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TSX Venture Exchange and Gold

Friday was a potential game-changer in the markets as an EU summit finally produced something concrete, a positive surprise relative to low expectations.  The agreement to allow the euro zone’s rescue funds to recapitalize Spain’s enfeebled banks directly and to buy Italian sovereign bonds sparked the biggest daily rise in European stocks, Italian and Spanish bond prices and the euro/dollar exchange rate this year.  Commodities surged as well with Gold jumping nearly $50 an ounce and crude oil climbing over 9%.

A key element of the deal was the introduction of a new system of European banking supervision via the European Central Bank, a first step towards a full banking union. The leaders also agreed on a 120 billion euro package of growth promotion measures and the start of negotiations to closer fiscal and economic co-operation.

With the ECB expected to lower interest rates next Thursday, and central banks across the globe sticking to accommodative monetary policies and ready to put the pedal to the metal if necessary, the “risk-on” trade could come to life at a time when many are expecting the summer doldrums.

Over the past decade, the Venture Exchange has enjoyed five “good” summers (July 1 through September 30) and five poor ones including last year when July was actually decent before the market started to unwravel in August.  So to expect the summer doldrums this year- well, you have about a 50% chance of being correct, perhaps less given the events Friday.

After a nasty 4-month correction that has has wiped nearly 30% off the value of the Venture, a strong third quarter could be in the cards.

The Venture found solid support just above 1150 last week and climbed 27 points Friday to close at 1191.  That was still a 15-point loss for the week but the technical picture has improved considerably. What was particularly encouraging Friday was the powerful finish.  The market gapped up in the morning, erased some of those gains, and then rallied toward the end of the day to close above the opening levels.  Volume picked up slightly.  Higher volume and broader participation are keys to driving the Venture back above 1200 and, importantly, through the downtrend line shown in John’s chart below.

Friday’s big success story was Barkerville Gold Mines (BGM, TSX-V) which surged 50% on CDNX volume of over 7 million shares after the company announced a robust NI-43-101 indicated resource estimate for its Cow Mountain Gold quartz open-pit model, in addition to impressive geological potential numbers over a 4-mile trend over its B.C. Cariboo properties.  This, plus the fact that New Gold (NGD, TSX) on Friday announced the start of production at its New Afton Mine near Kamloops,  is good news for B.C. plays in general.

Gold

Gold responded in very bullish fashion to the news out out of the EU summit and rocketed $47 higher to close Friday at $1,599 for a weekly gain of $32 an ounce.  Silver, which came within a whisker of a severe breakdown Thursday, gained $1.17 an ounce Friday to $27.49.  It’s important to note that the commercial short position in Silver is at a RECORD LOW – this is extremely bullish.

Sales of Silver coins in India are reported to be soaring in response to Gold prices hitting record highs in the local currency (the rupee has fallen 21% vs. the U.S. Dollar over the past year).

A close higher than $1,604 for Gold would put it above its 10, 20 and 50-day moving averages (SMA’s). The big challenge for Gold, however, will be to make a decisive move through some heavy resistance between approximately $1,650 and $1,700.

Copper exploded Friday, closing at $3.52, while Crude Oil enjoyed a spectacular day as it gained over 9% to close $7.27 higher at $84.96.  The U.S. Dollar Index fell sharply Friday to finish the week at 81.59.

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.

Welcome to our site, or at least the initial version of it!  BMR has been online for nearly three 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 a great deal 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.

The “risk-on” trade is back, at least temporarily…Gold and commodities in general are blasting higher today, along with the euro, after leaders at the EU summit struck a deal to cut borrowing costs for Spain and Italy…as of 6:10 am Pacific, the yellow metal is up $43 an ounce at $1,595 after testing support around $1,550 yesterday…Silver has climbed $1.29 an ounce to $27.61…Copper is up a whopping 13 cents to $3.48…Crude Oil has surged $4 a barrel to $81.72 while the U.S. Dollar Index has slipped more than a point to 81.53…

A Repeat Of 2004?

Despite today’s month and quarter-end surge, Gold has suffered its worst quarter (or one of its worst depending on today’s close) in 8 years since the three months to June, 2004…Gold bottomed in May, 2004, and jumped 20% off its lows by November of that year…during that same year, the Venture plunged from March until July and then recovered almost all of its losses by the end of 2004 with a 30% move to the upside that started in earnest in August…will we see a repeat of that action in 2012?…only time will tell, but we like the odds of a turnaround given such high levels of bearishness recently…

John’s CRB chart yesterday also showed that commodities may have put in a bottom…

EU Deal

The key parts of the EU summit announcement are the direct recapitalization of European banks via the euro zone’s permanent rescue fund, the European Stability Mechanism, and bond support for Italy and Spain without extra austerity…the change, agreed as part of a deal struck in the early hours of this morning, will not happen immediately, however…instead the leaders agreed it would come only after the euro zone set up a single banking supervisor to be run by the European Central Bank…

The Financial Times reported this morning that the dramatic shift in the bailout rules came after Italy and Spain forced leaders to remain at the summit overnight, blocking agreement on all other agenda items before getting a deal on short-term rescue measures…the summit agreement also contained some concessions for Italy, though less than for Spain, setting the stage for Rome to become the sixth euro zone country to request EU assistance as part of the euro zone debt crisis…Ireland, which suffered a bank meltdown like that in Spain, would also be considered for similar treatment, the summit agreed…

Today’s Markets

Stock index futures in New York as of 6:10 am Pacific are pointing toward a strong opening on Wall Street…Asia was robust overnight while European markets are up as much as nearly 4% this morning…

The Venture Exchange found support at 1154 yesterday and rebounded late in the day to close at 1164…the downward pressure seems to have exhausted itself, at least for now, and there is also a divergence between RSI and price – the recent drop below 1200 to a new yearly low has not been accompanied by a new low in the RSI…the Venture is ready for a rebound and John will examine the upside possibilities in a an updated chart tomorrow as part of our Week in Review And A Look Ahead…

From the rumor mill this morning, word is that Resource World Magazine is coming out with a feature article on Rainbow Resources (RBW, TSX-V) early next week…BMR will also be coming out with a special report early next week following last weekend’s site visit…not only is the International a superb target, but RBW also has very interesting possibilities with its Gold Viking, Ottawa and Referendum properties, in addition to the flake graphite potential of the Slocan Valley…

Cadillac Mining (CQX, TSX-V)

Initial results are imminent from the second round of Cadillac Mining’s (CQX, TSX-V) drilling at its Utah Goldstrike Project…a three-hole orientation program six months ago delivered encouraging results including 1.08 g/t Au over 73.1 metres (GS11-02) and 1.25 g/t Au over 82.3 metres (GS11-03) respectively, with significant intervals of up to 19.8 metres averaging 2.88 g/t Au… Goldstrike features some complex geology but a dozen former producing open-pits, so the potential of discovering a wider mineralized system near-surface or at depth clearly exists…a proper exploration program has never been conducted at Goldstrike but we’re confident that the team at Cadillac has been taking the right approach…

Below is an updated CQX chart from John – the technicals are looking favorable…the long-term moving averages (100, 200 and 300) are all in bullish alignment, and the 50-day SMA has also recently reversed to the upside…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) tested the 49-cent support level yesterday that John had identified, and it needs to hold that level on a closing basis and regain momentum…the recent overbought condition has now been cleansed, so that’s a positive factor moving forward…ultimately, the current drilling needs to confirm that the size of the Romero discovery has significant growth potential – that will dictate whether or not GQC will blast beyond its recent high…

Levon Mining (LVN, TSX)

Bottom-fishers should check out Levon Mining (LVN, TSX) which appears to be crawling along a bottom right now around 40 cents…Levon’s Cordero Project in Mexico holds a significant 43-101 resource (Ag, Pb, Zn and Au) and recent weak overall markets have driven the share price down to levels not seen since late 2009…at the very least, this could be an excellent trading opportunity…as always, perform your own due diligence…

Note: John, Jon and Terry do not hold positions in CQX, GQC or LVN.

Gold was as high as $1,579 overnight but has slipped to $1,563 as of 6:15 am Pacific, a loss of $11 an ounce…Silver is 17 cents lower at $26.77…Copper is flat at $3.37…Crude Oil is ahead 30 cents at $80.51 while the U.S. Dollar Index is up one-fifth of a point at 82.72..

Today’s Markets

Stock index futures in New York as of 6:15 am Pacific are pointing toward a modestly lower open on Wall Street…European leaders start a two-day summit in Brussels today with German Chancellor Angela Merkel already stating they must concentrate on fundamental reforms rather than emergency proposals put forward by Italy and Spain to help alleviate their cost of borrowing on the markets…Merkel has also refused to discuss the issue of debt burden sharing unless national budget controls across the euro zone are introduced first…an auction of Italian five and 10-year bonds held ahead of the summit saw yields spike to their highest level since December, 2011…Italy’s benchmark 10-year borrowing costs hit 6.19% while the 5-year rose to 5.84%…

A potential market-moving event could come at approximately 7:00 am Pacific when the U.S. Supreme Court will publish its ruling on whether President Obama’s health care reforms, or parts or them, are unconstitutional…

CRB Index – Encouraging Signs?

The CRB Index took a beating in the second quarter but John sees the possibility of a bottoming formation at the moment…

Prodigy Gold (PDG, TSX-V)

Prodigy Gold has released results from just over 15,000 metres of diamond drilling at its Magino Gold Mine Project in northern Ontario…many of the 66 drill holes reported this morning are shallow in-fill holes designed to increase drill hole density in near-surface portions of the deposit and establish continuity of higher grade geologic domains…highlights include 153 metres grading 1.05 g/t Au…83 metres grading 1.65 g/t Au…and 39 metres grading 3.4 g/t Au…a resource update for Magino is expected within a few weeks…this is a solid project that Prodigy is consistently advancing…the stock closed at 54 cents yesterday…

Strike Graphite (SRK, TSX-V)

Bottom-fishers may wish to take a look at Strike Graphite (SRK, TSX-V) which appears to be in the early stages of a rebound after falling as low as 9.5 cents recently…back in early April, it was trading in the mid-40’s…SRK closed yesterday at 12.5 cents…

Note: John, Jon and Terry do not hold positions in PDG or SRK.

Gold has traded between $1,562 and $1,585 so far today…as of 7:30 am Pacific, the yellow metal is up $4 an ounce at $1,577…Silver is 4 cents higher at $27.15…Copper is 2 cents higher at $3.37…Crude Oil has gained $1.37 a barrel to $80.73 while the U.S. Dollar Index is up nearly one-fifth of a point at 82.58…

Today’s Markets

Lots of green in the markets so far today, thanks to better-than-expected economic reports including pending U.S. home sales which hit a 2-year high in May…European markets are sharply higher while the Dow has gained nearly 90 points as of 7:30 am Pacific….the Venture Exchange is up slightly at 1170…

Italy’s six-month borrowing costs rose to 2.957% at auction today, their highest since December, piling pressure on the government as it pushes for concrete steps to ease market tensions at a European Union summit later tomorrow and Friday…this EU summit will be the first meeting of European leaders since pro-bailout parties in Greece won at parliamentary elections June 17…France and Italy are urging Germany to help end the debt crisis, now in its third year…German Chancellor Angela Merkel said today that there were no quick or easy solutions to end the euro zone’s debt crisis and leaders should avoid making rash promises they could not keep…addressing members of the lower house of parliament, she also reiterated her view that mutualized debt, or euro bonds, would be the wrong policy to pursue…

Most analysts see no major breakthrough coming out of this EU summit, even though there are hopes for the framework for a banking union…the summit is expected to result in a stimulus package of some 130 billion euros in infrastructure bonds, regional aid funds and European Investment Bank loans…

Positive Contrarian Indicators

Consumer nervousness over their stock portfolios is reaching an apex, which actually could mean good news for the market in the long run…the most recent U.S. Conference Board consumer confidence survey, delivered yesterday, contained an interesting nugget about worry over the state of equities…the report found that the percentage of Americans who believe stock prices are going to fall shot up from 32.4%  to 42.6%… historically, that kind of a surge in bearishness over a period of a month has rarely been seen and has typically proven to be a positive contrarian indicator for the market…

Meanwhile, mutual funds focused on U.S. stocks saw another $620 million of outflows last week, according to the Investment Company Institute, which said bond funds gained a whopping $3.6 billion…

When all this money in bonds goes back into the market, look out…

Rainbow Resources (RBW, TSX-V)

After three straight days of Indiana Jones-style due diligence on Rainbow Resources‘ (RBW, TSX-V) properties in the West Kootenays, and a challenging day of travel back to the West Coast, we’re preparing some special reports on Rainbow (including an interview) which will be posted over the next several days…suffice to say, the International Silver Property is a first-rate exploration target that holds very strong potential for a near-term significant discovery along a defined 1.2 km-long northwest trending mineralized structure (parts of which were mined for high-grade Silver, lead and zinc in the early 1900’s from near-surface) as drilling gets set to commence…this is a 4,000 hectare land package that has never been previously drilled due to access issues…during the site visit we also noticed promising potential new areas of mineralization well beyond the known vein system…language in various geological reports on the International has been very bullish yet no drilling has ever occurred –  that in itself speaks volumes about Rainbow’s chances for success…they are, indeed, drilling into a “honey zone” – and this particular area makes up only a fraction (1-15th) of the vein system that was surveyed by the B.C. government in the early 1900’s (and it’s open in all directions)…this a fascinating geological story that – we can assure our readers – is going to get increased media/newsletter exposure due to Sunday’s initial site visit that RBW stated was simply a test run for larger visits planned for when drilling is under way…

We have a slide show we’re working on but for now, two additional pictures from the International…

RBW President David W. Johnston looks up from the road toward the area where drilling will commence at the International. Holes will be angled directly into an exposed vein structure - an impressive "wall" up to as much as 7 to 8 feet high and approximately 300 feet long, featuring fine-grained galena (typically rich in Silver content), pyrite and rare sphalerite.

Samples from the "wall area" - galena is widespread.

Cadillac Mining (CQX, TSX-V)

Initial assay results from a new round of drilling at Cadillac Mining’s (CQX, TSX-V) Goldstrike Project in Utah are due shortly…we’ve been bullish on this project since Cadillac acquired it in January, 2011, and  results from a 3-hole orientation program released in late February were highly encouraging…Goldstrike features a dozen past producing (Gold and Silver) open-pits…based on historical mining activities, as well as the structural setting and style of mineralization, the Goldstrike property covers what could be a large mineralized system…technically, CQX continues to look strong in a challenging overall market environment…with a current market cap of approximately $7 million and a tight share structure, CQX continues to have strong upside potential if drill results continue to be positive…

Great Atlantic Resources (GR, TSX-V)

Please note that Greenlight Resources (GR, TSX-V), which we have been following since early this year,  has recently changed its name to Great Atlantic Resources though the trading symbol has remained the same…

GR has assembled a strong portfolio of properties in mining-friendly and resource-rich New Brunswick with a focus on antimony, tungsten, graphite, base and precious metals…President and CEO Chris Anderson is bright, aggressive and hard-working – a rising star among his peers in the industry, so this is definitely a company w0rth some serious due diligence as it has outstanding long-term prospects in our view…GR has also out-performed the Venture this year with the stock closing yesterday at 12.5 cents…below is an updated 2.5-year GR chart from John that shows very encouraging patterns…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) has been consolidating recently, as expected, with the stock closing yesterday at 61 cents…the recent RSI overbought condition has cleansed itself, so all GQC needs now is more positive drill results from its Romero discovery in the Dominican Republic…the current drill program, which started early this month, is testing lateral extensions to the north, south, east and west of discovery hole LTP-90 with short step-outs…as the market waits for news, expect the stock price to bounce around in a fairly narrow range based on technicals…there is very strong support in the 50-cent area as John shows in this updated 2-month daily chart…

Note: John holds share positions in RBW and GR.  Jon holds positions in RBW and GQC.

Morning Musings will be posted at approximately 8:00 am Pacific today as opposed to the regular pre-market time of around 6:00 am…

From Nelson, B.C.

Gold has traded between $1,571 and $1,588 so far today…as of 6:05 am Pacific, the yellow metal is down $5 an ounce at $1,580…Silver is off 24 cents at $27.30…Copper is down a penny at $3.34…Crude Oil is unchanged at 79.19 while the U.S. Dollar Index is up slightly at 82.51…this is another abbreviated edition of Morning Musings due to travel and limited Internet access…

U.S. Dollar Index Update

Silver Chart Update

John’s updated Silver chart shows a market that’s holding support and continuing to trade in a horizontal channel…a re-test of significant channel resistance around $29 is quite possible over the short-term given some bullish signs in recent trading sessions…

Today’s Markets

Asian markets were mixed overnight while European shares are flat this morning…U.S. stock index futures as of 6:05 am Pacific are pointing toward a slightly positive open on Wall Street after yesterday’s triple-digit loss…

Italy paid 4.712% to sell two-year paper this morning, a new high since December, as investor doubts continue over whether a European summit later this week will deliver a decisive answer to the bloc’s debt crisis…meanwhile, Spain’s short-term borrowing costs nearly tripled at auction this morning, underlining the country’s precarious finances as it struggles with a recession and a fragile banking system…the yield paid on a 3-month bill was 2.362%, up from just 0.846% a month ago…for six-month paper, it jumped to 3.237% from 1.737% in May…

European leaders are meeting on Thursday and Friday…

The Venture Exchange fell another 30 points yesterday to close at 1176…sentiment is negative among many investors and that’s always when the greatest opportunities exist…we’ll be examining numerous special situations over the next week or so, one of them of course being Rainbow Resources (RBW, TSX-V) as we are more confident than ever that this company has a discovery in the making in the West Kootenays (the International Silver Property) in addition to other important projects with significant upside potential…

What we’re convinced will turn the Venture around, sooner rather than later, are fresh discoveries and takeovers…this will be a discovery and takeover-driven market over the coming months – that’s where some big money is going to be made (GoldQuest Mining being one recent good example)…

Jon just completed three intense days on the ground in southeast B.C., covering most of Rainbow’s properties and speaking with some of the finest prospectors in the area…he has collected a large amount of information and hundreds of pictures, most of which we still need to sort through…the case for a potential discovery at the International Property, where Rainbow will soon be drilling, is more powerful than ever in our view and we’ll be explaining why in the days ahead…

Below are a few additional pictures from the International – drill sites are marked and a drilling company out of Salmo, B.C., is ready to proceed as soon as RBW receives the final ok from the ministry which could come any day now…

A close-up of a section of RBW's mineralized "wall" (300 feet long and up to 7 to 8 feet high where drilling starts at the International). Behind all of the weathered rock along this wall is galena, much of it fine-grained - as you can see in this picture - which suggests high silver content. This wall is just one exposed portion of a 1.2 km-long vein system that's open in all directions.

Rainbow's drilling at the International will begin right here - above the mineralized wall (structure) with holes angled right into the heart of it to test the system's thickness and grade. Rainbow's President David W. Johnston is standing on the road below, looking up at the impressive structure and where drilling will commence.

This rock sample is one of many taken from an area called the "Forgotten" which is over a kilometre north of where RBW's drilling will commence. The vein system extends for at least 4,000 feet and is open in all directions.

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