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Gold is taking another beating today, hitting a 15-month low…as of 7:50 am Pacific, bullion is off $54 an ounce at $1,507 after dipping as low as $1,505…critical technical and psychological support of course is at $1,500, but even a close below $1,550 today would be a bearish development which suggests $1,500 will be breached, though perhaps only on an intra-day basis…holdings in the SPDR Gold Trust, the biggest Gold-backed exchange-traded product, fell to 1,181.4 metric tons yesterday, the least since May, 2010…Silver is down $1.19 to $26.47…Copper is off 7 cents to $3.35 on concerns that demand from China may not be able to absorb rising global supplies…LME inventories climbed to 590,175 tons yesterday, the highest since September, 2003…interestingly, the Wall Street Journal is reporting this morning that two major commodities-trading firms (Glencore International PLC and Trafigura Beheer BV) have amassed much of the world’s Copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs…Crude Oil has lost nearly $3 a barrel to $90.79 while the U.S. Dollar Index is up one-tenth of a point to 82.29…

Cyprus Confirms It May Have To Sell Most Of Its Gold Reserves

Not surprisingly, it’s becoming increasingly evident that Cyprus may need a lot more bailout money than it was originally given…media reports this morning state the government will be asking for “technical and structural aid”, however, not an increase in the amount of bailout loans…euro zone finance ministers are meeting in Dublin…Cyprus also confirmed that it may have to sell most of its Gold reserves – “one of many options” – to raise about 400 million euros to finance its part of the bailout, according to Reuters…this follows a denial by Cyprus’ central bank on Wednesday which said no such plans were afoot…

Today’s Markets

Asian markets were off slightly overnight with Japan’s Nikkei average slipping 64 points to close the week at 13485 while China’s Shanghai Composite lost 13 points to finish at 2207…European shares are down moderately in late trading overseas, while North American markets are in the red through the first 80 minutes of trading…the Dow is down 47 points while the TSX has fallen 163 points as of 7:50 am Pacific…the Venture, meanwhile, is poised for its 10th consecutive weekly decline…it’s currently down 20 points at 1029…in this recent minor rally from last week’s intra-day low of 1018, the Venture has not been able to climb above its 10-day moving average (SMA) which continues to provide stiff resistance…a test of the 980 support level is becoming increasingly likely…

Below is a 9-month daily chart from John that shows very distinctly how the TSX has decoupled from the Dow and the S&P 500, especially since the beginning of February…the question is, what will happen to the TSX (and the Venture) if the U.S. markets go into correction mode?…the HXD (double short S&P/TSX 60 ETF), which we’ve been writing about recently, is looking very bullish at the moment and that suggests the Canadian markets have further to go on the downside…

GoldQuest Mining (GQC, TSX-V) and Richmont Mines (RIC, TSX)

GoldQuest Mining (GQC, TSX-V) and Richmont Mines (RIC, TSX) have each released drill results this morning from their respective projects, and we’ll review those in detail Monday…while this particular batch of results from GoldQuest – testing the northern and eastern boundaries of the Romero discovery zone plus the Escandalosa compliant resource to the south – were not impressive, new IP geophysics has extended the recently announced Guama trend (west of Romero) to over 3 kilometres in length and up to 2 kilometres in width…it remains open to the north and the south…two drill rigs will soon test Guama while more more drilling is being undertaken to further define Romero and test for other potential discoveries along the Las Tres Palmas trend…GQC is down sharply this morning, currently off 11 cents to 29.5 cents, slightly below its 1000 day moving average (SMA)…Richmont, meanwhile, has delivered more promising high-grade drill results from its newly-discovered deep zone at the Island Gold Mine in Ontario including 9.6 metres grading 13.6 g/t Au (true width)…three rigs are active on this project from underground drill stations…RIC is down 17 cents at $2.30…

St. Andrew Goldfields (SAS, TSX)

St. Andrew Goldfields (SAS, TSX) is on track to achieve its 2013 production guidance of between 95,000 and 105,000 ounces of Gold from its Holt, Holloway and Hislop mines as reported yesterday…this is one play for bargain hunters to keep in mind in the event there is further deterioration in the Gold sector…so far this year, the stock has traded in a horizontal channel between 40 and 50 cents…it’s down 2 pennies to 41 cents in early trading today…

Strategic Oil & Gas (SOG, TSX-V) Chart Update

Lomiko Metals (LMR, TSX-V) Chart Update

Lomiko Metals (LMR, TSX-V) is trying to cash in on the opportunities in the graphite and graphene space, and how successful they’ll be remains to be seen…securing financing will be the key…technically, the stock is showing some encouraging signs but this one is not for the risk-adverse…

Note: John, Jon and Terry do not hold positions in GQC, RIC, SAS, SOG or LMR.

Gold fell as low as $1,554 overnight before rebounding…as of 7:10 am Pacific, bullion is up $6 an ounce at $1,566…Silver is 16 cents higher at $27.81…Copper is off a penny at $3.41…Crude Oil is down 46 cents to $94.18 while the U.S. Dollar Index has fallen one-third of a point to 82.20…

Cyprus Denies Rumors Of Plans To Sell Gold

The Central Bank of Cyprus denied that it will sell 400 million euros ($525 million) worth of its Gold reserves as part of the conditions of Europe’s bailout of the island state…Aliki Stylianou, a spokesperson at the central bank, told CNBC this morning that there was “no such thing being discussed…the decision to sell the Gold is a decision to be taken by the board of the Central Bank of Cyprus…no such thing has been discussed or is in the process of being discussed…there are so many rumors flying about and this is just one of them”, she said…Bloomberg News reported yesterday that, according to a draft of a European Commission report it had obtained, Cypriot authorities committed to sell “the excess amount of Gold” owned by the state, yielding an estimated $525 million…Cyprus had 13.9 metric tons (446,895 ounces) of Gold as of March 31, according to data from the World Gold Council…the holdings are worth nearly $700 million based on today’s Gold price…if Cyprus were to sell most of its Gold, this would be the biggest euro zone bullion sale in four years (France sold 17.4 tonnes of Gold in the first half of 2009 – bad timing by the French)…in addition, although obstacles do stand in the way of way of euro zone central banks selling Gold to meet financing needs, any such move by Cyprus would no doubt focus attention on other heavily indebted euro zone Gold holders…

Updated Gold Chart

Gold got hit hard yesterday but managed to hold support at $1,550…Goldman Sachs lowered its Gold price forecast for the second time in 6 weeks while the Cyprus rumors and the Fed minutes weren’t helpful to bullion either…the technical trend for Gold is clearly bearish (this really became evident in February as shown in John’s chart below), so the key to Gold holding support around $1,550 is going to be physical demand…the market will be watching that closely…Gold will need a catalyst to push decisively through resistance beginning at $1,590 where it pulled back from yesterday…the possibility of Gold dropping this year to the $1,400 area certainly can’t be ruled out but wouldn’t necessarily change the bullish long-term picture…

U.S. Dollar Index Updated Chart

The greenback continues to be under pressure, and this could be a factor that allows Gold to hold support (for now at least) at $1,550…below is a 6-month daily chart for the U.S. Dollar Index which shows momentum is clearly to the downside after the Index failed to push through a resistance band between 83 and 84…key support levels to keep an eye on are 81.5, 81, and 80.5…the COT structure is not favorable for the Dollar Index either, as commercial traders have built up a large short position, so this adds further credence to the negative short-term outlook…

Bank Of Japan:  Ambitious Inflation Target A “Flexible” One

The Bank of Japan will pursue its 2 per cent inflation target “flexibly” and would consider adjusting its aggressive easing policy if it led to unwanted side-effects such as asset bubbles, Haruhiko Kuroda, the central bank’s governor, said in an interview with foreign media today…“If there is any serious asset market bubble appearing or approaching, of course we will take necessary measures”, Kuroda stated…“All central banks that adopt a so-called inflation targeting policy manage the inflation target very flexibly”…although he said he saw no sign of bubbles “now or in the near future”, the emphasis on flexibility added a new and more ambiguous shade to official BOJ rhetoric…

Q1 Credit Growth Increases Sharply In China

China is once again facing heavy capital inflows after its foreign exchange reserves posted their biggest quarterly increase since the second quarter of 2011…reserves jumped $130 billion to $3.44 trillion in the first quarter…the return of cash from abroad helped stoke fast credit growth amid concerns about the level of debt in the economy…new financing in the economy during Q1 increased 58% to $1 trillion compared to the first three months of 2012…Fitch this week cut China’s sovereign credit rating, the first such move by a major international agency since 1999 – on worries that local governments and companies had racked up too much debt…the rating agency also raised concerns about the rise in shadow banking, which continued unabated in the first quarter…the increase in outstanding bank loans was moderate at 16% year-on-year, but credit outside the formal banking system, including trust loans and corporate bonds, more than doubled…

Today’s Markets

Markets are generally quiet so far today…the number of Americans filing new claims for unemployment benefits fell more than expected last week, by 42,000 to 346,000, which could ease fears of a deterioration in labor market conditions after a surprise stumble in job growth in March…the Dow is up another 34 points in early trading…the TSX is down 30 points as of 7:10 am Pacific while the Venture Exchange is flat at 1047…the CDNX needs to close at 1042 or higher tomorrow in order to avoid a 10th consecutive weekly loss…the rough Venture market is certainly adversely affecting the number of new listings and the ability of companies to raise money…the Venture Exchange handled only six initial public offerings last month, down from 23 in March, 2012…in addition, Venture companies managed to raise only $471 million last month, down from the $920 million raised in March, 2012, and $1.6 billion in March, 2011..majors are facing their problems, too, of course, with the TSX Gold Index down nearly 25% so far this year as producers are having their problems as well…a good example yesterday was Barrick Gold (ABX, TSX) which fell another 8% after suspending construction in Chile on its Pascua-Lama Gold and Silver project, responding to a court order that further delays work on a mine already behind schedule and billions over budget…the appeals court said Pascua-Lama should be halted amid allegations the project is polluting groundwater and rivers in the Atacama desert…the chart for Barrick shows very oversold conditions and a support band between $22.50 and $23.50…as of 7:10 am Pacific, ABX is up 33 cents to $25.14…

Barrick Gold (ABX, TSX) Chart

New Gold Inc. (NGD, TSX) Updated Chart

New Gold Inc. (NGD, TSX-V) in our view is one of the best-run producers in the sector and recently came out with a highly encouraging resource estimate update for its huge Blackwater Gold-Silver deposit in central British Columbia…technically, the stock is struggling, however, which demonstrates how investor sentiment toward this sector is so negative at the moment (and ultimately could become even more negative)…the NGD chart shows a double top pattern last summer/early fall, and an important support band between $8 and $9 which really needs to hold…NGD touched its 1000-day moving average (SMA) just recently for the first time in three years…it closed yesterday at $8.44…

Jurisdictional Risk

Strapped-for-cash left-wing governments, lunatic environmentalists and some native groups are all posing serious risks to Gold miners, explorers and investors, and this has contributed to the current difficult market conditions…in Quebec, the leftist, separatist PQ government, which fortunately only holds a minority, would rather take the short-sighted approach of hiking mining royalties in an attempt to increase revenues as opposed to focusing strictly on reducing expenditures and the size of government which is the real problem there…a public petition circulated by the Quebec Mining Association is calling on the PQ government to review its plan to change the mining tax regime in the province has been signed by over 10,000 people…”The fact that 10,000 people have taken the time to sign the petition to indicate their support for the mining industry shows that the population is on our side and that people appreciate the positive impact of our industry in Québec”, stated Josee Methot, QMA President and CEO…”It is interesting to note that the messages of support we have received come from all across Québec, and not just from the mining regions”…the QMA petition reads: “I am not against mining royalties, but I believe they must allow a form of mineral resource development that is profitable and economically acceptable…a change to the current tax regime could lead to mine closures and the postponement of several key projects; it could also drive away investors and lead to a loss of jobs throughout Québec…I am therefore opposed to any change to the mining tax system“…good luck to the QMA – they have their hands full…

Gold has traded in a range between $1,568 and $1,590 so far today…the $1,590 level constitutes the next important resistance as we showed in our most recent Gold chart, and indeed bullion has reacted at that level…as of 7:40 am Pacific, Gold is off $15 an ounce at $1,570…Silver has retreated 34 cents to $27.61…Copper is down a penny at $3.43…Crude Oil is 34 cents lower at $93.86 while the U.S. Dollar Index is up slightly at 82.43…

Gold-Selling Boom In Japan

Will Japan’s current Gold-selling boom eventually turn into Gold-buying if policy makers succeed in their goal of ending 15 years of deflation and sparking a new round of inflation?…while Gold prices have softened globally, the declining value of the yen against the dollar in recent months has made the precious metal worth a lot more in Japan as reported in an interesting article in the Wall Street Journal this morning…as a result, Japanese families are now scrambling to dig out Gold objects from closets and jewelry boxes…they’re selling these items to metals dealers to convert their passive assets into cash for everything from vacations to children’s allowances…”The smart money is on buying Gold” rather than selling, said Mark O’Byrne, research director at Gold dealer GoldCore in Dublin…”Given the BoJ’s determination, there’s no doubt you’re going to get 2% inflation, and there’s a risk it might be much, much higher…for those who are prudent, diversifying into Gold makes sense”…it will indeed be interesting to see what the long-term impact on Gold might be given the extraordinary measures being undertaken by the Bank of Japan…

Goldman Sachs Lowers Gold Price Target – Again

For the second time in six weeks, Goldman Sachs has downgraded its 2013 price target for Gold in a commodities report issued this morning…”Despite resurgence in euro risk aversion and disappointing U.S. economic data, Gold prices are unchanged over the past month, highlighting how conviction in holding Gold is quickly waning”, said Goldman Sachs analysts Damien Courvalin and Jeffrey Currie in the note…the analysts cut their year-end Gold forecast to $1,450 per ounce from $1,600…they also see Gold falling to $1,270 by the end of 2014…”With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in the second half of 2013, we believe a sharp rebound in Gold prices is unlikely…given Gold’s recent lackluster price action and our economists’ expectation for higher U.S. real rates, we are lowering our U.S. dollar-denominated Gold price forecast once again…as a result, we recommend closing the long COMEX Gold position that we first initiated on October 11, 2010, for a potential gain of $219 per ounce, with the risk reversal overlay expired on March 25…while there are risks for modest near-term upside to Gold prices should U.S. growth continue to slow down, we see risks to current prices as increasingly skewed to the downside as we move through 2013″, the analysts stated…

Fed Minutes Show Concerns (Again) Over Central Bank’s Aggressive Monetary Stimulus

Minutes from the most recent Fed meeting, released this morning, suggest that members have grown increasingly concerned that things could get messy if the Fed continues its policies too far into the future…among those concerns are instability to the financial system, and a sudden rise in interest rates and inflation…”In particular, participants pointed to possible risks to the stability of the financial system, the functioning of particular financial markets, the smooth withdrawal of monetary accommodation when it eventually becomes appropriate, and the Federal Reserve’s net income”,  the March meeting minutes state…”Their views on the practical importance of these risks varied, as did their prescriptions for mitigating them”…Fed officials are clearly engaged in a debate about whether to begin winding down an $85 billion per month bond-buying program after mid-year…the minutes showed that “all but a few” Fed officials agreed at the central bank’s last policy meeting that they wanted to keep the program going “at least through mid-year”…but after that, officials had a wide range of views about how they might proceed…

Chinese Trade Data Questioned

How much trust can we put into government numbers coming out of China?…that’s a question that’s popping up again after the release of some bizarre Chinese trade data this morning…China unexpectedly swung to a trade deficit in March, as imports surged after a holiday-induced lull, following strong surpluses in recent months…here are the numbers…the country posted a trade deficit of $884 million for March, after reporting a $15.25 billion surplus in February, according to data from the General Administration of Customs…for the first quarter as a whole, China reported a trade surplus of $43.07 billion, compared with a surplus of just $660 million in the first quarter of 2012…exports from China increased 10% last month from the same month a year earlier, compared with a 22% increase in February, while imports surged 14.1% in March, compared with a year-on-year drop of more than 15% the previous month…what’s particularly confusing is that China’s exports to its separately administered territory of Hong Kong grew a whopping 93% in March from the same month a year earlier, the fastest growth since March, 1995, even as exports to the EU fell 14% and exports to the U.S. dropped 6.5%…total exports to Hong Kong of $48.4 billion in March were almost double the $26.8 in Chinese exports to the U.S. – China’s second-largest export market – last month…according to a report in this morning’s Financial Times, there is strong evidence that many exporters are faking orders in order to take advantage of government tax rebates for exports…some analysts have also suggested that local governments are pressuring exporters to book future orders so they can show good figures out of their jurisdictions to please China’s newly-installed leaders…in the three months until the end of February, China’s customs reported $95 billion in exports to Hong Kong but the independently-administered customs authorities in Hong Kong reported less than $59 billion in imports from mainland China, almost all of it for re-export to other countries…

Fitch Downgrade Is A Warning Over Credit Buildup In China

Fitch Ratings Inc. has lowered one of its key ratings on China’s government debt, in one of the most prominent warnings to date over a credit buildup in the world’s second-largest economy…the downgrade applies only to China’s yuan-denominated debt, which is primarily traded domestically – not the foreign-currency debt that it issues in international financial markets, so there was no impact on global financial markets due to this decision announced late yesterday…nevertheless, as reported by the Wall Street Journal this morning, this is the first outright downgrade in years of debt that is widely seen as buffered by China’s vast foreign-exchange reserves, highlighting a growing perception that massive lending by China’s banks, as well as shadowy non-bank lenders that operate under little regulation, could seriously disrupt China’s economic recovery…the country has seen rapid credit expansion as a result of Beijing’s stimulus in 2008-09 to counter the global crisis, with the stock of bank loans to the private sector hitting 135.7% of gross domestic product at the end of 2012, the third-highest of any Fitch-rated emerging market, the ratings agency said…total credit in the economy including various forms of “shadow banking” activity may have hit 198% of GDP by the end of last year, up from 125% at the end of 2008…the stimulus measures in 2008-2009 helped Chinese growth rebound but at the cost of weighing down local governments and banks with potentially bad debt…

Today’s Markets

The Dow has hit another new all-time high this morning…as of 7:40 am Pacific, it’s up 84 points at 14757..more significantly, the S&P 500 has finally broken its all-time intra-day high of 1576.09 (October 2007) and is currently up 11 points at 1580…the TSX is up 44 points while the Venture has pulled back with softness in commodities today…through the first of trading, the CDNX is down 8 points at 1047…Asian markets were mostly higher overnight with Japan’s Nikkei average adding 96 points to 13288…China’s Shanghai Composite was flat at 2226…European shares are up significantly today as the Italian treasury raised its targeted 11 billion euros ($14.36 billion) at an auction this morning with 1-year debt yields falling to their lowest since January…

Updated Dow Chart

The Dow has now surpassed John’s Fibonacci target of 14723…buy pressure remains very strong, and the question is at what point will a correction set in with technical conditions as overbought as they are right now…

HXD Updated Chart

This S&P/TSX 60 double-short ETF gives us some valuable insight into the possible near-term direction of the TSX…it recently met resistance, as predicted, around $8.40 but should find support near the $8 mark (it traded as low as $8.02 this morning)…this translates to immediate TSX resistance just below 12600 or at the 100-day moving average (SMA)…

CRB Updated Chart

Commodities are soft today but there are some hopeful technical signs in the CRB Index (2.5-year weekly chart)…note also how the Slow Stochastics indicator has given a CDNX “sell signal” each time it has either crossed, or nearly touched, the 80 level over the past couple of years…February was the latest example…currently this reading is outside that “danger zone” at 30…

Deveron Resources (DVR, TSX-V)

An interesting deal was announced after the market closed yesterday as Deveron Resources Inc. (DVR, TSX-V), which started trading just over four months ago after completing a $750,000 IPO, has acquired a stake in privately-held Boreal Agrominerals Inc. which owns and operates a carbonatite quarry near Sudbury, Ontario from which it produces and sells a product called Spanish River Carbonatite “SRC”…this is a powerful organic-certified fertilizer that features apatite, biotite and calcite – the ABC’s of agrominerals…SRC is perfectly suited for organic as well as conventional farming enterprises…the product has also passed the various Ontario and British Columbia Ministry of Environment tests which are required to have it included as a compost amendment at various major landfill/composting sites and as a soil amendment in those jurisdictions where parks, playing fields, lawns, forests and gardens are being legislated as chemical free…Deveron’s initial stake in Boreal (www.borealagrominerals.com) is just 6%, but the tone of the release leads us to believe that their game plan is to own a much bigger piece of this potential cash cow…Boreal is sitting on what appears to be a very significant deposit…if they’re successful in selling this product, then Deveron is off to the races…DVR currently has just 11.8 million shares outstanding and Greencastle Resources (VGN, TSX-V) owns most of them, making for a very tight public float…

Gold has reversed higher after trading as low as $1,570 this morning…as of 7:20 am Pacific, bullion is up $10 an ounce at $1,583…Silver is 42 cents higher at $27.72…Copper has gained 4 pennies to $3.41…Crude Oil is off 27 cents to $93.09 while the U.S. Dollar Index, which so far has been unable to plow through a strong resistance band between 83 and 84, is down one-tenth of a point to 82.54…

Gold is coming off what historically has been the second-worst month of the year for the metal as seen in the Bloomberg chart below…April and May tend to be much more favorable for bullion which lends support to the idea that a spring rally could be brewing for Gold and Gold stocks, especially given the fact that sentiment levels are so low…extreme oversold conditions in this space became very evident last week, and that included both the Venture Exchange and the TSX Gold Index…whether there’s simply a bounce that helps to alleviate these oversold conditions, followed by new lows, or if in fact we’re in the early stages of a true reversal remains to be seen…while the Venture has been looking better in recent days, the risk of a drop to the 980 area this month certainly can’t be ruled out as John’s charts have shown…but there are reasons for cautious optimism…

Today’s Markets

Asian markets were mostly higher overnight…Japan’s Nikkei average erased early gains, after touching nearly a 5-year high, and closed flat at 13192…this is a market on steroids thanks to the actions of the Bank of Japan which is injecting massive stimulus with plans to double the monetary base by 2015…if it’s not wise to “fight the Fed”, it’s also not wise to fight the Bank of Japan which has the full support and encouragement of the Japanese government…more gains are certainly in store for the Nikkei as demonstrated in John’s 20-year monthly chart…ultimately, a move up to the long-term down trendline resistance (near 17000) is certainly possible, but for now the next major milestone is the Fibonacci target of 14000…since money goes to where it can get the greatest return over the shortest period, continued strength and momentum in Japanese and U.S. equities can be considered to be problematic for Gold…

Nikkei 20-Year Monthly Chart

As of 7:20 am Pacific, the Dow is flat at 14615…Alcoa (AA, NYSE) kicked off earnings season yesterday with numbers that weren’t as bad as some had feared…the TSX has gained 69 points through the first 50 minutes of trading while the Venture has added 3 points to 1045…European shares are mostly in positive territory in late trading overseas…industrial production in the U.K. rose by more than expected in February, diminishing the risk the economy slipped back into recession in the first quarter of 2013…meanwhile, the Bank of France forecast today that the French economy posted growth of 0.1% in the first quarter of 2013, in line with its estimates, meaning that the euro zone’s second largest economy will have narrowly averted recession after its economy contracted by 0.3% in the last quarter of 2012…but such low growth could lead France’s government to miss its budget deficit targets, which are based on growth of 0.8% this year…oh well, the socialists in power there will just keeping finding ways to spend other people’s money, which socialists are so very good at doing as the late Margaret Thatcher so famously pointed out…eventually, of course, they’ll run out of money…the world today so desperately needs another Margaret Thatcher…

Chinese Inflation Eases In March

China’s annual consumer inflation eased to 2.1% in March from February’s 3.2%, data showed today, leaving policymakers room to keep monetary conditions easy and nurture a slow recovery…the lower inflation number was aided by a 5.5% drop in pork prices – not surprising, of course, given the widely televised spectacle of dead pigs floating upstream from Shanghai…pork is an important staple of the Chinese diet but there certainly hasn’t been as much of it on dinner tables in that country recently…meanwhile, factories and other producers saw price deflation deepen last month…producer prices in China were down 1.9% in March from a year earlier, compared with a year-on-year decline of 1.6% in February…while asset prices may be rising, the price of goods in China has stayed weak as many industries still face overcapacity…

Chinese President:  “We Don’t Want To Grow Too Fast”

Chinese President Xi Jinping said China’s days of breakneck growth are over as the world’s No. 2 economy tries to balance expansion with sustainability and increasing environmental awareness…speaking before business leaders at the Boao Forum for Asia in southern China yesterday, Jinping stated, “It’s not impossible to grow faster, but we don’t want to grow too fast”, according to an article in this morning’s Wall Street Journal…”I don’t think China can sustain super-high or ultra-high-speed growth”, he added, citing the need to balance economic growth with other issues…he said China’s slowdown last year to 7.8% economic growth is “partially due to our efforts to control the speed of growth”…he said the global economic recovery is “fraught with instability and uncertainty”, alluding to the sovereign-debt crisis in Europe and high unemployment in Western economies…by contrast, he said, “China’s economy is in good shape” and its upward trajectory can be sustained “for a long period of time”…there is still “huge space for growth” in an economy pursuing industrialization, urbanization and manufacturing modernization, he said…

Charts – EPO, PRB, UGD, RRX

John has updates this morning on four situations that all look reasonably promising at the moment based on technical considerations…obviously, a rally in the Venture in the coming weeks, should it materialize, would be beneficial to all four…as always, perform your own due diligence…

Encanto Potash Corp. (EPO, TSX-V)

Probe Mines Ltd. (PRB, TSX-V)

Unigold Inc. (UGD, TSX-V)

Raging River Exploration (RRX, TSX-V)

Note: John, Jon and Terry do not hold positions in EPO, PRB, UGD or RRX.

Gold has traded as low as $1,570 this morning, retracing some of Friday’s strong gains…as of 7:40 am Pacific, bullion is down $11 an ounce at $1,571…Silver is off 18 cents to $27.17…Copper is flat at $3.36…Crude Oil is 39 cents higher at $93.09 while the U.S. Dollar Index is off slightly at 82.66…

Soros:  Gold No Longer A Safe-Haven

Billionaire investor George Soros says Gold has been destroyed as a safe-haven asset, but expects continued central bank buying to support prices, according to an article over the weekend in the South China Morning Post…”Gold was destroyed as a safe haven, proved to be unsafe…because of the disappointment, most people are reducing their holdings of Gold,” Soros is quoted as saying…”But the central banks will continue to buy them, so I don’t expect Gold to go down…if you have the prospect of a crisis, you will have occasional flurries or jumps…so Gold is very volatile on a day-to-day basis, no trend on a longer-term basis”…Soros, who called Gold “the ultimate bubble” in 2011, slashed his position in the world’s largest Gold-backed exchange-traded fund, SPDR Gold Trust, by more than half to 600,000 shares in the fourth quarter of 2012 from 1.32 million in the third quarter…after a 12-year rally, Gold has fallen nearly 6% this year as investors have searched for better returns elsewhere including equities…

Problems In Portugal

Portugal is the latest example of how austerity in the euro zone is failing…the country’s Constitutional Court ruled on Friday that wage and pension cuts to public sector workers were unlawful…as a result, Portugal’s prime minister warned over the weekend that more spending cuts are coming in order to meet the conditions of the 78 billion euro ($101 billion) bailout it received in 2011…speaking in a televised address yesterday, Pedro Passos Coelho responded to the ruling, saying that is posed “serious obstacles and risks” to the 2013 and 2014 budgets…the European Commission responded last night by saying that Portugal must fulfill its bailout commitments to get an extension of maturity payments, which it requested along with Ireland…

IMF Managing Director Hails Bank Of Japan Stimulus

This should give everyone reason for concern…Christine Lagarde, the International Monetary Fund’s managing director, has welcomed the huge monetary stimulus plan unveiled by Japan and says it will help to boost global growth at a time when the outlook is already starting to improve…Lagarde said loose monetary policies and “unconventional measures” had helped boost global growth and “the reforms just announced by the BoJ are another welcome step in this direction”…she was speaking at a business forum in southern China yesterday…

Today’s Markets

North American markets are coming off their worst week of the year and face a major challenge this week as earnings season kicks off with results from aluminum producer Alcoa (AA, NYSE) after the close today….an unusually high number of negative warnings have come out recently with 107 negative revisions for companies in the S&P 500, the worst pace in 12 years according to Thomson Reuters…Fed Chairman Ben Bernanke will be speaking tonight on the topic of maintaining financial stability at a conference organized by the Atlanta Fed…through the first hour of trading today, the Dow is down 50 points at 145515…the TSX is off 3 points while the Venture is up 4 points at 1046…it’s an important week for the Venture is it needs to show some “follow-through” after very encouraging action last Thursday and Friday…Asian markets were mixed overnight but Japan’s Nikkei continued to climb after last week’s announcement of massive monetary stimulus from the Bank of Japan…the Nikkei gained another 359 points or 2.8% to close at 13193…the Nikkei business daily reported over the weekend that the central bank will buy government bonds totaling $77 billion in April…in response, the yen fell against the greenback to its weakest levels since 2009…the decline in the yen may spark fresh talk of a currency war after angry comments by Korean and Chinese authorities over Japan’s export advantage…European shares are up modestly in late trading overseas…

Updated Dow Chart

What goes up, must always come down, so a correction is certainly in store for the Dow given current overbought technical conditions as shown in John’s 1.5-year weekly chart below…however, it also wouldn’t be a surprise if the Dow climbed another 200 points in the near future as buying pressure remains strong and there’s still plenty of cash on the sidelines, waiting to pounce on any minor pullback…John’s Fibonacci target is 14723…

GoldQuest Mining (GQC, TSX-V) Update

Technically and fundamentally, GoldQuest Mining (GQC, TSX-V) is looking highly attractive at current levels as a speculative opportunity with more upside potential than downside risk…John’s charts in recent months have shown a strong support level at 35 cents which has held despite 9 consecutive weekly declines in the CDNX…since February 1, the Venture has fallen 15.2% while GQC slipped from 53 cents to an intra-day low March 25 of 34.5 cents…it closed Friday at 42 cents…GoldQuest in our view represents one of the best exploration opportunities in the market today with Romero comprising just 20% of the company’s Las Tres Palmas trend in the Dominican Republic where multiple new IP targets have recently been identified, including the highest chargeability anomaly to date…a 30,000-metre drill program commenced early in the first quarter and, quite frankly, it would be shocking if GoldQuest did not make another significant discovery at some point in the coming months…investors have been given more than enough clues in news releases December 20, February 11 and March 27…GoldQuest is blessed with a strong team on the ground that has intimate knowledge of the area…just prior to the discovery at Romero in late May of last year, we highlighted GoldQuest when it was trading at just a nickel…it rocketed as high as $2.03 last summer and has pulled back more sharply than it probably should have simply due to overall market conditions…with a possible rebound on the way in Gold stocks, GQC is certainly an opportunity to seriously consider given the exciting potential leverage investors have at current levels…

Below is an updated 2.5-year weekly GQC chart from John…the overbought condition from last spring and summer has unwound with RSI(14) currently flat at 40%…a bullish Slow Stochastics crossover below 20% is encouraging, and the declining 50 and 100-day moving averages are beginning to flatten out around 46 and 54 cents, respectively…technically and fundamentally, what we see with GQC is the ideal set-up for another powerful move to the upside though the exact timing is uncertain…the main spark, of course, will be more spectacular drill results…as always, perform your own due diligence…of course downside risks do exist with GQC (weak markets, disappointing drill results), but we find the risk-reward ratio in this instance to be highly favorable…GQC is up 2 cents to 44 cents in early trading today…

Fission Energy Chart Update (FIS, TSX-V)

Fission Energy (FIS, TSX-V) became short-term overbought recently based on several technical indicators and pulled back as expected last week to 98 cents, the Fibonacci 61.8% retracement level…below is an updated chart from John…the overall trend remains bullish…FIS is up 3 pennies to $1.05 in early trading today…

Updated Silver Charts

There are several factors that give us confidence that Silver is ready to rally, not the least of which is this long-term monthly chart from John showing Silver resting at strong support (note the Pitchfork line) while RSI(2) is at an extreme low…the RSI(2) indicator on all of the previous long-term monthly charts has been a very useful guide in determining “turning points”…RSI(2) is currently at its lowest level since the Crash, so a collapse below support at this juncture seems unlikely…extreme RSI(2) levels on the long-term chart like we’re seeing at the moment have consistently proven to be good buying opportunities, so there’s no reason to be believe that this time will be any different…

Silver Long-Term Chart

Silver Short-Term Chart

The last three trading sessions have formed a bullish Morning Star reversal pattern which needs to be confirmed…RSI(2) is emerging out of oversold territory, another encouraging sign…

Note: John, Jon and Terry do not hold a position in FIS.  Jon holds a position in GQC.

TSX Venture Exchange and Gold

The Venture Exchange has now declined 9 weeks in a row, an unprecedented event at this time of the year.  Evidence suggests, though, that last week may have marked a selling climax – not necessarily the ultimate bottom, but a low (for now at least) from which a significant rally could ensue.  Gold stocks got pummeled Monday through early Thursday as the Dow hit a new all-time high and bullion fell as much as $60 an ounce from its closing price the previous week, just before Easter.  Importantly, Gold rallied intra-day Thursday to hold support on a closing basis at $1,550, and then it surged $29 Friday after a much weaker-than-expected U.S. jobs report.  John’s charts showed that the Venture, Gold and Silver had all become extremely oversold, so the conditions were ideal for a near-term reversal.  The question is, will we see just a weak bounce or a reversal that actually has some strength behind it?  The latter, we believe, is more likely, but we’ll be watching closely for confirming evidence in the coming days.

Despite Friday’s 15-point gain, albeit on light volume, the Venture still finished the week with a whopping 57-point or 5.2% loss at it closed at 1042.  Intra-day Thursday, the Index fell as low as 1018 before recovering to finish the day exactly at Fibonacci support at 1027 (this was important).  Since its 9-week losing skid started at the beginning of February, the Venture is off 15.2% – almost matching the loss of the TSX Gold Index which is down 15.7% during the same period.

The Venture must show some “follow through” in the coming days after the action Thursday and Friday.  A “white candle” Monday is what John is looking for to help confirm a reversal.  What was particularly noteworthy about Friday was that the Venture decoupled from the broader equity markets which were quite weak, especially early in the day.  This, of course, had a lot to do with Gold but it was a positive sign that we haven’t seen for a while.

Gold

Gold’s impressive performance Friday limited the week’s loss to just $16 an ounce.  Strong physical buying out of Asia, in particular India, helped keep bullion above $1,550 on a closing basis through Thursday, and a wave of short covering entered the market Friday after a disappointing March jobs report sent equity markets and the U.S. Dollar Index lower.

There are three important resistance levels to watch closely as shown in the 2-month daily chart below:  $1,590 (the EMA-20), $1,600 and $1,617.  For Gold to generate some serious momentum in the coming days and weeks, it must break out into the $1,620’s.   What the catalyst will be for that is anyone’s guess.

Silver rallied sharply as well on Friday but still finished down 95 cents for the week at $28.30.  Copper was off 4 pennies at $3.36.  Crude Oil ended a 4-week winning streak as it fell $4.53 a barrel to $92.70.  The U.S. Dollar Index, meanwhile, lost nearly half a point to 82.57.  Record short positions in the greenback by commercial traders suggests the Dollar Index won’t be able to bust through the resistance band between 83 and 84, and that short-term weakness is likely.  This helps strengthen the argument for higher Gold prices and a stabilization/upward bias in the Venture.

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), a Fed balance sheet now in excess of $3 trillion and expanding at $85 billion a month, 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.  In the current environment, it’s hard to imagine Gold dropping below key support around $1,500.

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:

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

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Gold is firmer today after a weaker-than-expected U.S. jobs report…bullion fought back impressively yesterday to close just above the $1,550 support level, and as of 7:00 am Pacific it’s off its highs but still up $11 an ounce at $1,565 – about $27 above yesterday’s intra-day low…Silver has climbed 21 cents to $27.11…Copper is flat at $3.37…Crude Oil has fallen 97 cents to $92.29 while the U.S. Dollar Index has lost one-quarter of a point to 82.53…

U.S. March Jobs Report Disappoints

A rather ugly jobs report came out of the U.S. this morning with the economy creating just 88,000 positions, the smallest gain in 10 months and well below expectations of an increase between 150,000 to 200,000…the sequester and an unusually cold March in parts of the U.S. were likely contributing factors…the unemployment rate fell to 7.6%, but this was due to half a million people dropping out of the work force – not a good sign…there were job losses in both the retail and manufacturing sectors…offsetting some of March’s weakness, February payrolls were revised up to a gain of 268,000 from the originally reported 236,000, while January was revised to a gain of 148,000 from the previously reported 119,000…consistent month-after-month gains of 200,000 jobs or more will be required to seriously bite into the unemployment rate, and this will not come about just through loose monetary policy and a rising stock market but through smarter fiscal policy and Washington getting its act together…

Today’s Markets

The Dow has fallen 168 points to 14438 in the first 30 minutes of trading…in Canada, the TSX has lost 108 points to 12255 but the Venture is (encouragingly) bucking the trend (thanks to a rising Gold price) and has gained 2 points to 1029…on a closing basis, it held support yesterday at 1027…overseas, Japan’s Nikkei average topped the 13000 level intra-session overnight, hitting its highest levels since August, 2008, before trimming gains on profit taking to close up 199 points or 1.6% at 12834…the Bank of Japan yesterday unveiled radical measures to boost inflation and meet a 2% inflation target in two years…it plans to inject $1.4 trillion into the economy in less than two years, doubling the monetary base and buying government bonds of all maturities…the bank’s previous asset-purchase program had focused on buying bonds with a three-year maturity…European shares are down sharply, nearly 2%…retail sales fell in the 17 countries that use the euro in February (0.3% on the month and by 1.4% on the year as released by Eurostat this morning, the EU’s official statistics agency), underscoring the weakness in consumer demand that may delay an economic recovery leaders hope to see this year…the figures came a day after the ECB opted to keep its monetary policy stance unchanged despite continued weakness in the bloc’s economy, especially in the southern countries, such as Greece and Portugal, that are most deeply involved in its debt crisis…

Fed Has Exit Strategy In Mind For QE3

The U.S. Federal Reserve could adjust the pace of asset purchases to send a signal about its intentions, vice-chair Janet Yellen said yesterday as she became the latest senior official to hint at a slowing of QE3 – perhaps later this year, though of course she never gave any timelines (after this morning’s weak jobs report, the Fed will remain as supportive as ever through the spring and summer at least)…“In my view, adjusting the pace of asset purchases in response to the evolution of the outlook for the labor market will provide the public with information regarding the Committee’s intentions”, she told the Society of American Business Editors and Writers at a conference in Washington, DC…doing so “should reduce the risk of misunderstanding and market disruption as the conclusion of the program draws closer”, she said…Yellen is number two at the Fed and a likely candidate to succeed Ben Bernanke next year…

Long-Term Gold Chart

Gold continues to show resilience, and John’s 12-year monthly chart this morning puts the big picture into perspective…notice how RSI(14) is at an important support level after a consistent decline from when Gold hit an all-time high in the summer of 2011 at just over $1,900 an ounce…trading patterns over the last six quarters share some similarities to those in the year-and-a-half following the $1,000 peak in early 2008…

Richmont Mines (RIC, TSX) Update

Richmont Mines (RIC, TSX) was one of the top performers on the entire TSX in 2011 before crashing in 2012 in sympathy with the slide in the Gold stock sector in general, and due to operational problems at its Francoeur Mine and a disappointing PEA from the Wasamac Property where a substantial resource was outlined…a new CEO, Paul Carmel, took over the reigns last year and put the bad news behind the company and started the process of rebuilding…overlooked by the market during the big drop in the TSX Gold Index since the beginning of the year are impressive results from Richmont’s producing Island Gold Mine near Wawa, Ontario, where RIC has outlined a high-grade, deeper resource that is still open in all directions…on February 25, Richmont released its first resource estimate for the new “C” zone at the Island Gold Mine and it came in at 1.5 million tonnes grading 10.73 g/t Au for 508,000 ounces…the C zone is subvertical at depths of between 450 metres and 1,000 metres and appears to be an extension of the areas currently being mined…the resource has been drilled on an approximate 50-metre-by-50-metre pattern, with 55 drill hole intercepts…importantly, the average true width of this zone at depth is estimated at 4.5 metres, compared with an average of 2.7 metres above the 400-metre level (current mining operations)…in addition, preliminary metallurgical testing on representative samples has shown high recovery rates (over 96%)…Richmont will be investing $35 million in the Island Gold deep project this year which will include approximately 40,000 metres of drilling…after soaring from around $4 in early 2011 to an all-time high just above $13 a share later in 2011, Richmont has corrected a whopping 80% and is currently trading considerably below book value at $2.30 with just 40 million shares outstanding…if the risk-reward ratio wasn’t very attractive at $13 per share, it certainly is now around $2.30…yesterday, RIC hit a new 4.5-year low of $2.26 and closed down 8 cents at $2.29 (the slide in the Gold Index the last few days brought about a 19% drop in the share price)…as always, perform your own due diligence…we’ll have more on Richmont next week…below is a 5-year weekly chart from John…

Zenyatta Ventures (ZEN, TSX-V) Chart Update

Zenyatta Ventures (ZEN, TSX-V) climbed 18 cents on total volume (all exchanges) of nearly 2 million shares yesterday as it announced it has intersected the widest zone of graphite mineralization (47 metres to 410 metres) to date at its Albany Project in northeastern Ontario…results from this first hole are expected within the next two to three weeks…ZEN has pulled back slightly in early trading today, down 9 cents to $1.90…below is an updated chart from John…support is at $1.75…RSI(14) needs to break out above the down trendline in this 6-month daily chart before ZEN can regain serious momentum…

Note:  John, Jon and Terry do not hold share positions in ZEN.  Jon holds a share position in RIC.