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Gold has traded between $1,582 and $1,604 so far today…as of 6:50 am Pacific, the yellow metal is down $6 an ounce at $1,590…Silver is off 9 cents at $28.89…Copper has lost a penny at $3.55…Crude Oil is relatively flat at $92.85 while the U.S. Dollar Index has gained one-fifth of a point to 81.67…

Gold is set for the biggest monthly drop since May and the longest streak of monthly declines since 1997, as improving economies curbed demand for bullion as a haven asset…assets in the SPDR Gold Trust, the biggest exchange-traded product backed by the precious metal, slid 12 metric tons yesterday to 1,258.4 tons, the lowest since August, according to figures on the fund’s website…investors cut ETP holdings by more than 100 tons this month on concern a 12-year bull run is coming to an end, data compiled by Bloomberg show…however, as John’s charts have pointed out, a drop to $1,500 in Gold – or even slightly lower – would be a very normal retracement in an ongoing bull market…currently, Gold is down just 17% from its all-time high…commercial traders have trimmed their short positions to the lowest levels in more than a year…public sentiment regarding Gold is very negative right now and that’s a bullish contrarian sign…

BNP Paribas has revised its 2013 Gold forecast lower to $1,670 an ounce from $1,790 previously…the bank says it looks for a price rebound in the second half of the year, currently listing a fourth-quarter average forecast of $1,740…”Our mildly positive Gold price forecast for H2’13 is based on the assumption that QE (quantitative easing) in the U.S. will eventually weigh on the U.S. dollar and prop up inflation expectations,” the bank says…BNP Paribas economists currently look for the Federal Reserve to continue to expand its balance sheet into the second half of 2014…however, BNP Paribas looks for a “more entrenched correction” for Gold prices in 2014 – currently forecasting an average of $1,595 an ounce…just one more opinion…

Gold Weak – Dow Strong

The Dow is rapidly closing in on an all-time high, boosted by upbeat earnings and economic reports and as Fed Chairman Ben Bernanke reaffirmed his support of the central bank’s stimulus policy…U.S. unemployment probably reach the 6% level until 2015, Bernanke told Congress yesterday as he finished his two days of testimony on monetary policy and the economy…Bernanke continued to defend the central bank’s easy monetary policy and warned Congress against letting looming spending cuts take place…”There still seems to be quite a bit of unused resources, people that could be working, capital that could be used and is not being used,” Bernanke said of the economy…”We believe the monetary policies that we’ve conducted have helped get stronger recovery and more jobs than we otherwise would have had”…Bernanke said that based on Fed estimates, “we’ve helped create many private sector jobs, government jobs to support the economy quite significantly”…with the jobless rate in January at 7.9%, Bernanke said his “reasonable guess” would be that it will take three more years before the unemployment rate reaches 6%…late last year, the Federal Reserve said it would keep interest rates low until unemployment reached about 6.5%…Bernanke also sees little risk of a spike in interest rates in the near term but did warn of the potential economic damage from the automatic spending cuts that go into effect on Friday…

Today’s Markets

Asian markets posted strong gains overnight with Japan’s Nikkei average soaring 2.7%…a successful bond auction in Italy helped along with the nomination of Asian Development Bank President Haruhiko Kuroda, an advocate of aggressive monetary easing, as Japan’s next central bank chief…China’s Shanghai Composite soared 52 points to 2366…European markets are slightly higher while the Dow in the first 20 minutes of trading has added 30 points to 14105…the Venture is off a point at 1130…

Tracking The Canadian Dollar

Some recent weakness in the Canadian economy (one of several contributing factors is the oil price differential) has negatively impacted the loonie recently which is now trading at its lowest levels since last June…we’ve noted before how the Venture Exchange often moves in tandem with the Canadian dollar, and February has certainly been no exception as the loonie has suffered its worth month since last May and the Venture has hit a new three-year low…so what’s the outlook for the dollar from a technical perspective at the moment?…below are three charts from John that try to answer that question…it appears a reversal could be underway with the dollar clearly in oversold conditions…

Canadian Dollar Chart #1

Canadian Dollar Chart #2

The dollar strongly outperformed commodities throughout 2009 and 2010, a period when the Venture was in the midst of a powerful bull market…the recent consolidation in the dollar has brought it very close to long-term support as shown in chart #2…

Canadian Dollar Chart #3

Below is a three-year weekly chart that shows RSI(14) in a strong support zone…

One potential risk with the Canadian dollar would be a decision by the Obama administration to block the construction of the Keystone XL pipeline…as the Globe and Mail’s John Ibbitson argued in an interesting article yesterday, “relations between Canada and the United States will enter a deep freeze the likes of which have never been seen” if Obama were to say no to Keystone in an effort to pander to his environmental base…

The Leverage Of Discoveries

As bad as the Venture market is right now, there are still enormous opportunities with discoveries…this was demonstrated by GoldQuest Mining (GQC, TSX-V) in May of last year, when many investors were asleep at the switch, and again just recently when TomaGold Corporation (LOT, TSX-V) and Quinto Real Capital (QIT, TSX-V) announced a discovery at their Monster Lake Project near Chibougamau…the news came out last Wednesday when investors were running for the exits with Gold falling $40 an ounce and the Venture dipping below important support…sometimes that’s when the best opportunities arise…LOT doubled since last Wednesday’s close of 17 cents while QIT has skyrocketed from 23 cents to as high as 97 cents yesterday…keep in mind these “discovery plays” tend to be very volatile…

Gold Canyon Resources (GCU, TSX-V) Chart Update

Gold Canyon Resources (GCU, TSX-V) continues to slide closer to John’s support zone between 30 and 43 cents…yesterday, GCU fell another 14 cents on high volume to close at 51 cents…Gold Canyon has been working on an excellent project in northern Ontario (Springpole) with over 5 million ounces of Gold outlined to date and a PEA expected in the near future…with about 135 million shares outstanding, GCU’s current market cap puts a value of $14 on each ounce of Gold in the ground (the Springpole indicated resource is currently 128.2 million metric tonnes at an average grade of 1.07 g/t Au and 5.7 g/t Ag for 4.41 million ounces of Gold and 23.8 million ounces of Silver, with an inferred mineral resource of 25.7 million metric tonnes at an average grade of 0.83 g/t Au and 3.2 g/t Ag for 690,000 ounces of Gold and 2.7 million ounces of Silver at a cut-off grade of 0.40 g/t Au)…

In a February 6 news release, when GCU was trading around 70 cents, the company came out with a news release to explain the reasons for its sagging share price:

• Market participants have indicated that, due to investor fatigue with the mining sector, both retail and institutional, and prolonged mining sector weakness, resource money managers are experiencing higher than normal redemption challenges in their funds and managed accounts, causing them to sell shares to raise the cash needed to make redemption payments. With respect to Gold Canyon’s shares in particular, the continued recent demand has resulted in bids to buy at reasonable valuation levels, providing the sellers with better liquidity than is the case with many other mining issuers, and indeed than had historically been the case with Gold Canyon until very recently;

• Gold Canyon had historically issued a large number of flow-through common shares, which, because of the associated tax treatment in Canada for qualified flow-through mining expenditures undertaken by the company, carry a much lower cost base than regular shares. The lower cost base allows resource money managers to sell these shares at prices that, despite declining market prices generally, are still profitable, providing more attractive optics than selling at a loss.

Of course we can’t say for sure where exactly the bottom might be for GCU, but John’s 4-year chart (as indicated earlier) is showing a support band between 30 and 43 cents…this is not a price target but just what the chart is showing as a strong support area…capitulation may not have occurred yet with GCU…we’ll have to wait and see…as always, perform your own due diligence…GCU is up 3 pennies in early trading at 54 cents…

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

Gold, which is in danger of posting its fifth straight monthly decline, is pulling back slightly today after a strong start to the week…as of 7:35 am Pacific, the yellow metal is down $11 an ounce at $1,604…Silver has declined 29 cents to $29.14…Copper is off a penny to $3.56…Crude Oil is up slightly at $92.73 while the U.S. Dollar Index has retreated one-third of a point to 81.51, putting it right at previous important resistance…the weekly close of the Dollar Index will be important in determining whether or not it has staged a technical breakout and what the implications of that might be…

Today’s Markets

Asian markets were generally higher overnight with China’s Shanghai Composite Index gaining 20 points to close at 2313…overall investment sentiment is still frail after Italy’s inconclusive elections, and the startling rise of the Five Star Movement, re-ignited fears of more problems and instability down the road in the euro zone…the results in Italy threaten to unravel 15 months of austerity measures in that country that helped to restore investor confidence…two big questions are, how will things unfold there in the coming months and will events in Italy spill over into other euro zone countries?…European markets are up today while the Dow has posted a 75-point gain through the first hour of trading…the Venture Exchange is flat at 1132 while the TSX Gold Index has declined 4 points to 261…

Positive U.S. Economic Data

A gauge of planned U.S. business spending increased by the most in just over a year in January and new orders for long-lasting manufactured goods excluding transportation rose solidly, pointing to underlying strength in factory activity…the Commerce Department said this morning that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 6.3%, the biggest gain since December 2011, after slipping 0.3% in December…economists had expected this category to only rise 0.2%…durable goods orders excluding transportation increased 1.9%, the largest gain since December 2011, after increasing 1% in December…that was well above economists’ expectations for a 0.2% gain…

Copper Chart Update

Copper has been hit hard recently, which has spooked some investors as it’s an important leading indicator of global economic growth, but John’s updated 6-month daily chart shows it’s trading at support and a rebound appears to be underway…a bullish engulfing pattern has formed during the past couple of days…Copper was as high as nearly $3.80 a pound early this month before plunging about 7%, interestingly in line with the decline in the Venture Exchange…

TomaGold Corp. (LOT, TSX-V) & Quinto Real Capital Corp. (QIT, TSX-V)

A week ago today, during the plunge in Gold and the Venture Exchange, we alerted to our readers to an important high-grade Gold drilling discovery at TomaGold’s (LOT, TSX-V) Monster Lake Property near Chibougamau, Quebec, which Quinto Real Capital (QIT, TSX-V) also has a stake in – in fact, Quinto can earn an initial 50% interest in the project for $350,000 cash, 1 million shares at 15 cents, and exploration expenditures of $6 million over four years…yesterday, Quinto announced a $500,000 financing through secured debentures…Quinto has only about 11 million shares outstanding while TomaGold has over 50 million outstanding…hole M-13-94 was the real eye-opener as it intersected a very impressive 7.20 g/t Au over 42 metres at a vertical depth of 278 metres (true width estimated to be between 70 to 85%)…what’s particularly important is that the property had never been previously drilled below a depth of 125 metres…more results are pending…LOT is up 26% after closing last Wednesday (following the news) at 17 cents, while QIT jumped from a close of 23 cents last Wednesday to 63 cents on the close yesterday…what this shows is that it’s so important right now to watch for discoveries, particularly since investors in this current market environment are generally slow at reacting to them…another company we believe investors should keep an eye on in the Chibougamau area is Chibougamau Mines (CBG, TSX-V) which is currently drilling and has strengthened somewhat since the Monster Lake discovery was reported…CBG closed at 19 cents yesterday…it’s a recent spin-out from Globex Mining (GMX, TSX-V) and Jack Stock did a major financing at 50 cents…as always, perform your own due diligence…

Below is an updated LOT chart from John…LOT is up 2 cents to 23.5 cents in early trading…

Cap-Ex Ventures (CEV, TSX-V) Chart Update

Giyani Gold Corp. (WDG, TSX-V)

The last couple of years have not been kind to many juniors, and Giyani Gold Corp. (WDG, TSX-V) is no exception as it has fallen from a high of about $3.60 to an intra-day low Monday of 46.5 cents as it interestingly touched the bottom of a downsloping channel…on the last two occasions the stock did this, it went on to post significant gains over the next month or so…yesterday, WDG closed up a dime at 59 cents on strong volume…as an “awareness” issue for traders, below is a 2.5-year weekly WDG chart from John…as always, perform your own due diligence…

Note: John, Jon and Terry do not hold positions in LOT, CEV or WDG.

Gold traded as high as $1,604 overnight…as of 7:30 am Pacific, the yellow metal is down $3 an ounce at $1,591…Silver is off 28 cents at $28.75…Copper is unchanged at $3.55…Crude Oil is down 19 cents at $92.92 while the U.S. Dollar Index is flat at 81.86 after breaking through important resistance at 81.50 yesterday on fresh concerns regarding the euro zone after the election results in Italy…we’ll see how the Dollar Index fares the rest of this week (will the head-and-shoulders pattern put in by the Index over the past year be rendered invalid?) – a breakout by the greenback would not be a good sign for the equity markets, and we saw evidence of that yesterday when the Dow dropped over 200 points in its worst day of the year..

Traders are concerned over potential political deadlock in Italy after a stunning election that saw the anti-establishment 5-Star Movement of comic Beppe Grillo become the strongest party in the country but left no group with a clear majority in parliament…Italy is now looking a lot more like Greece…a long recession and growing disillusion with mainstream parties fed a bitter public mood that saw more than half of Italian voters back parties that rejected the austerity policies pursued by Prime Minister Mario Monti with the backing of Italy’s European partners…the voter abstention rate in Italy was alarming – a post-1945 record…this was due to much popular disgust with the entrenched political classes but it also pointed to one of Italy’s deepest social and economic problems – an ageing population…

Bernanke Begins Congressional Testimony

Fed Chairman Ben Bernanke is expected to provide soothing words about the Fed’s easy money policies today as he appears before the Senate Banking Committee (started at 7:00 am Pacific) in his first of two days of Congressional testimony on monetary policy and the economy…traders are hoping he’ll counter market concerns that some Fed members would like to end quantitative easing early…in the minutes of the last two Fed meetings, there was clear discussion about the end of easing, and it was noted that some Fed members wanted an earlier end to QE3…

Today’s Markets

Asian markets were off sharply overnight, following up on the Dow’s 216-point plunge…Japan’s Nikkei average tumbled 2.26% while China’s Shanghai Composite fell 32 points to 2293…European shares are weaker today, due to Italy’s election results, while the Dow is up nearly 70 points through the first hour of trading this morning…the Venture Exchange is off 6 points at 1135…

TSX Gold Index Chart Update

The TSX Gold Index is beginning to rebound out of the very oversold conditions we highlighted last week…the Index has advanced for three consecutive sessions after hitting its lowest level last Wednesday since the 2008 Crash…it closed yesterday at 261…below is an updated 6-month daily chart from John…there is a strong resistance band between 276 and 280 which includes the down trendline that has been in place since last fall…

Rainbow Resources (RBW, TSX-V)

The recent weakness in Rainbow Resources (RBW, TSX-V) makes a little more sense this morning with the company announcing that it has arranged a non-brokered financing of approximately $1 million in a combination of hard dollars and flow-through at 10 cents and 12 cents, respectively, with a full warrant at 15 cents for two years…management will be participating significantly in the financing which is a positive sign…on the ground, the company has made impressive progress at its Jewel Ridge Project and the Gold Viking Property following disappointing drill results from the International…Rainbow’s land package in the flake graphite region of the Slocan Valley is also one of the largest in the area with part of it bordering on privately-held Eagle Graphite’s processing facility…more drilling at Gold Viking and Jewel Ridge has the potential to build significantly on the discoveries made at each property to date…

RJK Explorations Ltd. (RJX.A, TSX-V) Update

The Blackwater West property held by RJK Explorations Ltd. (RJX.A) continues to look more interesting…this morning, the company reported that recent gridding, magnetic and IP geophysical surveying at West Grid 4 has further complemented and mostly closed out a deposit-scale-sized, high chargeability/resistivity anomaly measuring approximately 600 metres by 1,400 metres…in addition, the expanded survey has identified other interesting geophysical anomalies at West Grid 4…RJK was only able to drill two holes, at the eastern and western extremities of West Grid 4, last fall with results returning a strong base metal signature in felsic rocks – similar to the Blackwater camp Gold/Silver deposits…RJK is expected to receive an expanded drill permit from the Ministry of Mines which will allow the company to drill test this high chargeability anomaly in a systematic fashion…the stock closed yesterday at 8.5 cents…

Kaminak Gold Corporation (KAM, TSX-V)

Exploration in the Yukon has slowed to a crawl compared to 2010/2011, but the biggest players including Kaminak Gold (KAM, TSX-V) are still in the game and have potential to shine in 2013, particularly if Gold prices rebound significantly…Kaminak this morning announced an $11 million, Phase 1 drill program at its Coffee Project where a maiden resource estimate was announced in December…new incoming President and CEO Eira Thomas will add fresh energy and ideas…KAM has excellent technical support around the $1 level as the stock showed again last week…it closed yesterday at $1.16 and is up another 3 pennies in early trading today…

Adventure Gold (AGE, TSX-V) Updated Chart

Adventure Gold (AGE, TSX-V) continues to be one of our favorites in the junior exploration space…below is an updated chart from John…note the downtrend line and where it found recent support – in the low 20’s…

Note: John and Jon hold share positions in RBW while Jon also holds a share position in RJX.A.

Gold has traded in a range between $1,583 and $1,596 so far today…as of 5:45 am Pacific, the yellow metal is up $8 an ounce at $1,589…there is technical resistance at $1,600…Silver is up 18 cents at $28.95…Copper has gained 3 pennies to $3.56…Crude Oil is up 94 cents a barrel to $94.07 while the U.S. Dollar Index has slipped nearly half a point to 81.18…

The Gold market – and the equity markets – have plenty to focus on this week, from Italian elections to two days of Congressional testimony on the economy from Ben Bernanke to a March 1 deadline facing U.S. lawmakers on “sequestration”…investors will also be weighing a slew of fresh economic data including consumer confidence, home sales and manufacturing…

A fascinating dynamic has emerged in Gold at the moment – commercial traders have cut their net short positions to their lowest levels in over a year, according to the latest available data through Tuesday of last week, while “managed money” (funds, large speculators) now has the highest gross short position of all time…this “tug of war” is going to be interesting to watch…rarely are the commercials on the wrong side of the trade which prompted one analyst (Clive Maund at www.CliveMaund.com) to write over the weekend:  “There is now such an overwhelming array of technical evidence that the Precious Metals sector is forming a major bottom, that by the end of reading this update you will, or should unless you are stupid, understand why we now have no choice but to turn strongly and unequivocally bullish on the sector…Up until now we have had some reservations, but these have been swept away by the latest truly extraordinary data”…

A couple simple points we made last week are worth repeating…Gold’s RSI(14) on some long-term charts is at its lowest level in 13 years – the same with the TSX Gold Index…that doesn’t mean to say both Gold and the Gold Index can’t still move a little lower ($1,500 on Gold is certainly possible) but a major bottom is definitely forming given such negative (and extreme) sentiment readings…

Let’s take a look at how the Silver market is shaping up with John’s regular Monday Silver charts…

Silver Long-Term Chart

John’s 15-year monthly chart helps put things into perspective…a powerful “Wave 5” move is still completely intact with superb technical support at $26 which coincides with the Fibonacci 50% retracement level…one of the benefits of this long-term chart is the RSI(2) which has slipped below 20 – this has occurred on only a few occasions over the last decade and is a clear buy signal…if you want to go bearish on Silver right now, do so at your own peril – it could still drop another dollar or two but this chart provides strong evidence that Silver’s next BIG move it to the upside…

Silver Short-Term Chart

John’s 9-month daily chart shows RSI(14) at oversold levels while selling pressure is beginning to abate…notice the large gap between the price and the daily EMA-20 (good buying opportunity) which needs to flatten out and then reverse to the upside…this will take a bit of time…for now the EMA-20 is overhead resistance…

U.S. Dollar Index

An “awareness issue” for this week – keep a close eye on the U.S. Dollar Index which has moved up over the last few weeks and closed Friday at critical resistance (81.50)…a classic head-and-shoulders pattern has formed in the Dollar Index since late 2011 which is why we believe it has a greater chance of breaking down than busting out to the upside…a weaker U.S. Dollar Index is positive for Gold and the Venture Exchange…a convincing move through the 81.50 area, however, would invalidate the head-and-shoulders pattern, so we’ll be watching the direction of the Dollar Index with a great deal of interest this week…

Today’s Markets

Asian markets were mostly higher overnight, led by a 2.4% jump in Japanese shares after the yen slumped on news the government looks set to nominate Haruhiko Kuroda, the president of the Asian Development Bank and advocate of aggressive monetary easing, as the next Bank of Japan governor…Kuroda ran the Japanese finance ministry’s currency policy for four years in the early 2000’s…there, among other things, he oversaw an extended effort to drive down the yen’s value in order to make Japanese exports more affordable on the world market as outlined in an excellent piece this morning in the Financial Times…European shares are higher today as low turnout in Italy’s general election encouraged investors to bet on a victory of a pro-reform centre-left coalition…stock index futures in New York as of 6:00 am Pacific are pointing toward a strong opening on Wall Street…

SilverCrest Mines (SVL, TSX-V) Updated Chart

It’s a good time to be looking at Silver stocks and one of our favorite smaller producers is SilverCrest Mines (SVL, TSX-V) which closed Friday at $2.38, its 200-day moving average (SMA) which has recently reversed to the upside…SVL produced 579,609 ounces of Silver in 2012, exceeding market guidance by 33% in its first full year of commercial production at Santa Elena in Mexico…below is a 2.5-year weekly chart from John…

Critical Elements Corp. (CRE, TSX-V) Updated Chart

Critical Elements Corp. (CRE, TSX-V) ended last week on a strong note, closing up 3 pennies Friday at 23.5 cents on total volume (all exchanges) of more than 2 million shares…CRE is certainly worth our readers’ due diligence…

Note: John, Jon and Terry do not hold share positions in SVL or CRE.

TSX Venture Exchange and Gold

It was another rough week for most Venture stocks as the Index fell through important support, hitting an intra-day low Thursday of 1124 (4 points above another support level) before rebounding somewhat to close Friday at 1145.  That was still a 41-point drop for the week.  The question is, was Wednesday/Thursday a capitulation moment – coinciding with a sharp sell-off in Gold?  There is no question that negative public sentiment toward Gold at the moment, and Gold stocks in general, is at extreme levels, and this has taken its toll on the Venture.   As we pointed out the other day, the RSI(14) for both Gold and the TSX Gold Index hit 13-year lows on some long-term charts – quite incredible, actually, and additional evidence that bearishness has reached extreme levels.  In this business, when the crowd is going in one direction only, it’s usually wise to move quickly in the opposite direction.

Below is an updated 3-month daily Venture chart from John.  Support is at 1120 while resistance is in the mid-1160’s.  A test of that area is likely in the near future.  Failure to push through that resistance could result in a re-test of last week’s low.  Investor patience is critical.  When this Index finally breaks out of its slump that started in March, 2011, the move to the upside could be explosive as the technical picture reverses.  The catalyst for that could be a major discovery and/or a powerful turnaround in Gold and Silver.

Gold

Gold took another beating last week, losing $28 to close at $1,581 after falling as low as $1,555.  But as John showed in a long-term chart a few days ago, bullion could drop to $1,500, or even slightly lower, and such a development would still keep the 12-year-old bull market cycle technically intact.  In fact, $1,500 would only be a 22% correction from the summer 2011 high of just over $1,900.  Investors have to keep these pullbacks in perspective.  In 2008, Gold corrected 30% in another classic example of the crowd running in the same direction.  That quite normal “dip” was an incredible buying opportunity, and Gold stocks became an absolute steal.

One lesson we’ve learned in examining the Gold market is to keep a very close watch on what the commercial traders are doing.  When they aggressively ramp up their short positions, it’s best to get on the defensive as bullion is likely headed for a drop.  This occurred last September which is one reason we suggested investors take a look at the HGD (double short TSX Gold Index ETF) which at the time had been beaten down severely and was extremely oversold around $8.  The opposite is now the case – the HGD became extremely overbought this past week, and the latest COT chart for Gold is at its most bullish for a over a year as the commercial traders have dramatically reduced their short positions.  In otherwords, Gold is close to a major turnaround.  It could still dip a little more – even test $1,500 – but the point is that Gold is nearing a bottom if it hasn’t hit one already.  That’s why the HGU (double long TSX Gold Index ETF) is starting to look very attractive.  As always, perform your own due diligence.

Another bullish contrarian sign last week – the world’s biggest Gold-backed ETF, the SPDR Gold Trust, experienced its largest one-day outflows since August, 2011.  Many investors simply fled the sector following the Federal Reserve’s meeting that revealed a growing dissension among some of its members over the central bank’s bond-buying program.

Below is a 2-year weekly Gold chart update from John.  Don’t expect a dramatic reversal to the upside just yet.  But one is definitely in the cards in our view.

Silver fell 54 cents last week to close Friday at $28.76.  Copper tumbled 19 cents to $3.53.  Crude Oil fell $2.59 a barrel to $93.13 while the U.S. Dollar Index climbed a full point to 81.47, just beneath important resistance.

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.  QE3 has arrived, and massive central bank intervention is now taking place to keep the euro zone intact 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 more than 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:

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Gold has traded between $1,573 and $1,589 so far today…as of 5:55 am Pacific, the yellow metal is unchanged at at $1,577…Silver is 6 cents lower at $28.60…Copper is flat at $3.55…Crude Oil is 30 cents higher at $93.14 while the U.S. Dollar Index is up slightly at 81.43 after briefly touching 81.50…

Investors need to keep a close eye on the Dollar Index as it tests resistance around 81.50…this is an important “awareness issue”…the weekly chart of the Dollar Index shows a long-term head and shoulders reversal pattern which has developed over the past 12 months as you can see in John’s chart below…the left shoulder developed in January, 2012…the head developed last summer (July)…the right shoulder developed in November…the neckline of the pattern connects the March 2012 low, the September 2012 low and the late January/early February low…this head and shoulder pattern is invalidated by a sustained rally and move above 81.5 which the Index is quickly approaching…Gold and the Dollar Index don’t always move in tandem but often do…equity markets also tend to fare better when the Index is struggling…a break below the neckline could precipitate a major tumble in the Index…

Mixed Signals From The Fed

The Federal Reserve’s “very aggressive” easy money policy is going to stay that way for a “long time,” St. Louis Fed President James Bullard told CNBC this morning…”This is a monetary policy that packs a punch,” said Bullard, who’s a voting member on the Federal Open Market Committee (FOMC)…uncertainty about the future of the central bank’s bond buying program has weighed on the stock market and Gold in recent days…on Wednesday, the FOMC released minutes of its January meeting, which said “many participants” expressed concerns about “potential costs and risks arising from further asset purchases”…

Today’s Markets

Asian markets were mixed overnight…China’s Shanghai Composite fell 12 points to 2314…European shares are up significantly this morning as markets there got a boost from a better than expected reading of Germany’s business sentiment…stock index futures as of 6:00 am Pacific are pointing toward a strong opening on Wall Street…

The Venture Exchange fell as low as 1124 intra-day yesterday (4 points above support) but rebounded to close up 3 points for the day at 1134…on the daily chart, RSI(14) and the CMF (Chaiken Money Flow) hit their lowest points Wednesday since May, so a relief rally at the very least appears to be in the cards…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) reported fresh results this morning – assays from 3 new holes – from its Romero discovery in the Dominican Republic…the best intersection was 138 metres grading 1.0 g/t Au and 0.20% Cu from 134 to 272 metres in LTP-123 (infill hole at Romero North)…this included a 68-metre interval grading 1.76 g/t Au and 0.23% Cu…LTP-122 tested the area between the Romero North and South trends and returned 99 metres grading 0.41 g/t Au and 0.12% Cu while LTP-124 (eastern end of Romero North) included a 48-metre interval grading 1.21 g/t Au and 1.02% Cu…GoldQuest stated these are the last results from the phase of drilling targeting the shallow Induced Polarization (“IP”) interpretation that discovered the Romero mineralization…future drilling will be guided by new, ongoing deep geophysical data…

Probe Mines (PRB, TSX-V)

Amazingly, Probe Mines (PRB, TSX-V) declined for 9 consecutive sessions (it found support just above its rising 200-day moving average) before rebounding yesterday on more positive drill results from its Borden Lake Property which continue to improve grade in the southeast…PRB climbed 21 cents yesterday to close at $1.75…below is an updated 6-month daily chart from John…as always, perform your own due diligence…

Zenyatta Ventures (ZEN, TSX-V) Updated Chart

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

Gold is trying to stabilize today after a brutal $40 sell-off yesterday that took the yellow metal to a 7-month low…as of 7:15 am Pacific, bullion is up $15 an ounce at $1,580…it had dropped as low as $1,559 overnight…Silver is 26 cents higher at $28.82…Copper is off another 6 cents to $3.54…Crude Oil has fallen $2.38 a barrel to $92.84 while the U.S. Dollar Index has climbed one-fifth of a point to 81.29…there is important resistance at 81.50…

What really rattled the markets yesterday was the perception the U.S. Federal Reserve is cooling on open-ended asset purchases as officials grow nervous about the dangers of a bigger balance sheet…according to the minutes of its January meeting, released two hours before the markets closed yesterday, “many” officials are concerned aut the costs and risks of further asset purchases, as the Fed buys securities at a pace of $85 billion per month…the minutes suggest that QE3 – as the Fed’s third round of quantitative easing is known – could end earlier than previously thought and is no longer a truly open-ended program…the Fed’s balance sheet has reached $3.078 trillion and could exceed $4 trillion if QE3 continues for the rest of the year…launching QE3 last September, the rate-setting Federal Open Market Committee said it would keep buying assets until there was substantial improvement in the labour market…the goal, of course, of the asset purchases is to boost the economy by driving down long-term interest rates…but according to the minutes, “a number of participants stated that an ongoing evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labour market had occurred”…that could reduce the support that QE3 provides to the economy because markets can no longer be certain that the Fed will keep buying assets until the labour market recovers…markets don’t like uncertainty and the Fed has done a good job of creating uncertainty recently, not unlike politicians in Washington…

Gold. TSX Gold Index & Venture Exchange

There are important “awareness” issues that we’re going to cover this morning concerning Gold, the TSX Gold Index and the Venture Exchange…

Gold

First, it’s important to keep in mind that Gold’s correction from its all-time high of just over $1,900 an ounce in late 2011 has been a very normal retracement so far of just under 20%…in 2008, Gold corrected 30% and fear was running rampant when it was briefly trading around $700 an ounce…that, of course, turned out to be an incredible buying opportunity…below is a long-term Gold chart from John going back to the beginning of the bull market…a drop to $1,500 an ounce, or even a little lower, would not derail the long-term bull market…interestingly, RSI(14) on this weekly chart is at its lowest level in 13 years…ask yourself this question – if RSI(14) were at its HIGHEST level in 13 years, like it was in the late summer/fall of 2011, would that be a favorable time to be a buyer? In September, 2011, we warned that Gold was extremely overbought and a correction was imminent…oversold extremes are now beginning to appear though we may not see the bottom in Gold until $1.500, plus or minus about $50…interestingly, the Fibonacci 61.8% retracement works out to $1,454…a drop to that level would be enough to shake all the loose apples off the tree, and perhaps that’s what needs to happen in order to set the stage for the next powerful wave higher that could take Gold beyond the $2,000 level…

Bottom line:  Gold prices are still in a 12-year-old uptrend on the longer-term chart…

Gold vs. Dow

Gold has been moving in the opposite direction of major equity markets in recent months…both the Dow and the S&P 500 are very close to new all-time highs but their short-term signals are turning bearish…the correlation coefficient between Gold and the Dow is reaching previous inverse highs, and Gold relative to the Dow is at a 4-year low…again, this provides evidence that Gold is nearing an important bottom…

TSX Gold Index

So how are the Gold stocks looking?…the TSX Gold Index has tumbled nearly 30% from its September high, and on the daily chart the RSI(14) has fallen to its lowest level since 2000 – before the bull market began…below is a 12-year monthly chart from John that shows a strong support band between 225 and 240…the Index closed yesterday at 251, so more weakness is certainly possible but it’s fair to argue that the Index is likely within 5-10% of an important bottom…the 240 level provided strong resistance from 2003 until 2006…240 has been breached only once since then, and that was for a brief period during the 2008 financial crisis…

It’s noteworthy that on the 10-year daily chart for the TSX Gold Index, RSI(14) hit an all-time high in September and is now at an all-time low…again, ask yourself the question, was the TSX Gold Index a good buy last September with RSI(14) at an all-time high?…it’s now at an all-time low but some investors are throwing their Gold stocks overboard…makes no sense…you make money in this business by going AGAINST the crowd, not by following the crowd…

Venture Exchange

The Venture Exchange (clearly in oversold conditions based on RSI, Stochastics and the CMF) has fallen to a new 52-week low (its lowest level since 2009) and quite frankly we’re surprised it was not able to hold strong support at and above 1154 as it did in December amid tax-loss selling, weakness in Gold, and all the media fear-mongering surrounding the so-called “fiscal cliff”…if this is a capitulation moment, then that’s what maybe this market needs…John’s 13-year weekly chart below shows support at 1120 and a strong support band between 1000 and 1075…there are some stocks that simply don’t deserve to be trading when they are…in late 2010/early 2011, at the height of the bull market, that was also the case but greed was rampant…fear is now the dominant emotion in this market and that’s when great opportunities open up for patient and astute investors…

TomaGold Corp. (LOT, TSX-V)

It’s nice to see a company report a high-grade Gold discovery, and TomaGold (LOT, TSX-V) and Quinto Real Capital Corp. (QIT, TSX-V) did that yesterday on the release of the first three holes drilled at their Monster Lake Property near Chibougamau…QIT has only 10 million shares outstanding and climbed 20 cents yesterday to 24 cents, but they’ll need to spend $6 million over the next four years to earn a 50% interest in the property (they also have an opportunity to earn up to a 70% interest)…they acquired an option on Monster Lake through their recent qualifying transaction…previously, Monster Lake had never been drilled to a depth of more than 125 metres…hole M-13-95 cut an impressive 7.20 g/t Au over 42 metres with true width of the mineralized zone estimated to be between 70 to 75%…as of 7:30 am Pacific, LOT is off half a penny at 17 cents while QIT is up a penny-and-a-half at 24 cents…

Below is a 14-month weekly LOT chart from John for some technical guidance…

Seafield Resources (SFF, TSX-V)

Seafield Resources (SFF, TSX-V) is trading again after the company issued another news release this morning, stating it has arranged a $16.5 million loan facility with RMB Australia Holdings Ltd with the proceeds to be used to fully finance the bankable feasibility study (BFS) for Seafield’s Miraflores deposit and general corporate purposes…Seafield was halted last Friday and a few hours later put out news regarding a stellar infill drill hole at Miraflores (238.15 m grading 2.06 g/t Au) and positive preliminary metallurgical results…the stock is up a couple of pennies in early trading this morning…

Note: John, Jon and Terry do not hold positions in LOT, QIT or SFF.