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Gold has traded between $1,273 and $1,293 so far today…as of 7:40 am Pacific, bullion is unchanged at $1,285 after coming off its largest percentage weekly increase in nearly 2 years…Silver is also flat at $19.92…Copper is off 2 pennies to $3.12…Crude Oil is 31 cents lower at $105.64 while the U.S. Dollar Index is off its highs of the day but still up one-quarter of a point at 83.21…

Bloomberg reported this morning that physical Gold delivered to buyers by China’s largest bullion bourse in the first half of this year almost matched the entire amount taken from its vaults in 2012, and was more than double the country’s annual production…the Shanghai Gold Exchange supplied 1,098 metric tons in the six months through June, compared with 1,139 tons for the whole of last year, according to data from the bourse today…output in China, the world’s largest Gold producer, reached a record 403 tons last year, according to the China Gold Association…

The surge in deliveries underscores buying interest in China, which may pass India as the largest bullion consumer as early as this year after the government in New Delhi raised import taxes while regulators in Beijing made investing in the metal easier…miners, smelters and refineries are required to sell Gold via the Shanghai bourse, the only state-sanctioned marketplace for spot bullion in China…

“The number shows demand for bullion as an underlying asset in China that investors here remained big buyers of the physical commodity this year,” said Fu Peng, a commodity strategist in Beijing at Galaxy Futures Co, a brokerage controlled by the country’s sovereign wealth fund…

Updated Gold Chart

Despite the intense doom-and-gloom, which of course is bullish from a contrarian standpoint, Gold hit a 3-week high last week…its next major challenge from a technical perspective is to push through a band of resistance between $1,320 and $1,350 as you can see in John’s 2-year weekly chart below…RSI(2) has climbed out of the oversold zone to 31…sell pressure is gradually abating, and a period of seasonal strength for Gold (the last half of Q3) is rapidly approaching…the strong support band between $1,150 and $1,180 has remained intact but at some point during the second half of 2013, it’s reasonable to expect that there will be a re-test of that area…for now, though, the bulls have regained some strength which could persist for a while…

China’s Q2 GDP Growth Slows But Matches Expectations

China’s gross domestic product slowed during the 2nd quarter but not as much as expected by some analysts…China announced this morning that its GDP growth in Q2 fell slightly to 7.5% (we don’t assume this number is true, could be inflated) from 7.7%, marking the slowest pace of growth (year-on-year) since the third quarter of last year…the figure was in line with general expectations…China is set to contribute 13% of global economic activity this year, compared with 5% in 2005, so that’s why it’s so important to keep a close eye on developments in that country…the U.S. hasn’t felt China’s recent slowdown because demand for some of its top exports to China – airplanes and high-tech computer goods – has remained strong…as Alex Frangos and Eric Bellman reported in this morning’s Wall Street Journal, “China is trying to pull off a tricky rebalancing…it hopes to reshape its economy to be less reliant on construction and heavy industry, and more reliant on consumer spending…this is sparking optimism among industries such as car makers and food producers…to boost domestic consumption, the government has raised minimum wages to put more money in people’s pockets and loosened controls on interest rates to give household savers better returns…it has tilted tax and land incentives toward industries that cater to consumption, such as food and autos, and away from heavy industries suffering from overcapacity, such as steel making and ship building“…

China also said today that industrial output rose 8.9% in June from a year earlier, compared to a forecast of 9.1% and lower than May’s 9.2% growth…fixed-asset investment also disappointed slightly, with 20.1% growth in the first half compared to a forecast of 20.2%…consumer spending was a bright spot, as retail sales accelerated to 13.3% in June, compared with 12.9% growth in May…but disposable income growth for urban households slowed to 6.5% year-on-year in the first half, down from 9.7% growth in the first half of 2012…

Today’s Markets

China’s Shanghai Composite gained 20 points overnight to close at 2059…the Index has so far held at or above critical technical support at 1950…markets in Japan were closed today due to a public holiday…European shares are up moderately in late trading overseas…in New York, the Dow is up 10 points as of 7:40 am Pacific…U.S. retail sales rose less than expected (0.4%) in May…economists polled by Reuters were expecting a 0.7% increase, up from 0.6% increase in May…meanwhile, growth in New York state’s manufacturing sector accelerated to 9.46 in July from 7.84 in June, according to the New York Federal Reserve…economists surveyed by Reuters expected a reading of 5 (a reading above zero indicates expansion)…the TSX has jumped 82 points after the first 70 minutes of trading while the Venture is up 2 points at 900…

Venture Exchange Updated Chart

The Venture climbed 15 points last week to finish at 898, its highest close since June 19…support at the 860 level was strong as expected…RSI(14) is showing increasing up momentum and is now at its highest level since January…the next important resistance is around 920…look for the rising 10-day moving average (SMA), currently at 885, to provide support as this gradual uptrend continues…

Zenyatta Ventures Ltd. (ZEN, TSX-V) Updated Chart

Even in a challenging overall market, there are shining stars…one of those of course has been Zenyatta Ventures (ZEN, TSX-V)…management has shown a tremendous ability to execute both on the ground and in the market, and now some penny plays are trying to ride their coattails by staking around them…John’s charts on ZEN have proven to be very accurate…below is some fresh TA from John on ZEN after Friday’s close…ZEN is off a penny in early trading at $3.93…

Garibaldi Resources (GGI, TSX-V) Updated Chart

We’ve written quite a bit recently regarding the fundamentals concerning Garibaldi Resources (GGI, TSX-V)…we like their Mexican projects but the near-term catalyst for this stock in our view is their 100%-owned Grizzly Property, a 17,000-hectare strategic land package contiguous to the western and southern boundaries of the important Copper Creek Property just northwest of Telegraph Creek at the top of the “Golden Triangle” in northwest British Columbia…Copper Creek and the Grizzly are about 60 miles west of Colorado Resources‘ (CXO, TSX-V) North ROK discovery…we’re convinced the Telegraph Creek area is going to blossom into an exploration hot spot this summer, and we’ll give more reasons why later this week…

What we wish to point out now, however, are some very interesting technical developments in GGI which closed Friday at 8 cents…we get excited whenever we see this type of behavior because it often precedes a major breakout on high volume, accompanied by some changing dynamics with the company…the changing dynamics in this case, we believe, will revolve around the Grizzly…

You’ll notice in John’s 3-year weekly chart below that GGI has broken above a 6-month horizontal channel…in addition, and this is a critical point, RSI(14) has broken above long-term resistance going back to 2011…there are other bullish technical indicators as well, but those are 2 that John wants to draw our readers’ attention to this morning…as always, perform your own due diligence, and we hope this can help in that effort…GGI is unchanged at 8 cents as of 7:40 am Pacific…

Colorado Resources (CXO, TSX-V) Updated Chart

It was a great week for Colorado which completed its $4 million financing and closed 16 cents higher for the week at 93 cents…there is Fibonacci resistance at $1.01 which also coincides with the 50-day moving average (SMA), currently reversing to the downside …technically, busting through that $1 level on increased volume is going to be key…in the meantime, the 85-cent level is the next obvious support…our hunch is that it could be at least 2 or 3 weeks before CXO releases its next set assay results…below is a 7-month weekly chart…CXO is off a nickel at 89 cents as of 7:40 am Pacific…the trend is bullish as shown in this 7-month weekly chart…

Short-Term Silver Chart Update

The $17.50 – $19.50 support band for Silver has held, and a rally appears to be brewing with up momentum slowly increasing…

Long-Term Silver Chart Update

RSI(2) recently hit its lowest ever level on this 11-year monthly chart…good reason to believe that a summer rally is in the works…

While the BMR crew is taking its annual short summer break from Wednesday through Sunday, Morning Musings will not appear as usual during this time.  Morning Musings will resume Monday, July 15, with updated market developments and additional information on the Telegraph Creek-Iskut River area of northern B.C. through special research that is being conducted this week.  In the meantime, the comments section remains open and special postings are possible depending on market developments.

Specific situations we’re watching closely at the moment:

GoldQuest Mining (GQC, TSX-V) was one of the Venture’s top performers today, gaining 7 cents or 19% to close at 44 cents on volume of 1.1 million shares after impressive infill assay results were released from Romero…GoldQuest started drilling the very promising Guama trend west of Romero in mid-May, so interest in GQC should remain high in anticipation of those results…

Garibaldi Resources (GGI, TSX-V) broke above resistance at 7 cents and its 200-day moving average (SMA) today, closing up half a penny at 7.5 cents…as John’s chart showed this morning, a powerful new uptrend is forming technically in GGI which – besides its Mexican projects – holds a large and strategic land package contiguous to the western and southern boundaries of the important Copper Creek Property in the next hot exploration area of northern British Columbia…this is where Pete Bernier and his highly skilled Prosper Gold (PGX.H, TSX-V) team plan on chasing down a potential major Copper-Gold porphyry system…Teck Resources (TCK.B, TSX) has staked right up to the southern boundary of Garibaldi’s Grizzly Property which may host the “heat engine” for mineralization in this area with Mount Kaketsa in the northwest corner of the property…drill permits are ready for Copper Creek…

About 60 miles to the east of the Copper Creek-Grizzly properties, Colorado Resources (CXO, TSX-V) is 3 weeks into a drill program at its North ROK discovery, and also in the final stages of wrapping up a financing at 80 cents…

Pacific Potash (PP, TSX-V) continues to attract a large following after raising $6.5 million in 3 financings as it prepares to drill its very prospective Amazonas Potash Property in northwest Brazil…PP closed down half a penny today at 19 cents, 2.5 cents above its rising 50-day SMA…continues to look very strong technically…

Fission Uranium (FCU, TSX-V) and Alpha Minerals (AMW, TSX-V) are both looking solid as a major summer drill program commences at their Patterson Lake South (PLS) joint-venture in the Athabasca basin…

An interesting Tungsten play this summer could be Happy Creek Minerals (HPY, TSX-V) which begins a follow-up drill program any day now at its Fox Property north of 100 Mile House in B.C.’s interior…

If you’re looking for a promising company in the “technology” area, do some due diligence on Magor Corp. (MCC, TSX-V) and check the principals involved…one of only 2 companies in the world that is changing the landscape of video conferencing and collaboration, which could also have significant benefits for the mining and exploration industry…

Gold is advancing again today, thanks to a combination of short covering, bargain hunting and safe haven buying…as of 7:30 am Pacific, bullion is up $13 an ounce at $1,250…it climbed as high as $1,261 overnight…last week’s high of $1,267 will be an important level for the bulls to overcome in order to build some upside momentum…Silver got above $19.50, lost all of its gains but is now up 17 cents at $19.25…Copper is off a nickel at $3.06…Crude Oil is down 20 cents at $102.94 while the U.S. Dollar Index has gained one-third of a point to 84.58…

Not surprisingly, due to a lull between buying seasons, government measures and a stronger rupee, Indian Gold imports declined sharply in June but many analysts expect them to pick up again, particularly as the country moves toward its key autumn buying season…according to news reports, an Indian government source said the country’s demand fell to 31.5 metric tons in June after a record 162 in May…the All India Gems and Jewelry Trade Federation reportedly estimated June imports at 37 to 40 tons…Indians’ appetite for Gold is deeply rooted in the country’s culture and is not about to stop, so investors shouldn’t read too much into that weak June number in our view…physical buying out of China is reportedly strong which is helping to offset the temporary slowdown in India…

Scotiabank analysts are the latest to revise their Gold-price forecasts…“Our 2013 Gold price assumption is adjusted to $1,400/oz from $1,550/oz…we have also decreased our 2014 to 2016 estimates to $1,300/oz (from $1,700/oz), $1,400/oz in 2015 (from $1,700/oz) and $1,500/oz in 2016 (from $1,600/oz)…our long-term Gold price is unchanged at $1,300/oz, which reflects normalized all-in costs in the industry,” said Scotia Capital in a report yesterday…”Short-term, the Gold price faces headwinds with the strengthening of the U.S. dollar…and more positive sentiment toward the global economic outlook,” said the analysts…“This has resulted in Gold’s role as a ‘safe haven’ changing somewhat, and outflows have been evident both in the Gold ETF’s and Comex positions…we believe this sentiment will continue into 2014…“We believe we are in a period similar to the 1970’s when the Gold price is expected to pause and the next move upward will be driven by inflationary expectations…with the recent decline in the Gold price, mine output is forecast to slow down and decline longer-term…this is due to lower grades being mined coupled with the deferral of the projects,” they stated…

Today’s Equity Markets

Asian markets were strong overnight with Japan’s Nikkei average surging 364 points or 2.6% to close at 14473…China’s Shanghai Composite was more subdued, adding just 7 points to finish at 1965…consumer prices in China were up 2.7% in June from a year ago, more than a Reuters forecast for a 2.5% gain…meanwhile, overcapacity issues led producer prices to fall for a 16th straight month…the country’s shadow banking system, however, remains the market’s short-term focus…European shares are up moderately in late trading overseas…meanwhile, the Dow is up 22 points through the first hour of trading…the TSX is off 5 points while the Venture is up 1 at 874…

Fission Uranium (FCU, TSX-V)

We expect the Saskatchewan uranium play to remain hot…last week, an excellent chart from John showed how Fission Uranium (FCU, TSX-V) at 70 cents was trading at channel support and poised to move higher which it has done…yesterday, it climbed 6 cents on nearly 2 million shares to close at 79 cents…below is an updated chart…as always, perform your own due diligence…FCU is off a penny at 78 cents as of 7:30 am Pacific…

GoldQuest Mining (GQC, TSX-V) Drills 269.35 Metres Grading 2.35 g/t Au & 0.56% Cu

An infill hole, but impressive nonetheless as the longest mineralized intercept to date at GoldQuest Mining’s (GQC, TSX-V) Romero discovery – 269.35 metres grading 2.35 g/t Au and 0.56% Cu…LTP-140 was located about 125 metres east of the original discovery (LTP-90), while another infill hole in the immediate vicinity (LTP-143) returned a 34-metre interval of 10.94 g/t Au and 1.87% Cu at a depth between 150 and 184 metres…a step-out hole collared 200 metres northwest of LTP-90 returned just 35 metres of 0.53 g/t Au and 0.05% Cu…Romero is more open to the south where there could be an important link with La Escandalosa…what we’re most looking forward to are drill results from the very promising Guama trend to the west of Romero…GQC gapped up to 44 cents this morning and got as high as 47 cents…after 1 hour of trading, it’s ahead 6 cents at 43 cents on volume of more than half a million shares…technically, a close above the opening price today would be very bullish…the chart is looking strong…

Garibaldi Resources (GGI, TSX-V) and Prosper Gold (PGX.H, TSX-V)

One of the “sweet spot” entry points in any stock from a technical perspective is when the 50-day moving average (SMA) reverses to the upside and has the ability to continue to gradually trend higher over the longer-term…that’s the case with Garibaldi Resources (GGI, TSX-V), which we like also for important fundamental reasons…what’s also highly significant about GGI technically at the moment is the fact that it has broken above long-term RSI(14) resistance as you can see in John’s chart below…folks, there’s a strong case for a powerful reversal in Garibaldi just based on what the technical picture is telling us…on the ground, GGI holds an attractive package of properties in Mexico but the likely catalyst for a potential sharp move higher in this stock is the company’s Grizzly Property in northern British Columbia, just northwest of Telegraph Creek and about 60 miles from Colorado Resources‘ (CXO, TSX-V) North ROK discovery…the Grizzly is BIG – 17,000 hectares – and contiguous to the western and southern boundaries of the advanced-staged Copper Creek Property which Pete Bernier’s Prosper Gold (PGX.H, TSX-V) has major immediate plans for…

There is no one who has established greater credibility in the junior resource sector over the last few years, in our view, than Bernier who took Richfield Ventures from pennies in 2009 to a $500 million buy-out by New Gold Inc. (NGD, TSX) in 2011…he then created Prosper Gold, looking for the right project to vend into it…after searching everywhere, they chose the Telegraph Creek area in early May…Bernier has the exact same team that allowed Richfield to execute so magnificently at Blackwater, including award-winning geologist Dirk Tempelman-Kluit…if you want to make money, follow those who have made it, still have it, and are growing it…we’re convinced there are historic opportunities on the Venture at the moment, but investors must focus on companies and individuals with proven track records and the ability to execute both on the ground and in the market…that’s the only way to avoid deception and the money-sucking “lifestyle” companies that have infested the Venture like rats in recent years…

While Prosper Gold remains halted pending approval of a very important transaction (option agreement for the Copper Creek Property), investors can get a head start on what promises to be a very hot exploration play with Bernier’s new deal this summer by taking a good look at Garibaldi…we did our due diligence which included a trip to the Iskut area, conversations with independent geologists and prospectors, and discussions as well with company management (Garibaldi and Prosper Gold)…Garibaldi’s Grizzly Property is of major strategic value in the context of Copper Creek…investors have slowly been catching on to this in recent weeks, which is why volume in Garibaldi has picked up considerably…with working capital of 8 cents per share as of the quarter ending April 30, Garibaldi is in a healthy financial position – unlike most juniors – and has a very reputable management team led by President and CEO Steve Rogoci…

Prosper Gold’s Game Plan And How Garibaldi Is Involved

Tempelman-Kluit believes the Copper Creek Property has immense potential as a major Copper-Gold porphyry system given historical data and the geology of the area (undiscovered belts)…that’s why Prosper Gold has optioned the 7,000-hectare property from Firesteel Resources (FTR, TSX-V) as its “qualifying transaction” currently under review by the Venture Exchange…Prosper Gold has the technical expertise to take Copper Creek to the next level – Firesteel doesn’t, as simple as that…Tempelman-Kluit is a genius at data compilation and interpretation…that’s why he discovered one of Canada’s biggest-ever Gold deposits at Blackwater…

Drill permits for Copper Creek are in hand and investors can expect the Prosper Gold team to hit the ground running very hard…Bernier made fortunes for many investors through Richfield…they will be lining up for a possible repeat performance with Prosper Gold…it’s important to note that Bernier’s team reviewed many possible projects since 2011 before settling on Copper Creek…in the words of one very well known British Columbia claim staker we spoke to, Copper Creek is “exceedingly good”…

Copper Creek & Grizzly – 240 Sq. Km Of Prime Geological Real Estate

What most investors and brokers are unaware of is the geological connection between Garibaldi’s Grizzly Property and Copper Creek…the Grizzly, though certainly less advanced as an exploration target, is more than twice the size (17,000 hectares vs. 7,000), and is contiguous to the western and southern boundaries of Copper Creek…over the last year, Teck Resources (TCK.B, TSX) has staked ground right up to the southern border of the Grizzly…if you read the latest technical report on the Grizzly on Garibaldi’s web site, it’s not difficult to come to the conclusion that Copper Creek-Grizzly could be one giant mineralized system…some geologists we’ve spoken to believe the “heat engine” source for the entire area is in the northwest corner of the Grizzly Property (we’ve posted a 3-D map of this)…that’s why we believe the Grizzly holds huge strategic value for Prosper Gold, geologically and also for potential industrial/infrastructure reasons (read our July 2 Morning Musings for additional geological details)…

Garibaldi not only holds 100% of the Grizzly Property, but they also have significant exploration assets in Mexico…it’s a year-round play which adds to its attractiveness…the company has been focusing almost entirely on its Mexican properties, which has helped to hide this opportunity with the Grizzly…but they are keenly aware of the quality and importance of the Grizzly Property, and our sense is that Garibaldi will bring the Grizzly out of “hibernation” very shortly…it’s in their strategic interest to do so with Bernier ready to unleash an aggressive exploration program immediately to the north…

Bernier and his team WILL EXECUTE, in our view, and this means investors could prosper tremendously – not just through Prosper Gold, but also through Garibaldi…Firesteel is also a good option, and other juniors may enter the picture as well…of course Doubleview Capital Corp. (DBV, TSX-V) has recently completed 6 holes at the Hat Property with assays pending…

Happy Creek Minerals (HPY, TSX-V) and Magor Communications (MCC, TSX-V)

Two other interesting situations we suggest our readers perform fresh due diligence on – Happy Creek Minerals (HPY, TSX-V) and Magor Corp. (MCC, TSX-V)…we’ve mentioned these plays before, but not for a while…they are worth revisiting right now…

It’s hard not be bullish on Tungsten, a strategic metal that has obviously been performing much better than Gold…Happy Creek is expected to commence a new phase of drilling any day now at its Fox Tungsten Property north of 100 Mile House where previous drilling has intersected top-tier Tungsten grade and thickness at or in a near-surface setting…this upcoming program will test the extent and grade of the mineralized zone with a view to outlining an initial resource…investors will be Happy this summer if HPY can bust through a downsloping channel in place for the past year…the Fox Property looks very good and it’s yet another British Columbia exploration story that could really up over the next couple of months…HPY closed a penny higher yesterday at 16 cents…it hasn’t traded yet this morning…below is a 2.5-year weekly chart from John…

Magor Corp. (MCC, TSX-V)

We initially brought our readers’ attention to Magor Corp. (MCC, TSX-V) the day it started trading on the Venture several months ago after completing its QT and raising gross proceeds of nearly $6 million…what excites us about Magor are powerful individuals involved (eg: Terry Matthews, Mike Pascoe) and the fact this is one of only 2 companies in the world that is changing the landscape of video conferencing and collaboration…we’ve seen this system in action and it’s a game-changer in our view…Magor has been gradually gaining clients and revenues are expected to ramp up considerably during the second half of this year…their latest quarterly financials will be coming out shortly – something to watch for…MCC has been a thin trader so far but investors will jump in once they see revenue momentum and the earnings potential for this company’s high-margin products…at just 42 cents, MCC could be a major winner for patient investors over the next 12 months…we’ll have more on MCC in the coming weeks…in the meantime, we highly recommend our readers look into this situation…below is a chart from John on MCC’s first 4 months…

Note: John and Terry do not hold share positions in FCU, GQC, GGI, HPY or MCC.  Jon holds share positions in GQC, GGI, HPY and MCC.

The BMR team is taking its annual short summer break from tomorrow through Sunday, July 14.  Morning Musings returns Monday, July 15.

Gold extended Friday’s losses into early trading today, but has bounced back after touching an overnight low of $1,218…as of 7:00 am Pacific, bullion is up $8 an ounce at $1,232…Silver is 18 cents higher at $19.08…Copper is up 2 pennies to $3.08 despite new concerns regarding China…Crude Oil has pulled back 68 cents to $102.54 while the U.S. Dollar Index has retreated one-fifth of a point to 84.26…

HSBC expects China’s Gold imports to remain “elevated” in the near-term…the bank cites data from the Hong Kong Census and Statistics Department showing China’s Gold imports from Hong Kong increased to 127 metric tons in May from 76 in the same month last year and up slightly from 126 this April…“Physical buyers in China have reacted positively to lower Gold prices for the bulk of this year,” HSBC stated…“Most notably, Gold’s price break below $1,600/oz U.S. during Lunar New Year in mid-February resonated well with Gold buyers in China as imports from Hong Kong hit the record high of 224t in the following month of March…we think Gold imports may remain at elevated levels in the near-term with
prices currently trading closer to $1,200/oz…an indicator of good demand from China is bullion’s premium on the Shanghai Gold Exchange, which more recently stood at $34/oz, significantly higher than the $10-25/oz range seen in May”…

Analysts at Stifel Nicolaus note that China has already imported about 20 million ounces of Gold in 2013, compared to 26.7 million in all of 2012 and 13.8 million in all of 2011…if these import numbers hold up through the year, they would equal about 50% of global mine production…or as Paolo Lostritto of National Bank Financial puts it, the Chinese buying exceeds the total GLD ETF liquidation (source: www.usfunds.com, Weekly Investor Alert)…this is phenomenal and should, in our view, put a floor on Gold around the 50% Fib. retracement level ($1,088) from the low of $253 in 1999 to the high of $1,924 in 2011…that’s a very normal pullback in the context of a long-term bull market that remains fully intact…

Updated Silver Charts

So what’s happening in Silver?…below is John’s updated 11-year monthly chart, and it reveals a couple of interesting facts…first, Silver continues to trade within a strong support band between $17.50 and $19.50…it has not yet hit the bottom of that range but certainly could…what’s important to highlight, however, is the very extreme RSI(2) reading which is now below 1 at 0.87…this is the opposite of what was seen in late 2010/early 2011 when the monthly RSI(2) climbed as a high of 99.40…Silver was overbought then and due for a major correction…it’s oversold now and due for a major reversal – exact timing is uncertain, but probably beginning during this 3rd quarter…with that in mind, it makes sense to start doing some serious “window shopping” for beaten-down Silver stocks that should have a serious bounce to the upside at some point, at least, during the second half of this year…could come sooner than later, who knows…

Long-Term Silver Chart

3-Year Weekly Silver Chart

The short-term Silver chart also shows very oversold conditions, though there are no obvious signs of an imminent reversal…RSI(2) on this 3-year weekly chart is at 2.95 – could still drop a little more…the support band is holding and sell pressure has been declining slightly…

Encouraging Signs In Venture-Gold-TSX Gold Index Comparative Charts

The Venture Exchange has proven to be a very reliable leading indicator of Gold prices…for example, it led Gold to the upside throughout 2009 and 2010, and then strongly diverged from Gold (and the TSX Gold Index) during the 2nd and 3rd quarters of 2011…the Venture declined about 40% during that 6-month period while Gold surged to an all-time high of $1,924…what the Venture was saying was that Gold was about to top out, along with the producers, and indeed that’s what occurred…

The Venture led Gold to the downside in 2011 and 2012…if Gold’s drop is now nearing an end, we would expect to see evidence of that in the Venture with the CDNX beginning to outperform bullion in a new trend that should accelerate…and that’s exactly what appears to be underway, despite this morning’s activity, and we have a couple of fascinating charts to illustrate that…

First, let’s take a look at the “Big Picture”- the Venture, Gold and the TSX Gold Index in a comparative monthly chart from April 1, 2011, through June 30, 2013…the black line is the Venture Exchange…notice what has happened during the last 3 months – the set-up for a reversal in the 2-year+ trend is clearly in place…

Now, let’s take a look at the last 3 months – the April-June quarter – another interesting picture…

The Venture has outperformed the TSX Gold Index in each of the last 3 quarters, and also slightly outperformed Gold during the second quarter (Gold fell 23%, the Venture declined 19.8%)…the Venture appears to be saying that Gold’s decline is in its final stages – the downside from here is quite limited…for confirmation of this, it’ll be very important to closely monitor the Venture–Gold relationship in the coming weeks…while the Venture fared a little better than bullion during the 2nd quarter, over the last 3 quarters they have closely paralleled each other – the Venture is down 34% since the end of September last year, Gold is off 31% while the TSX Gold Index has plunged 51%…if a serious turnaround is coming in Gold before the end of this year, we would expect to see the Venture’s recent outperformance vs. Gold to rapidly accelerate at some point during this 3rd quarter…

Venture Long-Term Chart

A long-term chart shows that the down wave in the Venture has quite possibly played itself out with a low of 859 June 27…this corresponds to the strong support at 860 that we’ve referred to the last few months…the next major support is at 800…picking a bottom or a top in any market is fraught with difficulty, but it’s probably safe to say – given all the technical and fundamental evidence – that the Venture is currently within 10% of its low…that means there are some historic buying opportunities at the moment for patient and disciplined investors…yes, there could be another scary little dip to the downside, but the worst is certainly over and the conditions are ripe for a recovery…but be very selective…the next rising tide will not lift all boats…some will sink in the months ahead, though that will actually be a good thing…

Today’s Markets
The Dow is off to a strong start to begin the new week, up 103 points at 15239 after the first 30 minutes of trading…a rise in 10-year Treasury yields above 2.7% on Friday for the first time since August, 2011, is just the start of a long-term upward trend, according to Goldman Sachs, with the investment bank forecasting yields will now enter 2014 at 2.75 – 3% and will climb to 4% by 2016…”Factors driving yields higher include the improving outlook for growth in the U.S. (and partly also in Europe), a decline in systemic risks stemming from the euro area, and the reduction in the pace of Fed purchases,” Francesco Garzarelli, head of market research for Europe at Goldman Sachs said in a research note on Sunday…”In this regard, our U.S. Economics team now calls for the Fed to announce its intention to taper its monthly purchases of Treasuries and Agency MBS (mortgage backed securities) in September”…the TSX is 63 points higher as of 7:00 am Pacific, while the Venture has slipped 5 points to 879 in light trading…

Asian markets were lower overnight, led by China’s Shanghai Composite which sank 49 points or 2.4% to 1958…the 1950 area is key technical support…news that Beijing will no longer extend credit to sectors that struggle with overcapacity spooked mainland investors and led to steep declines in property stocks and banks…Chinese authorities are clearly trying to address some structural issues in the economy, and that could certainly have a negative impact on growth in the 2nd half of the year…it’ll be interesting to see how things play out there…

Japam’s Nikkei average slipped 200 points overnight to close at 14109…the Nikkei is about 2500 points below a long-term down trendline as seen in this 20-year monthly chart from John…what’s also interesting is that about every 3 years, the TSX Gold Index hits an important bottom relative to the Nikkei – the last time was late 2010…

Probe Mines Ltd. (PRB, TSX-V) Updated Chart

Probe Mines (PRB, TSX-V) continues to be one of our favorite Venture plays – solid as a rock with its strong cash position, superior management team, and a growing and evolving deposit in northern Ontario (Borden Lake) where 4 rigs are currently drilling an expanding high-grade zone…Agnico Eagle Mines Ltd. (AEM, TSX) took a 9.9% equity position in Probe in May, so the way things are going it’s probably safe to speculate that by this time next year they may own the remaining 90.1%…Probe closed Friday at $1.60 and has the potential to run much higher by the end of the year, depending of course on how Gold behaves and if impressive results continue to flow from Borden Lake…it’s a great-looking deposit and one of the best exploration stories in the country right now…below is a 2.5-year weekly chart…

Note: John, Jon and Terry do not hold share positions in PRB.

TSX Venture Exchange and Gold

The Venture posted a modest 3-point gain last week, finishing at 884, and held up extremely well in the face of Gold’s $29 an ounce drubbing Friday.  In fact, an important change in trend that started at the beginning of April is powerful evidence that a turnaround in bullion is not far off and that now is an historic buying opportunity in the higher quality juniors.  During the 2nd quarter, the Venture Exchange – while it still fell – out-performed both Gold and the TSX Gold Index, and that trend has continued into the beginning of Q3.  The Venture is always a leading indicator, and its relative under-performance vs. Gold and the Gold Index that began in the spring of 2011 was a major warning sign that a top was drawing near in both Gold and Silver.  Right now the opposite is occurring, and we have a couple of rather stunning charts to illustrate this as part of Monday’s Morning Musings.  We’re not saying Gold has found a bottom just yet, or even that the Venture has necessarily hit bottom.  But the current period in our view is remarkably similar in an opposite way to late 2010-2011 – that was the time to be a seller, when the Index was within 10% of a top.  Now is the time, in our view, to be accumulating in a selective way some incredible opportunities that have been knocked down to mere pennies in some cases.  When the reversal comes, it will likely be explosive but limited at first to the best quality plays.  If we’re right, this is when fortunes are born.

Below is a 9-month daily Venture chart from John.  Strong support levels are at 860 and 800.  The still-declining 20-day moving average (SMA), not shown on the chart, is at 900.  There is important resistance around 920 as John points out.  If and when the 20-day reverses to the upside later this month, this would be a clear indication that a summer rally is kicking in.  In the meantime, it’ll be important to keep a close eye on the performance of the Venture relative to Gold and the Gold Index to see if the change in trend that started at the beginning of Q2 continues.  Despite all the gloom, doom and fear out there (actually a positive sign as that’s what creates a bottom in a market), we believe there are a lot of reasons to be excited right now.  On the ground, we expect some exploration fireworks in British Columbia this summer which could provide the spark to help ignite this market.

Gold

Gold reacted negatively to Friday’s stronger than expected U.S. jobs report, and could certainly re-test the $1,150 to $1,180 support band in the near future.  But the best way to cure low prices is through low prices.  Cutbacks are occurring not only in exploration (where are the deposits of the future going to come from?), but also in production with some mines simply unprofitable below $1,200 Gold.  In fact, the CEO of Gold Fields recently indicated that the average all-in cost to produce Gold in Africa is $1,500.

Below is a 2-year weekly chart from John that shows the bearish trend continues but smart money, in our view, is buying into it.  The bottom could be around $1,100, but if you get greedy and try to get in at the very bottom on any commodity or stock you’ll often miss out on a sudden and sharp reversal to the upside.  Gold and Gold stocks are getting thrashed in the mainstream media which makes the case for a turnaround this quarter all the more convincing.

Robust Demand For Gold In China

As Frank Holmes pointed out in his weekly Investors Alert (www.usfunds.com), net Chinese Gold imports jumped 40% in May from the month before.  Analysts at Stifel Nicolaus noted that China has already imported about 20 million ounces of Gold in 2013, compared to 26.7 million in all of 2012 and 13.8 million in all of 2011. If these import numbers hold up through the year, they would equal about 50% of global mine production. Or as Paolo Lostritto of National Bank Financial puts it, the Chinese buying exceeds the total GLD ETF liquidation.  This is phenomenal and should, in our view, put a floor on Gold around the 50% retracement level ($1,088) from the low of $253 in 1999 to the high of $1,924 in 2011.  That’s a very normal pullback in the context of a long-term bull market that remains fully intact.

Gold was down $8 for the week, closing at $1,232.  Silver fell 76 cents to $18.90 but remains in a strong support band.  Copper was off 2 cents to $3.07.  Crude Oil (WTIC) hit a 14-month high, climbing $6.66 a barrel to close at $103.22 as U.S. stockpiles decreased and unrest grew in Egypt.  The U.S. Dollar Index gained 1.27 points to finish at 84.45, just beneath the May high of 84.60.

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 its current 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 recent plunge below the technically and psychologically important $1,500 level, along with the strong performance of equities which are drawing money away from bullion.  Where and when Gold bottoms out in this cyclical correction is anyone’s guess, 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 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 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 is getting smacked again following a headline U.S. jobs number that was better than expected…bullion is down $37 an ounce at $1,215 as of 6:50 am Pacific…it opened weaker overnight and accelerated to the downside after the release of the jobs report…Silver is off 91 cents at $18.81…Copper has dipped 8 cents to $3.06…Crude Oil is 38 cents higher at $101.62, and one would think the current strength in WTIC (+$100 a barrel) would lend some support to Gold…the U.S. Dollar Index has surged half a point to 84.38…

China’s net Gold imports from Hong Kong increased 40% in May from a month earlier as the metal’s slump continued to attract bargain hunters to bullion shops…mainland buyers purchased 106 metric tons during the month, after deducting flows from China into Hong Kong, compared with 76 tons a month earlier, according to calculations by Bloomberg based on data from the Hong Kong government today…inbound shipments including scrap were 127 tons, from 75.6 tons a year earlier and 126.1 tons in April…

There are signs, however, that interest has slowed in other countries…Gold sales from Australia’s Perth Mint, which refines nearly all of the bullion mined in the country, declined for a 2nd month in June as the falling prices deterred buyers…the U.S. Mint sold 57,000 ounces of American Eagle Gold coins in June from 70,000 ounces in May and 209,500 ounces in April, according to data on its web site…in India, the largest user last year, imports may drop 52% in the 3rd quarter after government curbs, according to the All India Gems & Jewellery Trade Federation…

U.S. Jobs Report:  Better-Than-Expected Job Growth But Unemployment Rate Remains At 7.6%

U.S. job growth accelerated in June, though probably not at a pace fast enough to give a lot of encouragement to the Federal Reserve…non-farm payrolls grew by 195,000, but the unemployment rate held at 7.6%…economists were expecting 165,000 more jobs and a decline in the unemployment rate to 7.5%…also, the quality of job gains was weak – the bulk of the gains (75,000) came in the hospitality industry of bartending and waiters…the percentage of discouraged and underemployed in the U.S. increased last month to 14.3 from 13.8, so the headline jobs number that traders focus on doesn’t reveal the true picture…the Labor Department, however, revised upward (by a total of 70,000) the non-farm payroll numbers for April and May…the U.S. economy is indeed strengthening but certainly not at a robust pace at this point, and many global headwinds exist including China…

Today’s Markets

The Dow is up 96 points through the first 20 minutes of trading…2nd quarter earnings season in the U.S. kicks off with numbers from Dow component Alcoa on Monday…the TSX is flat at 12167 while the Venture is down 2 points at 884, 6 points above its still-declining 10-day moving average (SMA) though it’s beginning to flatten out…

Asian markets were mostly strong overnight with Japan’s Nikkei average gaining 291 points to close the week at 14310…China’s Shanghai Composite, however, posted just a 1-point gain to finish at 2007…European shares are mostly moderately lower in late trading overseas…Goldman Sachs predicts that both the ECB and the Bank of England (BoE) could launch fresh monetary easing measures within months…”More unconventional easing is likely in the U.K…in addition, the ECB is more likely than not to ease further from here,” said Goldman Sachs analysts in a global outlook piece published yesterday…Goldman Sachs said neither central bank was likely to raise rates before mid-2015, and added that the ECB could instigate a deposit rate cut and/or credit easing if the euro zone economy weakened further…”We are…more open to potential opportunities in Europe than for some time…although the growth picture there remains weak, our forecast is for some improvement (albeit from a low base), including in the periphery, as fiscal drag fades there too…and the prospect of fresh easing – in the U.K. and in continental Europe – is higher than in many other places,” wrote Goldman Sachs…

U.S. Dollar Index Chart Update

The general consensus seems to be that the outlook for the greenback is very bullish, if for no other reason than the fact it just happens to be the best of a very bad bunch…recently, we warned of a potential imminent reversal to the upside in the Dollar Index (and a potential corresponding drop in Gold) when it appeared to have found support at the 80.50 level as shown in John’;s 6-month daily chart below…since then, it has raced back up to important resistance near the May high of 84.60…a move above that level would give the bulls fresh wind in their sails…the Dollar Index, with this V-shaped move, will be interesting to watch in the coming days…

Fission Uranium (FCU, TSX-V) Update

A $7 million summer drill program is set to begin at the Patterson Lake South (PLS) Property in Saskatchewan as Fission Uranium (FCU, TSX-V) and joint-venture partner Alpha Minerals (AMW, TSX-V) have received all the necessary permits…2 diamond drill rigs and an RC rig will be used as the companies follow up on a successful winter program that discovered high-grade uranium in 3 separate zones along strike of an EM conductor…a total of 44 holes (11,000 metres) are planned for this summer, most of which will attempt to expand the existing 3 zones…a few holes will test other targets along trend to the northeast and southwest…

Below is a 10-month weekly chart update for Fission, accounting for the changes after the Dennison buy-out in April and the spin-out of the uranium assets into FCU…a strong upsloping channel remains intact…

Comstock Metals (CSL, TSX-V) Update

Very incomplete news shared by Comstock Metals (CSL, TSX-V) this morning which reported it has completed a Phase 1 exploration program at its QV Property in the Yukon which included diamond drilling, IP, mag and surface geochemical surveys…results of this program are still being received, compiled, and reviewed by field staff…they did not, however, indicate how many holes or metres were drilled, nor did they provide any details regarding what the”Phase 2″ program entails…Phase 1 drilling, CSL reported, “focused on down-dip and along strike extension of the VG Zone…the target has been drill tested to about 350m down dip and 900m along strike…the company has intersected favorable ‘structure’, alteration and host rock in a 620 m step-out drill hole along strike of the VG Zone“…our interpretation is that this first round of results could be disappointing, and the way this morning’s news was communicated just doesn’t give us a warm-and-fuzzy feeling…CSL also announced it will conduct a non-brokered financing for gross proceeds up to $408,000 through the issuance of 2.4 million flow-through shares at a price of 17 cents per share…

Mart Resources (MMT, TSX-V) Updated Chart

Below is an updated 2.5-year weekly chart from John for Mart Resources (MMT, TSX-V)…the technical picture continues to look favorable…important support held at $1.40…the share price has broken above the EMA(20), and a bullish +DI/-DI crossover appears to be in the works…as always, perform your own due diligence…this is meant to be a guide to assist our readers in that effort…

Note: John, Terry and Jon do not hold share positions in FCU, CSL or MMT.

Happy Independence Day to our American friends…due to the U.S. holiday, this is an abbreviated edition of Morning Musings as Canadian markets will be quiet today…

Today’s Markets & Tidbits

Gold has traded in a tight range so far today, between $1,244 and $1,257…as of 7:00 am Pacific, bullion is down $1 an ounce at $1,251…Silver is off 16 cents at $19.56…Copper has shed 2 pennies to $3.15…Crude Oil is off slightly at $101.08 while the U.S. Dollar Index has surged nearly two-thirds of a point higher to 83.74, thanks to weakness in the euro…

Tomorrow’s U.S. non-farm payrolls report will be critical in shaping the near-term direction of Gold and the equity markets…the report is expected to show the economy created 165,000 jobs last month…the data could influence when the Federal Reserve will begin scaling back its $85 billion monthly bond buying stimulus program…

The European Central Bank maintained its accommodative stance today, keeping its main refinancing rate at a record low of 0.5% and leaving deposit rates unchanged…the bank held off on further rate cuts, amid turmoil in Portugal which has led to volatility in stocks and a jump in bond yields…it follows a cut in the interest rates from 0.75% in May – the first reduction in 10 months…in a news conference following the rate decision, Mario Draghi said the ECB’s key rates would remain at current or lower levels for an “extended period of time” which is well into the future…when pressed for a time frame, Draghi stated, “An extended period of time is an extended period of time, it is not 6 months, or 12 months…our exit is very distant”…he added that he was open to all rate options, including a negative deposit rate…

Bank of England officials kept their stimulus program on hold today as Mark Carney’s first policy meeting as governor coincided with data pointing to an improving economy…the 9-member Monetary Policy Committee held quantitative easing at 375 billion pounds ($572 billion), as expected…Carney of course replaced Mervyn King on July 1, becoming the first foreigner to run the 319 year-old central bank…reports this week on manufacturing, services and the housing market signaled that the U.K. economy is strengthening…

The Financial Times reported this morning that China’s cash crunch appears to have drawn to a close with money rates falling back to normal levels after the central bank steadied the market with a pledge to backstop ailing lenders and provide liquidity injections to support the financial system…the 7-day bond repurchase rate, a key gauge of short-term liquidity in China, fell to 3.98% today…it marked the 7th consecutive daily decline since rates hit double digits 2 weeks ago…it was also the first time since late May that the repo rate fell below 4%, a level that usually marks the high end of its trading range…

The Financial Times also reported this morning that China is considering a dramatic relaxation of its capital controls over the next few years as part of an accelerated push to make its currency freely tradable, despite international advisers warning against hasty implementation of reform…this would allow businesses, investors and individuals to trade the renminbi across China’s borders with no significant barriers, a liberalization necessary for the Chinese currency to emerge as a global rival to the dollar…

China should increase its Gold holdings in its large foreign-exchange reserves to help make the yuan a truly global currency, the president of the nation’s largest Gold producer stated recently (according to a Wall Street Journal report June 28)…”Look at the dollar and the euro,” Sun Zhaoxue of China National Gold Group Corp., the country’s largest Gold producer by output, said on the sidelines of a financial forum in Shanghai…”Neither became a global currency without Gold reserves”…China’s foreign-exchange reserves, the world’s largest, rose to $3.44 trillion at the end of the first quarter, according to central-bank data released in April…Beijing has been trying to step up diversification of its huge portfolio away from U.S. government debt, in part by increasing its Gold holdings…but China is still widely regarded by analysts as holding too little Gold in its reserves, particularly relative to the issuers of the two dominant global currencies – the U.S. dollar and the euro…according to data from the World Gold Council, it’s believed that China holds just under 2% of its official reserves in bullion…that compares with 70% to 75% in the U.S., Germany and France…

Asian markets were mostly higher overnight, though Japan’s Nikkei average bucked the trend by falling 37 points to 14019…China’s Shanghai Composite gained 12 points to 2006…European shares are up strongly in late trading overseas…the TSX, meanwhile, is up 64 points to 12210 while the Venture is 2 points higher at 883 as of 7:00 am Pacific…it’ll be a light volume day in Canada…

Venture-Canadian Dollar Comparative Chart

The Venture performs best when the Canadian dollar is in an uptrend, so the recent weakness in the dollar has not been helpful and has coincided with the Venture breaking below support in the 920’s June 20th…current support for the Venture is at 860 which was successfully tested last week…the loonie, trading slightly below 95 cents this morning, appears to be in a good position for a near-term rally out of oversold conditions, but the concern is that the primary trend has a negative bias…a 90-cent dollar can’t be ruled out, as we’ve mentioned previously…based on historical patterns, perhaps only when the dollar bottoms will the Venture finally bottom…below is Dollar-CDNX 12-year monthly chart from John…

Colorado Resources (CXO, TSX-V) Updated Chart

Colorado Resources (CXO, TSX-V) came back to life yesterday…it gapped up slightly at the open to 72 cents and held above that price throughout the day, closing a nickel higher at 74 cents on the strongest volume (702,000) in 9 sessions…after 30 minutes of trading today, CXO is up another 4 cents to 78 cents but volume is light…the current drill program at North ROK started in mid-June, so it’s realistic not to expect assay results from the next batch of holes until sometime in August…there’s a good chance that speculation will build in the meantime, given that the current holes are taking direct aim at a very strong mag high feature…strong technical support in the stock has held in the 60’s after a rather normal retracement from the May 21 intra-day high of $1.74…the next Fibonacci resistance is at 85 cents, a key level to watch…we’re bullish on how things are coming together on the ground…

West Cirque Resources (WCQ, TSX-V) Set To Drill Castle Property

As we’ve mentioned, West Cirque Resources (WCQ, TSX-V) is an emerging potential star in the Iskut area with its 3 properties – most notably, the Castle Property which is 15 km west of the North ROK discovery…yesterday, WCQ announced that a Phase 2 drill program will begin during the second half of this month at Castle…it will test a 400-metre-by-1,500-metre-long coincident magnetic and chargeability high outlined in September, 2012, following phase 1 drilling…the central core of the anomaly underlies an outcropping zone of quartz-magnetite-chalcopyrite stockwork mineralization in monzodiorite porphyry, discovered in late August, 2012…in addition to the drill program, mapping and sampling will be carried out in order to better define geological controls and to outline additional targets within the 5.5-km-long Castle porphyry system…WCQ is operator of the program which is being funded by Freeport McMoRan Corp. of Canada as part of its JV agreement with WCQ…at the same time, West Cirque is busy with its promising Aspen Grove Project between Merritt and Princeton…

Pacific Potash Corp. (PP, TSX-V) Update

Aggressive buying came in right at the open yesterday on Pacific Potash (PP, TSX-V) and it held at or above its opening price (17 cents) throughout the day, closing up 2.5 cents at 17 cents on the best volume (3.3 million shares) since May 22…as of 7:00 am Pacific today, PP is up another penny at 18 cents…PP’s Amazonas Potash Property in Brazil holds excellent potential, and the company’s hope is that Amazonas can develop into a domestic source of fertilizer products for the growing Brazilian market, and serve China as well…Brazil imported 7.5 million tonnes of potash in 2012, accounting for over 90% of consumption…

Below is an updated PP chart from John (2.5-year weekly) which shows a bullish cup-with-handle pattern…

Note: John and Terry do not hold share positions in PP.  John holds a share position in CXO while Jon holds share positions in CXO and PP.