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Gold has traded between $1,322 and $1,345 so far today…as of 7:35 am Pacific, bullion is down $8 an ounce at $1,328…Silver is off a dime at 21.68…Copper is up a penny at $3.30…Crude Oil is down $1.51 a barrel to $101.34 while the U.S. Dollar Index has retreated one-tenth of a point to 80.19…

Interesting headline on CNBC’s web site this morning – “U.S. Budget Uncertainty May Limit Gold’s Decline”…according to CNBC’s latest survey of traders, analysts and strategists (16 of them), “Spot Gold prices are likely to fall this week though declines may be limited by investors seeking a safe haven as fears of a government showdown loom.”

What Gold does on a day-to-day or week-to-week basis is almost impossible to predict, but bullion could actually really start to shine again in Q4 as debt issues come more into focus and investors also start to realize that the Federal Reserve is in a trap that it likely won’t be able to easily escape from which means the prospect of “tapering” could stretch out to sometime in 2014…meanwhile, the Fed’s balance sheet continues to expand by $85 billion a month…

A partial U.S. government shutdown, even for a few weeks, is not a big deal…the last one occurred in late 1995-early 1996 and lasted 21 days…historically, there have been 17 U.S. government “funding gaps” and shutdowns since 1976, ranging in length from 1 to 21 days…The Wall Street Journal reported over the weekend that the average decline in the S&P 500 during 1 of these periods lasting 10 days or more was about 2.5%…for those lasting 5 days or fewer, the average decline was 1.4%…

What’s unique about this situation, of course, is that it’s part of a bigger picture which is a nasty fight over the roll of government in American society (Obamacare is very much at the centre of this particular debate) and the fact Washington is on the verge of maxing out its $16.7 trillion credit card…Congress must approve an increase in the debt ceiling during the last half of October or the U.S. may begin to default on some of its debts…don’t discount the possibility of that happening…some politicians may actually want to trigger that kind of an event in order to bring the debt issue to the forefront of public debate…

For what it’s worth, below is a chart showing how Gold has performed during previous U.S. government shutdowns…Gold started climbing about halfway through the last shutdown but the move was still modest (about 7%) as bullion jumped from the high $380’s and peaked at $415 about a month after the shutdown ended…other factors may have contributed to Gold’s strength at that time…we’re in a totally different situation right now, and the wild card is obviously the debt ceiling issue (we saw what happened in August 2011) which has the potential of driving Gold significantly higher in the event of a government default or even the imminent threat of one…

China To Ease Gold Import/Export Restrictions

Reuters reported this morning that China’s central bank is planning to increase the number of firms allowed to import and export Gold and will also ease restrictions on individual buyers of the precious metal, according to a draft policy document issued today…the proposed policy change could boost imports by China which is expected to overtake India this year as the world’s top Gold consumer, and where Gold normally trades at a premium to London spot prices…a shortage of Gold in China earlier this year when a steep fall in prices sparked a surge in demand could have been a factor in easing the rules…

Interesting comments from Frank Holmes (www.usfunds.com) in his weekly Investor Alert regarding the recent Denver Gold Forum…“The Denver Gold Forum brought a certain dose of optimism to the sector, but as Dorothy Kosich of Mineweb reports, times are changing in the Gold sector and more clear, visionary leadership is needed. As chief executive ranks dwindle, it becomes evident there are few up-and-coming leaders that exhibit the creative innovation of the legendary CEO’s who made everyone listen. The Denver Gold Forum left us with numerous homogeneous presentations and cookie-cutter formulas for success. But, according to Kosich, there is hope the optimism engendered by this year’s forum translates into the emergence of young, visionary, caring leaders from within the sector who can replace the status-quo rhetoric with refreshing transparency.”

IAMGOLD Corp. (IMG, TSX) President and CEO Stephen J. Letwin told Kitco News at the Denver Gold Forum that there is a strong need for innovation in the mining industry…“Any industry, at some point, needs to reinvent themselves, or they die,” Letwin stated. “You have to take information and adjust to it – that’s what we (mining industry) need to do.  We’ve got a high-cost business and we have to take the price down.  That’s the reality, and you can ignore it for a while, which we did, and the consequence of that? The equities got smashed.”

Today’s Markets

China’s Shanghai Composite bucked the trend overnight, gaining 15 points to close at 2175…Japan’s Nikkei average fell 304 points or 2% while European shares are under pressure in late trading overseas…

The Dow, which has fallen in 6 out of the last 7 sessions, is off more than 100 points as of 7:35 am Pacific…the TSX is down just 26 points while the Venture has slipped 9 points to 943…

Prosper Gold Corp. (PGX, TSX-V)

Prosper Gold Corp. (PGX, TSX-V) was halted just prior to the open this morning, pending news which we assume will be initial drill results from the company’s Sheslay Cu-Au Porphyry Project in northwest British Columbia…a stellar hole or 2 from Prosper would be extremely helpful in terms of generating some exploration excitement and getting things moving on the Venture…much more on Prosper tomorrow after we’ve had a chance to digest the news, assuming it’s out later today…PGX last closed at 50 cents…

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

Garibaldi has turned aggressive with a 1-2-3 punch, and as a result we’ll be digging deeper into this story with what we expect will be a fascinating interview this week with GGI President andCEO Steve Regoci…this interview could be a game-changer in terms of investors’ understanding of GGI as we explore 3 key areas…

1. Exploration has started at the Grizzly in the prolific Sheslay area – initial results due shortly from GGI, and of course initial drill results appear to be imminent from PGX;

2. Six holes drilled at Mexican Gold-Copper target, results due shortly – more drilling in Mexico during Q4;

3. Coal and graphite at Tonichi Project in Mexico – very interesting developments with the current coal income stream and graphite possibilities.

As we see it, Garibaldi fits perfectly into that small category of Venture companies (10% or less) with the working capital, the expertise, the properties, and the drive to succeed both on the ground and in the market…as a result, GGI has long-term success written all over it…in the immediate future, October could potentially be a breakthrough month featuring a new 52-week high given what the Sheslay Valley could deliver plus Mexico results and fresh activity there…our interview with Regoci will get right to the core of the value proposition with this company, and will help investors with their own due diligence…

As we’ve been reporting, the Sheslay area in northwest B.C. holds incredible potential for a major discovery as it’s under-exploited and right on trend with huge deposits to the southeast…meanwhile, the Garibaldi opportunity in Mexico is far greater than investors realize as for several years GGI has efficiently been narrowing down its very best prospects over a land position that now stands at approximately 1,000 sq. km…the initial fruits of that labor came in 2009 when Paramount Gold & Silver (PZG, NYSE) bought GGI’s Temoris Property…now, GGI is clearly on the edge of even greater success at 3 district-scale projects plus a recently acquired Gold property that has near-term small-scale production possibilities…our interview with Regoci will provide investors with a whole new perspective on Garibaldi’s initiatives in Mexico…

No warrants…clean share structure (no financings in 4+ years)…management holds 20%…strong working capital position ($4.5 million as per April 30)…

Canada Carbon Inc. (CCB, TSX-V) Updated Chart

Canada Carbon Inc. (CCB, TSX-V) met stiff resistance in the mid-30’s last week, but pullbacks on this volatile graphite play have proven to be good buying opportunities…below is an updated 3-year weekly chart from John…strong Fibonacci support exists at 25 cents (Fib. 38.2 retracement level)…CCB is unchanged at 27 cents on light volume as of 7:35 am Pacific…

Critical Elements Corp. (CRE, TSX-V)

Critical Elements Corp. (CRE, TSX-V) has been a strong performer since the end of July, more than doubling in price after closing Friday at 23 cents…John has an “awareness” chart this morning which shows that CRE is very close to an important resistance band between 24 and 25 cents with RSI(14) also approaching resistance…a pullback, therefore, appears likely, setting up a better potential entry point for interested investors…technically, a “cup with handle” pattern could be in the process of forming…if that’s the case, expect CRE to test support in the mid-to-upper teens…the 20-day moving average (SMA), currently at 19.5 cents, has provided strong support since early August, while the 50-day SMA is at 15.5 cents…

CRE is certainly worthy of our readers’ due diligence, and we’ve written about the company previously at BMR…it’s focused on rare metals/rare earths, particular tantalum, and its Rose lithium-tantalum deposit in Quebec is currently at an advanced exploration stage…“To the best of our knowledge, the Rose lithium-tantalum deposit is the only new economic, conflict-free, tantalum, industrial-scale source in the world,” stated President and CEO Jean-Sebastien Lavallee in a news release last week.  “The recent robust recoveries and high-purity results from the optimization testing program prove the stand-alone class of the deposit, which has the potential to become a key source of strategic metal supply.”

CRE is unchanged at 23 cents as of 7:35 am Pacific…

Richmont Mines (RIC, TSX)

Keep a close eye on Richmont Mines (RIC, TSX) which has formed a double bottom reversal pattern…RIC of course has gone through a difficult period over the last year-and-a-half with the share price tumbling from a high of $13 in early 2012 to this year’s low of $1.32 September 20…the bad news is behind RIC now, and the company is doing well with its Island Gold Mine in Ontario by expanding high-grade resources at depth…could be a good turnaround story beginning in Q4…as of 7:35 am Pacific, RIC is unchanged at $1.49…

Updated Silver Charts

Short-Term Silver Chart

Long-Term Silver Chart

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

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TSX Venture Exchange and Gold

The Venture posted its 2nd straight weekly gain and is on track for its 3rd consecutive monthly advance, a notable achievement given Gold’s 4.6% drop in September with just 1 trading day left.  The Venture closed Friday at 953, a 7-point increase over the previous week and just 5 points shy of a nearly 4-month high (958) reached September 19th.

The EMA-20, currently at 946, has been providing strong, consistent support for the Venture.  The key challenge for the Index now is to push through 2 important resistance levels – 955 and, more significantly, 970.  A breakout above 970 would also trigger a reversal to the upside in the 100-day moving average (SMA) and would push the Index to a nearly 6-month high – a very bullish development, if it were to occur.  Higher Gold prices would help.  So would a spectacular drill hole from somewhere (anywhere, please).  October has generally been a good month for the Venture with gains in 2009 (1%), 2010 (14%), and even 2011 (10%).  Last year, the Index was off slightly in October (1.7%).

Below is a 3-month daily chart from John.  Plenty of room for RSI(14) to move higher.  After dropping off for a brief period, buying pressure as shown by the CMF is picking up again.

The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks

There’s no better cure for low prices than low prices.  The great benefit of the collapse in Gold prices this year is that it 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, have started 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 is just around the corner due to demand-supply dynamics, much leaner producers who will suddenly become earnings machines, and a junior market that will be healthier simply because a lot of the “lifestyle” companies sucking money out of investors will simply disappear or get taken over by individuals or groups who are actually competent and serious about building shareholder value.   A healthy “cleansing” in the market has been taking place.  As this continues, more and more 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.  As for the juniors, focus on the small universe of companies that have the ability to execute both on the ground and in the market – companies that have the cash, the expertise, the properties and the drive to make discoveries that majors will buy.

Gold

Gold continues to hold important support around $1,300 and finished the week on a positive note with a $12 gain Friday.  That allowed bullion to finish $10 higher for the week at $1,336.  Important resistance is in the mid-$1,360’s and then $1,400.

It is becoming increasingly apparent that the Federal Reserve is in a sticky situation and may not have the nerve to begin scaling back its bond-buying program until at least December, if not later.  Fiscal and regulatory mistakes in Washington (Obamacare being one excellent example) have contributed to a very cautious private sector when it comes to hiring, so job growth just hasn’t been able to reach the level one would expect during a normal recovery.  The circus in Washington right now (the government is on the brink of a partial shutdown for the 1st time in nearly 2 decades) has the potential to escalate into a debt default, and one has to assume that would be bullish for Gold.  Isn’t it strange that President Obama can reach out to Iran, a nasty and evil regime that sponsors terror around the world and is a constant threat to Israel and the West, but he can’t reach out to Republicans in Congress or even certain members of his own party?  There is no Presidential leadership in Washington, and ultimately that may lead to problems for the greenback and the economy.  The last 3 years of Obama’s 2nd term are shaping up to be very challenging for this “community organizer”.  And what he may face in about a year is not only a Republican-controlled House but a Republican-controlled Senate – the opposite of what he had beginning in 2009 but messed up with.

A partial U.S. government shutdown is no big deal.  If anything, less government for a while will actually be refreshing.  But how the debt ceiling issue plays out of course will be critical.  At some point during the last half of October, the U.S. government may not be able to meet all of its obligations unless the debt ceiling is increased.  It appears some politicians in Washington don’t seem to have a problem with the possibility of a debt default – their line of thinking is that such an event might be necessary in order to wake up the masses to the government’s spending addiction.  Might be a sensible strategy.

Technically, Gold has found strong support at the Fibonacci 50% level (the retracement following the move from the late June low of $1,179 and the August high of $1,434) and appears ready to test resistance again in the mid-$1,360’s.  Below is a 3-month daily chart from John.

Silver was essentially unchanged last week at $21.78 (John has updated Silver charts in Monday’s Morning Musings as usual).  Copper added a penny to $3.29.  Crude Oil fell $1.88 to $102.87 while the U.S. Dollar Index was up slightly to 80.52.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion.  Despite this year’s drop, 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 (especially from China), emerging market growth, geopolitical unrest and conflicts…the list goes on.  However, deflation is prevailing over inflation in the world economy and this had a lot to do with Gold’s plunge during the spring below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew money away from bullion.  June’s low of $1,180 may have been the bottom for bullion – time will tell.  We do, however, expect new all-time highs as the decade progresses.  There are many reasons to believe that Gold’s long-term bull market is still intact despite this 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 4 years and strictly through word-of-mouth we have built a loyal following.

We’re continuing with our plans to ultimately construct a very unique investment and money-management resource site that goes considerably beyond what we have now.  We focus a great deal on the Gold, Silver and Copper markets as well as trends in the global economy, in addition of course to the technical health of the TSX Venture Exchange (CDNX).  An important component of this site, as well, will always be original research on high quality junior exploration companies or small producers 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, and we are being more selective than ever in the current market environment.  We look for companies with the ability to execute both on the ground and in the market, who are determined to build shareholder value, which actually excludes most Venture stocks.  However, investors must understand that the companies we do put forward for our readers’ due diligence 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.

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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 closing the week on a strong note…as of 7:45 am Pacific, bullion is up $16 an ounce at $1,340…Silver, which dropped below $21.50 overnight, is now up 15 cents at $21.88…Copper is 3 pennies higher at $3.30…Crude Oil has reversed and is now up 54 cents at $103.57 while the struggling U.S. Dollar Index has lost nearly one-third of a point to 80.21…

Gold was mostly flat early today but suddenly pushed higher following wire reports that Chicago Federal Reserve President Charles Evans suggested, in rather ambiguous Fed-style language, that the U.S. central bank may not begin to scale back its monthly bond-buying program until 2014 because the U.S. economic environment still needs to improve…

In a review of senior Gold company presentations at the Denver Gold forum, which was published Wednesday, Scotia Capital analyst Jakusconek observed that only 3 mining companies – Agnico-Eagle (AEM, TSX), Goldcorp (G, TSX) and Newmont (NMC, TSX), highlighted possible mergers and acquisitions in their presentations…“AEM is looking at opportunities similar to how its Mexican assets have performed,” said Jakusconek. “AEM has the balance sheet flexibility to make any acquisition should an opportunity present itself.”

Today’s Markets

Asian markets were mixed overnight…China’s Shanghai Composite steadied after yesterday’s drop, gaining 4 points to close at 2160…Japan’s Nikkei average slipped 39 points to finish the week at 14760…European shares were off moderately today, thanks to political turmoil in Italy…Silvio Berlusconi’s center-right People of Freedom (PDL) party has threatened to pull out of the country’s fragile coalition government…

The Dow is down 77 points as of 7:45 am Pacific…the TSX, however, is up 3 points while the Venture has added a point to 949…Madalena Energy Inc. (MVN, TSX-V), which John featured yesterday in a chart, is the CDNX volume leader so far this morning and has hit a new 52-week high of 50 cents…

U.S. lawmakers continue to play Russian roulette with the budget and debt ceiling…Congress’s rocky path to avoiding a government shutdown became even rougher yesterday as Speaker John Boehner said the House wouldn’t accept the spending plan likely to emerge from the Senate…Congress must pass a new budget by next Tuesday or trigger a partial government shutdown…more significantly, just a couple of weeks later, the U.S. Treasury says it will be close to running out of money to pay its bills…a brief government shutdown is one thing, and has occurred before; the U.S. defaulting on its debts is quite another…how the circus act in Washington will play out next month will be fascinating to watch…some are certainly taking it in stride and remain very bullish on stocks…Dennis Gartman said, “Even the government can’t ruin this rally.”

A shutdown of the U.S. government for 3 to 4 weeks would reduce Q4 economic growth by as much as 1.4%, economists say, as government workers from park rangers to telephone receptionists are furloughed…has the U.S. become that dependent on government?…perhaps so, given the $16+ trillion in debt that has been racked up…

In a Bloomberg report, Joel Prakken, senior managing director at Macroeconomic Advisers, was quoted as saying, “A shutdown of non-essential services is inconvenient for a while. If we hit the debt ceiling, we’re in unchartered territory.  If you miss an interest payment on the national debt, that’s a sovereign default of sorts, and I think it would shake the foundations of the global financial system.”

Corporate America took on a record amount of debt in the month of September as corporate Treasurers rushed to take advantage of a dip in rates and a receptive market…Verizon’s biggest ever $49 billion offer helped drive the month’s investment grade offerings to an all-time high of $147.8 billion so far, besting the $133.9 billion of May, 2008, according to Informa Global Markets. But the offers picked up momentum as the month wore on, and particularly after the Fed surprised markets last week by leaving its $85 billion monthly bond buying program intact for now…

WTIC Chart Update

Important support for WTIC is between $100 and $102 as John points out in this 6-month daily chart…Crude Oil has cooled off considerably after hitting the $110 Fib. target – we’ll now see if the support band holds…

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

Garibaldi Resources‘ (GGI, TSX-V) President and CEO Steve Regoci promised that GGI would have its feet moving quickly during the last several months of the year, and indeed he is delivering on that promise as outlined in yesterday’s news following the close…October could be a breakthrough month for GGI…exploration is underway at the very prospective Grizzly Property contiguous to Prosper Gold Corp.’s (PGX, TSX-V) Sheslay Cu-Au Porphyry Project…results expected shortly from GGI’s already completed airborne mag and radiometric survey…this survey, flown over parts of the northwestern section of the Grizzly in the area of the Kaketsa Pluton, could provide highly valuable new information…GGI has made the “Grizzly West” target an immediate high priority in the coming weeks, but it’s only 1 of a multiple number of targets that have been identified over a 15 km corridor which underlines the potential scale of this project…rock units and structures are very similar to those immediately to the north on the Sheslay…it’s worth noting that GGI has added C.J. Greig & Associates Ltd. as geological consultants for the Grizzly project…Charlie Grieg is highly respected in the industry, very well known out here in British Columbia…

Meanwhile, there are interesting developments for GGI in Mexico…the company has completed 6 new drill holes at the Locust Gold-Copper target which forms a small portion of the nearly 500 sq. km Tonichi Project…assay results are expected in the near future, and more drilling in Mexico is planned for Q4 (the company has 3 district-scale projects there plus the recently acquired La Patilla Property which has near-term small-scale commercial production potential)…the big surprise in yesterday’s news was the fact that GGI is earning royalty income from coal sales and has also found graphite as part of a pilot program with a private Mexican company…the Mexicans are exploiting near-surface coal seams over parts of Tonichi (GGI owns the asset)…Sonora state has a history of coal and graphite production, and coal seams in this area are very favorable exploration targets for graphite deposits…Garibaldi has submitted graphite surface samples for analysis, and it’ll be interesting to see how the lab results turn out in terms of look, grade, purity, etc…GGI has proven its ability to deliver value out of its projects in Mexico – the sale of Temoris to Paramount Gold & Silver (PZG, NYSE) being an excellent example…not only do they have some outstanding Gold-Copper-Silver prospects in Mexico, but the coal/graphite situation may have some serious legs to it…

As always, perform your own due diligence…GGI has a strong working capital position and in our view clearly falls into the category of that small percentage of Venture companies possessing a healthy balance sheet, clean share structure, the expertise, the properties and the drive to succeed both on the ground and in the market…

Below is an updated long-term GGI chart which has many favorable aspects to it, including a recent reversal to the upside in the 300-day moving average (SMA)…Fib. levels to watch for on the upside are 24 cents, 36 cents and 55 cents (these aren’t price targets, just theoretical levels based on Fib. analysis)…

What To Look For In A Powerful Cu-Au Porphyry System – Dr. Dirk Tempelman-Kluit

Earlier this week, BMR conducted a fascinating interview with Dirk Tempelman-Kluit, recognized as one of Canada’s premier geologists who honed his skills for nearly 3 decades with the Geological Survey of Canada…after leaving the GSC, he met entrepreneur Pete Bernier and the two quickly started what has turned out to be a very successful decade-long friendship and business partnership…together, they are a highly effective and dynamic team, and of course it was Tempelman-Kluit who unlocked the mysteries of the Blackwater system in central B.C. a few years ago which resulted in a multi-million ounce Gold discovery and a $500 million takeover of Richfield Ventures by New Gold Inc. (NGD, TSX)…

Tempelman-Kluit has a deep understanding of B.C. geology, and is currently gunning for his 2nd consecutive major discovery in the province in the emerging Sheslay Valley area south of Dease Lake and west of Iskut…Prosper Gold started drilling the Sheslay Cu-Au Porphyry Project at the end of August, and initial drill results are expected sometime during the 1st half of next month…Sheslay core photos published recently on the PGX web site, combined with the geological summary released by the company September 18, clearly indicate there has been a lot of “fluid movement” in the Sheslay system which is critical for the potential formation of a large porphyry Cu-Au deposit, or series of deposits…below are some interesting comments from Tempelman-Kluit on what he looks for in trying to nail down an economic porphyry system (click on the forward arrow – requires Adobe Flash Player, version 9 or above)…

[audio:https://e8d59e.a2cdn1.secureserver.net/wp-content/uploads/2013/09/Dirk-PGX-Clip-2.mp3|titles=Dirk PGX Clip 2]

North American Nickel Inc. (NAN, TSX-V) Chart Update

After busting through resistance at 30 cents last week, North American Nickel (NAN, TSX-V) has tested that area for support this week as it hit a low of 31.5 cents yesterday…RSI(14) is unwinding from a temporarily overbought condition…the support at 30 cents is strong as John shows in this 2.5-year weekly chart…

Sunridge Gold Corp. (SGC, TSX-V)

Numerous Venture stocks are showing some interesting technical patterns at the moment…below is a “heads up” on Sunridge Gold Corp. (SGC, TSX-V) from John…as always, perform your own due diligence…

Note: John and Jon both hold share positions in GGI.  Jon also holds share positions in PGX and NAN.

BMR Exclusive Report – 7:00 p.m. Pacific

Prosper Gold Corp. (PGX, TSX-V)

Garibaldi Resources Corp. (GGI, TSX-V)

Key Points

• The Right People (proven business/geological expertise, motivated leaders)
• The Right Area (incredible untapped geological potential, an early “model”)
• The Right Opportunity (all the ingredients necessary for a market “home run”)

First 6 Holes at PGX’s Sheslay Cu-Au Porphyry Project Hit Mineralization From Top to Bottom – Assays Pending

The “SV” is one of British Columbia’s best-kept geological secrets.  Though it’s right on trend with major systems to the southeast, few investors are aware of this mineral-rich area of northwest B.C. and the potential it holds to host a world class Copper-Gold porphyry deposit (or series of deposits).  This is an immediate and rapidly evolving story that features some of the brightest, most successful individuals in the junior exploration sector.

“SV” stands for “Sheslay Valley”, unquestionably one of the most intriguing geological situations we’ve ever come across.  And it’s like pouring gasoline on a fire when you have the very rare and powerful combination of exceptional geologists, money available to spend, savvy business and market people who are motivated to succeed and know how to execute, and attractive company share structures.  When you find an opportunity with all of those ingredients, you truly have a potential home run on your hands.  This kind of situation defines the secret to investor success in the current junior exploration market:   The key to significantly reducing risk and making money is to focus on the very small percentage of Venture companies who have the working capital, the expertise, the properties and the drive to succeed both on the ground and in the market.

BMR first alerted its readers to this opportunity many weeks ago after extensive due diligence including an area visit.  Right now, we’re going to quickly review what’s developing both on the ground and in the market with these two very interesting companies – Prosper Gold Corp. (PGX, TSX-V) and Garibaldi Resources Corp. (GGI, TSX-V).   Drill results are pending from Prosper Gold’s property (Sheslay Cu-Au Porphyry Project) while exploration has commenced on Garibaldi’s adjoining land package (Grizzly Property).  Investor interest in both companies could ramp up dramatically in the coming days and weeks through news flow and increased overall awareness of the “SV”.

The Location:

Approximately 60 miles WSW of Dease Lake and 30 Miles NW of Telegraph Creek at the Top of B.C.’s Prolific “Golden Triangle”

These strategic properties are situated within an under-exploited part of the Stikine Arch, a highly mineralized, prospective belt of rocks. The Sheslay and the Grizzly are on trend with massive deposits to the southeast.  Teck Resources Ltd. (TCK, TSX) staked a large land package right up to the southern boundary of the Grizzly, while recent staking has also been occurring in the general area as certain juniors try to strategically position themselves.

The Properties:

The two major properties at the centre of this unfolding drama are the advanced 68 sq. km Sheslay Cu-Au Porphyry Project (Prosper Gold) where drilling started in late August, and the 175 sq. km Grizzly Property (Garibaldi Resources) contiguous to the western and southern borders of the Sheslay.

The Sheslay

Prosper Gold was drilling its sixth hole at the Sheslay as of September 18, its most recent news release.  Each hole completed to that point intersected Copper-Gold mineralization from surface to the bottom of the hole. The host rocks are the same as those found at Red Chris, Galore Creek and Schaft Creek, three large Copper-Gold porphyry deposits in the Stikine Arch.  The Red Chris didn’t blossom into the deposit it is until Imperial Metals Corp. (III, TSX) took over the property and decided to drill aggressively at depth, below 400 metres.  That’s what Prosper Gold is now doing at the Sheslay.  The average length of Firesteel Resources Inc.’s (FTR, TSX-V) two dozen holes at the Star target was a paltry 174 metres (only two holes went below 300 metres – 330 m and 337 m) despite the fact that 80% of their holes ended in strong Cu-Au mineralization, including CC2004-05 which intersected 0.44% Cu and 0.32 g/t Au from surface to 242.3 metres.

A total of 22 Sheslay core photos were released recently on the PGX web site.  The core shows all the characteristics of a strong Cu-Au porphyry system.  Below are 3 photos we chose to highlight.  They provide ample evidence of a robust hydrothermal system (multi-directional veins, multi-generations of veins, etc.).  This is exactly what one looks for in a classic Cu-Au porphyry deposit.  Grade and tonnage of course, will determine if a potential mine here can be economic.  But if there’s anyone who can put all the pieces of that puzzle together, it’s Dr. Dirk Tempelman-Kluit, Prosper Gold’s highly respected geologist and director who’s aiming for his second consecutive major discovery.  He’s guiding an impressive assault on the Sheslay, from both the air and the ground, with every tool at his disposal.  He’s a master at data compilation and interpretation.

Tempelman-Kluit On Selecting The Sheslay

BMR had the pleasure of interviewing Tempelman-Kluit earlier this week.  He is a brilliant geologist, in a league of his own.  Below is an excerpt of Jon’s discussion with Tempelman-Kluit who sees something very special in the Sheslay (click on the forward arrow to listen to this 2-and-a-half-minute excerpt – requires Adobe Flash Player, version 9 or above):

[audio:https://e8d59e.a2cdn1.secureserver.net/wp-content/uploads/2013/09/Dirk-PGX-Clip-11.mp3|titles=Dirk PGX Clip 1]

The Grizzly

Garibaldi, meanwhile, is pushing ahead with fresh exploration at the Grizzly.  Results are due shortly from a just-completed heli-borne aeromagnetic and radiometric survey over “Grizzly West”, a priority target area within the northwest portion of this property, as announced by the company following today’s close.  The geophysics survey could provide highly valuable and important new information, and will also help guide GGI on the ground in the coming weeks.  Grizzly West is just one of multiple target areas stretching 15 kilometres across this land package as reported by Garibaldi (tremendous potential scale).  Incredibly, no modern drilling has ever occurred at the Grizzly – historically, just three backpack drill holes.

Important Highlights – Sheslay & Grizzly Properties

• The Sheslay features 5 permitted and drill-ready Copper-Gold-bearing porphyry bodies – the Star (most advanced), North Star, East Star, Copper Creek, and Pyrrhotite Creek.  The first 4 are clustered within a 12 sq. km area while the Pyrrhotite Creek porphyry is located in what appears to be a 2nd distinct multiple target area 4.5 km to the southwest.  Mineralization is open everywhere, laterally in all directions and at depth. Only the Star target has been drilled to date – all 5 targets will be drilled in 2014;
• Historical data for the Sheslay, including about two dozen holes at the Star, are highly encouraging, and the property exhibits great potential in terms of both grade and size.  As Bernier told BMR, “This thing has a lot of legs and a lot of room to get bigger”;
• Infrastructure at the Sheslay (airstrip, road and trail access, permanent camp) suggests that exploration costs and ultimately the capital costs to develop a mine in this area could be significantly less than at other remote properties in northern B.C. – an important part of Bernier’s calculation in selecting the Sheslay;
• The Kaketsa Pluton, a key geological feature interpreted by some as a “heat engine” for the entire area, originates in the northwest corner of Garibaldi’s Grizzly Property;
• While considerably less advanced from an exploration standpoint than the Sheslay, the Grizzly is 2.5 times the size and features similar geological, geophysical and geochemical signatures as the Sheslay (same rock units and structures) over very wide areas; geologically, these 2 properties appear to be connected and mineralization at the Sheslay trends generally north-south, demonstrating the importance of the Grizzly;
• The Grizzly covers the western and southern contacts of the Kaketsa intrusion with the surrounding Stuhini Group volcanics, and shows many of the characteristics of alkalic porphyry Copper-Gold mineralization.  The possibility of a high-grade Gold system somewhere on this property also can’t be ruled out, according to technical reports and some geologists we’ve spoken to.  Keep in mind, the past producing high-grade Golden Bear Mine is just 20 miles west of the Grizzly;
• The fact Bernier and Tempelman-Kluit chose the Sheslay after reviewing so many other possible properties confirms Garibaldi’s wise decision years ago to acquire its large land position.  They smartly held on to every square inch of it, even through challenging market conditions, and carried out intermittent exploration which has defined highly prospective areas of interest.

The Two Key Companies – Quick Facts:

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

Prosper Gold

Pete Bernier’s Prosper Gold is up 20% since it resumed trading Tuesday, September 3, following a halt since early May for approval of the company’s qualifying transaction (the deal with Firesteel).    PGX has just 25 million shares outstanding after raising $3.6 million, mostly in “hard” dollars, so huge upside potential exists – especially in the event of a “glory hole” at a time when there’s so much restricted stock (escrow and PP).  Bernier and award-winning geologist Tempelman-Kluit examined at least 150 properties before selecting the Sheslay following their huge win with Richfield Ventures a couple of years ago when it was bought out by New Gold Inc. (NGD, TSX) for half a billion dollars.  That should tell you something about the quality of the Sheslay and the overall attractiveness of this area.

Garibaldi Resources

At only 10.5 cents, Garibaldi’s market cap ($6 million) is just moderately above its working capital.  The company is now exploring the Grizzly while also continuing to develop its valuable assets in Mexico where it’s efficiently advancing three district-scale projects covering some of the best Gold, Silver and Copper producing areas in the country (drill results are pending from one target, and more drilling on GGI’s Mexican properties is planned for Q4).  In addition, the company is actually generating royalty income from a pilot coal program in Sonora state with ongoing production.  The coal seams being exploited there also have graphite potential, and the company is awaiting results of graphite surface samples sent to a lab.  This part of Mexico has a history of coal and graphite production.  That’s a surprising and important new development regarding Garibaldi, along of course with the Grizzly.

Garibaldi has a highly capable President and CEO in Steve Regoci who’s 100% focused on GGI and has formed a very strong team both at the board level and on the ground.  Regoci has smartly added the highly respected Charlie Greig to the Grizzly geological team through C.J. Greig and Associates Ltd., Charlie’s consulting firm (he’s also working on Pretium’s huge Gold deposit to the southeast).

In Mexico, Garibaldi has already demonstrated its ability to make a discovery and create value for shareholders (Temoris sale to NYSE-listed Paramount Gold & Silver).  Because of its success there in recent years (with much more to come we believe), GGI has NOT had to do a financing since 2009 and has no warrants outstanding.  It’s one of the few companies on the Venture that has been successful in maintaining the integrity of its share structure during the difficult last couple of years in the market. The runway for the share price, so to speak, is clear for take-off.

The “Power Teams” Involved:

If there’s any group in the junior exploration sector that can nail down a major new discovery in this part of B.C., and provide a much-needed spark for the Venture Exchange, it’s most certainly Prosper Gold.  The Sheslay has always had all the geological ingredients to potentially become one of the hottest Copper-Gold exploration plays in the world.  It just needed the right people to unlock its value.  It’s already at a more advanced stage and has greater upside, we believe, than Colorado Resources’ (CXO, TSX-V) North ROK discovery 60 miles to the east-southeast.  Many exceedingly good properties have gone through multiple owners over decades before the right group finally comes along and finds a major deposit that develops into a mine.  The right group has arrived at the Sheslay, just like it did at Blackwater a few years ago.

Bernier has great respect and a large following in the market due to his success with Richfield.  He’s a straight-up guy, and it’s unfortunate he can’t be cloned.  The Venture Exchange could use many more Pete Bernier’s.  He knows how to execute and makes things happen.  He’s “street smart” and a go-getter with a great sense of timing.  Many Venture companies are run by geologists who have no business savvy or any understanding of the capital markets, and these companies’ share prices often suffer as a result.  With Bernier, investors can have a high level of confidence that Prosper Gold will deliver on its brand –  exploration, discovery and wealth. At Bernier’s side of course is Tempelman-Kluit, the geological genius who figured out Blackwater.  Together, the 2 create a very special dynamic that’s rarely seen in this business.  Other members of Bernier’s Richfield team have followed him into Prosper Gold and he has recruited a couple of other stars as well.

Garibaldi, meanwhile, has an impressive team of its own.  Regoci was a successful broker for many years.  He, too, understands the capital markets and what a junior exploration company needs to do in order to survive and thrive.  He has been at the helm of Garibaldi for nearly a decade and has put the company in a serious game-changing position with a series of smart strategic moves in both Mexico and British Columbia.  Like Bernier, he’s a straight shooter and has surrounded himself with a strong group of individuals with proven track records, including the likes of Dr. Craig Gibson and Dr. Peter McGaw.   Regoci is not flamboyant but speaks with authority when telling his company’s story.  He has Garibaldi’s feet moving all the time, no matter what the market conditions are, and that’s important.  He is driven to build shareholder value.

Conclusion:

Both Prosper Gold and Garibaldi could be on the verge of creating a whole new chapter in the incredible story of exploration success in British Columbia.  Investor sentiment toward this sector in B.C. has improved dramatically in recent months after the surprising re-election of the pro-mining Liberal Party.

We firmly believe there are historic opportunities in the junior resource space at the moment.  While there are never any guarantees in this always risky junior market, you can greatly reduce your risk and dramatically increase your odds of success by focusing on the very small percentage of companies on the Venture (probably less than 10%) who have the working capital, the expertise, the properties and the drive to execute effectively both on the ground and in the market, and make discoveries that majors want to buy.  Prosper Gold and Garibaldi both fall into that category.

Good luck, and as always – perform your own due diligence.  Note:  the writer holds a position in both PGX and GGI.

Disclaimer:

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

Forward Looking Statements:

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

Gold has traded between $1,328 and $1,341 so far today…as of 6:40 am Pacific, bullion is off $1 an ounce at $1,332…Silver is 4 cents higher at $21.83…Copper has added 3 pennies to $3.27…Crude Oil is flat at $102.78 while the U.S. Dollar Index is up one-tenth of a point at 80.50…

Kitco’s Alan Sykora reported from the Denver Gold Forum (www.Kitco.com) that Fund managers and mining analysts at the event are generally upbeat about the precious metal’s picture, especially over the longer term, and some analysts like what they see for the upcoming 4th quarter…

“Lately, what I am seeing is whenever Gold goes up a percent or 2, mining stocks are going up anywhere from 5% to 20%,” said Dan Hrushewsky, senior analyst for Gold-mining equities with Jennings Capital. “I’m starting to see a high sensitivity or beta of mining stocks to Gold prices.  It looks to me like the mining stocks want to move. So if the Gold price goes up, mining stocks will outperform.”

Dan Denbow, assistant vice president of equity portfolios at USAA Investments and manager of the USAA Precious Metals and Minerals Fund, cited efforts by companies to scale back overall spending, seeking to improve cash flow and profitability…previously, some felt producers were too focused on simply ramping up output during a long-running bull market before prices fell this year…“They have taken a serious tone towards costs and managing operations,” Denbow said. “As you meet with different companies, not all of them have taken it to heart. But a good many have taken it to heart.”

Some producers have still not taken cost-cutting and streamlining measures to heart?…that’s quite amazing, which shows how careful investors must be in terms of their due diligence…

Today’s Markets

Japan’s Nikkei average staged a sharp reversal overnight, closing 179 points higher at 14799 after being down more than 1% earlier in the session…China’s Shanghai Composite, however, slipped 43 points to a 20-week low of 2156 after a after a nation-wide survey of over 2,000 companies, known as China’s Beige Book, showed business conditions are not as healthy as recent positive economic data suggests…

European shares are mixed in late trading…France released a consumer confidence survey for September that met expectations…in the UK, meanwhile, the final reading of GDP for the 2nd quarter came in unchanged at 0.7%…

North America

The Dow, trying to snap a 5-session losing skid, is up 65 points as of 6:40 am Pacific…the U.S. government could start to run short of funds to meet its obligations by October 17, said Treasury secretary Jack Lew, unless Congress votes to lift the debt ceiling before then…Lew’s letter to John Boehner, the Republican House speaker, and other congressional leaders, effectively sets a deadline for Republicans and the White House to resolve their stand-off over approval for new government borrowings…

The TSX has gained 34 points while the Venture is 7 points higher at 955 through the 1st 10 minutes of trading…

“It’s Got All The Earmarks”:

BMR Interviews Prosper Gold’s Dirk Tempelman-Kluit On The Sheslay Porphyry Copper-Gold Project

Dirk Tempelman-Kluit is unquestionably one of Canada’s premier geologists, in a league actually of his own given his track record and incredible understanding of all the dynamics involved in the creation of a world class deposit – specifically Copper-Gold porphyry or Gold in British Columbia…just over 2 years ago, his expertise and the business/market savvy of Pete Bernier combined to pay huge dividends for shareholders of Richfield Ventures which was bought out by New Gold Inc. (NGD, TSX) following its massive bulk tonnage Gold-Silver discovery in the Blackwater district of central British Columbia…this was a classic “10-bagger” for many investors, including some BMR readers as we followed that story almost from the very beginning…now, with Bernier also at the helm, Tempelman-Kluit is working hard at another major geological project that has the potential to dramatically impact the mining landscape of northwest British Columbia…

The 74-year old Tempelman-Kluit, who honed his skills for nearly 3 decades with the Geological Survey of Canada before he met Bernier about a decade ago, is overseeing the exploration program at the Sheslay…this 68-sq. km property, with a minimum of 5 Copper-Gold bearing targets including the advanced Star target where Phase 1 drilling began a month ago, couldn’t be in better hands…there are never any guarantees in this risky junior exploration sector, and obviously some luck is required too in finding these deposits…but if there’s anyone who can figure out the Sheslay, it’s Tempelman-Kluit who is a master at data compilation and interpretation…he is also a very personable and outgoing individual with a high level of energy; very confident in his abilities, yet humble as well –  clearly a gentleman to admire…he has an amazing command of this potential large-scale system at the Sheslay that could easily trend across its boundaries – this is the rich Stikine Arch, and adjoining the western and southern borders of the Sheslay of course is Garibaldi Resources’ (GGI, TSX-V) 175 sq. km Grizzly Property…Teck Resources Ltd. (TCK, TSX) holds a large land package as well, as they staked right up to the southern edge of the Grizzly…

After Richfield was bought out by New Gold, Tempelman-Kluit and Bernier took their time in deciding which project to cut their teeth into next…the fact they chose the Sheslay after looking at so many other possibilities over a 2-year period speaks volumes about the potential of that property, and the immediate surrounding area…

Click on the forward arrow to listen to the 1st excerpt (2-and-a-half minutes) of the discussion between Jon and Tempelman-Kluit (requires Adobe Flash Player, version 9 or above)…more excerpts from the 1-hour interview in the coming days…

Dirk Tempelman-Kluit:

[audio:https://e8d59e.a2cdn1.secureserver.net/wp-content/uploads/2013/09/Dirk-PGX-Clip-1.mp3|titles=Dirk PGX Clip 1]

$1,500 Gold – Q4?

Check out www.GoldInvestingNews.com for an interesting interview conducted by Kevin Michael Grace of the The Gold Report who spoke with Michael Curren of Beacon Securities…Curren had some thoughtful comments on Gold (he’s calling for $1,500 during Q4) and various companies…“Our recommendation is to focus on early exploration or discovery plays,” he stated. “We’re also looking beyond Gold. We like select base metals and uranium, and we have a few favorites there as well. Diversification is our focus for investors right now.  We concentrate on assets, location, management and balance sheets.  We’re looking for assets with potential for high-grade discovery. We’re looking for low political risk in the location of these assets.  We’re looking for strong management with backgrounds in exploration and discovery or people who have demonstrated past involvement in success stories. And we’re looking for companies that have enough cash to do exploration in the short term or a combination of assets and management expertise sufficient to raise money, which is not the easiest thing to do in this market.”

Dow-Gold Comparative Chart

The Dow and Gold have traveled in opposite directions for most of 2013 – it’ll be interesting to see if that negative correlation continues in Q4, or if the Dow and Gold return to a pattern where they move in tandem…below is a 5-year weekly Dow-Gold comparative chart from John…the negative divergence between RSI(14) and price was a warning sign as far as the Dow was concerned – there could be more downside to come over the short-to-medium term, though traders/investors have been consistently buying on the dips this year…

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

Fission Uranium (FCU, TSX-V) has been following such a predictable path, both on the ground and in the market…more excellent results from Patterson Lake South discovery were released yesterday, and FCU climbed 6 cents higher to close at $1.38 on strong volume (4.1 million shares, all exchanges)…the 50-day moving average (SMA) has provided incredible support throughout this stock’s move, and now it appears that resistance just below $1.50 is about to be challenged again…this is a major Venture success story, one to hold on to we believe for a potential takeover…below is a 6-month daily chart…as always, perform your own due diligence…

Arianne Phosphate Inc. (DAN, TSX-V)

Arianne Phosphate (DAN, TSX-V) has been trending higher recently on increased volume…the company has an exceptional phosphate project (Lac a Paul) in Quebec, and a feasibility study is in its final stages…interestingly, the stock has bounced around in a horizontal channel for nearly 2 years between 80 cents and $1.47…some traders have done well playing the swings…the question is, when will it break out of this channel?…like FCU, DAN is another potential takeover target given the quality of its project…below is a 3-year weekly chart from John…the daily 1-year chart shows overbought conditions at the moment, but the 20-day SMA around $1.25 should provide strong support in the event of a near-term profit-taking pullback…

Madalena Energy Inc. (MVN, TSX-V) Updated Chart

Madalena Energy (MVN, TSX-V) is a Canadian-based, domestic and international upstream oil and gas company with a healthy balance sheet (positive working capital of $7.7-million as of June 30, no debt) and increasing production levels…the stock has been volatile at times this year, bouncing from the mid-to-upper 40’s to the low 20’s and back again (a couple of times)…at the moment, support is strong at the EMA-20 and another attempt to bust through resistance appears to be on the way…

Note: John, Jon and Terry do not hold share positions in FCU, DAN or MVN.  John and Jon hold share positions in GGI while Jon also holds a share position in PGX.

Gold has traded between $1,316 and $1,331 so far today…as of 6:45 am Pacific, bullion is unchanged at $1,323…Silver is up a nickel at $21.78…Copper is up a penny at $3.24…Crude Oil has added 38 cents to $103.51 while the U.S. Dollar Index is down more than one-tenth of a point at 80.42…

Simple but very reasonable conclusion from one analyst at the Denver Gold Forum:  “Long term, Gold can only go up because of the lack of fiscal discipline of the major world economies, which then translates into overall weaker currencies as countries print money,” stated Dan Hrushewsky, senior analyst for Gold mining equities with Jennings Capital. “Weaker currencies, especially the U.S. dollar, would mean a higher Gold price.”

For now, cost containment is the dominant trend in the industry and that’s a message being repeated consistently in Denver…lower Gold prices this year have of course negatively impacted company balance sheets and share prices, but a positive effect of $1,300 Gold is that producers have been forced to get a much better handle on their overall cost structures…this, in turn, is laying the foundation for future success in terms of earnings…less exploration also brings up the question of where the next new deposits will come from – juniors who have the ability right now, and over the next couple of years, to make a discovery that a major will buy are going to be rewarded very handsomely in the market…investors have incredible opportunities at the moment if they focus like a laser beam on juniors who have the working capital, the expertise, the properties and the drive to succeed both on the ground and in the market…

TSX Venture-Gold Comparative Chart

Below is an interesting 3-year weekly Venture chart from John that also compares the Index with the price of Gold…this chart paints a clear picture of how the junior market and Gold have interacted over the last few years, and why we remain positive going into the final quarter of the year…first, notice how the Venture went from being in an extended overbought condition in late 2010/early 2011 to an extended oversold condition earlier this year…RSI(14) is currently at 41%, gradually climbing in a nice-looking uptrend…the outlook is very positive as long as that trendline support holds…sell pressure, dominant for the 1st half of the year, turned into accumulation and buy pressure at the beginning of July…

A couple of other interesting points – the CDNX is quickly approaching a down trendline in place for 2.5 years – a breakout above this down trendline would be extremely bullish, given failed attempts to do so last year and early this year…the Venture also tends to lead Gold to the upside or the downside, which is why the last few weeks have been interesting as the Venture has essentially shrugged off more than a $100 drop in bullion…what the CDNX seems to be saying is that Gold will hold important support around the $1,300 level and push higher in Q4…that goes against what many analysts are saying, but many of those analysts also predicted the Fed would start scaling back its bond-buying program this month (that may not actually begin to occur until sometime next year)…

The “Unintended Consequences” Of QE

On the subject of the Federal Reserve and the “tapering” issue, some interesting comments from Eric Sprott on a Mineweb podcast (www.mineweb.com)…responding to a question posed by Geoff Candy, Sprott went on a roll and stated:

“Who would have thought that printing money was appropriate, QE1, QE2, QE3 whatever, it’s totally ridiculous. If we all stand back and look at it from first principles here, we know that that’s a Ponzi scheme, that there’s going to be unintended consequences. Yes, it doesn’t show itself in the Gold and Silver market and yes, the stock market keeps going up, but sooner or later the unintended consequences will come into play here and I guess the biggest one will be the decline in the U.S. dollar. If the U.S. dollar starts going down, which is going down by the way, people owning those U.S. Securities, not only are they getting no return, the yields are going up, they’re losing on capital and they’re losing on the currency, so there could be a moment here when there’s a revolt against U.S. debt here and the dollar goes down and rates go up. So there’s no reason to believe anything that the Federal Reserve says, then they talked in 2009 about an exit policy – nothing’s ever happened there. They talked about tapering this year and nothing’s happened there. They have a bond market to deal with and it’s not going the way they wanted it and when Mr Bernanke was asked in the last Senate hearing what he thought about rates going up recently, he said, ‘well we’re puzzled by that’. And I thought, how can the chairman of the Federal Reserve be puzzled by interest rates going up? In other words, he didn’t really want to give the answer, and the answer is there are more sellers than buyers, and of course the sellers are selling for a reason.”

Today’s Markets

Asian markets were mostly modestly lower overnight with China’s Shanghai Composite off 9 points at 2199…Japan’s Nikkei average slipped 112 points to 14621…European shares are down slightly in late trading overseas…new data today showed that German consumer confidence is at its highest level in 6 years entering October…

In New York, the Dow will try to break a 4-session losing skid today…it’s down 8 points through the first 15 minutes of trading…the TSX is up 27 points while the Venture is off a point at 945…

Rackla Metals Inc. (RAK, TSX-V)

This is not a situation you’d want to bet the farm on, but if you’re looking for a bottom-fishing opportunity under a nickel with a chance of a drill hit – Simon Ridgway’s Rackla Metals Inc. (RAK, TSX-V) appears worthy of consideration…what’s interesting is that Rackla had been quiet all year up until just a couple of weeks ago when it struck a deal with Kestrel Gold Inc. (KGC, TSX-V) to option that company’s King Solomon’s Dome Property in the Yukon…Rackla commenced drilling almost immediately, and then quickly announced a $250,000 flow-through financing at a nickel…volume in the stock has picked up modestly but remains light…

There is plenty of history in the area surrounding the KSD Property, located in the heart of the Klondike Goldfields approximately 30 km southeast of Dawson City…Dominion, Sulphur and Gold Bottom creeks drain away from KSD and were some of the richest placer Gold creeks in the Klondike with historic production believed to exceed 3.5 million ounces…recent academic work suggests a clear link between the placer Gold and the widespread lode Gold occurrences across in the vicinity of KSD – they appear to represent a single, zoned eroded orogenic hydrothermal system…Kestrel’s trenching program defined a Gold bearing-quartz vein system over a strike length of at least 1,700 metres and at least 400 metres wide with Gold values from trace up to 17 g/t Au and several values of Silver greater than 50 g/t…Rackla’s drill target is a large chargeability anomaly to depths of approximately 350 metres…who knows, they may get lucky and pull out some nice numbers…at least they’re drilling and trying to make something happen when far too many Venture companies have gone into hiding…

RAK, which touched an all-time low of 1.5 cents last month after declining steadily since late 2011 when it commenced trading, closed at 3.5 cents yesterday…it has 50.4 million shares outstanding (prior to this 5 million share FT round), and the company reported working capital at the end of June of approximately $600,000…below is a Rackla chart since just after it started trading in late 2011…it’s interesting that RAK’s technicals look better now than they ever have…

Corvus Gold (KOR, TSX)

Quite a recovery in Corvus Gold (KOR, TSX) since May when the stock hit a low of 51 cents…it got as high as $1.35 early this month before experiencing a normal pullback…it closed yesterday at $1.12, its 4th straight daily decline…Corvus‘ North Bullfrog Property in Nevada continues to look very promising with favorable drill results showing an expansion of a higher-grade zone, a “starter pit” that could have a dramatic impact on the project economics…

Technically, KOR has excellent support around the $1 level…RSI(14) on John’s 2.5-year weekly chart is at 58% and trending higher…the rising 50-day moving average (SMA), just below $1, is about to cross above the 200-day SMA – another positive sign…as of 6:45 am Pacific, KOR is down 3 pennies at $1.09…

Two Graphite Plays – Mason Graphite Inc. (LLG, TSX-V) and Graphite One Resources Inc. (GPH, TSX-V)

We had some reader inquiries regarding 2 graphite plays – Mason Graphite Inc. (LLG, TSX-V) and Graphite One (GPH, TSX-V)…we have a chart for each this morning…as always, perform your own due diligence and remember that management is always key…

From a technical standpoint, LLG appears to have turned the corner but the critical thing to watch for is a close above the downsloping channel which is providing strong resistance in the mid-40’s (yesterday’s intra-day high)…LLG finished up a nickel yesterday at 38 cents…

Graphite One Resources Inc. (GPH, TSX-V)

Graphite One has been on a roller coaster ride this year, tumbling from nearly 30 cents in May to 7.5 cents in August (followed by a $2.2 million financing at 8 cents, how strange or how typical?) and then recovering to a September high of 19.5 cents yesterday…drilling has commenced at the company’s Graphite Creek Project in Alaska…the best time to jump in was around the time of the cheap financing…support levels are between 15 and 17 cents…this one will require a lot of volume and heavy lifting to get back to its May high, but anything’s possible – drilling is a good start…

Note:  John, Jon and Terry do not hold positions in RAK, KOR, LLG or GPH.