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Gold is under pressure but off its lows a few hours ahead of the Fed policy statement, thanks to some better-than-expected U.S. economic data…growth unexpectedly accelerated in the 2nd quarter, potentially laying a firmer foundation for the rest of the year that could bring the Federal Reserve a step closer to cutting back its monetary stimulus…GDP grew at a 1.7& annual rate, the Commerce Department reported this morning, a significant improvement from the Q1 downwardly revised 1.1% expansion pace…economists polled by Reuters had forecast the economy growing at a 1% pace after a previously reported 1.8% advance in the first 3 months of the year…so Q1 was weaker than previously thought while Q2 (at least based on the initial set of data) was better than expected…does that change anything?…meanwhile, private sector job creation surged in July to 200,000 as small businesses and services led the way, according to the latest report this morning from ADP and Moody’s Analytics…the report topped analysts’ expectations of 180,000 and sets the stage for a possibly stronger non-farm payrolls number Friday…but we’ve seen this before when the market sets itself up for a good jobs number based on the ADP report, and then the official jobs figure disappoints…

We’ll see what kind of clues the Fed may give later today regarding its bond-buying program…many analysts and investors expect the Fed will begin to scale back as early as its next meeting in September, but the doves are firmly in control at the Fed and they may wish to see a longer and sustained period of economic growth and better employment numbers before “tapering”…as of 7:25 am Pacific, bullion is down $10 an ounce at $1,317 after falling as low as $1,311…at $1,317, Gold is up 6.6% for the month and is about to end a 3-month losing skid…below $1,320, there is support at $1,300…Silver is off 9 cents at $19.65…Copper is 3 pennies higher at $3.08…Crude Oil remains within a support band between $100 and $104…it’s up slightly at $103.43, while the U.S. Dollar Index is relatively unchanged at 81.89…

UBS says the first two Gold EFT’s in China were under-subscribed but “should be kept on the radar” of market watchers in case momentum picks up…the HuaAn Gold ETF and Guotai Gold ETF began trading Monday…prices were under some weak selling pressure but transaction volume was described as active, according to Chinese media reports…UBS stated, “There was not much surprise that the first two ETF’s launched in China were under-subscribed; as expected, the bulk of investors were institutional.  Headlines two weeks ago noted that the missed funding targets were a result of investors wanting to see how things play out in the international bullion market first before increasing exposure to these Gold ETF’s further.  Ultimately, it will take time for these products to gain traction across the broader retail customer base.  ETF’s in China currently get strong competition from banks’ Gold-accumulation plans and offerings of other small retail products, which enjoy a wider distribution network. However, despite being a slow-starter for now, Chinese ETF’s should be kept on the radar – these could easily pick up momentum as distribution channels improve and the Chinese gold market becomes more and more sophisticated over time” (source: Kitco)…

Today’s Markets

Asian markets were mixed overnight…China’s Shanghai Composite added 4 points to close at 1993…important manufacturing data (the government’s official PMI) is due out tomorrow and is expected to show factory activity contracted for the first time in 10 months as the world’s largest economy suffers a deepening slowdown…a key drag on the manufacturing sector is tighter liquidity conditions, say economists, which is making it more difficult for businesses, particularly small and medium sized enterprises, to raise working capital to invest and fund their operations…Japan’s Nikkei average fell 201 points to close the month at 13668…

European markets are mixed in late trading overseas…retail sales for Germany managed to dent investor sentiment after it showed a fall of 1.5% in June from the month before, the biggest drop in a year…

The Dow is up 59 points as of 7:25 am Pacific…the TSX is relatively unchanged while the Venture, after climbing as high as 919, is now flat at 914 with the modest pullback in Gold…

CDNX Chart Update

Weakness in potash plays hurt Canadian markets yesterday…the Venture put in its 2nd-worst daily performance of the month by falling 10 points…the Index is still poised to register its first monthly gain of the year after finishing June at 881, but today and the balance of this week will be important in terms of shaping the short-term momentum as John points out in the 9-month daily chart below…the 10 and 20-day moving averages (SMA’s) are still rising and the 20-day provides support at 906…a close back above the 918 level today would be encouraging…

Potash World Turned “Upside Down”

Yesterday’s stunning announcement that Russian company Uralkali plans to break up 1 of the 2 main potash marketing groups to boost its sales sent reverberations throughout the industry, with shares in potash producers and exploration companies taking a hard hit…BMO Capital Markets analyst Joel Jackson called the announcement “the end of the potash world as we know it” as more supply hits the market (price-over-volume leadership has “crumbled”) and the industry is re-shaped…or is this perhaps some sort of “high stakes bluff?”…Uralkali has more flexibility than most rivals to operate in a lower-price environment due to its cheap costs of approximately $62 a tonne, and it says it plans on targeting China and India for more sales…Potash Corp. of Saskatchewan (POT, TSX) closed 16% lower yesterday…Karnalyte Resources Inc. (KRN, TSX) got hammered, falling 46% to close at $3.04…on the Venture, Encanto Potash Corp. (EPO, TSX-V) lost 36% to close at 16 cents and was the CDNX’s most active stock…Pacific Potash Corp. (PP, TSX-V), which has been an impressive play this year and has raised over $6 million for exploration and development of its Amazonas Potash Property in northwest Brazil, fell 2.5 cents or 14% to close at 15 cents…

In situations like this, investors get scared and markets often over-react…some excellent buying opportunities typically emerge – not necessarily immediately, but over time…so we’ll see how this plays out…

Below are some comments from a news release this morning from Passport Potash (PPI, TSX-V) which dropped just a penny yesterday to 13 cents:

“The downward volatility being witnessed in potash stocks across the board…is, in our opinion, a knee jerk reaction to unsubstantiated claims being made from Uralkali. It is instructive to note that when Vale S.A. announced that it was pulling out of its 4.3 million tons per year (“MTPY”) Rio Colorado project in Argentina, and BHP Billiton Ltd. put its 8 MTPY Jansen project on hold the markets did not see an associated upward volatility in potash stocks. It is important to keep in mind that the fundamental demand for potash on a global scale has and will likely remain consistent. Regardless of the activities of potash producers big and small, the following fundamentals remain true:

1. Global population is expected to grow by approximately 300 to 400 million every 5 years;

2. As income growth in developing countries continues to rise, diets change and become more crop intensive;

3. Arable land is flat in absolute terms and falling per capita, and opportunities to increase arable land are limited;

4. Crop prices remain high by historical standards and supportive of robust demand for agricultural inputs, like potash.

“It is our opinion that the present turmoil is likely to have more of a regional than a global impact.”

As far as Pacific Potash is concerned, below is an updated chart from John for guidance…the stock closed at important support yesterday, but the likelihood of additional weakness and a consolidation phase has to be considered high given yesterday’s external shock…the 50-day moving average (SMA), which has been on the increase since late March, is in imminent danger of reversing to the downside (the same with the 200-day)…that’s definitely a warning sign…but keep in mind that PP plans to drill in September, so any potential August weakness that would create oversold conditions could be quickly followed by a powerful rally…as always, perform your own due diligence…as of 7:25 am Pacific, PP is off half a penny at 14.5 cents…this company has done an excellent job this year of executing its game plan…

Garibaldi Resources Corp. (GGI, TSX-V) Chart Update

One of the best Copper-Gold exploration plays in the country is about to unfold, in our view, in the Sheslay River Valley of northwest British Columbia – about 60 miles west of Colorado Resources (CXO, TSX-V) North ROK discovery where drilling continues…Garibaldi Resources Corp. (GGI, TSX-V), already anchored by some strong projects in Mexico, has a game-changing situation on its hands in B.C. as Pete Bernier and his Prosper Gold (PGX.H, TSX-V) get set to start drilling the highly prospective and advanced-stage Sheslay River Project (6,800 hectares) which borders GGI’s 17,000-hectare Grizzly Property…GGI has perked up considerably in recent weeks, hitting a new 52-week high Friday of 17 cents, so the pullback witnessed over the last 2 days is quite normal and healthy from a technical perspective (a cleansing of temporarily overbought conditions)…the primary trend remains very bullish, and below is John’s chart update showing strong support at current levels after yesterday’s close at 9 cents…Garibaldi is in an enviable position with its Grizzly Property…with a strong management team that understands the special dynamics of this situation, we strongly suspect they will take full advantage of this opportunity to build value both on the ground and in the market…as of 7:30 am Pacific, GGI is up a penny at 10 cents…

Fission Uranium Corp. (FCU, TSX-V) Chart Update

John often amazes us with his understanding of Fibonacci analysis and his ability to apply it to Venture stocks…the latest example is Fission Uranium (FCU, TSX-V) which we believe will be a major focus of investor interest over the summer with its important discovery at Patterson Lake South in Saskatchewan…Fission reacted Monday after touching the Fib. $1.10 level, as John had predicted, and retraced yesterday to an intra-day low of 93 cents…below is an updated chart with Fib. support levels…the primary trend remains very positive…FCU is unchanged at 94 cents through the first 55 minutes of trading…

Alberta Oilsands Inc. (AOS, TSX-V) Chart Update

The last several trading days have been quite dramatic for Alberta Oilsands Inc. (AOS, TSX-V) which issued a corporate update this morning…over 60 million AOS shares have changed hands (all exchanges) since last Friday as the stock broke out dramatically, supported by news Monday morning regarding its Clearwater leases in Alberta…AOS closed up 2.5 cents at 17 cents yesterday, and is off 2.5 cents at 14.5 cents as of 7:25 am Pacific…below is an updated chart…

Note: John and Jon both hold share positions in GGI.

Gold has traded between $1,317 and $1,330 so far today…as of 7:15 am Pacific, bullion is off $3 an ounce as $1,324 as the 2-day FMOC meeting begins…observers do not expect Fed action as soon as tomorrow but the market will be scrutinizing the Fed statement for any change in language that offers a clue on when policymakers may decide to start scaling back the $85 billion per month bond-buying program…Silver is 7 cents lower at $19.78…Copper is off 6 cents at $3.05 after data showed that first-half expansions in most provinces in China missed targets, reinforcing concern about demand growth in the world’s largest consumer…Crude Oil is down $1 a barrel to $103.54 while the U.S. Dollar Index is up one-tenth of a point to 81.83…

The Commodity Futures Trading Commission weekly commitment of traders report (COT) for the week ended July 23 shows speculators continued to not only cover previously sold positions, but also established new bullish positions in Gold – not surprising given bullion’s jump last week…after reaching a record high earlier this month, HSBC noted that Gold gross speculative short positions fell for a 2nd week to 16.5 million ounces from 17 million a week earlier…“Further short covering for Gold speculative positions may help boost prices in the short term, in our view,” they said…managed-money accounts boosted exposure to Gold futures and options, increasing their net long position to 70,067 contracts, the highest since mid-March…commercials lightly added to their net short position…bulls need to conquer the $1,350 resistance level in Gold and it’s possible that a series of events, from the Fed meeting to Friday’s jobs report, could allow for that…since late June, a series of higher daily highs and lows have unfolded in the Gold chart…the upsloping channel remains intact with strong support at $1,320…check out this interesting 2-month daily chart from John…

Gold 2-Month Daily Chart

Will India’s Abusive Government & RBI Gold Policies Backfire?

India’s Finance Minister said yesterday the government would continue with its restrictions on Gold imports, following another recent surge in inward shipments of the metal…though imports were low in June, the tide appears to have turned again in July, Finance Minister Chidambaram told journalists yesterday…after moderating in the previous month, he said the high imports in July would force the hand of the government…some market participants believe that the demand for physical Gold in India is so powerful, that these abusive policies by the finance ministry and the RBI will simply not work as multiple legal (and in some cases illegal) alternatives are being discovered to circumvent these policies…when a government attempts to ban something or put curbs on it, especially in this case when the product (Gold) is not harmful to people and so deeply rooted in the culture of Indians, such efforts can often backfire…

Russia Pulls Out Of Potash Cartel

In an unexpected move that could transform the landscape of the fertilizer industry, Russia’s Uralkali is dismantling one of the world’s largest potash marketing groups by striking out on its own…Uralkali said it expects the move will result in the fall of global prices by 25%, and this is hurting potash producers and exploration plays in that sector as well this morning…the break-up of the Belarus Potash Company (BPC) leaves North America’s Canpotex as the ruling potash export venture…BPC and Canpotex had accounted for 70% of global trade in potash, an important ingredient for fertilizer, and the duopoly had set identical prices in key markets such as China and India…Uralkali said it was pulling out after reaching “deadlock” over sales and would export all potash via its Swiss-based Uralkali Trading…reports say the decision may lead to a fall in the global potash price to below $300 per ton in the 2nd half of 2013, from the current $400 per ton…lower fertilizer prices could result in rising demand from price-sensitive farmers in Asia, however…

Copper Theft Like “An Epidemic” Sweeping U.S.

CNBC reported this morning that Copper is such a hot commodity that thieves are going after the metal anywhere they can find it: electrical power stations, middle-class homes, construction sites – you name it…on a Utah highway construction site recently, crooks managed to abscond with 6 miles of Copper wire…Copper theft has become at least a $1 billion business in the U.S., and it’s a growing problem in Canada as well…“There’s no question the theft has gotten much, much worse,” said Mike Adelizzi, president of the American Supply Association, a nonprofit group representing distributors and suppliers in the plumbing, heating, cooling and industrial pipe industries…“There was a perception that Copper theft slowed down after the recession, and the rise in commodity prices seemed to ease off,” he said…”But that’s not the case…The theft has only been growing”…

Today’s Markets

Asian stocks rebounded overnight after China’s central bank injected funds into money markets for the first time in nearly half a year, while the Japanese yen weakened ahead of key global central bank meetings this week…China’s Shanghai Composite climbed 14 points to close at 1990 (key support is around 1950)…seeking to stave off a repeat of the cash crunch that blighted the economy in June…the People’s Bank of China pumped $2.8 billion U.S. into the money market via 7-day reverse repurchase agreements today, the first time it has conducted that kind of liquidity injection since February 7…the amount was relatively small but its intent to prevent cash rates from drifting too high was clear, and the impact was immediate…the 7-day bond repurchase rate, a key gauge of short-term liquidity in China, fell 14 basis points to 4.98%…Japan’s Nikkei average jumped 209 points or 1.5% to finish at 13870…

European shares are modestly higher in late trading overseas after a mixed bag of earnings reports and fresh economic data released from the euro zone…economic sentiment data showed a rise to 92.5 in July from 91.3 in June, in numbers released by the European Commission that were essentially in line with expectations…German consumer confidence has risen to its highest level in nearly 6 years…a cover story in Barron’s last week reported on the economic turnaround that’s underway in the euro zone…

In North America, the Dow is up 41 points as of 7:15 am Pacific…the TSX, thanks in parts to weakness on the potash front, is down 104 points…the Venture, meanwhile, has retreated 4 points to 921…Pacific Potash Corp. (PP, TSX-V), which has been such a great performer since early this summer, is off 2.5 cents to 15 cents…Encanto Potash Corp. (EPO, TSX-V) is also hurting, down a nickel at 20 cents…blame the Russians…it’s not a regime that can be trusted…

Zenyatta Ventures (ZEN, TSX-V) Updated Chart

Red-hot Zenyatta Ventures (ZEN, TSX-V) has cooled off and fell as low as $4.05 in early trading today…it has recovered to $4.36 (down 29 cents) as of 7:15 am Pacific…its 10-day moving average (currently just below $4.50) has provided superb support over the past month…below is an updated 2-month daily chart from John…the $4.50 Fib. target was obviously exceeded (ZEN hit an all-time intra-day high of $5 last Friday) and the stock closed yesterday at $4.75 before plunging this morning…a negative divergence between price and RSI may have been a cause for concern among some investors who closely monitor the technicals, and the ADX indicator has shown some weakening of the bullish trend…but there’s a lot of firepower behind ZEN given the apparent strength of its graphite project, the highly effective branding of this play and the very positive perception of ZEN in the market given the company’s ability to execute in all areas…the 10-day SMA (referred to earlier but not shown in this chart) and the up trendline (currently $4.22 as you can see in the chart) both provide excellent support on a closing basis…$3.75 is another very strong support area…

Macro Enterprises Inc. (MCR, TSX-V)

A company with some “ZEN-like” qualities we’ve been following quite closely over the past couple of months (it’s up nearly 40% since we introduced it to our readers) is Macro Enterprises (MCR, TSX-V) which is one of the few Venture companies making a profit…MCR hit another fresh all-time high yesterday of $4.39…MCR, which is headquartered in Fort St. John, B.C., and provides construction and maintenance services to the energy and resource industries, reported Q1 earnings May 22 of 40 cents per share…so it’s not hard to understand why there has been heavy accumulation of this stock going back to last summer actually, but many speculative investors in the junior exploration space have overlooked this particular opportunity with a simple story…perhaps it’s just because the idea of a Venture company actually making money is so foreign to most of us…below is an updated MCR chart from John…note the Fib. level – not a price target, just a theoretical level based on Fibonacci and technical analysis…as always, perform your own due diligence…

Teuton Resources Corp. (TUO, TSX-V)

Back now to the speculative exploration side which we all so enjoy…an overlooked situation that’s certainly worthy of being on our readers’ radar screens is Teuton Resources (TUO, TSX-V) TSX-V) which has been around since the days of Billy The Kid…we’ll be following Teuton closely this summer given the increased interest in Gold/Copper opportunities in British Columbia…while it doesn’t have a position in the critical Sheslay River area, where Prosper Gold (PGX.H, TSX-V) and Garibaldi Resources (GGI, TSX-V) are dominant (more on that tomorrow), Teuton is nonetheless a huge landholder in northwest B.C. with about 300,000 acres…this includes the Yellow Chris claims a few kilometres northeast of Colorado Resources‘ (CXO, TSX-V) North ROK discovery…Teuton recently cut a deal with Red Hill Resources Corp. (RHR, TSX-V), giving Red Hill an option to acquire up to a 60% interest in one of Teuton’s several claim blocks at Yellow Chris…

What we’d particularly like to draw our readers’ attention to is the fact that Teuton has commenced fieldwork at its Stewart-area mineral properties…that news was announced last Wednesday…Teuton has started a program of prospecting and rock sampling has begun on the King Tut zone, located at the northern end of its High property, approximately 50 km north of Stewart in the famous Golden Triangle region…the King Tut lies 150 metres south of the border between the High property and Pretium Resources‘ (PVG, TSX) Brucejack-Snowfield Property, the latter featuring the exceptionally high-grade Valley of the Kings zone…in case you missed it, Pretium announced July 23 the discovery of another high-grade structure (Cleopatra Vein) from which 1 drill intersection returned 5.8 metres (19 feet) grading an incredible 2,567 g/t Au (75 opt)…the Valley of the Kings hosts huge high-grade reserves (15.1 million tonnes grading 13.6 g/t Au, 6.6 million ounces)…

In 2012, Teuton drilled a hole running 0.88 g/t Au over 222 metres on its High Property which it has held onto for 27 years…recently, “climate change” (whatever you want to call it) has begun to melt permanent ice and snowfields, exposing virgin ground…the 2012 appearance of one such exposure led to the discovery of Teuton’s new King Tut zone, so there’s plenty of potential here…it’s right on geological strike of course with Pretium’s Brucejack-Snowfield as you can see on the map…

Technically, TUO is currently in a horizontal channel, establishing a base between 8 cents and 12 cents…below is a 5-year monthly chart from John…sell pressure has been dominant since April, but that doesn’t concern us as that can often be the best time to start accumulating…RSI(14) is near long-term support and has flattened out…TUO closed yesterday up a penny at 9 cents on light volume…

Dynasty Gold (DYG, TSX-V) Update

Dynasty Gold (DYG, TSX-V) perked up yesterday, climbing half a penny to close at 2 cents…Dynasty has a very interesting property (the “Strike”, acquired last year) about 20 km north of Stewart and the company is gearing up for a summer drill program to test some promising structures…Dynasty has spent the last several months compiling some of the historical drill data into cross-sections and 3-D views…this effort, along with geological maps, geophysics reports and other information, has highlighted some major areas of interest, especially over the northern part of the property where very limited historical drilling has occurred…the volcanics at depth have never been adequately tested anywhere on this property, and that’s what Dynasty plans on doing this summer…check out the company’s news release from November 21 last year for more details on their field program that returned some highly encouraging results…

Below is a 2.5-year weekly chart…RSI(14) is trending higher and the stock has mostly been under accumulation since last October in a range between 1.5 cents and 4 cents…

Note: John and Jon both hold share positions in DYG and GGI.  Jon also holds a share position in TUO.

Updated – 9:00 am Pacific

Gold has bounced around today but has stayed within the resistance band between $1,320 and $1,350…this could be a volatile week for bullion given the Federal Reserve meeting (Tuesday and Wednesday) and an abundance of economic data…Gold has posted 3 consecutive weekly gains and is up 8% so far this month as it tries to snap a 3-month losing skid… as of 9:00 am Pacific, bullion is down $2 an ounce at $1,332…Silver is 3 pennies lower at $19.96…Copper is up a penny at $3.11…Crude Oil is relatively unchanged at $104.77 while the U.S. Dollar Index is up one-tenth of a point at 81.71…further down in today’s Morning Musings, John has a fresh and revealing Gold chart along with his regular Monday Silver charts…

COMEX open interest in Gold options surged to a new record high of about 5,600 tons, or about 2 years’ total annual mine production, last week…this move is indicative of still very strong trading interest in Gold, and suggests that speculators are taking a view on potentially higher prices later in this 3rd quarter…

Rising WTIC prices have been a supportive factor for Gold recently, and may remain so throughout the summer – especially if long-term resistance at $110 is breached…also coming up later this quarter is another chapter in the debt ceiling debate that 2 years ago led to the downgrade of the U.S. credit rating and a powerful rally in Gold to an all-time high of just over $1,900 an ounce…many analysts have little confidence that this next debt ceiling debate will be resolved in a manner that satisfies the rating agencies…

Much has been written about the big outflows in Gold ETF’s listed in the U.S. this year – certainly a major contributing factor to Gold’s decline – but investors in their newer Asian counterparts are a different story as Frank Holmes pointed out in his Weekly Investor Alert over the weekend…a net $33.5 million was added to Asian Gold and precious metals miners’ funds in the 2nd quarter…the inflows are not very large in size, but they do serve to reinforce the idea that the Asian appetite for Gold is relentless…on another note, Russia, the world’s 4th-largest Gold producer, has announced plans to set up a stock exchange for junior Gold and other mining companies to encourage exploration…

Today’s Markets

The Dow is off 67 points at 15492 through the first two-and-a-half hours of trading today…about one-fifth of the S&P 500 companies report earnings this week…about half of the S&P 500 has reported earnings so far, with 68% beating estimates and 56% topping revenue forecasts, according to data from Thomson Reuters…

Interesting story in the Wall Street Journal this morning…the WSJ examined more than 700 predictions made between 2009 and 2012 in speeches and congressional testimony by 14 Fed policy makers – and scored the predictions on growth, jobs and inflation…the most accurate forecasts overall came from Janet Yellen, now the Fed’s vice chair…she was joined in the high scores by other Fed “doves,” policymakers who wanted aggressively easy money policies to confront a weak U.S. economy and low inflation…collectively, they supported Fed Chairmen Ben Bernanke’s strategy to pump money into the U.S. economy…the least accurate forecasts came from central bank “hawks,” those who feared Fed policies would trigger rising inflation…the “doves” are firmly in control at the Fed and, so far at least, have history on their side…

The TSX is down 4 points as of 9:00 am Pacific while the Venture is up 2 points at 927…Fission Uranium Corp. (FCU, TSX-V) and Alpha Minerals Inc. (AMW, TSX-V) reported more positive results this morning from their Patterson Lake South joint venture…2 holes (PLS13-073 and PLS13-075) successfully tested the eastern and western extensions of the R390E Zone with PLS13-075 returning the largest accumulation of discrete off-scale mineralized intervals in any drill hole at PLS to date…FCU hit $1.10 this morning (Fib. level) and is currently off a penny at $1.04…AMW climbed as high as $5.80 but is now down a penny at $5.59…Macro Enterprises Inc. (MCR, TSX-V) continues to push higher and hit a new all-time high this morning of $4.39…it’s up 15 cents at $4.35 as of 9:00 am Pacific…

European markets closed modestly higher today…meanwhile, Japanese stocks fell to a new 4-week low overnight on the back of a stronger currency…the Nikkei average plunged 469 points or 3.3% to close at 13661…China’s Shanghai Composite fell 35 points to finish at 1976…bank lending conditions in emerging Asian nations have tightened the most since the global financial crisis, according to the latest survey from the Institute of International Finance (IIF)…the IIF’s index of bank lending conditions in emerging Asia fell in the 2nd quarter to 45.7, below the key 50-level that divides easing and tightening territory and its lowest level since the beginning of the survey in 2009…Asia also showed the tightest lending conditions of global emerging regions…

New Gold Chart Gives Encouragement

This 5-year weekly Gold chart from John uses 3 trend indicators (Vortex, Aroon and ADX) to show that the current rally in bullion may have some legs…what these indicators tell us is that the down trend in Gold has clearly weakened, setting up the possibility of an even stronger rally than what we’ve seen so far which has been 13% off the $1,180 low near the end of June…while the primary trend is still bearish, at least for now, Gold could be readying itself to test resistance during the 2nd half of this year in the $1,550 area (previous strong support)…

When it comes to teaching about panning for Gold and why exploration and mining are so integral to our everyday lives, there’s no one better in our view than “Yukon Dan” who was once again booked solid each day in the months of April, May and June with classroom presentations in British Columbia from grades 1 through 12…during the rest of the year, he spreads his message at fairs, festivals, rock and gem shows, birthday parties – you name it…he was also a big hit at January’s Cambridge Resource Show in Vancouver where we first interviewed him…

“I’m very proud to say with my teaching at schools and educating kids, I’ve had students leave the school system who are now in the mining field,” Dan told us during a breakfast get-together last Friday…

The story of  Yukon Dan is a fascinating one and we’ll be dedicating our Morning Musings this Friday with a special article on him…BMR is also pleased to announce that it has become an official sponsor of the upcoming Fraser River Gold Panning Championships (August 22-25) and Dan’s overall efforts at educating the young people of B.C. (and elsewhere) about the mining industry in general…his impact has been incredible, and his work is hugely important – especially at a time when the mining industry is hurting and also under attack from “environmentalists”…

The upcoming Fraser River Gold Panning Championships at the Anderson Creek Campground are expected to attract about 170 participants (all ages from 2 and up, beginners to pros) and lots of onlookers as well…on August 22 and 23, Yukon Dan will be be teaching the art of Gold panning to all competitors for free in the town of Yale on the Fraser River from 1 pm until 4 pm…metal detecting competitions will take place August 23 while the Gold Panning competitions will be August 24 and 25 (Saturday and Sunday)…check out Yukon Dan’s web site for more details – www.yukondan.com….campground spots are filling up very quickly, and competitors will be coming from as far away as Austria…this Friday, as mentioned, we’ll be posting a special article on Yukon Dan as the main focus of Morning Musings…

British Columbia – The Land Of Gold, Copper, And So Much More

Yukon Dan’s excitement over the Gold and mineral potential of British Columbia is shared by many, including the new sheriff in town for the Sheslay River Valley in the northwest corner of the province – Pete Bernier, assisted by his very capable deputy, Dirk Tempelman-Kluit…the dynamic duo of Bernier and Tempelman-Kluit made themselves and many investors very wealthy

through the discovery of the massive Blackwater Gold-Silver deposit that resulted in New Gold’s buy-out of Richfield Ventures for half a billion dollars in 2011…after 2 years of searching the globe for their next best opportunity, they’ve landed in the Sheslay River Valley where they’ve re-named Firesteel Resources‘ (FTR, TSX-V) Copper Creek Property the Sheslay River Porphyry Project which we believe will become an immediate exploration hotspot given historical results and the immense untapped geological potential this area has…

As announced July 18, a definitive deal has been struck between Bernier’s Prosper Gold (PGX.H, TSX-V) and Firesteel, and field exploration has already commenced at Sheslay River with a 5,000-metre drill program slated to begin early next month…this qualifying transaction for Prosper Gold still requires Exchange approval but given the credibility of the players involved, this is expected imminently…

“Since the sale of our last company, Richfield Ventures in 2011, it has taken us two years to identify a multiple bulk-tonnage Copper-Gold target area, with historical drill confirmed discoveries that met our exploration criteria for Prosper Gold,” Bernier stated in the July 18 news release. “The Sheslay project area is close to infrastructure, drill permitted and drill ready. We look forward to advancing the project in the near term.”

Tempelman-Kluit has a plethora of targets to chase at Sheslay which has never been properly tested at depth and includes some impressive surface mineralization as you can see in the picture below…4 of the 5 porphyry bodies identified to date at the Sheslay (more will likely be discovered) are clustered within a 12 sq. km target area (Star)…the Pyrrhotite Creek porphyry, according to Prosper Gold, appears to be located in a 2nd distinct multiple target area to the southwest…of course adjoining the western and southern borders of the 68-sq. km Sheslay Project is Garibaldi Resources‘ (GGI, TSX-V) 170-sq. km Grizzly Property which hosts a major intrusive (Kaketsa Pluton) that’s interpreted to be an important “heat engine” driving mineralizing fluids on both properties…

Garibaldi Resources (GGI, TSX-V) Update

Investors are starting to see huge opportunities for Garibaldi with its Grizzly Property given 2 important catalysts – Colorado Resources‘ (CXO, TSX-V) discovery in the spring, of course, which generated fresh interest in the general area, and – even more importantly – Bernier’s arrival on the the scene at Sheslay…Garibaldi is already anchored by some strong projects in Mexico and has its own very capable management team that knows how to execute…GGI blasted through important resistance Friday on strong volume, hitting a new 52-week high and closing at 15 cents…it has tripled since we first introduced it to our readers several weeks ago…but the good news is, the Sheslay River Cu-Au play is just getting started…it’s still in its infancy and many investors aren’t even aware of it yet…Sheslay River has superb potential to quickly become northwest B.C.’s next major Cu-Au discovery given historical results and the highly respected team that is now developing this property…and the impact on Garibaldi could be immense…Garibaldi also has the ability and the capacity to unlock the value of the Grizzly through its own exploration…GGI is catching its breath today after running at a frantic pace on Friday…as of 9:00 am Pacific, GGI is off 2 cents at 13 cents on volume of more than 500,000 shares…this is positive action from a technical standpoint and an opportunity for bargain-hunters in our view given how we see this play unfolding in the coming weeks…

As always, perform your own due diligence…below are 10 important factors that we believe are in Garibaldi’s favor…

• Game-changing event – Pete Bernier and his former Richfield Ventures‘ team options the Sheslay River Porphyry Project;

• Exploration has started at Sheslay with 5,000-metre drill program commencing in early August;

• GGI’s Grizzly Property is 170 sq. km and adjoins the western and southern boundaries of Sheslay;

• The Grizzly and the Sheslay appear to be intimately connected geologically with a major intrusive in the NW corner of the Grizzly;

• The Grizzly displays similar geophysical signatures to mineralized zones already identified at the Sheslay;

• Share structure – Garibaldi has not done a financing since 2009, no cheap paper overhanging the market;

• Management – Garibaldi has a strong team that has proven it can execute given its success in Mexico;

• Working capital – GGI is in solid financial shape, unlike most juniors at the moment;

• Year-round activity – exceptional projects in Mexico, 2 B.C. properties in addition to the Grizzly;

• Technical strength – major breakout, one of the best charts on the Venture.

Probe Mines (PRB, TSX-V) Updated Chart

Besides Zenyatta Ventures‘ (ZEN, TSX-V) graphite deposit that has captured investors’ hearts, one of the really promising and exciting exploration stories in Ontario continues to be Probe Mines‘ (PRB, TSX-V) Borden Lake Gold Project…we have written about Borden Lake on numerous occasions and the incredible work that Probe is doing under the strong guidance of President and CEO David Palmer…Agnico Eagle Mines (AEM, TSX) took a position in Probe a couple of months ago and for good reason…Borden Lake, which already boasts a significant resource, is evolving in a major way with a dramatic improvement in Gold grades in the expanding southeast extension of the deposit…Probe is actually reclassifying the deposit as a more traditional high-grade, Archean lode Gold system, amenable to underground recovery, which is also bounded by significant ancillary lower-grade mineralization, the latter ideally suited to potential open-pit mining techniques…drilling continues at Borden Lake, Probe is sitting on piles of cash and has only 75.4 million shares outstanding for a current market cap of $143 million based on Friday’s closing price of $1.90…still plenty of upside potential as exploration continues, especially if Gold and Gold stocks in general continue to strengthen as this 3rd quarter progresses…below is an updated 2.5-year weekly PRB chart…

Silver Chart Updates

An important support band has held between $17.50 and $19.50 with Silver now trying to close above the $20 level and gain some traction from there…near-term resistance is at $20.60 and then at $22…iShares Silver Trust (NYSE: SLV), the world’s largest Silver-backed ETF, said it saw the biggest daily inflows in holdings since mid-January last Wednesday…according to reports, holdings in SLV increased by 144 metric tons…year-to-date SLV has seen an increase in holdings of more than 3% while year-to-date holdings in GLD have declined by 31%…at the same time, Silver prices have underperformed vs. the yellow metal which analysts say is mostly due to Silver’s more volatile nature…while Gold is currently down about 21% this year, Silver has dropped 34.5% so far in 2013…

Short-Term Silver Chart

Long-Term Silver Chart

Note: John and Jon both hold share positions in GGI.

TSX Venture Exchange and Gold

The Venture’s slow but gradual recovery continues as the Index posted its 4th consecutive weekly gain, climbing 5 points on another moderate increase in volume to close at 925.  Significantly, the Index confirmed a breakout above resistance at 918 (now new support – interestingly, that’s also where the 10 and 50-day moving averages currently are) which it pushed through July 19.  The Venture managed to hold above that 918 level throughout the week.  The rising 20-day SMA is at 901, providing strong secondary support in the event of a sudden pullback.  There’s no question in our view, looking at all the technical evidence, that a bullish new trend has started with the next major resistance at 970.

It’s still too early to tell at this stage, but theoretically what appears to be forming with the CDNX is a very bullish inverted head-and-shoulders bottom.  The scenario in terms of how this could potentially play out is a near-term move up to resistance at 970 followed by a minor consolidation to unwind temporarily overbought conditions at that time.  The market would then recoup the strength it needs for a powerful push on strong volume through that important resistance.  If and when that occurs, it’s game on for a major rally – one that would likely test the 200-day SMA currently sitting just below 1100.

Is the bear market over?  Did the Venture finally hit bottom at 859 June 27 at the same time Gold slipped below $1,200 an ounce?  Our simple answer is, we don’t know – no one has a crystal ball.  But one thing appears quite certain at the moment – the Venture is currently in rally mode, and this 3rd quarter is shaping up to be very positive.  Some investors, asleep at the switch this summer who also forgot the notion that the best time to buy is when almost everyone is bearish, are sure to be caught by surprise at the strength of this potential move.   The Venture’s 50-day SMA is flattening out and appears poised certainly by sometime in August to reverse to the upside after being in decline since November of last year.  So this bullish trend could really start to accelerate in the next few weeks.  PREPARE NOW.

Other technical indicators support this bullish view.  The recent +DI/-DI bullish crossover in the ADX trend indicator is exactly what occurred in August 2012 and January 2012 – just prior to significant upside moves in the Index.  In addition, the rapid surge in buy pressure suggests that an underlying shift in investor sentiment is underway.  This is the strongest buy pressure we’ve seen in the 9-month daily chart we normally use for our weekend reviews since January 2012.  Something big is brewing, in our view, and we’re also seeing highly encouraging signs in a number of individual stocks we’re tracking.  On Friday, for example, Garibaldi Resources (GGI, TSX-V) – 1 of our favorites – blew past major resistance on strong volume after recently breaking above long-term RSI(14) trend resistance.  A game-changing event for Garibaldi, which also has strong fundamental factors in its favor, but when you see things like that it’s usually a clear indication of a major shift coming in the market.

Below is John’s updated 9-month daily Venture chart.  At 59%, RSI(14) is showing increasing up momentum and should continue to head higher.

British Columbia is an exploration hotspot that could provide the spark this summer that lights up the market, and Garibaldi will be in the heart of that action along with numerous other companies including of course Prosper Gold (PGX.H, TSX-V) and Colorado Resources (CXO, TSX-V).  Meanwhile, in Ontario, Zenyatta Ventures (ZEN, TSX-V) continues to sizzle. Excitement over ZEN’s graphite deposit has started a mini-area play that has breathed new life into a few struggling penny stocks, bringing more volume and new players into the market. Some energy stocks are performing extremely well, too, with WTIC prices (and Canadian heavy crude) surging recently.

In the other world, “Taper talk” should pick up again this coming week as the Federal Reserve gets set to meet Tuesday and Wednesday. While Fed officials are not expected to make any major changes in their statement or policy, traders will be watching for any subtle tweak that could shed light on the Fed’s views as to when it may begin to scale back its $85 billion a month bond-buying program.

About a fifth of the S&P 500 companies report earnings in the coming week, and it’s a first look at big Oil, with BP, Exxon and Chevron all reporting. Then there are 2 major U.S. data releases – the Friday jobs report, always important to the equity markets and Gold, and 2nd quarter GDP on Wednesday.  Many economists expect 2nd quarter GDP to come in at less than 1%.  But the big deal may be the government’s special release of revisions going all the way back to 1929, which could make the economy look slightly better, at least on paper. The last time the government issued major revisions was 2009.

Gold

It was a strong week for Gold, which is helping the Venture, as bullion cracked the $1,300 barrier last Monday and held above that level the rest of the week.   RSI(14) on John’s 2-year weekly chart has broken out of a downtrend, sell pressure is declining rapidly as shown by the CMF(20), while a strong bearish trend is clearly showing signs of weakening according to the ADX trend indicator.

Gold, which is up for July after declining for 3 straight months, gained $37 an ounce last week to close at $1,334, right in the middle of the resistance band between $1,320 and $1,350 as shown again on John’s chart below.  Our guess, based on technical evidence and seasonal patterns, is that Gold is going to break above $1,350 this summer and then quickly challenge the $1,400 area.  It could also certainly go higher from there, and even climb its way back up to resistance between $1,550 and $1,600.  The trend at the moment is bullish (Gold is also getting help from strong Oil prices) but it’s still too early to determine if the bullion correction has run its course.

Silver closed 46 cents higher last week at $19.99.  Crude Oil (WTIC) took a breather, falling $3.35 a barrel to $104.70 but strong support exists between $100 and $104.  Copper fell 3 pennies to $3.10 while the U.S. Dollar Index closed down nearly a point to 81.66, falling below important support at 82.  Our most interesting and revealing chart last week, we believe, was the 10-year monthly WTIC last Tuesday.  Crude is looking very strong, and if it pushes past long-term resistance at $110 – look out.  This could catch a lot investors by surprise and would give Gold a boost as well.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been 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, has had a huge impact on bullion.  Despite this year’s weakness, the fundamental long-term 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, a Fed balance sheet now in excess of $3 trillion and expanding at $85 billion a month, money supply growth around the globe, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, emerging market growth, geopolitical unrest and conflicts…the list goes on.  However, deflation is prevailing over inflation in the world economy and this had a lot to do with Gold’s plunge below the technically and psychologically important $1,500 level during the spring, along with the strong performance of equities which have drawn money away from bullion.  Where and when Gold bottoms out in this cyclical correction is anyone’s guess (has it already found a bottom?), but we do expect new all-time highs later in the decade.  There are many reasons to believe that Gold’s long-term bull market is still intact despite a major correction from the 2011 all-time high of just above $1,900 an ounce.

Welcome to our site, or at least the initial version of it!  BMR has been online for almost 4 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, Silver and Copper 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 intent is to provide you with information that you can use as part of your own due diligence.  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.  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 perspective (His money that we have been given stewardship of), He will bless you.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

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

Forward Looking Statements:

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

Gold has hovered between$1,319 and $1,340 so far today as it continues to trade within a resistance band ($1,320 – $1,350)…as of 6:45 am Pacific, bullion is off $9 an ounce at $1,325 but is still poised for a weekly gain as it pushed through the $1,300 barrier…the technicals still look favorable for the short-term despite today’s weakness…Silver is 26 cents lower at $19.99…Copper is 7 cents weaker at $3.10…Crude Oil is down 55 cents to $104.94…WTI is headed for its first weekly drop in more than a month on profit taking and amid rising crude output in the U.S. and speculation that China’s plans to cut excess manufacturing capacity will curb fuel demand…however, as we’ve pointed out, WTI has solid technical support between $100 and $104…the U.S. Dollar Index, which importantly closed below 82 yesterday, is off slightly at 81.67…

China’s Gold demand could hit a record 1,000 tonnes this year, the World Gold Council said yesterday, which means it would overtake India as the world’s biggest bullion consumer…Chinese Gold demand is likely to be in the range of 950 to 1,000 tonnes in 2013, the WGC’s managing director for investment, Marcus Grubb, said, but risks are skewed to the upside and could push demand past the upper end of that range…”China will probably be the world’s biggest Gold consumer this year for the first time on an annual basis,” Grubb said…”That will be driven by both jewellery and investment demand…Jewellery will be the biggest overall demand segment, but investment will grow fastest“…

Physical deliveries from the Shanghai Gold Exchange in the first half of 2013 exceeded total deliveries for all of last year, exchange data showed, while premiums over spot prices rose above $20 an ounce…

India’s Gold demand is likely to be at the lower end of earlier guidance, Grubb said, at around 850 tonnes, which is still impressive considering the Indian’s government’s aggressive efforts at trying to curb Gold imports this year in a bid to cut a record trade deficit and boost the rupee…Indians have a deep cultural affinity for Gold, and the government’s attempts to counter that in a significant way may prove to be more difficult than first thought…

Last month, the government also made it harder for dealers to use bank credit to buy the precious metal from suppliers overseas…the nation’s central bank restricted banks and trading agencies from importing Gold on behalf of customers and taking payment later…the move effectively required dealers to pay cash in advance for imports…on Monday, the central bank changed tack, scrapping the ban on deferred payment but requiring banks and dealers that import the metal to ensure that 20% of imports are re-exported…

“Overall, this measure would mean that Gold availability in open markets is going to reduce still further,” said Santosh Srivastava, managing director of Gitanjali Jewellery Retail Ltd., which runs a chain of 135 retail shops across the country…

The Indian government’s measures are having an effect…Gold imports declined 11% to 859.7 tons in 2012 from 969 tons in 2011…and the total for June fell about 80% to 30 tons from 162 tons in May, according to a trade ministry official…

But while supply may be falling, demand isn’t…Gold is the preferred form of savings for farmers, Srivastava said…it is also the traditional gift for brides and purchased by millions of Indians during Hindu festivals, he added…”We have always maintained that there is a very innate demand for Gold in India,” said P.R. Somasunderam, managing director of the World Gold Council’s India office…”Trying to manage this demand, which is so diversified, by restricting supply will lead to undesirable consequences“…India’s Gold demand is likely to be at the top end of the council’s forecast range of 865 to 965 tons, or 2.24 trillion rupees ($37.7 billion), this year, Somasunderam said…plentiful monsoon rains and an ample harvest are expected to drive up demand from farmers in the second half, during the height of the festival season, he stated…

Reports suggest that smuggling of Gold into India continues to increase on a monthly basis, rising in tandem with the government’s efforts to curb demand…a senior official in the Department of Revenue Intelligence, a part of the Finance Ministry that combats tax evasion, told the Wall Street Journal that smuggling is mostly coming from Dubai but also from Bangkok and Singapore…the official said some of the Gold comes by sea, but it also is being smuggled across land borders with Bangladesh and Nepal…the number of people arrested by the department for Gold smuggling rose to 32 in the quarter that ended in June from 4 during the same period a year earlier, according to the Revenue Intelligence official…the value of the Gold seized during the quarter was 270 million rupees, more than 10 times the 25 million rupees of precious metal retrieved from smugglers during the same period in 2012, said the official…but this is only a fraction of the Gold being smuggled into the country, Revenue Intelligence officials say…”I think we are able to detect only about 5% to 10% of the Gold smuggling in the country,” a second Revenue Intelligence official told the Wall Street Journal…

In June, a man was stopped at customs while carrying cardboard boxes containing household appliances, such as a television and a food blender…an excessive number of staples on the boxes aroused suspicion…on closer scrutiny, customs officers discovered that the staples were made of solid Gold, weighing 755 grams in total, worth around two million rupees…a couple and their 5-year-old child were stopped by customs this week at the southern Indian port of Mangalore…a search led to the discovery of over four pounds of Gold coins and jewelry, valued at 5 million rupees, inside the woman’s underwear…others continue to rely on time-tested methods – Gold carried inside hollowed-out shoes, false bottoms in luggage or stuffed inside their own bodies (source: Wall Street Journal)…

Central Bank Buying Of Gold Continues

Central banks in several emerging-market countries continued to boost their Gold reserves last month, buying as the price plunged to its lowest level in almost 3 years…regular Gold buyers Kazakhstan and Azerbaijan were among those that added to their holdings in June, when many other central banks were also active…not all were looking to buy, however. Germany and Guatemala both sold holdings, while Turkey’s official reserves also fell, according to data from the International Monetary Fund…

Ukraine returned for the second month running in June, adding 80,000 troy ounces of Gold to its official reserves, which now stand at nearly 1.3 million ounces, the IMF figures showed…Azerbaijan bought for the 6th consecutive month, adding nearly 65,000 ounces to its official holdings…its reserves, which in December stood at virtually nothing, now exceed 250,000 ounces…Kazakhstan, another regular bullion buyer in recent months, also increased its holdings in June…the country’s central bank bought more than 45,000 ounces of the metal, taking its reserves to 4.2 million ounces…Russia, a significant purchaser in recent years that has increased its reserves by almost 10% in the past year alone, added just 9,000 ounces to its holdings in June…according to the World Gold Council, Russia’s 32 million ounces represent the seventh-largest reserves of any country in the world…Greece added 1,000 ounces to its 3.6-million-ounce reserve, while Kyrgyzstan and Belarus also added a small amount of Gold to their holdings…

Net sellers in June included Germany, which lowered its Gold holdings by 25,000 ounces – a small amount given that the country’s reserves stand at more than 109 million ounces, putting it second only to the U.S., according to the Gold council…Guatemala, which last sold gold in July 2012, cut its holdings by 7,300 ounces, the IMF data show, leaving it with 214,300 ounces. Neighboring Mexico and the South American nation Suriname made small cuts to their official reserves too…Turkey’s Gold reserves similarly declined…the country’s holdings have nearly quadrupled over the past 2 years…analysts say a central bank decision to accept Gold as collateral from commercial banks is the main cause…in June, Turkey reduced its reserves by just over 120,000 ounces to 14.2 million ounces…

Today’s Markets

Japan’s Nikkei average tumbled to its lowest level in nearly 3 weeks overnight as the yen rose against the greenback while the rest of Asia traded mixed as attention turned to the region’s corporate earnings results...the Nikkei lost 433 points or 3% to close the week at 14130…China’s Shanghai Composite slipped 11 points to finish at 2011…European shares are off moderately in late trading overseas…in New York, the Dow has lost 77 points as of 6:45 am Pacific…the TSX is 24 points lower while the Venture is up a point at 925…

Fission Uranium (FCU, TSX-V) Chart Update

Of course we remain very bullish on the Saskatchewan uranium play, and John made a great call on Fission Uranium (FCU, TSX-V) when it pulled back into the 60’s in late June/early July…you can see how it has remained in an impressive upsloping channel in John’s 10-month weekly chart below…the next level to watch for, based on Fibonacci analysis, is $1.10…that’s not a price target, just a theoretical level FCU appears to be headed to over the near-term based on Fib. and technical analysis…as always, perform your own due diligence…

Castle Resources Inc. (CRI, TSX-V)

With interest in exploration on the rise in British Columbia, bottom-fishers may wish to take a look at Castle Resources (CRI, TSX-V) which recently engaged KPMG Corporate Finance as financial adviser to identify, analyze and execute a transaction that will fast-track the development of the Granduc Copper Project in the northwestern part of the province…”We are excited to be teaming up with KPMG,” stated Mike Sylvestre, President and CEO of CRI in a news release July 10…”Their global reach and proven expertise will be a strategic asset as we move forward with the redevelopment of the Granduc Copper Project…with a large, high-grade Copper resource and robust PEA level economics, we believe the best course for Castle is to find a strategic partner“…

Castle has been much more active in the past couple of weeks…it also gained a penny-and-a-half yesterday on volume of nearly 2.5 million shares (all exchanges), closing at 4.5 cents…the stock is very close to an all-time low after climbing as high as 95 cents in 2011…below is an 8-month weekly chart from John…a bullish engulfing pattern has formed in the past couple of weeks…the first Fibonacci resistance level is 10 cents…

Eastmain Resources (ER, TSX) Chart Update

Eastman Resources (ER, TSX) has much going for it in Ontario and Quebec, and has been gradually creeping higher since June 28 when it bottomed at 18.5 cents, a 12-year low, and reversed violently that day to close at 27 cents on volume of nearly 2 million shares…that was clearly a major reversal and perhaps a broader indication of a bottom in the overall market…ER closed yesterday at 33 cents…a key level to watch is 35 cents – that’s where there is important resistance…strong support exists at 25 cents…below is an 8-month weekly chart…

Alberta Oilsands Inc. (AOS, TSX-V)

This is a company that has gone through some internal strife and reorganization but appears to be in the early stages of a turnaround…at least that’s what the market and the chart are each saying…as always, perform your own due diligence…AOS has made a big move this week, closing yesterday at 6.5 cents where there was significant resistance…this morning, it surprisingly gapped up to 10 cents and through 15 minutes of trading it’s up 3 cents at 9.5 cents on volume of over 3 million shares (the Venture’s trading leader so far this morning)…there is Fib. resistance at 9, 11 and 13 cents, and it will also be interesting to see if this morning’s gap eventually gets filled (would seem unlikely at this point given the huge volume)…short-term, overbought conditions clearly exist, so there’s a risk in succumbing to temptation and chasing this at the moment…but clearly there is something happening with AOS…this also illustrates the growing opportunities in the energy sector given the strength in Oil prices…

Below is a 20-month weekly AOS chart through yesterday when we noticed something was up with this…such a big gap-up this morning was unexpected…all things are possible in the market…

Editor’s note:  AOS was halted at 7:13 am Pacific, pending an announcement from the company…at the time of the halt, it was up a nickel on total volume (all exchanges) of 7.5 million shares…

Note: John, Terry and Jon do not hold positions in FCU, CRI, ER or AOS.

Gold fell as low as $1,308 overnight but has recovered to $1,324 as of 7:35 am Pacific, a gain of $2 an ounce from yesterday…Silver is unchanged at $20.16…Copper has pulled back a penny to $3.15 after 5 straight days of advances, its longest winning streak since December…the global surplus of Copper may rise to 500,000 tons in 2015 from 257,000 tons this year, Goldman Sachs stated in a report released yesterday…Crude Oil is off $1.02 a barrel to $104.37…Fibonacci support for WTIC exists between $100 and $104, and then expect another run-up in prices…the U.S. Dollar Index (see John’s important updated chart in this morning’s Musings) is off one-quarter of a point to 82.10…

In a move bound to confound the bears and comfort even the most shell-shocked Gold bugs, renowned economist and precious metals investor Peter Schiff has launched a new Gold mutual fund with exposure to the sector…Schiff, the author of 3 books including The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country, announced last Friday the launch of the EuroPac Gold Fund (MUTF: EPGFX) through his company, Euro Pacific Asset Management…the fund will invest in both precious metals producers/explorers and precious metals, with at least 80% targeting Gold-related investments…it will be sub-advised by Adrian Day of Adrian Day Asset Management, also a high-profile investor and author whose titles include Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks…

“With precious metals stocks currently at their lowest levels in years, and with many investment firms declaring the end of the bull market in Gold, some may consider the launch of our fund to be poorly timed,” said Schiff.  “But for those who believe, as Adrian and I do, that Gold still has a long way to rise, then the timing may be attractive.  In our view, the fundamentals behind the metal become stronger every day.”

Day stated, “The underperformance of the miners versus the metal appears stretched. We believe the severely depressed levels of many mining stocks provide a good opportunity to seek and exploit value in the mining space.”

Metals Warehousing Industry Being Probed By U.S. Justice Department

The Department of Justice has opened an initial probe into the metals warehousing industry, a source familiar with the matter has told the Wall Street Journal in an article written by Devlin Barrett and Deborah Solomon…the probe comes amid growing concerns in Washington over banks’ ownership of metals warehouses and other commodity assets…the Commodity Futures Trading Commission has also sent letters to some firms telling them to preserve documents, in what is likely the beginning stages of an investigation, according to other people briefed on the matter…banks that trade physical commodities have come under attack by government officials, companies and consumer groups, who worry about the ability of the financial sector to exert influence over markets for raw materials…

China Provides Kick To Economy

China will scrap taxes for small firms, offer more help for ailing exporters and widen funding channels to speed railway investment, the cabinet said yesterday, in Beijing’s latest efforts to boost the slowing economy…the world’s second-largest economy has slowed in nine of the past 10 quarters and while the government has said it will tolerate slower growth to push reform, it has begun fine-tuning policy in recent weeks to stop the economy from slipping too far…State radio and TV quoted the State Council, or China’s cabinet, as saying Beijing would exempt more than 6 million small firms with monthly sales of less than 20,000 yuan ($3,300) from business and value-added taxes…such firms collectively employ several tens of millions of workers…the cabinet also said later on its website that banks should step up support for exporters, while the government would simplify customs clearance procedures, cut administrative fees and provide zero tariffs for exporters in the services sector…China will also increase interest rate discounts on loans to benefit importers, while “keeping the yuan basically stable at a reasonably balanced level,” the cabinet decided in a regular meeting chaired by Premier Li Keqiang…unlike 2008 when China deployed a massive stimulus package to fend off the global financial crisis, it is instead using a series of targeted reforms to reduce the power of the government and give companies more space to operate…the State Council, China’s cabinet, said late on Wednesday it hoped to “arouse the energy of the market”…

Obama’s Fixation On “Inequality” Instead Of Growth

President Obama could probably learn something from the Chinese…he made yet another one of his famous pivots on the economy in a speech yesterday when he used word “inequality” more than the word “growth”…corporate America is sitting on record amounts of cash, and one of the main reasons why is that it doesn’t have a lot of visibility or confidence in future growth thanks to a rapid acceleration of stifling government regulations under Obama that, among other things, have reduced incentives for companies to hire…that, in turn, has actually made inequality worse, but this “community organizer” President can’t seem to understand this…Wall Street Journal editorial board member Steve Moore describes it best:

“For four and a half years, Mr. Obama has focused his policies on reducing inequality rather than increasing growth. The predictable result has been more inequality and less growth. As even Mr. Obama conceded in his speech, the rich have done well in the last few years thanks to a rising stock market, but the middle class and poor have not. The President called his speech “A Better Bargain for the Middle Class,” but no President has done worse by the middle class in modern times.

“The core problem has been Mr. Obama’s focus on spreading the wealth rather than creating it. ObamaCare will soon hook more Americans on government subsidies, but its mandates and taxes have hurt job creation, especially at small businesses (our emphasis).  Mr. Obama’s record tax increases have grabbed a bigger chunk of affluent incomes, but they created uncertainty for business throughout 2012 and have dampened growth so far this year.

“The food stamp and disability rolls have exploded, which reduces inequality but also reduces the incentive to work and rise on the economic ladder. This has contributed to a plunge in the share of Americans who are working – the labor participation rate – to 63.5% in June from 65.7% in June 2009. And don’t forget the Fed’s extraordinary monetary policy, which has done well by the rich who have assets but left the thrifty middle class and retirees earning pennies on their savings.

“Mr. Obama would have done far better by the poor, the middle class and the wealthy if he had focused on growing the economy first. The difference between the Obama 2% recovery and the Reagan-Clinton 3%-4% growth rates is rising incomes for nearly everybody.”

Today’s Markets

Asian markets were lower overnight, though losses weren’t heavy…China’s Shanghai Composite fell 12 points to 2012 while Japan’s Nikkei average slipped 168 points to finish at 14563…European shares are moderately lower in late trading overseas, thanks to some earnings disappointments…in Germany, business morale improved in July for the 3rd month in a row, figures from the Ifo institute released today showed…the Business Climate Index rose to 106.2 in July, above expectations of 106.1…in New York, the Dow is down 51 points as of 7:35 am Pacific…a gauge of planned U.S. business spending rose more than expected in June and new orders for long-lasting manufactured goods surged, offering tentative signs of a pickup in economic activity…meanwhile, the number of Americans filing new claims for jobless benefits rose slightly last week…the TSX is down 17 points through the first 65 minutes of trading while the Venture is flat at 925…

U.S. Dollar Index Updated Chart

Keep a close eye on the U.S. Dollar Index as a drop below 82 on closing basis would be a bearish development and a shot-in-the-arm for Gold and Oil prices as well…below is a 6-month daily chart from John…

Four Interesting Venture Situations

We have updates on 3 companies we’ve been tracking recently, plus a new situation in the energy sector which is certainly worthy of our readers’ due diligence – Pine Cliff Energy Ltd. (PNE, TSX-V)…it’s not just that we like the symbol – the PNE is a great event every summer here in Vancouver – but Pine Cliff is showing impressive development as a company and its chart shows us that even better things could be on the way…PNE is actively engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids…the company also has a minerals division through its wholly-owned subsidiary Geomark Exploration Ltd. which is focused on exploring for precious and base metals by acquiring early stage properties…it has assets in Utah, Ontario, the Northwest Territories and Nunavut…

Pine Cliff now has production of approximately 6,000 barrels of oil equivalent per day (boepd), weighted approximately 96% toward natural gas…its current production levels do not include the previously announced acquisition of approximately 850 boepd production expected to close at the end of August…below is a 20-month weekly chart from John…note the important breakout yesterday which needs to be confirmed today…great-looking chart…as always, perform your own due diligence…

Pine Cliff Energy (PNE, TSX-V) 20-Month Weekly Chart

Macro Enterprises Inc. (MCR, TSX-V) Update

We first brought Macro Enterprises (MCR, TSX-V) to our readers’ attention when it was trading in the $3 range near the end of May because of the unusual fact it’s a Venture company not only making money, but showing tremendous earnings momentum…MCR announced superb Q1 earnings near the end of May…since late last year, it has risen in Zenyatta-like fashion…Macro specializes in construction and maintenance of small-to mid-inch pipelines, facilities and gathering systems…operations are centered in Fort St. John, B.C., with a satellite office located in Hinton, Alberta…Macro maintains one of the most modern fleets of heavy equipment in the industry…

Last week, John’s chart showed MCR was ready for another push to the upside…sure enough, the stock hit a new 52-week high yesterday of $4.27…what a bargain this was around $3…check out the Fibonacci target level of $5.66…

Sego Resources Inc. (SGZ, TSX-V)

A near-surface drill intersection of 100.39 metres grading 0.95% Cu, 0.55 g/t Au and 3.47 g/t Ag is impressive by any standards…that’s what DDH-21 returned for Sego Resources (SGZ, TSX-V) last year at its Miner Mountain Property near Princeton, and a follow-up drill program is scheduled to begin today…this property is in the prolific Nicola Arc where West Cirque Resources (WCQ, TSX-V) and others, including some majors, are also very active this summer…it’s an area that investors need to be paying attention to…we’ll have more on Sego in the days ahead, but Miner Mountain is approximately 15 km north of the Copper Mountain Mine and shows similar geological signatures to that current producer…several mineralized zones have already been identified at the 2,000-hectare Miner Mountain Property clustered in an area about 3 km north-south and 2.5-km east-west…mineralization appears to be open in all directions…what Sego is conducting now is a 2,000-metre percussion drill program, to depths of approximately 150 metres, to identify specific diamond drilling target areas (percussion drilling is about 1/3 the cost of diamond drilling)…the areas being drilled in this program are coincidental with magnetic, chargeability and soil geochemical anomalies…Sego has also signed a geoscience partnership with the BCGS that will contribute to continuing regional geological studies in the Princeton to Merritt area, a priority for the BCGS which should be a strong message to investors…

Below is a 2.5-year weekly SGZ chart from John…rest assured, this play has legs over the summer…it closed yesterday at 10 cents and has 58 million shares outstanding…the company just completed 2 financings totaling $630,000 at a dime…one important note – there are about 14 million warrants outstanding at an average weighted price of 11 cents per share with expiry dates ranging between April and December, 2014…

West Cirque Resources (WCQ, TSX-V)

West Cirque (WCQ, TSX-V) is currently drilling its promising Castle Property immediately west of Iskut, through its joint venture with Freeport-McMoRan of Canada Ltd., and the company is also very active in the Princeton-Merritt region, as mentioned above, with its 100%-owned Aspen Grove Project that covers an extensive belt of alkalic porphyry Copper-Gold-Silver mineralization hosted by Upper Triassic Nicola group volcanic rocks and late Triassic to early Jurassic intrusions…this is a well-run company that could suddenly grab the attention of the market this summer with good results…exploration is a risky business, so there are never any guarantees of course…but WCQ knows what it’s doing and has some outstanding targets to drill at both Castle and Aspen Grove…

John’s 3-year weekly chart for WCQ shows excellent potential for a breakout above resistance at 40 cents this summer…

Note: John, Terry and Jon do not hold share positions at the moment in PNE, MCR, SGZ or WCQ.

Gold has traded between $1,329 and $1,347 so far today…as of 8:00 am Pacific, bullion has retreated $13 an ounce to $1,334 as it remains within the resistance band ($1,320 to $1,350) identified in our most recent Gold chart (see Sunday’s Week In Review And A Look Ahead)…a close above $1,350 on a closing basis would certainly be significant with the next resistance at $1,400…Silver is 21 cents lower at $20.28…Copper is up 2 cents to $3.19…Crude Oil is down nearly 50 cents at $106.75 while the U.S. Dollar Index is up slightly at 82.05…

Gold supply from recycled materials may fall by as much as 25% this year as lower prices deter holders from selling the metal at a time when physical demand is strengthening, according to the World Gold Council…scrap bullion supply may fall by 300 to 400 metric tons in 2013 from about 1,600 tons last year, according to Marcus Grubb, managing director of investment research at the WGC…recycling accounted for 37% of total supply last year, according to Barclays Plc which forecasts recycled sales of the metal to fall by 174 tons this year…

“Business in Vancouver” tallies the salaries, bonuses and stock options earned by British Columbia’s top CEO’s every year and Gold miners again dominate the rich list released this yesterday…the province’s top 100 executives were paid a collective $360 million in 2012 with nearly half of that going into the pockets of the 25 highest earners…top honors go to Paul Wright, the CEO of Eldorado Gold (ELD, TSX) who received an inflation-busting 64% pay hike to bring his total pay package for the year to $18.7 million or $75,000 a day…Wright’s $4 million in share-based compensation and $3 million bonus could certainly be in jeopardy this year, given the state of the industry, but his total pay could still easily top $10 million…last week, Eldorado trimmed its 2013 capital budget by $240 million, delaying certain projects, and also cut is exploration budget from $98.5 million to $51 million…

Today’s Markets

Asian markets were mixed overnight…China’s Shanghai Composite fell points to close at 2033 after HSBC’s key survey of Chinese manufacturing activity fell to an 11-month low in July, confirming signs of a further slowdown in the world’s second-largest economy…Japan’s Nikkei average was down slightly, losing 47 points to finish at 14731…European shares are modestly higher after PMI data for the euro zone came in better than expected…in New York, the Dow is down 22 points as of 8:00 am Pacific…the TSX is off 17 points through the first 90 minutes of trading while the Venture has lost 2 points to 928…

TSX Gold Index Chart Update

The TSX Gold Index has climbed 13.5% so far this month (through yesterday) vs. a 5.6% jump in the Venture Exchange and an 8.6% increase in the price of Gold…this is the first time the Gold Index has led both the metal and the Venture since the 3rd quarter of 2012 which was strong for all 3…so a positive summer appears to be shaping up for Gold and Gold stocks – not unusual given historical patterns…we see a high likelihood, therefore, of the Venture ultimately busting through important resistance at 970 this quarter…technically, one possibility with the Venture at the moment is a bullish inverted head-and-shoulders bottom…you can see this type of pattern developing right now…it’ll be interesting to see how this plays out in the coming weeks…

Back to the TSX Gold Index which closed yesterday at 193 and has clearly taken on a bullish posture according to a variety of technical indicators…it has also pushed decidedly above its 50-day moving average (SMA) for the first time in 9 months…the next major resistance is at 210…the possibility of a move significantly beyond 210 during the 2nd half of this year now has to be considered very real…the Gold Index is off slightly in early trading today to 190, but any weakness at this point (the last 3 trading days have been very strong) should be viewed as a normal but temporary pullback…the 10-day SMA, currently just below 180, should provide good support…the trend is pointing higher in the weeks ahead…

GoldQuest Mining Corp. (GQC, TSX-V) Update

The moment of “decision” is quickly approaching for GoldQuest Mining (GQC, TSX-V) which is still trading within a resistance band between 40 cents and 48.5 cents…what’s interesting is that the stock price is being squeezed by a recent sharp narrowing in the gap between the 100 and 200-day SMA’s as you can see in John’s 2.5-year weekly chart (the 100-day on this weekly chart is the MA-10 in blue, currently at 42 cents, while the 200-day is the MA-40 in red, currently at 51 cents)…there are 2 possible near-term scenarios – a major breakout above the 200-day, or a breakdown below the 100-day…we favor the former scenario given the overall technical picture…everything, of course, will hinge on results from the company’s drilling along the promising Guama trend immediately west of last year’s Romero discovery…one can take a chance by jumping into GQC now ahead of those results, or wait until they come out before making a decision…the latter approach is safer and will still offer investors an opportunity to make substantial gains even if it means acquiring GQC (or adding to a current position) above 50 cents…if and when a breakout occurs, next major resistance is at 80 cents…GQC has a history of making huge runs over a short period of time, so watch this one closely in the days ahead…as of 8:00 am Pacific, GQC is down a penny at 43.5 cents on light volume…

Magor Corp. (MCC, TSX-V)

Only rarely do we feature technology plays, but we’ve seen this company’s product in action first-hand through a live investor/broker video conference with President and CEO Mike Pascoe…Magor Corp. (MCC, TSX-V), which started trading on the Venture just 4 months ago after raising $6 million, is a truly unique opportunity given the credibility and track records of the individuals involved (Pascoe, for example, is the former President of Newbridge Networks which was sold to Alcatel for $10 billion) and the company’s proprietary software…Magor is 1 of just 2 companies in the world that is changing the landscape of video conferencing and collaboration where there’s a “big pie” to draw from in terms of revenue in the years ahead…MCC also has high margins which is why they expect to turn profitable as early as next year…what they’ve done through their fully patented software is to eliminate the expensive infrastructure that is currently used by many of their competitors…MCC has invested approximately $20 million in the R&D necessary to achieve this disruptive software, and they’ve already secured some important clients across various industries including technology, oil and gas, government agencies, law enforcement, finance, electrical power, aerospace, manufacturing and retail to name a few…to us, this technology also makes incredible sense for the mining sector…

MCC’s software allows companies to communicate using High Definition video while collaborating with one another by sharing, editing, viewing documents and other related materials from group meeting rooms and desktops, laptops, tablets, smartphone applications, whiteboards and other devices…and they do all of that for a fraction of the cost of other competitive products in the market…their revenue growth is gaining momentum and the company is also in the middle of transitioning into a recurring revenue model through its cloud-based services called Aerus^TM, which will drive both a growing and recurring revenue stream…

Lately, there has been an uptick in volume in MCC with Citigroup in particular accumulating a position…the latest financials should be coming out shortly, accompanied we suspect by a general corporate update which should give investors some valuable insight into how the company is progressing…so watch for that…technically, the stock is developing a bullish tone after just over 4 months of trading…an ascending triangle has formed this month with resistance around 44-45 cents…look for a close above that level as a signal MCC could be ready to make an important move…as of 8:00 am Pacific, MCC is up 2.5 cents at 43.5 cents…as always, perform your own due diligence…this opportunity truly has 10-bagger potential if the company can penetrate the market the way they believe they can…

Two Graphite Updates – Zenyatta Ventures (ZEN, TSX-V) and Canada Carbon (CCB, TSX-V)

Zenyatta Ventures (ZEN, TSX-V), which is being rewarded by investors for doing such an excellent job in terms of execution both on the ground and in the market, continues to march higher and has broken above the upsloping wedge resistance around $4.20 that John pointed out last week…in situations like this, extremely overbought conditions can ensue, and this morning ZEN has even pushed through the Fib. set #2 target of $4.50 as you can see in the 6-month daily chart below…

Canada Carbon Inc. (CCB, TSX-V)

With the success of Zenyatta, investors are also keeping a close eye on other graphite plays including Canada Carbon (CCB, TSX-V) which came out news after being halted early yesterday…it resumed trading and finished the day up 2.5 cents to 16 cents on total volume (all exchanges) of 2.6 million shares…important support, as shown on this 3-year weekly chart, is at 15 cents which is where there are some strong bids this morning…resistance is at 19 cents…CCB appears to have formed a double bottom pattern, so this will be interesting to watch going forward…as of 8:00 am Pacific, CCB is off half a penny at 16 cents…

Note: John and Terry do not hold share positions in GQC, MCC, ZEN or CCB.  Jon holds share positions in GQC and MCC.