums…Bernanke helped pull Gold down at the beginning of March…just the opposite may occur tomorrow…the risk for Gold is to the upside as it seems to have already factored in any potential negatives over the last eight weeks…

The Venture Exchange fell as low as 1363 yesterday before rebounding marginally near the end of the day to close at 1371…over 38 sessions the Index has lost 19.6%, a typical major CDNX correction and almost identical to the one during the same period in 2005…expect a significant turnaround in May given the very oversold conditions that now exist…

John has two interesting company charts this morning – Spanish Mountain Gold (SPA, TSX-V) and Richmont Mines (RIC, TSX)…the fundamentals for both are strong with SPA developing a significant low-grade deposit in central British Columbia while Richmont of course is a producer with an impressive growth profile based in Rouyn-Noranda, Quebec…

Spanish Mountain’s chart shows a rapidly improving technical picture which, we believe, is a positive sign for the Venture as a whole…

Richmont, which is trading at just 8 times its 2011 earnings (it should do at least as well in 2012), is a classic example of how oversold many Gold stocks have become…one cannot look at this chart below and argue that Gold or Gold stocks are not at or very close to an important bottom…intense selling pressure in recent weeks may have reached a climax…at yesterday’s closing price of $6.47, RIC is one of the best bargains in the industry at the moment in our view…

Note: John, Jon and Terry do not hold positions in SPA or RIC.

Analysts with Barclays Capital say their visit to the CESCO/CRU copper conference in Chile last week confirmed their view that the near-term fundamental outlook offers downside risks to copper prices. They cite soft Chinese demand and imports and subsequent rises in London Metal Exchange inventories. Still, Barclays says this is likely to be limited by higher contracted tonnage that China has booked for 2012, to the tune of 200,000 to 250,000 metric tons a month, plus a tightening global mine supply picture. Six months ago, expectations had been for 2012 to be a “bumper year” for copper-mine production. However, Barclays says, feedback from producers suggests that moderate growth is more likely. Further growth had been expected in 2013-14, and while increases are still expected, this also may be more constrained than once thought, Barclays says. “People, power and permitting are the key challenges for mining companies, and with an increasingly hostile geopolitical environmental, capital costs for projects are rising and leading to miners acknowledging the need to work with higher long-term price assumptions for future projects to be realized.”