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Gold is bouncing around a bit this morning after yesterday’s bullish intra-day reversal, the third straight “hammer” we’ve seen in the yellow metal recently…as of 5:25 am Pacific, Gold is down $3 an ounce at $1,559…Silver is flat at $27.91…Copper is unchanged at $3.40…Crude Oil is 15 cents higher at $87.97 while the U.S. Dollar Index has fallen one-fifth of a point to $82.84…

The action in the TSX Gold Index yesterday was another strong statement by the Gold stocks that Gold will NOT break strong support in the low $1,500’s, and it’s next major move is higher – not lower…with Gold down about $20 intra-day to around $1,530, and the overall markets very weak, the Gold Index shed just 6 points when it could have taken a real pounding…and then it reversed sharply to finish higher for the day as Gold itself rebounded…the chart for the TSX Gold Index shows that a very important low was likely put in May 16 at 266 (the same day the Venture may have bottomed out at 1215)…lately, this Index has significantly out-performed Gold which is a bullish sign for the metal…given this chart, June is shaping up to be a much better month for Gold stocks which may suggest the Fed and central banks around the globe are about to embark on a wild money printing spree…

The chart for Gold itself is less spectacular than the Gold Index but encouraging nonetheless (the stocks will typically lead the metal) even though Gold is about to post its 4th consecutive losing month, matching a similar run 12 years ago…Gold’s hammer reversal yesterday was particularly impressive considering it came on a day when the U.S. Dollar Index jumped half a point…

India Growth Slows

India’s economic growth fell to a 9-year low in the first three months of 2012, a clear sign that the country’s slowdown is deepening and affecting all sectors of the economy…sharp falls in the manufacturing and agriculture sectors led Asia’s third-largest economy to grow only 5.3% year-on-year in the quarter, compared with 9.2% growth a year earlier…this is the worst performance of India’s economy since 2003 and far worse than the situation in the wake of the global financial crisis and the collapse of Lehman Brothers in late 2008, adding pressure on policymakers to take emergency actions to revive the country’s growth…India’s parliament, however, has been in a state of virtual paralysis since the Congress-led coalition government became embroiled in a wave of corruption scandals involving senior members of the cabinet…key reforms are not being implemented, so government is very much the problem in this country as in many other jurisdictions…

Today’s Markets

Asian markets were off modestly overnight with Japan’s Nikkei Index shedding 1.1%, closing out its worst monthly fall in 2 years…the Nikkei hit a 4.5-month closing low and was down 10.3% in May, its biggest one-month fall since May, 2010, when it lost 11.7%…

May, 2010, was a great time to be a buyer in the markets, wasn’t it?

European shares are higher this morning, rebounding from sharp losses yesterday, while U.S. stock index futures as of 5:25 am Pacific suggest a positive open on Wall Street…a slew of economic data is coming out of the U.S. today, including ADP’s latest employment report for May as well as the Chicago Purchasing Managers Index, ahead of tomorrow’s all-important jobs report…the ADP report was just released with private-sector job growth a disappointingly weak 133,000 from April to May…

After a 7% jump last week, the Venture Exchange is down 36 points the last two trading sessions but the 10-day moving average (SMA), which has made a sharp turnaround, is providing support…

Some of our readers have asked for a chart on Gold Bullion Development (GBB, TSX-V) which has been stirring lately after hitting a low of 7 cents May 23…GBB needs results on the ground for a sustained move up, and the current drilling in the promising northern part of the Eastern Extension is the Big Hope…

Note: John, Jon and Terry do not hold positions in GBB…

Gold has traded in a range between $1,544 and $1,560 so far today…as of 6:00 am Pacific, the yellow metal is down $6 an ounce at $1,549…Silver is 17 cents lower at $27.71…Copper has fallen 4 pennies to $3.44…Crude Oil, which is down about 14% for the month, is off another $1.39 to $89.37 while the U.S. Dollar Index is up over one-tenth of a point to 82.67…

Euro Zone, China & Today’s Markets

European markets and U.S. stock index futures temporarily rebounded this morning after the European Union Commission said the euro zone should move towards the direct recapitalization of banks from its permanent bailout fund…it also said the region should move towards a banking union and consider euro bonds as it laid out year-long recommendations…

The Commission was also critical of both Spain and France…despite introducing 27 billion euros in austerity measures this year, the Spanish government has still not done enough to hit tough EU-mandated fiscal targets and will need to implement yet more tax increases and spending cuts up until the end of the decade, according to the Commission…most strikingly, the commission began laying the groundwork for a potential showdown with France, saying Paris has not done nearly enough to meet its targets – like Spain, it must get its deficit to 3% of GDP by next year – and the Commission appears ready to fine the new French government if it did not take immediate action…

Italy’s 10-year bond yields breached the 6% mark today for the first time since January, and Spain’s 10-year yields rose close to a new euro-era high, as limp demand at an Italian debt auction reinforced fears over the the euro zone’s financial crisis…the gloomy outlook was exacerbated by a second consecutive drop in Europe’s economic sentiment indicator and to its lowest level since October, 2009…

Feeding fears that China, the engine of global growth, will not grow as fast as hoped, influential academics said Beijing should shun aggressive fiscal stimulus, in remarks published in leading state-backed newspapers today…they joined a chorus of commentary countering market expectations that China might unveil a stimulus package similar to the 4 trillion yuan ($630.1 billion) in spending unleashed during the global financial crisis…

Asian markets finished lower overnight with China’s Shanghai Composite off a modest 5 points at 2385…U.S. stock index futures as of 6:00 am Pacific are pointing toward a 100+ point drop at the open on Wall Street…

Venture Exchange

The Venture Exchange suffered its first loss in six trading sessions yesterday, falling 16 points to 1309…it would be a very positive sign if the rising 10-day moving average (SMA), currently around 1275, provides support as this market tries to gain traction…not surprisingly GoldQuest Mining (GQC, TSX-V) announced a bought-deal private placement yesterday – an agreement with Dundee Securities on behalf of a syndicate of underwriters…the PP will raise $5 million at 45 cents and is expected to close by June 20…

Crude Oil – Interesting Chart

As Crude Oil goes, so do the markets…there has been a close correlation between equity markets and Oil prices, so with Crude Oil down 14% this month it’s no surprise the stock markets have been rattled…so where is Oil headed?…John’s 2.5-year WTIC weekly chart below is quite revealing and offers hope that the Oil price has found a bottom after dipping slightly below the $90 per barrel mark this morning…

U.S. Dollar Index

Like dropping Oil prices, a surging U.S. Dollar is also market-negative…a recent breakout above key resistance at 80.78 was bullish for the Dollar Index which is effectively a mirror image of the euro…keep in mind the euro represents about 58% of the Dollar Index weighting…and the other currencies in the Index (with the exception of the Japanese yen) tend to move in tandem with the euro…despite its recent sharp gains, the Dollar Index is by no means wildly overbought on this 2.5-year weekly chart though RSI(14) is approaching previous resistance…the 83 to 83.56 area is where the Dollar Index could hit a temporary wall and begin to consolidate its recent gains which would certainly bring some relief to the equity markets…

Euro Chart

The battered and technically oversold euro is approaching a support band and there is also a small divergence between the current price and RSI(14), so conditions are probably ripe for a euro rally in the near future especially considering the current very large short position…

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.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

Gold is flat this morning…as of 5:15 am Pacific, the yellow metal is unchanged at $1,574…Silver is 27 cents lower at $28.16…Copper is up a penny at $3.51…Crude Oil has added 27 cents to $91.13 while the U.S. Dollar Index is off slightly at 82.31…

Today’s Markets

Asian markets were strong overnight with China’s Shanghai Composite gaining 1.2% to close at a two-week high of 2390…traders were buoyed by hopes for additional easing measures from Beijing to support the economy, with carmakers and cement producers in demand, the latter in the belief that an infrastructure boost is on the way…European shares are up this morning while stock index futures in New York suggest a positive open for Wall Street after a long holiday weekend…

Environmental Extremists At It Again

Protests against an Xstrata PLC copper mine prompted the Peruvian government to declare a state of emergency last night…media reports say that two people were killed and 50 were injured in protests against the mine, located in the southern area of Cusco…

A Quick Look At 2012

Below is a 2012 price comparison chart through last Friday for Gold, Silver, Copper, the U.S. Dollar, the TSX Gold Index and the Venture Exchange…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) has had a spectacular run over the last three trading days after releasing news regarding a very significant discovery hole at its Las Tres Palmas Project in the Dominican Republic…after yesterday’s late session surge, a gap-up this morning seems to be in the cards…from a technical perspective, the stock is certainly overbought but that of course doesn’t mean it can’t move even higher before it starts to unwind that overbought condition…confidence in GoldQuest chairman Bill Fisher, whose previous success stories include Aurelian and GlobeStar, is likely drawing strong institutional interest (Fisher has many institutional contacts) which may account for the sudden surge yesterday…a “bought deal” financing seems to be a certainty…with just that one discovery hole drilled so far, the market has plenty to speculate on and could really kick into high gear when drilling resumes which is expected to be in the very near future…

GoldQuest sliced through resistance at 48 cents like a knife through butter yesterday, and that area now becomes strong support…below is a 2.5-year weekly chart from John that you won’t see very often in your lifetime…it appears investors will continue to chase GoldQuest today…

Folks, this is what is great about the Venture Exchange and junior resource stocks – a major potential discovery and a 10-bagger in less than a week…this is exactly what the Venture needs at the moment, and hopefully more discoveries are on the way…

Rainbow Resources (RBW, TSX-V)

An area that we’re looking at closely for a potential discovery is the West Kootenay region in southeast British Columbia…it’s as mineral-rich as the Dominican Republic and has had a prolific production history…interestingly, however, there has been a surprising lack of drilling in the West Kootenays which merely underscores the geological opportunities…this is why we’re so excited about Rainbow Resources (RBW, TSX-V) which has emerged as an exploration leader in southeast B.C. and will be commencing a major drill program shortly…one stellar hole could turn RBW into a 10-bagger like GQC, and we like the odds considering the fact Rainbow will be drilling into some known high-grade structures at its flagship International Property as well as Gold Viking…neither property has been previously drilled…neither has the Ottawa Property (immediately adjacent to Gold Viking) which is part of the old Ottawa Mines that produced 1.8 million ounces of silver at an average grade of 61.6 ounces per ton…if you like porphyry systems, RBW could be looking at one of those too at its Referendum Property near Nelson where a 4.4% Cu showing was discovered…

The RBW chart is looking strong from a technical standpoint and a breakout through 20 cents would confirm that a potentially powerful new uptrend is underway…the 20-day moving average (SMA) has reversed to the upside which increases the likelihood of a near-term breakout…

Focus Graphite (FMS, TSX-V) and Levon Resources (LVN, TSX-V)

John has updated interesting charts this morning on two additional interesting situations we’ve been following in recent months – Focus Graphite (FMS, TSX-V) – formerly Focus Metals – and Levon Resources (LVN, TSX-V)…

Focus Graphite (FMS, TSX-V)

Levon Resources (LVN, TSX-V)

Note: Both John and Jon hold share positions in Rainbow Resources while Jon also holds a share position in GoldQuest Mining.

GoldQuest Mining (GQC, TSX-V), which just last Wednesday was trading around 6.5 cents when we brought it once again to our readers’ attention, exploded late in today’s session and closed at 61 cents for a 56% daily gain.  More fuel was added to the fire as soon as GQC cleared the 48-cent resistance area.  All of this after a 27% jump in the share price Friday and a whopping 313% initial advance Thursday.

Some heavy buying is coming into this stock, and it’s not certainly not from just retail investors.  GoldQuest made a spectacular new discovery last week at its Las Tres Palmas Project in the Dominican Republic, 2.5 km north of its Escandalosa Sur deposit.  This is definitely a game-changer for GoldQuest which, we’ll remind everyone, also has many other highly prospective targets in the DR including its Las Animas deposit.  But right now the market is focused on the Romero discovery and rightly so.  It’s safe to assume GQC will be announcing a financing soon, likely of the “bought deal” variety, in order to aggressively follow up on hole LTP-90 which intersected 241 metres grading 2.4 g/t Au.

As we pointed out last week, geologically consistent alteration and mineralization was observed from 30 metres to 261 metres in this hole. What’s different about this hole, compared to ones drilled in the Hondo Valle and Escandalosa Sur areas to the south, is the thickness of mineralization, more sulphides as well as high Gold values associated with high copper values at depth.  A 12-metre section, for example, between 216 m and 228 m graded 16.95 g/t Au and 2.14% Cu.  The hole was terminated in mineralization due to technical problems, so the discovery is open in all directions.  Romero could turn out to be a very rich porphyry system – much more drilling will be required to determine that, but the market is clearly excited about this and could really go crazy when drilling resumes shortly.

Below is an updated GQC chart from John – expect more volatility tomorrow.

Note: Jon holds a position in GQC (John and Terry do not).

Rainbow Resources (RBW, TSX-V)

The West Kootenay region of southeast British Columbia is another area to watch closely for a potential major discovery, and the exploration leader in that district at the moment is Rainbow Resources (RBW, TSX-V) with drilling expected to begin soon at the company’s Gold Viking Property, followed by the International.  Prospecting in certain areas of the 12,700-hectare Big Strike Project is already underway.

In a significant technical development, RBW’s 20-day moving average (SMA) has reversed to the upside, ending a decline that started in March.  With resistance at 19 cents also taken out today, readers are advised that the next bullish phase in RBW appears to be underway. This fits well with increased activity on the ground at Big Strike, and an overall market that’s looking a lot healthier.  John updates the RBW chart below.

Note: John and Jon both hold positions in RBW (Terry does not). 

Gold has traded between $1,575 and $1,585 so far today…as of 5:50 am Pacific, the yellow metal is up $4 an ounce at $1,578…Silver is flat at $28.53…Copper has gained 4 cents to $3.52…Crude Oil is up 91 cents to $91.77 while the U.S. Dollar Index is off slightly at 82.06…

CME Group is cutting margins for Gold futures at the end of business tomorrow, according to HSBC…

Today’s Markets

We wish our American friends a happy Memorial Day today…U.S. markets are closed which will mean a quiet trading day on the Canadian markets…Asian markets finished in the green overnight with China gaining 28 points to 2361…European shares are higher this morning on news of a gain in Greek opinion polls of New Democracy, a right-wing and more sensible alternative to the socialist/communist Syriza Party…the rise in support for anti-bailout Syriza has been one of the key factors dragging down markets in recent weeks…New Democracy, which says Greece must become more “business-friendly” and cut taxes in order to attract investment, pulled ahead of Syriza in opinion polls over the weekend…

The euro zone, however, is only as strong as its weakest link and it’s time the cheaters and schemers in Greece be held to account with the country given the boot out of the euro zone…it has abused the privilege of being in the euro zone, and eviction from this group would send a powerful message and remove a constant irritant…the euro zone would then have to seriously ring-fence other vulnerable countries such as Spain, Ireland, Portugal and Italy…

Spain’s borrowing costs have jumped as lingering worries over the state of the country’s banking system and the cost to the state of nationalizing Bankia continued to pound sentiment…yields on Spain’s 10-year government bonds today moved above 6.50% once again – moving closer to the 7% level that prompted bailouts for Greece, Portugal and Ireland…Spain’s cost of borrowing had recovered dramatically from the highs seen at the end of last year after the European Central Bank injected more than 1 trillion euros into the euro zone banking system under its three-year longer-term refinancing operation…Spanish and Italian banks were heavy users of the LTRO, using the money to buy government bonds…

Venture Exchange

The Venture Exchange enters a new week above the 1300 mark after climbing 7% last week…it’s still too early to say this market has finally put in a bottom after a 28% correction since February 29 and a 51% pullback form its 2011 high, but at the very least it appears a significant rally is underway that could carry on for several weeks…if this is true, expect the RSI(14) to overcome resistance at the 50 level as shown in John’s 6-month daily chart below…

RJK Explorations (RJX.A, TSX-V)

We’re keeping a close eye on RJK Explorations (RJX.A) which started a 2,000 metre drill program at its Blackwater East Gold Property in mid-February and should be reporting initial results soon…unlike GoldQuest Mining (GQC, TSX-V), which was a no-brainer at a nickel, we’re more comfortable taking a wait-and-see approach with RJK given evidence of recent selling pressure in the stock…the Blackwater District surrounding New Gold’s (NGD, TSX) multi-million ounce Blackwater-Davidson Project holds immense potential, however, and RJK is certainly an exploration leader in that area…at 20 cents, RJK’s market cap is approximately $17 million, so the stock price is already factoring in encouraging but not outstanding results from this particular round of drilling…below is an updated chart from John…

Adventure Gold (AGE, TSX-V)

Adventure Gold (AGE, TSX-V) found strong support recently just above 20 cents, a drop of more than 50% since March due to overall market weakness…we remain very bullish on AGE’s Pascalis-Colombiere Gold Property near Val-d’Or where a 15,000 metre Phase 3 drill program commenced in mid-February…there’s no reason why AGE should not report solid results from this phase of drilling given previous numbers that showed AGE is identifying a very significant mineralized system at Pascalis…AGE closed at 25 cents Friday…below is an updated chart from John…

Our final chart this morning is on Cap-Ex Ventures (CEV, TSX-V) which, like Adventure Gold, has fallen by more than 50% since March…CEV is due for a substantial rebound…it has dropped well below its still-rising 200-day moving average (SMA) around 75 cents, so a 50% move from current levels to test that area seems reasonable…the declining 100 and 300-day SMA’s are slightly above the 200-day…CEV came under intense selling pressure in April and became quite oversold technically as it hit a recent low of 42 cents…it closed at 50 cents Friday…

TSX Venture Exchange and Gold

The Venture Exchange rebounded sharply last week and dramatically outperformed the major indexes with a 7% gain (the TSX climbed 3%, the Nasdaq was up 2% while the Dow eked out just a 1% gain).  The Venture, which fell 28% over 55 trading sessions from its February 29 yearly high of 1696 to a low of 1215 May 16, may now be ready to pull off a 2005-style advance through the remainder of the year after a major spring correction.  That remains to be seen; however, the catalyst for that would be central banks firing up the printing presses which seems to be a growing possibility given the situation in Europe and a slowing global economy.   The Fed and the ECB could very easily ignite a “risk-on” trade in the very near future aimed at restoring confidence in the euro zone and kick-starting the global economy.  China is ready to take additional  monetary and fiscal measures as well to avoid a hard landing.

So while we’re not quite ready to proclaim that May 16 was indeed the bottom of a nasty correction, the picture is nonetheless looking considerably brighter for the beaten-down Venture Exchange.  Last Wednesday’s trading was particularly encouraging and revealing as sharp intra-day bull hammer reversals occurred in Gold and Silver stocks (TSX Gold Index and the Venture) while the underlying metals were still down significantly for the day, though they were quick to follow.  It was the type of trading activity that one normally sees at major reversal points.  There was also follow-through on Thursday and Friday.

Volume levels for the Venture are still relatively low and need to increase, though this didn’t stop GoldQuest Mining (GQC, TSX-V) from trading a whopping 25 million shares on the Venture Thursday and Friday after reporting a major discovery at its Las Tres Palmas Project in the Dominican Republic.  More discoveries like this will rekindle interest in the CDNX and provide the necessary fuel for this market to move significantly higher.

The Yukon, of course, is an area to certainly watch closely.  Natural Resources Canada recently estimated that $300 million would go into mineral exploration in the Yukon this year, just a little less than the $307 million last year.  There are some outstanding companies with an excellent chance of exploration success in the Yukon this summer.  The western U.S. is also hot, and we’re also convinced that the West Kootenay region will become a major focus of attention this summer with the work that Rainbow Resources (RBW, TSX-V) and some other companies are doing there.  Geologically, this area is mineral-rich but has been heavily under-explored.  In our view it’s not a question of “if” but only “when” a new discovery will be made in this region.  Rainbow‘s ground covers 130 square kilometres; prospecting is underway and the start of a major drill program is imminent.

Below is John’s updated chart for the CDNX. As he states, “It has been a long time since the Index appeared this strong”.  Notice how the RSI(14) on this 6-month daily chart is now up against resistance – what we’ll be looking for this coming week is a break above that RSI resistance level, as well as increasing volume, to provide additional evidence that this market has indeed “turned the corner”.

Gold

Gold had a strong finish to the week, climbing $16 an ounce Friday to close at $1,574.  Overall, the yellow metal was still down for the week but the trading action was encouraging.  Wednesday’s activity in particular carried a lot of potential significance.  The first major resistance Gold needs to crack is $1,600, and another test of that level seems likely this coming week. Ultimately, Gold needs to overcome its down trendline as shown below and then expectations will build for a run to a new all-time high.

Silver, which has held important support levels, also had a strong finish to the week and closed at $28.53 Friday (down 19 cents for the week).  Copper was relatively unchanged for the week, down just a penny, while Crude Oil lost another 62 cents to $90.86.  The surging U.S. Dollar Index broke through resistance at 81.78 and closed up more than a point for the week at 82.39.  The greenback is heavily overbought due to the euro zone situation, and a correction can’t be far off which would be bullish for the equity markets and Gold.

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.  Massive central bank intervention appears increasingly likely to prevent a breakup of the euro zone and to kick-start the global economy.  It’s hard to imagine Gold not performing well in this environment.

Gold found support at $1,550 overnight…as of 5:55 am Pacific, the yellow metal is up $4 an ounce at $1,562…Silver is 13 cents lower at $28.19…Copper is 2 pennies higher at $3.47…Crude Oil is flat at $90.72 while the U.S. Dollar Index is up slightly at 82.35…

Gold is down for the week but the chart action in the yellow metal in recent days has been encouraging, and Gold stocks have been responding well – moving ahead of the metal which is a bullish sign…the Venture Exchange has climbed 4% this week while the TSX Gold Index is up 7%…they have advanced 6% and 15%, respectively, since their mid-May lows when Gold touched the $1,525 area…the set-up for the end of the month and June looks promising, and we’re convinced central banks will soon have to print money faster than rabbits can make bunnies…such a scenario could produce a spectacular move in the markets…

Today’s Markets

The euro is bouncing off a 22-month low against the U.S. Dollar after Italian Prime Minister Mario Monti said Greece will probably stay in the euro, and Germany can be persuaded to support Europe’s “common good”…European markets are down modestly this morning while Asian markets were mixed overnight…Japan’s Nikkei Index suffered its eighth consecutive weekly loss, its longest weekly losing streak in 20 years…stock index futures in New York as of 5:55 am Pacific are pointing toward to a slightly lower open on Wall Street…volumes will likely taper off today in advance of the Memorial Day long weekend in the United States (U.S. markets are closed Monday)…

GoldQuest Mining (GQC, TSX-V)

As expected, GoldQuest exploded yesterday with a gain of 320% after reporting a spectacular drill result from its Las Tres Palmas Project in the Dominican Republic…additional drilling of course will determine this, but has GoldQuest perhaps hit only the edge of a potentially massive porphyry system?…initial small step-outs should help to answer that question…there’s enough substance and speculation here to keep the market enthused about GQC for a considerable period of time yet, so rest assured this is not going to be a one-day wonder…there has to be a heat engine for Romero and if GoldQuest finds it, the stock will soar much higher…

Below is a chart from John on just yesterday’s activity for GQC with the stock trading a total of 20.3 million shares (all exchanges) and closing at 31 cents, an important Fibonacci level as we pointed out yesterday…

Note:  Jon holds a position in GQC (John and Terry do not)…

Greenlight Resources (GR, TSX-V)

We’ve mentioned Greenlight a few times over the past couple of months as it’s a company whose stock has performed well this year (it’s up nearly 50% to 12.5 cents) due to the energy, leadership and strategic planning of President and CEO Chris Anderson…we view him as a very bright up-and-comer in the industry…Greenlight is using a project-generation model to build shareholder value, covering a wide range of specialty and traditional minerals…its properties are in Atlantic Canada (New Brunswick, recently ranked by the Fraser Institute as the world’s #1 mining jurisdiction)…

Below is an updated GR chart from John (2.5-year weekly chart) that shows plenty of promise…this is definitely a company worth performing considerable due diligence on…

Note: John and Jon both hold share positions in GR (Terry does not)…

As we close the trading week, our thoughts and prayers go out to John’s son David and his family, and all those in the Kirkland Lake area, who are threatened by major forest fires at the moment…below are a couple of pictures that John received from his son yesterday…

Forest fire near Kirkland Lake, Ontario

Forest fire near Kirkland Lake