After powering through important resistance at $1,350 yesterday, to a fresh 7-week high, Gold is up $1 an ounce at $1,367 as of 7:30 am Pacific…Silver is 7 cents higher at $23.08…it has climbed for 7 straight sessions entering today, gaining 17% during that time amid a more positive outlook for global industrial production…Copper is up 2 pennies to $3.34…Crude Oil remains firm, underpinned by the chaos in Egypt…WTIC is up 48 cents to $107.81…the U.S. Dollar Index, meanwhile, has added more than one-tenth of a point to 81.28…a quick note to our readers…we’d appreciate your help in getting Pete Bernier’s Prosper Gold (PGX.H, TSX-V) added to the Stockcharts.com data base in anticipation of imminent trading so we’re able to include charts at the appropriate time…the request on Stockcharts.com is easy to carry out – John will provide simple instructions in the comments section…

Total holdings in Gold exchange-traded funds appear to have stabilized lately, according to HSBC…the bank cites Bloomberg data showing that the top 14 Gold ETFs collectively held 62.7 million ounces as of August 14, virtually unchanged from a week earlier…“By our calculations, Gold ETF liquidations have occurred in 30 out of the 32 weeks so far this year with an average weekly liquidation of 736,000 oz,” HSBC said.  “Stabilization in Gold ETF holdings may be a sign that investors are turning less pessimistic on the yellow metal.  Furthermore, another indicator of investor’s waning pessimism on Gold is the short positions on the Comex, which have declined for 4 straight weeks.  Short positions stood at 13.6 million oz at the end of 6 August, down from the all-time high of 17.9 million oz on 9 July.  With that said, declining investor pessimism for Gold may open up the possibility for short positions to continue to be covered, which in turn is positive for prices, in our view.”

A filing with the Securities and Exchange Commission (SEC) this week revealed that Goldman Sachs increased its holdings in SPDR Gold Trust during the 2nd quarter to 4.4 million shares – 6 times its holdings at the end of March…the Goldman Sachs “Gold Smash” created a panic in March, then they turned around and became buyers…there were large sellers during Q2, of course, including billionaire John Paulson who cut his holdings in the ETF by more than half…other sellers included Northern Trust, which sold 5 million shares, and Bank of America and UBS which sold over 2 million shares each…

Commerical traders (smart money) cleared out virtually all of their short positions in July – an obvious clue that Gold has put in an important bottom, at least for now…while the commercials were reducing their short positions to historic lows, other traders (large and small specs often wrong on their positioning) were trimming their long positions to very low levels, another sign Gold was ready to reverse…public opinion surveys in North America show that the average “Joe” is still very negative about Gold – great sign – after being incredibly bullish just a couple of years ago…meanwhile, the Chinese keep buying like crazy…

Updated Gold Charts

Immediately below we begin with fresh 2-year weekly Gold chart from John…yesterday’s move requires confirmation today, which appears likely, with the next major resistance at $1,400…RSI(14) has broken out of a downtrend and is showing strong up momentum…sell pressure has declined significantly and it’s reasonable to expect it will turn into buy pressure in the very near future…the overall bearish trend is clearly weakening, so this move in Gold does appear to have legs – shorts are about to get clobbered like the longs were a few months ago…

Gold Chart – 50, 200, 500-day Moving Averages

Below is a 2-year daily chart showing Gold’s 50, 200 and 500-day SMA’s…note the large gap that has opened up between the 50-day ($1,309 and likely to reverse to the upside soon after being in decline since late 2012) and the 200-day ($1,523)…it’s this gap that we can see closing during the current rally…the 500-day is declining at $1,616…plenty of resistance between $1,500 and $1,600, where Gold broke down in the spring, but there’s certainly a good opportunity to test that resistance later this quarter or in Q4…

CRB Index Chart Update

Below is a 5-year monthly CRB chart…note how reversals have occurred every 2 years…also note how strong WTIC has been – a steady upsloping channel…

Today’s Markets

China’s Shanghai Composite was volatile overnight, surging 5.6% at one point before going into reverse and finishing in negative territory – down 13 points at 2068…traders attributed the wild swings to a variety of factors, including a possible erroneous trading order from brokerage Everbright Securities, whose shares have since been suspended…other rumors included a possible cash reserve ratio cut for banks and futures-related trades ahead of the settlement of August contracts…Japan’s Nikkei average finished down 103 points at 13650…

European shares were mixed today…euro-area exports increased for the 1st time in 3 months, led by a rebound in Germany, while inflation held steady at 1.6% as the economy gathers strength after the longest recession since the debut of the single currency…exports from the 17-nation bloc rose a seasonally adjusted 3% in June from May, when they dropped 2.6%, the European Union’s statistics office in Luxembourg said today…shipments from Germany, Europe’s biggest economy, gained 6.4% after a 9% decline the prior month…the euro-area inflation rate remained at 1.6% in July, a separate report showed…

North America

After losing over 300 points the last 2 trading sessions, while bonds yields jumped to their highest level in 2 years, the Dow is essentially unchanged through the first hour of trading today…U.S. consumers, bracing for higher interest rates and slightly slower economic growth, were a bit less optimistic in August as sentiment retreated from last month’s 6-year high, a survey released this morning showed…the Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment slipped to 80.0 from 85.1 in July, well below the 85.5 reading expected by economists…

Retail giant Walmart reported yesterday a surprise drop in sales for the latest 3 months and offered a very cautious outlook for the rest of the year…in addition, data released yesterday by the Bureau of Labor Statistics showed that Americans’ real weekly earnings tumbled 0.5% from June to July…the figure is derived from a 0.2% drop in real average hourly earnings, plus a 0.3% decrease in the average work week…these are all factors the Fed will be taking into account next month when it decides whether or not to begin scaling back QE…given the expected volatile political climate in Washington, we believe the Fed will be patient and will wait to see other data during Q4 before any tapering process begins…

The TSX is up 18 points as of 7:30 am Pacific while the Venture has added 3 points to 935…the TSX Gold Index backed off from 210 resistance in early trading and is currently down 2 points at 205…

Fission Uranium Inc. (FCU, TSX-V) Updated Chart

The Patterson Lake South Uranium discovery in Saskatchewan heated up again yesterday with Fission Uranium Inc. (FCU, TSX-V) and Alpha Minerals (AMW, TSX-V) reported a 4th mineralized zone, and the stocks responded by hitting new all-time highs…we’re still very bullish on this play, but it’s never foolish to take some profits off the table – especially when you see a chart in a temporarily overbought condition and likely in need of a minor correction for “cleansing” purposes…FCU closed yesterday at $1.34 and is up another 11 cents to $1.45 as of 7:30 am Pacific, 7 pennies above John’s latest Fib. level…keep in mind that FCU corrected nearly 20% when it hit the previous Fib. level of $1.10…so guide yourself accordingly…we’re not here to tell you when to buy, sell or hold, just to provide you with additional insight and information that can form part of your own due diligence…

Great Panther Silver (GPR, TSX)

Great Panther Silver (GPR, TSX) has had quite a run, posting gains in 7 consecutive sessions (same as Silver) and jumping 48% during that period…it closed yesterday at $1.24, its 200-day SMA (in decline since late 2011) where resistance for now can be expected…it’s reasonable to assume that there will be a pullback before there’s a a possible assault on the Fib. resistance levels John has outlined (RSI-2 on the daily chart is in extreme overbought territory)…a few positive factors with regard to this 2.5-year weekly chart…RSI(14) at 57% is showing strong up momentum…weak buy pressure has replaced sell pressure which has been dominant all year…and there has also been a bullish ADX crossover, the first time we’ve seen that in GPR since the summer of last year…there’s strong support at $1…a minor correction to unwind temporarily overbought conditions could see GPR test that $1 area before resuming an upward trend…the company reported a net loss of $5.1 million loss for the 3 months ended June 30, compared with net income of $400,000 for the same period in 2012…as always, perform your own due diligence…as of 7:30 am Pacific, GPR is down 6 pennies to $1.17…

Note: John, Terry and Jon do not hold positions in GPR or FCU.

Gold climbed as high as $1,343 overnight before staging a very normal pullback within the current uptrend…as of 7:55 am Pacific, bullion is off $10 an ounce at $1,327…Silver continues to out-perform Gold (good sign)…it’s ahead 2 pennies at $21.90…Copper is off 3 cents at $3.28…Crude Oil has gained 14 cents to $106.99 while the U.S. Dollar Index is up slightly at 81.69…

Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, climbed yesterday to 913.23 metric tons after gaining on August 9 for the first time in 2 months…in China, the volume for Shanghai’s benchmark spot contract increased to 10,739 kilograms yesterday, the most since August 6, according to the Shanghai Gold Exchange…China is on track to overtake India this year as the world’s largest Gold consumer…physical demand, especially in Asia, remains supportive of Gold which appears to be headed for a 2nd monthly advance after rising 7.4% in July, the best gain since January 2012…a key technical hurdle for Gold to overcome, as John has pointed out on numerous charts, is $1,350…

A U.S. filing showed billionaire John Paulson reduced his holding in the SPDR Gold Trust by 53% in the 2nd quarter…

Gold demand fell 12% to a 4-year low during its dismal 2nd quarter as record exchange-traded product sales and less central bank buying countered surging jewelry, bar and coin purchases, according to the World Gold Council…global demand slipped to 856.3 metric tons in the quarter, from 974.6 tons a year earlier, the London-based industry group said in a report released yesterday…consumer demand in India, the biggest buyer, jumped 71% while China gained 87%, helping to push global bar and coin purchases to a record and jewelry usage to the most since 2008…Central Bank buying fell 57% from a record a year earlier, the WGC stated..

Today’s Markets

Asian markets were weak overnight with Japan’s Nikkei average losing 297 points or 2% to close at 13753…the drop was due to a higher yen and followed comments from Japanese ministers that downplayed the idea of corporate tax cuts…earlier this week, the Nikkei newspaper reported that Tokyo may be considering cutting corporate tax rates to offset the impact of a consumption sales tax hike…China’s Shanghai Composite slipped 18 points to finish at 2082…

European shares were off significantly today but it was a lighter day of trading in Europe with financial markets closed in Italy, Portugal, Luxembourg, Greece and Austria…

North America

The Dow is off sharply again today as events in Egypt are unsettling some investors…as of 7:55 am Pacific, the Dow is down 216 points…the number of Americans filing new claims for unemployment benefits fell to a near 6-year low last week, hinting at a pick-up in job growth in early August…meanwhile, factory activity in the U.S. mid-Atlantic region weakened in August as new orders fell and the pace of hiring slowed, a survey indicated this morning…the Philadelphia Federal Reserve Bank said its business activity index fell to 9.3 from 19.8 in July, undershooting economists’ expectations for a reading of 15.0…in a separate release, U.S. consumer prices remained largely benign in July…yesterday, St. Louis Fed President James Bullard said the Central Bank needs to see more data in the 2nd half of the year before it starts to cut back on its stimulus, and if it tapers while inflation is too low, it risks deflation…

The TSX is down 66 points through the first 85 minutes of trading while the Venture is holding up well, down just 2 points to 924…more good news from the Patterson Lake South uranium discovery…Fission Uranium Corp. (FCU, TSX-V) and joint-venture partner Alpha Minerals Inc. (AMW, TSX-V), both halted yesterday, reported this morning that they’ve discovered a 4th zone of uranium mineralization and off-scale radioactivity located 165 metres grid east of zone R780E (and the hole is still in progress)…this 4th zone is referred to as the R945E zone…there are now 4 mineralized zones on strike with each other along a trend of just over 1 km…both stocks have hit new highs…as of 7:55 am Pacific, FCU is up 9 cents at $1.30 (it hit $1.34) while AMW has gained 36 cents to $6.60…they resumed trading at 7:30 am Pacific…

TSX Gold Index Long-Term Chart:  Reversal Time

Yesterday, we posted a 6-month TSX Gold Index daily chart that showed a bullish ascending triangle and the imminent possibility of a breakout above that triangle and important resistance at 190…sure enough, the Gold Index surged 9 points yesterday to close at 196…the 50-day moving average (SMA) for this Index is also very close to reversing to the upside – it has been in decline since November of last year…new support is now at 190 with the Index off a point at 195 as of 7:55 am Pacific…

Further evidence of a powerful reversal in Gold and Gold stocks comes from the 10-year monthly TSX Gold Index chart below…this is a great example of how technical analysis can be used to detect a trend change…everything here points to a higher Gold Index in the coming weeks…a break above the 210 resistance would be a very significant move…

Yesterday’s and today’s Gold Index charts (they are often reliable leading indicators when they correlate with other technical data we look at) tell us that Gold is gearing up for a breakout through $1,350 in the near future (immediately or in the short-term) and could take a run at the $1,500-$1,600 area (where it broke down from in the spring) during the 2nd half of the year…

It’s safe to assume that rising Gold prices and a higher TSX Gold Index, over the short-term at least, will translate into a strong rally by the Venture Exchange…firm Oil and Copper prices will also help…the Venture is looking much healthier from a technical standpoint these days and a move above critical resistance at 970 will indeed signal a serious breakout…a rising tide, however, will not lift all boats on the Venture – many of those boats, in fact, remain in serious danger of sinking before the end of the year, even in an environment of stronger Gold prices…the chickens are coming home to roost for many of these “lifestyle” companies that have fleeced the public over the years…when looking at companies, as individual investors, each one of us should commit to performing even better due diligence to ensure the following conditions are met:

A company must have…

1. A superior management team with proven track records at building value and executing both on the ground and in the market;
2. A strong working capital position;
3. An attractive share structure (many companies have been forced to do cheap financings over the past 2 years);
4. An exploration program(s) in progress or about to begin at a property (or properties) with strong geological and upside potential with limited jurisdictional risk;
5. A healthy stock chart;
6. A simple but exciting and compelling story.

It’s one thing if a company with the above characteristics drills a property and the results just aren’t there – that’s the nature and the risk of the exploration business, and as an investor one has to be prepared for that…never invest money you can’t afford to lose…but you can reduce the “other” risks that come from a company not possessing all of the above qualities and tripping over its own feet…there is plenty of speculative money sitting on the sidelines, in our view, that can propel the Venture significantly higher as this quarter progresses (historic opportunities exist)…but this money will be more selective than ever in terms of the companies it’s flowing into…

Colorado Resources Ltd. (CXO, TSX-V) Update

Colorado Resources (CXO, TSX-V) closed above resistance at 80 cents yesterday, and is looking solid so far today as investors sense that drill results from North ROK are just around the corner…there are several interesting technical features at the moment with CXO, as John outlines below in a 7-month weekly chart…strong support has held around 70 cents…not shown on this particular chart is the 50-day SMA which has provided resistance over the past couple of months and has been in decline since last month…however, it’s now flattening out and will reverse to the upside in the coming days if the share price continues to trade around current levels (above 80 cents)…so the stock is at a critical juncture from a technical standpoint…it’s up a penny at 83 cents as of 7:55 am Pacific…the technicals are encouraging but drill results, obviously, will determine whether CXO explodes higher or breaks down…

From our perspective, it’s reasonable to conclude that the upcoming batch of drill results from North ROK should contain some excellent numbers given the apparent quality of the targets there…summer drilling has focused on a continuous and strong magnetic high core that is 300 to 400 metres wide and 1200 metres long, trending southeast from holes #1 and #4…where Colorado has intersected the magnetic high feature in 3 drill holes reported to date, the average grade over 694 metres of cumulative length is 0.40% Cu and 0.60 g/t Au…CXO has hopefully stepped out slowly and gradually, with the goal of staying in strong mineralization (not always easy when attempting to define a porphyry deposit) to keep the market happy in these early stages…when a geologist tries to be a hero by attempting a bold step-out too soon, that’s often a recipe for disaster…ultimately, North ROK is going to require hundreds of drill holes…some will be dusters (like hole #2), others could be home runs…Imperial Metals (III, TSX) missed on 25% of the holes it drilled at Red Chris in 2011 and 2012, but they still have a world class Copper-Gold porphyry deposit with very robust economics that goes into production next year…at Kennecott’s giant Bingham County open-pit Copper Mine in Utah (porphyry), there are barren areas bigger than the size of football fields…that’s just the nature of porphyry deposits…Colorado’s job is to smartly start to nail down the geometry, size and grade of what appears at this point to be a potentially large Copper-Gold system, and we believe they have the expertise to do just that…

B2Gold Corp. (BTO, TSX)

A quick follow-up to Monday’s short piece and chart on B2Gold Corp. (BTO, TSX)…the company reported a big jump in 2nd-quarter earnings yesterday on a royalty sale as well as increased revenues…BTO earned $33.1-million, or 5 cents per share, up from $11.9-million, or 3 cents per share, as Gold revenue rose to $122.6-million from $57.3-million a year ago…no writedowns…lower operating costs…upgraded production guidance…improved earnings picture…increased reserve estimates…it’s rare to read or hear those words from any producer these days, but that’s what’s happening with BTO during a challenging market environment… “With the company’s proven technical team, strong operational performance, financial strength, and high-quality development and exploration projects, B2Gold is well positioned to continue its rapid growth as an intermediate Gold producer,” stated company President and CEO Clive Johnson in a news release last week…

Technically, BTO closed above resistance at $3.20 yesterday…we’d like to see another close above $3.20 today to confirm that breakout and new support…the next major resistance is around the $4 level…as of 7:55 am Pacific, BTO is down 8 cents at $3.20…

Azincourt Uranium Inc. (AAZ, TSX-V) Update

A couple of days ago we were happy to be able to finally produce a chart for Azincourt Uranium (AAZ, TSX-V), after its 23-cent close Monday, which was finally added to the StockCharts.com database at the urging of BMR and some of our readers (thank you)…AAZ enjoyed quite a move yesterday as it jumped 8 cents to finish at 33 cents as FCU and AMW were halted…

Since April, AAZ has been trading in a horizontal channel primarily between 20 cents and 33 cents where it met resistance yesterday…AAZ closed a $1.5 million financing in June at 15 cents and currently has 27 million shares outstanding…the trend here is definitely bullish and any pullbacks are likely opportunities as the probability of a breakout (eventually) above the horizontal channel seems high…as always, perform your own due diligence…as of 7:55 am Pacific, AAZ is off 4 cents at 29 cents…

Gold has traded between $1,318 and $1,328 so far today…as of 7:20 am Pacific, bullion is up $6 an ounce at $1,327…Silver is 16 cents higher at $21.63…Copper is up 2 pennies at $3.32…Crude Oil is off 47 cents at $106.36 while the U.S. Dollar Index is relatively unchanged at 81.72…

India continues with its futile effort to curb the country’s appetite for Gold…the RBI (Reserve Bank of India) has announced a new duty hike on imports of precious metals, but the country’s demand for Gold is likely to pick up later in the year due to seasonal demand (the festive Gold buying holiday Diwali is November 3), according to HSBC…duties on Gold, platinum and Silver rose to 10%, the 3rd hike this year…last month the RBI tightened the country’s bullion trade by requiring all nominated banks/agencies to keep at least 20% of imported Gold for the purpose of exports in customs bonded warehouses, leaving the other 80% for the use by entities engaging in the jewelry business or bullion dealers supplying Gold to jewelers…these restrictions with regard to Gold are an attempt by the RBI to fix the country’s current account deficit…some individuals and companies are reportedly finding ways around these measures, however…the love for Gold is deeply rooted in the Indian culture…

Euro Zone Growth Picks Up

The euro zone has emerged from the longest recession in its history with heavyweights France and Germany leading the way, according to data released today…the 17-member area grew 0.3% cent during the 2nd quarter, beating economists’ forecasts for 0.2% expansion and heralding a long-awaited return to growth for the 1st time since the end of 2011…the figures followed stronger-than-expected GDP growth in Germany, which recorded its most robust economic expansion in more than a year, while France confirmed that it was no longer in recession…

Today’s Markets

Asian markets were mixed overnight but Japan’s Nikkei average posted a gain of 183 points or 1.3% to close at 14051…China’s Shanghai Composite slipped 6 points to 2100…European shares are generally slightly higher in late trading overseas after growth data managed to beat expectations…

In New York, the Dow is off 53 points as of 7:20 am Pacific…the Wall Street Journal reported last night that the growing threat of a political stand-off over fiscal policy in Congress has some economists and market pundits predicting that this could limit the Federal Reserve’s drive toward slowing asset purchases in the coming months…“This is going to be an extremely noisy time in Washington – I think the rhetoric is going to be incredibly heated,” WSJ quoted says Ethan Harris, a senior global economist at Bank of America Merrill Lynch…“Like everybody else the Fed probably hopes that the bark is worse than the bite but it has to be in their thinking,” he adds, explaining that the fiscal environment was “one of the reasons” he was betting on a December tapering move, even if he said the chance of real “disruption” to the government was only 20%…

The TSX is off 17 points to 12626 as of 7:20 am Pacific while the Venture is up a point at 926…

GTA Resources & Mining Inc. (GTA, TSX-V) was yesterday’s big mover, almost tripling in value (11.5 cents to a closing price of 31 cents) after an announcement updating its Auden Property adjacent to Zenyatta Ventures‘ Albany East Graphite Project…not surprisingly, it has pulled back somewhat in early trading today and is down 3 cents at 28 cents as of 7:20 am Pacific (after touching a low of 22 cents)…it’s an encouraging sign for the overall market that speculative money jumped in the way it did with this play yesterday…GTA has staked additional claims, expanding the size of Auden (initially acquired 3 years ago) to 27,000 hectares, and also reported that not only is it the largest single landholder in the area, but the only company other than ZEN to have known electromagnetic targets…Auden geology, according to GTA, is also favorable for hosting other commodities including platinum group elements and base metals…up until now, GTA has kept relatively hush about its presence next to Zenyatta (as an aside, sort of how Garibaldi Resources – GGI, TSX-V – has been quiet – so far at least – about its very strategic 170 sq. km Grizzly Property bordering Pete Bernier’s Sheslay Copper-Gold Porphyry Project in northwest B.C.)…

Zenyatta Ventures (ZEN, TSX-V) Updated Chart

So things are heating up with the Zenyatta “area play”, and big bids are also coming in for Brookemont Capital Inc. (BKT, TSX-V) as some of our readers have commented…so how about Zenyatta itself from a technical standpoint?…below is another ZEN chart update from John…everything continues to look very, very good…as of 7:20 am Pacific, ZEN is up 7 cents at $3.95…

TSX Gold Index Update

There are some really encouraging signs in the TSX Gold Index, adding credence to our belief that we could see some stunning 3rd quarter gains in select producers and juniors…an ascending triangle is forming in the TSX Gold Index, just as John noted in Copper recently…while buy pressure is still low, you can see that this is also the longest period of buy pressure witnessed in the 6-month daily chart…intense sell pressure has dominated most of this period…on Thursday, Friday and Monday, the Index gained a total of 15% before pulling back slightly yesterday to close at 187…as of 7:20 am Pacific, it’s up 5 points at 192…a confirmed breakout above resistance at 190 (and the top of the ascending triangle) would be a very bullish development, though exact timing of that of course is uncertain…the Index may need to pause for a bit to catch its breath before pushing higher, but the next major move definitely appears to be to the upside – consistent with the signs we’re also seeing in the Venture…

Note that the 50-day moving average (SMA), while still declining, is beginning to flatten out…a scenario that we see unfolding by the end of this month is a reversal to the upside in the 50-day SMA which would provide fresh fuel for a major new advance…the 50-day has been in decline since last November and has also provided stiff resistance until just recently…

The time to be bullish is when the masses are bearish, and vice-versa…below is a chart we showed recently when the TSX Gold Index was near its 2008 Crash low, and investors were still throwing their Gold stocks overboard…we’ve seen (and we’re still seeing) historic opportunities in this sector, and those who have been brave enough to get well-positioned in high quality situations during the incredible sell-off that we saw could be rewarded handsomely in the weeks, months and years ahead..

CRB Index Update

We’re seeing positive signs not only in the TSX Gold Index and the Venture, but also in the CRB Index which has formed a very obvious bullish “W” in this 6-month daily show below…there’s an important resistant band between 290 and 292.5 – watch this carefully…if our hunches are correct, within a couple of weeks we could see a breakout in the CRB and that would certainly bode well for the Venture…

Probe Mines Reports More Encouraging Results From High Grade Zone at Borden Lake

Probe Mines continues to define a significant high-grade Gold zone at its Borden Lake Project in northern Ontario…results from 10 infill holes in this area were released pre-market this morning, and included (in separate holes) 47 m @ 6.8 g/t Au…29.4 m @ 5.9 g/t Au…21.1 m @ 5.2 g.t Au…19.4 m @ 5.2 g/t Au…22.8 m @ 4.2 g/t Au…35.8 m @ 3.6 g/t Au…10.7 m @ 3.2 g/t Au…and 33.5 m @ 2.1 g/t Au…all intervals approximate true width…the mineralized zones are between 225 and 379 metres vertical depth…the hole that returned 21.5 m @5.2 g/t Au (BL13-431) was collared more to the northwest on Section 950m SE, suggesting an expanded strike length of the high-grade zone of up to 950 metres…all other results highlighted above were from Sections 1100m SE to 1300m SE…assays for the high-grade zone from Sections 1500m SE to 1900m SE are expected shortly…all 4 drills are currently focused on infill and expansion drilling on the high grade zone…Probe is off slightly through the first 50 minutes of trading today, down a nickel at $1.95…

Copper Fox Minerals Inc. (CUU, TSX-V) Update

Interesting news on Copper Fox Minerals (CUU, TSX-V) yesterday which gave the share price a 25% jolt to 65 cents…the company’s new JV agreement on the Schaft Creek Project with Teck Resources Ltd. (TCK, TSX) has given CUU the flexibility to pursue new ways of driving shareholder value, and a wholly owned subsidiary (Desert Fox Copper) will now immediately advance the company’s promising Van Dyke and Sombrero Butte Copper projects in Arizona that were acquired last year…CUU is also giving shareholders a tax-free distribution of 2.75 cents per share (ex-distribution date is August 16)…it’s interesting to note that in yesterday’s news release, CUU stated it sees “unprecedented current market value opportunities” in terms of potential projects available in the industry at the moment…

Last week, John indicated that from a technical perspective there was a high likelihood that CUU had bottomed out around the 50-cent level…we were waiting for a pullback after the sudden spike July 16 to 88 cents after the revamped deal with Teck was announced (by the way, Teck has also now commenced a 10,000 metre drill program at Schaft Creek)…below is an updated CUU chart…strong technical support in the 58-61 cent area…CUU is off a nickel at 60 cents as of 7:20 am Pacific…

BMO Research On China

China’s slowing economic growth is “the new reality” for the Asian nation, and that will affect commodity consumption, said BMO Research yesterday (source: Kitco)…the firm, which said that it recently completed a 2-week research trip to China, noted that most analysts now forecast 7.5% GDP growth for 2013…“Thus, a substantial rebound near term is unlikely, especially one driven by massive government spending,” they said…rather the government is likely to offer targeted spending for certain regions or sectors…“These announcements should, therefore, not be viewed as significant changes to the government’s general policy though commodity prices are nonetheless likely to move as headlines emerge on various ‘mini-stimuli’,” they said…BMO forecasts global commodities demand growth to slow materially over the medium term and for commodity prices to remain under some pressure near-term on the anticipation of oversupplied markets…the firm left its price forecasts unchanged and noted that Copper remains a preferred commodity for investors, “albeit within a challenged commodity complex”…in July, they forecast 2013 average Copper prices at $3.30 a pound…BMO Research predicted yesterday that China’s Copper consumption growth will be 4% this year while they pegged mine supply growth at 7%…

Gold is taking a slight breather today after an impressive run since Thursday…as of 7:15 am Pacific, bullion is down $8 an ounce at $1,329…Silver, which has been out-performing Gold recently – a bullish sign for precious metals – is up a penny at $21.44…Copper is unchanged at $3.28…Crude Oil is off 50 cents at $105.61 while the U.S. Dollar Index is up one-third of a point at 81.82…

“There is a clear conflict between physical and speculative demand right now, but as things stand, China’s buying spree has been the bigger influence right now and has driven leveraged funds to cover shorts,” CNBC quoted Chris Weston, chief market strategist at IG Markets, who noted that if Gold moves above resistance around $1,350, it could immediately test the $1,370 level and then $1,400…

CNBC also reported that according to Barry Dawes, head of resources at Paradigm Securities, there’s a strong case for buying Gold, citing tighter supply in the physical market…“The physical demand for Gold is robust and we’re seeing premiums in Asia that you don’t see in other parts of the world,” Dawes said. “The physical market for Gold is now really tightening up and the shenanigans being played by hedge funds and bullion and investment banks may just be coming to an end”…

Gold-Silver Ratio

In terms of the trend in precious metals, it’s almost always a positive development when the Gold-Silver ratio is in decline…that’s what we’re starting to see right now…Gold has been performing a lot better lately, but Silver is taking the lead and that reflects money flow into precious metals…below is an updated Silver outlook from John, and near the bottom of the chart you can see how the Gold-Silver ratio importantly has broken above a downtrend on this 6-monthly daily…the ADX trend indicator has turned bullish for Silver as well, so we are looking at a change in the market here…Silver appears headed toward the $22-$23 resistance band over the near-term, but ultimately we expect a bigger move later in Q3 or Q4…major resistance will be around $26…

Discovery Plays

Even during this challenging year on the Venture, serious discovery plays – whether they’re graphite, uranium, Copper-Gold, etc., have been hot – and we expect that trend to intensify in the weeks and months ahead…if you can focus on the 10 to 15% of companies who have the ability – the geological expertise, management skill and financial resources – to find a major new discovery, you could make fortunes as that’s where the speculative money is going to be increasingly drawn to…new deposits of all sorts in safe jurisdictions are going to be required in the years ahead – yet there are fewer dollars being invested in that effort by a decreasing number of companies…that’s why we’ve been regularly mentioning situations like Zenyatta Ventures (ZEN, TSX-V), Fission Uranium (FCU, TSX-V) and Alpha Minerals (AMW, TSX-V), Colorado Resources (CXO, TSX-V), West Cirque Resources (WCQ, TSX-V), GoldQuest Mining (GQC, TSX-V), among others…

That’s also why we’re so bullish on the Sheslay River Valley area of northwest British Columbia because that’s where we see great possibilities for a major new discovery, and many independent prospectors and geologists agree with this after the extensive due diligence we’ve carried out over the past few months…you make money when you get ahead of the crowd…all the necessary ingredients exist with this situation – historical information, geological structures, the proven expertise, the financial resources…very shortly, Pete Bernier’s Prosper Gold (PGX, TSX-V) is expected to begin trading, armed with all the cash and expertise he and his highly qualified team need to begin to take the highly prospective Sheslay Copper-Gold Porphyry Project to the next level as we reported in a detailed update yesterday…average investors are asleep at the switch this summer and don’t even know this story exists…these same investors will be jumping on the bandwagon in due course…

Meanwhile, Garibaldi Resources (GGI, TSX-V) will be a major player in developments in the Sheslay River Valley with its massive 170 sq. km Grizzly Property contiguous to the western and southern boundaries of the Sheslay Project…our hunch is that Garibaldi is going to come out swinging as soon as Prosper Gold starts trading – why wouldn’t they?…they’re a smart and opportunistic group…all technical reports show that the Grizzly and the Sheslay are intimately connected geologically, though the Sheslay of course is much more advanced from an exploration standpoint…but the “blue sky” potential of both is huge, and Prosper Gold head geologist Dirk Tempelman-Kluit, who of course founded the multi-million ounce Blackwater deposit just a couple of years ago, has the advantage of a plethora of historical data at his disposal to help him immensely at figuring out the geological puzzle of the Sheslay and surrounding area…Garibaldi also has an exceptional geological team, one that convinced them of the value of the Grizzly well before Bernier came along…GGI has also created (and continues to create) shareholder value in Mexico where it identified and sold a property to NYSE-listed Paramount Gold and Silver, allowing Garilbaldi to not have to do a financing for more than 4 years…the Sheslay River Valley area is going to rapidly develop into an exploration hotspot, beginning almost immediately as we suspect that both teams – Prosper Gold and Garibaldi – are ready to deploy assets there…

You don’t think Tempelman-Kluit is almost salivating at the fact that no less than 85% of Firesteel’s 23 holes at the Star target, beginning in 2004, bottomed in strong mineralization and that the average length of those holes was only 174 metres? (check Prosper Gold’s PowerPoint presentation)…and the Star is just 1 of several advanced mineralized porphyry zones at the Sheslay…this is a geologist’s dream…in northwest B.C., you often hit the real juicy stuff when you drill deeper…

An important “heat engine” – Mount Kaketsa – driving mineralizing fluids in the Sheslay River Valley originates on Garibaldi’s property and extends onto the southwest corner of the Sheslay, with “spectacular alteration” reported on parts of Kaketsa (technical reports)…important Copper-Gold occurrences in the northwest corner of the Grizzly have been reported (BC MINFILES), yet this area has yet to be followed up with a proper drill program…

Technically, Garibaldi continues to show amazing underlying strength with the Grizzly coming out of hibernation…from both a short-term and long-term perspective, there are few charts on the Venture at the moment as strong as GGI’s…

Don’t forget about Firesteel Resources (FTR, TSX-V) in the Sheslay play as they would still hold 20% in the project with Prosper Gold…they have other important assets, too, in the Iskut area…

Fission Uranium (FCU, TSX-V) Updated Chart

Speaking of discoveries, what a day yesterday for both Fission Uranium (FCU, TSX-V) and Alpha Minerals (AMW, TSX-V) as they reported more outstanding results from their Patterson lake South discovery in Saskatchewan…last week, John gave our readers a heads-up that a near-term move through its $1.10 resistance by Fission was increasingly likely based on technical considerations…the new Fib. level given (not a price, but a theoretical level based on Fib. analysis) was $1.38…FCU blasted through $1.10 resistance yesterday and closed at $1.18 on total volume (all exchanges) of 15 million…below is an updated 4-month daily chart…FCU is unchanged at $1.18 as of 7:15 am Pacific…

Azincourt Uranium Inc. (AAZ, TSX-V)

Azincourt Uranium (AAZ, TSX-V) is certainly worthy of our readers’ due diligence, and we’re happy to report that StockCharts.com has finally added AAZ to its database, thanks in part to our efforts and those of some of our readers…Azincourt has an option to acquire up to a 50% interest in Fission’s Patterson Lake North Project (PLN), considered an “important core holding” by Fission and totaling 27,400 hectares…a summer exploration program with a budget of just over $500,000 will assist in identifying and prioritizing drill targets for an anticipated 2014 winter program…

Below is a “big picture” view of AAZ from a technical perspective through a 15-month weekly chart…since April, the stock has been trading in a horizontal channel primarily between 20 cents and 33 cents…it closed yesterday at 23.5 cents…AAZ closed a $1.5 million financing in June at 15 cents and currently has 27 million shares outstanding…

Today’s Markets

The Dow is down 56 points through the first 45 minutes of trading today…a gauge of U.S. consumer spending rose in July at its fastest pace in 7 months…the U.S. government is posting the strongest revenue since before the recession, buoyed by higher tax rates and a slowly improving economy, leaving the federal budget on track for its narrowest deficit in five years…revenue from October to July, the first 10 months of the government’s fiscal year, totaled $2.287 trillion, the Treasury Department said yesterday…that’s up approximately 14% from a year earlier…meanwhile, government spending is down slightly, largely due to across-the-board cuts called the “sequester” that went into effect March 1…

Overall, the government is still spending well more than it collects, albeit at a slower pace…the budget deficit for the 10 months reached $607.42 billion, 38% narrower than a year earlier…the CBO (Congressional Budget Office) estimates a deficit of $642 billion for the fiscal year ending September 30, compared with $1.087 trillion a year earlier and the smallest gap since 2008’s $458.55 billion shortfall…while the short-term deficit and debt issues have improved, Congress will still have to raise the debt ceiling later this year, likely between mid-October and mid-November…and Washington still has to get its spending under control, especially when it comes to entitlement programs, in order to address long-term structural debt issues that could easily spiral out of control….deficits and the debt are still projected to rise sharply over coming decades as an aging population and health-care cost inflation boost spending on government benefit programs such as Medicare…

TSX, Venture, Asian Markets

The TSX is up 17 points as of 7:15 am Pacific while the Venture has declined 2 points to 923…

Asian markets were higher overnight, led by Japan’s Nikkei average which climbed 348 points of 2.5%…news of possible corporate tax cuts helped boost sentiment…China’s Shanghai Composite edged 5 points higher to close at 2106…

Below is a 2.5-year weekly chart for the Shanghai…occasionally we look at the Shanghai chart because history has shown there is a strong correlation between this Index, the Venture Exchange and Gold…the technical posture of the Shanghai at the moment is quite bullish, another reason we’re expecting a good run by the Venture and Gold before this 3rd quarter is over…

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

Updated at 8:50 am Pacific

Gold is enjoying another strong day…as of 8:50 am Pacific, bullion is up $25 an ounce to $1,340, thanks to a variety of factors including short covering and fund buying…$1,350 is the key resistance on a closing basis as John’s charts have shown…Gold has been as high as $1,346 today…Silver has shot up 81 cents to $21.39…the next major resistance for Silver is $22 (updated charts below)…Copper, which staged an important technical breakout at the end of last week, is up a penny at $3.28…Crude Oil is flat at $105.90 while the U.S. Dollar Index has added one-fifth of a point to 81.31…

Assets in the SPDR Gold Trust increased 1.8 metric tons to 911.13 tons on Friday, the first increase since June 10, according to data compiled by Bloomberg…holdings in the SPDR Gold Trust have tumbled nearly 450 tons this year, Bloomberg data show…

China’s appetite for Gold continues…the China Gold Association reported today that the country’s actual Gold consumption has risen fully 54% in the 1st half year-on-year and totaled 706.38 tonnes vs. 460 tonnes a year earlier…in 2012, full-year consumption was 832.18 tonnes, so the country is well on target to exceed this figure by a substantial margin having thus already achieved around 85% of last year’s consumption levels in the 1st 6 months of this year alone…China is ready to top India as the world’s largest Gold consumer…

Today’s Markets

The Dow fell modestly in early trading today but has since recovered most of its losses…as of 8:50 am Pacific, it’s down 10 points at 15416…among key U.S. reports this week are retail sales, wholesale and retail inflation figures and manufacturing data…speeches by senior Federal Reserve officials later in the week will also be watched closely amid ongoing speculation over how soon the Fed may start to pull back its asset purchase program…QE “tapering” may not begin as early as next month as many market participants are expecting…the U.S. Treasury will release details of its budget deficit for July at 11:00 am Pacific today…expectations are for a July deficit of $96 billion which would bring the deficit to $606 billion for the first 10 months of the fiscal year, according to analysts from Barclays…

The TSX, thanks in part to strength in the Gold Index, has climbed 30 points to 12572…the Venture is ahead 3 points to 923…more excellent results this morning from the Fission-Alpha Minerals’ Patterson Lake South discovery…FCU is the runaway volume leader so far today on the Venture, hitting a new high of $1.18…as of 8:50 am Pacific, it’s up 6 pennies at $1.16 while AMW has gained 24 cents to $5.89…

Japan’s Nikkei average fell to a 6-week low overnight, closing down 96 points at 13519, as the yen rose on the back of weak 2nd quarter growth data…Japan’s economic performance for the 3-month period through June came in below expectations, suggesting the policies of Prime Minister Shinzo Abe haven’t yet been as effective in spurring growth as hoped, and adding to uncertainty about the government’s willingness to raise the sales tax to firm up its fiscal house…the country’s GDP grew at an annualized rate of 2.6% in the April-June quarter, the government said today…that was much weaker than the 3.6% growth forecast by economists polled by The Wall Street Journal…growth in the first 3 months of the year was also revised down to 3.8% annualized compared with the government’s previous estimate of 4.1%…Japanese officials, however, said the data added to growing optimism over the success of “Abenomics” as it marked a 3rd straight quarter of expansion…

China’s Shanghai Composite hit a 7-week high, gaining 49 points or 2.4% to close at 2101 after more encouraging news over the weekend following following Friday morning’s upbeat industrial production figures…late Friday it was reported that a key measure of China’s money supply, known as the M2, increased 14.5% in July from the year earlier…environmental stocks also got a boost today after Beijing announced unveiled plans to ramp up investment in green industries…

European shares were mixed today…

Canadian Dollar Chart Update

It’s “decision time” for the Canadian dollar which is showing signs of a potential breakout – this would be excellent news for the Venture which tends to perform best when the loonie is in an uptrend…the dollar is very close to climbing out of a downsloping channel in place since late last year as you can see in John’s 3-year weekly chart below…watch closely, this will be important to monitor…

The Sheslay River Valley Copper-Gold Porphyry Play:

B.C.’s Next Exploration Hotspot

How To “Prosper” With Bernier, and Assessing The Potential Power Of Garibaldi’s Grizzly

“It’s critical to always keep your feet moving forward in this business, no matter how challenging the markets might be,” Garibaldi Resources‘ (GGI, TSX-V) President and CEO Steve Regoci told us recently as we were carrying our due diligence on GGI…“You just keep pushing forward”…Garibaldi is now benefiting immensely from the fruits of that gritty approach and leadership, mixed with prudence, as the company is in such an enviable position compared to most of its peers in the junior exploration business…Garibaldi, already anchored by a strong portfolio of Mexican Gold-Silver-Copper properties that it’s actively advancing, is now blessed with an enormous, company-building opportunity in northwest British Columbia where since 2006 it has slowly but systematically explored the very strategic 170-sq. km Grizzly Property adjoining the western and southern borders of the Sheslay Copper-Gold Porphyry Project…

Unlike many Venture Presidents and CEO’s, Regoci is focused exclusively and very intensely on 1 deal – Garibaldi – and quickly created value in Mexico several years ago when he was able to sell the Temoris Property to Paramount Gold & Silver Corp. (PZG, NYSE) for cash and 6 million PZG shares…that deal has allowed GGI to NOT have to carry out a financing for 4 years…as per the most recent financials ending April 30, the company had working capital of $4.7 million…that’s why Sprott Asset Management Ltd. has shown strong confidence in Garibaldi by actually increasing its ownership to approximately 20%, while Regoci and CFO Barrie Di Castri combined hold another 20% or so…there is no warrant “overhang” – no warrants are currently outstanding – and unlike most companies, since it hasn’t done a financing for 4 years, there’s no cheap paper the stock has to fight through…many juniors have destroyed their share structures over the last couple of years, but not Garibaldi…

Recently, 3 game-changing events in the following order occurred that have greatly elevated the importance of the Grizzly, generating fresh investor interest in Garibaldi:  1) Colorado Resources‘ (CXO, TSX-V) North ROK Copper-Gold discovery 60 miles to the east that has created a frenzy of exploration activity in the general area; 2) Pete Bernier’s decision, after nearly 2 years of searching the globe for the best project for his new venture (Prosper Gold, PGX.H, TSX-V), to acquire an option to earn up to an 80% interest in the Copper Creek Property (renamed the Sheslay Copper-Gold Porphyry Project) contiguous to the western and southern boundaries of the Grizzly; and 3) the surprise May 15 re-election of the mining-friendly free enterprise coalition (Liberal Party) in British Columbia that’s encouraging the development of resources throughout the province…

Regoci has agreed to an interview with BMR shortly after Bernier’s Prosper Gold begins trading, expected imminently, following approval of PGX’s qualifying transaction by the Exchange…while he has been tight-lipped regarding the Grizzly, our hunch is that Garibaldi – while still pushing hard with its quality assets in Mexico that give the company its rock-solid foundation for the future – could soon come out with guns blazing in northwest B.C. given its financial, management and geological strengths, plus 3 special dynamics regarding the Sheslay River Valley:

1. The Credibility And Expertise Of Bernier’s Prosper Gold Group

What they did at Blackwater over a very short period was incredible – they executed with amazing precision – and in 2011 Bernier’s Richfield Ventures was bought out by New Gold Inc. (NGD, TSX) for half a billion dollars as Blackwater became one of the largest Gold discoveries in Canadian history;

2. The World-Class Deposit Potential Of The Sheslay Project

What many investors don’t realize is that Bernier and renowned geologist Dirk Tempelman-Kluit are taking over a property at a considerably more advanced stage of exploration than what Colorado started with at North ROK in the spring of this year…that fact, combined with how aggressively they will approach this project, is why we believe the Sheslay could rapidly emerge as the most exciting Copper-Gold play in all of British Columbia…Tempelman-Kluit is a master at data compilation and interpretation, which is why he was able to figure out Blackwater when others before him couldn’t…Prosper Gold will start with no less than 5 mineralized zones and drill-ready targets (Star, North Star, East Star, Copper Creek and Pyrrhotite Creek)…4 of the 5 porphyry-style targets are permitted for drilling and clustered within a 12 sq. km area with mineralization open in all directions…

Drilling will start at the Star (formerly Dick Creek) where Firesteel drilled a total 23 holes beginning in 2004…results included 242.3 metres grading 0.44% Cu and 0.32 g/t Au and 142.1 metres grading 0.44% Cu and 0.25 g/t Au…each and every hole intersected significant mineralization and no less than 85% of the holes bottomed in strong mineralization… stunningly, the average length of the holes was only 174 metres…Firesteel never went deep enough, and quite frankly the company lacked the geological expertise and the financial resources to take this project to the next level…

Meanwhile, there are multiple distinct porphyry-style targets in the Pyrrhotite Creek area located in the southwest portion of the Sheslay Property with mineralization again open in all directions…

Properties that ultimately become major deposits and operating mines have often gone through multiple owners and exploration stages over many years, just like the Red Chris to the east…finally, one could say, the Sheslay is now in the right hands…below is an interesting early conclusion from geologist William Thompson when he filed a Copper Creek assessment report for Erin Ventures Inc. in 1997…

“Geochemical survey anomalies with coincident old and new geophysical anomalies indicate the presence of widespread mineralization with some very significant anomalies…it is difficult to imagine there is not an ore body somewhere on a property with results such as these…the area as a whole where significant mineralization exists extends southwest to Mount Kaketsa (5 km) and southeast to Hatchau Lake (about 10 km) or roughly 50 square kilometres”…

3. The Grizzly-Sheslay Geological Connection

Largely due to its easier access, Sheslay is much more advanced from an exploration standpoint than the Grizzly…but there’s an intimate connection between the 2 properties and the “blue sky” potential of the latter is very evident based on airborne magnetic surveys, other data, and common sense…particularly intriguing is the northwest corner of the Grizzly which features the Kaketsa Pluton, an elliptical, north-trending intrusion approximately 4 x 5.6 km in size and interpreted by geologists as an important “heat engine” driving mineralizing fluids – at both the Grizzly and the Sheslay…it extends from the Grizzly onto the southwest portion of the Sheslay as you can see in this 3D perspective looking north…”spectacular alteration” has been noted on parts of Mount Kaketsa…

As above map shows, there are (so far at least) 2 main and large areas of interest at the Grizzly – the “Southern Block” and the “Western Block“…4 known alkalic porphyry Cu-Au showings (Grizzly, Kid, Ho and West Kaketsa) were discovered historically through intermittent exploration within the NW corner of the Garibaldi claims…keep in mind, this entire area of the Grizzly is still very under-explored…what we do know from historical reports is that the mineralization observed, for example, at West Kaketsa (highly altered and sheared volcanic and intrusive rocks containing disseminated and fracture controlled chalcopyrite over exposed widths of at least 24 metres – that’s just the surface expression, what’s the length of this structure?) resembles that at Pyrrhotite Creek…only 3 shallow holes have ever been drilled at the Grizzly – more than 3 decades ago, and in the NW corner of the property…each hole reportedly intersected potassic alteration and Copper mineralization, though no values are available and apparently none of the holes was assayed for Gold…airborne magnetic surveys and soil geochemical work on the southern block, carried out by Garibaldi, have outlined significant areas of interest with similar geological and geophysical signatures to the Sheslay…

Below is a regional map that shows how the Sheslay and the Grizzly are at the top of B.C.’s infamous “Golden Triangle”, right on trend with other major discoveries to the south…the past producing, high-grade Golden Bear Mine (Au) is about 30 km to the west of the Grizzly…

The Sheslay River Valley is a fascinating geological area and an ideal setting for a new mine in northwest British Columbia…more on this story as the week progresses…

B2Gold Corp. (BTO, TSX)

No writedowns…lower operating costs…upgraded production guidance…improved earnings picture…increased reserve estimates…it’s rare to read or hear those words from any producer these days, but that’s what’s happening with B2Gold Corp. (BTO, TSX)…“With the company’s proven technical team, strong operational performance, financial strength, and high-quality development and exploration projects, B2Gold is well positioned to continue its rapid growth as an intermediate Gold producer,” stated company President and CEO Clive Johnson in a news release last Tuesday…

BTO closed Friday up 9 cents at $3.10…significant additional appreciation appears likely based on the stock’s current technical posture as shown in John’s 3-year weekly chart…as always, perform your own due diligence…as of 8:50 am Pacific, BTO is trading at $3.17 for a gain of 7 cents after climbing as high as $3.21…important resistance levels are $3.20 and $4.00…

Updated Silver Charts

Silver has been out-performing Gold just recently, and that’s an encouraging sign…when the Gold-Silver ratio is declining, typically this is a clear indication that money flow is positive for precious metals…

Silver’s strong support band between $17.50 and $19.50 has held, at least for now, with the near-term outlook positive as a rally gains traction…sell pressure has declined significantly, and RSI(2) has climbed to its highest level since early January on this 3-year weekly chart…as it works its way higher, the next major resistance level Silver will need to overcome is $22…

Silver Long-Term Chart

What’s interesting about the long-term chart is that RSI(2) has finally battled its way out of extreme oversold conditions not seen since the 2008 Crash…Silver has gone about a year without RSI(2) entering the overbought area…based on historical patterns, we should expect RSI(2) on this long-term chart to return to the overbought zone during the 2nd half of this year – perhaps within the next couple of months…keep in mind there is major resistance around $26…

Short-Term Silver Chart

TSX Venture Exchange and Gold

Editor’s Note: Monday’s pre-market Morning Musings will be posted at 4:00 am Pacific followed by an important updated version at 9:00 am Pacific.

The Venture declined slightly for a 2nd straight week after 4 consecutive weekly advances, but the Index continues to show technical strength on modestly increasing volume.  There are many reasons to expect a summer rally to intensify in the weeks ahead, given the current technical posture of the Venture in addition to important moves in Copper and base metals in recent days (not to mention the fact that so many investors have given up on the junior resource market and Gold stocks in general – a bullish contrarian sign).  Crude Oil (WTIC) is strong while Gold found support at $1,280 on a closing basis and finished the week up $2 an ounce at $1,315.  All of this, combined with a much-needed and healthy portion of good news on several exploration fronts as summer results start to roll in, could provide the necessary fuel to power the Venture through critical resistance at 970 this quarter.  Are there still immediate downside risks?  Of course, we can’t deny that, and no one has a crystal ball.  But after studying the balance of probabilities, we believe the balance is tilted more to the bullish side at the moment based on numerous technical and fundamental factors.

While we’re cautiously optimistic right now, we’re not saying the Venture has necessarily found an ultimate bottom in this cycle yet (Fib. support levels in terms of the “big picture” are 860, which has held, 800 and 679).  The 859 multi-year low June 27 may very well end up as having been the bottom, a 65% correction from the early 2011 high, but obviously no one can say for sure at this point.  What we believe we can state again, with increased confidence, is that the Venture appears to be in the early stages of a significant rally that has the potential of accelerating sharply between now and the end of September. The rally most likely won’t be broad-based as so many companies are just struggling to survive at the moment.  Financings of course have dwindled, and a good percentage of them are being completed at prices of less than a nickel under current Exchange “relief” measures in effect until August 31.  As Mineweb’s Kip Kean reported a few days ago after an interview with Venture President John McCoach, financings below a nickel as of September 1 will no longer be permitted but restrictions on share consolidations will be eased.  That’s interesting.  Expect a lot more rollbacks before the end of the year, and good riddance to the “lifestyle” companies that are on life support right now – time to pull the plug.  Obviously, companies that are active with strong working capital positions at the moment must be favored by investors who are looking for the best money-making situations, at least over the immediate to medium-term.  One thing that’s really important to understand about this market – a lot of babies have been thrown out with the bathwater this year, creating historic opportunities for astute investors in our view.

Let’s now take a look at the current technical state of the Venture, and you’ll see why we’re leaning toward the bullish side at the moment.  It’s important to note that last week, the secondary support at 900 that John identified on the Venture held.  Gold got smacked down into the $1,270’s, some investors were getting scared again, but the Venture took it in stride.  After pulling back to 907 last Wednesday, 1 point above its rising 30-day moving average which is obviously providing support, the Index started climbing higher again Thursday and finished the week on a strong note.  The 20 and 30-day SMA’s are rising in tandem – the 1st time we’ve seen that in 7 months.  The 50-day, currently at 912, is flattening out, and the really critical moment will be if and when this SMA reverses to the upside. There’s a good chance that will occur before the end of this month, which would set up a particularly bullish scenario for September.

John’s 9-month daily chart shows increasing up momentum in the RSI(14) which has formed a bullish “W”.  Plenty of support between 906, the 30-day SMA, and 918, the 20-day SMA.  Buy pressure is steady and volume is slightly above average.  You can see how the 970 level is so critical.  On a move through 970, expect a major injection of fresh buying as the technical picture would brighten considerably.

Gold

Gold rallied impressively Thursday and Friday to finish the week up $2 an ounce at $1,315.  After falling through support at $1,320 and then at $1,300 early in the week, it was highly encouraging to see bullion rebound quickly and overcome fresh resistance at $1,300 where the declining 50-day SMA currently sits.  Gold is benefiting from solid physical demand in Asia, strong WTIC prices, and a weak U.S. Dollar Index.  If and when it’s able to blast through stiff resistance at $1,350, massive short-covering could really take bullion for a ride.  Yes, the primary trend is still bearish, until the technicals prove otherwise, but one cannot rule out a powerful upside move that could send Gold back up to the $1,500 – $1,600 area where its collapse started in the spring.  As Frank Holmes recently told Kitco News, “The positive news is that we’re in the historical cycle over the past 35 years that Gold bottoms in July and starts this run in August, September, October”…

In his weekly Investor Alert at www.usfunds.com, which we encourage all of our readers to use as a valuable resource, Holmes also pointed out the following: “Australia’s ANZ Bank is the latest to open a Gold vault in Singapore.  Other recent vault builders there include Deutsche Bank and JP Morgan, while Switzerland’s Metalor has one under construction.  The new Gold vault openings evidence the continued flight of Gold from West to East. It appears Western bullion banks have misjudged the power that Gold retains in the global psyche and as a key financial instrument, especially to Asian buyers. A recent statement by Yao Yudong of the People’s Bank of China Monetary Policy Committee calling for a new system to manage international liquidity is another indication that China is moving toward abandoning the U.S. dollar hegemony. In the future, China may look toward a hard asset backed currency to negotiate, a move that would certainly bode well for bullion”…

Below is an updated 2-year weekly Gold chart from John.  What’s interesting is that the strong bearish trend of the last several months is clearly weakening based on the CMF and ADX indicators. If Gold is able to overcome the resistance band between $1,320 and $1,350, then life is suddenly going to get very uncomfortable for the many shorts currently in this market.

The Seeds Are Being Planted For The Next Big Run

There’s no better cure for low prices than low prices.  The great benefit of the collapse in Gold prices this year is that this has forced producers to learn to become much more lean and mean in terms of their cost structures. Among many others, Barrick Gold (ABX, TSX), the world’s largest producer, said it may sell, close or curb output at 12 mines from Peru to Papua New Guinea where costs are higher.  Producers, big and small, are starting to make hard decisions in terms of costs, projects, and rationalizing their operating structures.  Exploration budgets among both producers and juniors have also been cut sharply.  In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists.  Ultimately, all these factors are going to create a supply problem – think about it, where are the next major Gold deposits going to come from?  On top of that, a recent Mineweb study shows grades have indeed fallen significantly just over the past decade.  For instance, grades in the South African Gold sector fell from an average of 4.3 grams per metric ton in 2002 to an average of 2.8 grams per metric ton in 2011.  It doesn’t take a rocket scientist to figure out that the next huge bull market in Gold stocks will occur in the not-too-distant future due to demand-supply dynamics, much leaner producers who will suddenly become earnings machines, and a junior market that is healthier simply because a lot of the “lifestyle” companies sucking money out of investors will have thankfully disappeared.  The strong will survive and the weak will perish.  That’s how it’s supposed to work.  A healthy “cleansing” has been taking place, and as this continues the seeds are being planted for an incredible future move in well-managed Gold producers and explorers that could make the dotcom bubble look like a tea party.

Silver, Copper and Oil

Silver jumped 67 cents last week to close at $20.56.  The U.S. Mint reported that American Eagle Silver Bullion coins experienced their best July ever with a whopping 93.4% increase over July 2012 sales. John will have updated Silver charts (short-term and long-term) Monday morning.  Copper, meanwhile, broke out Thursday above important resistance at $3.20, and confirmed that move Friday with another gain to finish the week up a dime at $3.27 a pound.  Copper responded favorably to better-than-expected economic data out of China, while economic conditions continue to improve in the euro zone.  Base metals all rocketed to their highest levels in 2 months. Crude Oil (WTIC) was down about $1 for the week, though it climbed sharply Friday ($2.57 a barrel to close at $105.97). The U.S. Dollar Index remains under pressure and closed the week at 81.13, down more than three-quarters of a point.

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.

John posted an excellent chart last Wednesday that showed how some bullish signs were flashing in the Copper market.  Sure enough, the metal finally blasted through resistance at $3.20 Thursday and the breakout was confirmed Friday when it climbed again to finish the week at $3.27 a pound ($3.31 on the December contract).  Better-than-expected economic data out of China was the catalyst, but also helping Copper at the moment is the fact that economic confidence in the euro zone is improving significantly – and not just because of Germany.  The latest reading of the Purchasing Managers’ Index (PMI) for the euro zone exceeded expectations, indicating growth for the first time since January 2012.  Recently, Barron’s ran a very informative piece on how a rebound in the euro zone is gaining traction.  This weekend, Frank Holmes at www.usfunds.com echoed the same message and stated boldly, “Stay tuned for Europe’s much-anticipated return to the limelight”…

Chinese Copper imports rose 12% year-on-year in July to a 14-month high of 410,680 tonnes.  While Chinese end-use consumption has been better than expected, some analysts (Barclays mentioned this Friday) have suggested that a build-up in domestic stock is occurring.  This, they predict, will lead to softer prices later in the year.  We’ll see.  For now, though, there is fresh momentum in the Copper market and prices are at 2-month highs with strong support now at $3.20.

Below is a 2.5-year weekly Copper chart update from John.  For 8 weeks prior to last week’s move, Copper traded primarily between $3.00 and $3.20.  It attempted a breakout in each of the previous 6 weeks and failed, but the lows kept getting higher.  This created a bullish ascending triangle which Copper finally broke out of Thursday.  Confirmation came Friday.  Based on John’s chart, at the very least we should expect Copper to take a run at the $3.40 resistance.  Things could get really interesting if Copper were to climb past that level.

This new momentum in Copper comes at a great time for the Venture, and for the important Copper-Gold porphyry plays that are unfolding – or are about to unfold – in northwest British Columbia (and elsewhere for that matter).  In Monday’s Morning Musings (the 2nd version at 9:00 am Pacific), we’ll have a detailed update on the potentially prolific Sheslay River Valley area – Prosper Gold (PGX.H, TSX-V) and Garibaldi Resources (GGI, TSX-V) – which we predict is quickly going to become British Columbia’s next exploration hotspot.  Pete Bernier’s timing is perfect yet again, while Garibaldi is uniquely positioned, and perhaps almost ready, to demonstrate The Power Of A Grizzly.

2.5 Year Weekly Copper Chart

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.