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After a 4.5% drop last week that took bullion to its lowest level ($1,304) since early August, Gold will attempt to get back on track this week but its fate is clearly in the hands of the Federal Reserve which begins a much anticipated 2-day meeting tomorrow…the FMOC gathering culminates in a fresh policy statement and a Ben Bernanke news conference late in Wednesday’s trading session…Gold staged an encouraging intra-day reversal Friday, dropped lower this morning as it re-tested a Fib. support level ($1,307), but has bounced back to $1,319 as of 6:45 am Pacific…that’s a loss of $9 for the day…Silver fell below $21.70 overnight but is now down just 17 cents at $22.09…Copper is up 3 pennies to $3.21…Crude Oil has slipped $1.27 a barrel to $106.94 as tensions over Syria have ended for now…the U.S. Dollar Index, meanwhile, is off one-tenth of a point at 81.04…

The Fed meeting will likely be a game-changer for Gold, one way or the other…

Most economists and traders expect the FOMC to announce a scaling back of QE3 by anywhere from $5 to $20 billion a month…as a result, many observers are also expecting Gold to weaken but the logic behind that argument is suspect…expectations of Fed tapering by this month have been 1 of the driving forces in pushing Gold down since the spring, so a “sell on rumor, buy on news” scenario is quite possibly in the cards…one must also keep in mind that while being hawkish in one way (reducing monthly bond purchases and starting the process of weaning the baby off the bottle), the Fed could be quite dovish in another in terms of its language, and could even adjust its goalposts regarding future moves…

U.S. labor growth is still far from robust…a slew of economic data released last week was also tepid at best – disappointing numbers for consumer sentiment, retail sales and business inventories…the Fed also can’t ignore the upcoming U.S. budget battle, and the potential impact of a stimulus withdrawal on emerging market economies, some of which are already feeling the pain (capital outflows) stemming from higher long-term U.S. interest rates…and higher interest rates in the U.S. also present a potential serious threat to government finances given current debt levels (at the end of fiscal year 2000, the national debt totaled $5.67 trillion and the federal government paid $361.9 billion in interest that year…the debt stood at $16.6 trillion at the end of last year and the government paid $359.7 billion in interest because of much lower rates, 2.6% vs. 6.6%)…so Bernanke has quite a balancing act to perform, and his post-meeting news conference will be fascinating to watch…

There’s also the possibility, of course, that the Fed will surprise the pundits and not proceed with tapering just yet – Gold may then pop significantly to the upside along with other commodities…no matter if the Fed tapers or not, we like the odds of Gold pushing higher in a “sell on rumor, buy on news” scenario…a scaling back by the Fed of at least $10 billion has already been baked into the Gold price…

Summers Withdraws Name For Fed Chairmanship

He was rumored to be President Obama’s preferred choice for the next Fed Chairman, but Larry Summers – who may have taken the Fed on a more hawkish monetary course – has pulled out of the contest to replace Ben Bernanke, and equity markets are cheering that news this morning…it became increasingly obvious at the end of last week that Summers, viewed in many circles as a confrontational figure, would get a rough ride in the Senate where his nomination likely wouldn’t have the votes to get pushed through…the leading candidate now is Janet Yellen, the Fed’s current vice chairwoman, who has garnered substantial support among Democrats in Congress and among economists…but according to The Wall Street Journal, administration insiders say the public lobbying on her behalf appears to have annoyed the President and may lead him to look elsewhere…

The Movement Of Physical Gold From West To East

Frank Holmes’ www.usfunds.com reported the following over the weekend:  “Paolo Lostritto, Director at National Bank, shared his most recent physical Gold research with our team. According to Paolo, notwithstanding all the taper talk, physical Gold continues to migrate east.  Year-to-date net physical imports by China equate to approximately 37% of global mine supply. This in addition to the reports from GFMS suggesting that China is the world’s largest Gold producer, with an estimated 400-plus tonnes annually, or roughly 14% of global mine supply. This suggests that China on its own is amassing nearly half of the world’s annual Gold supply within its borders.”

A Sign Of The Times Regarding Exploration

Major Drilling (MTI, TSX), an important player in the industry, has reported that usage of its rigs is currently sitting at 33%, a far cry from the 75% utilization rate just 12 months ago…the company has taken up to a 20% cut on pricing for jobs, and admits that it is only a break-even business in this market…the order book is wide open in case anyone wants to book a drill…reserve replacement is going to become a problem which ultimately is bullish for Gold prices…

Updated Silver Charts

6-Month Daily Chart

Silver, which typically follows Gold’s price movements to a disproportionate extent, got hit hard last week as it fell $1.57 an ounce or 6.6% vs. the 4.5% pullback in Gold…importantly, however, Silver held support at $22 on a closing basis for the week, thanks to Friday’s “hammer” reversal after it briefly fell below $21.50 intra-day…John’s 6-month daily chart shows how Silver has nicely unwound an overbought condition that emerged last month when it shot up 20%…RSI(14) bounced up from previous support Friday…it would certainly be encouraging if the $22 level holds…this will be a critical week for Silver as it will be for Gold…

Long-Term Silver Chart

Silver’s major challenge over the coming months will be to overcome very strong resistance at 2 critical levels – $26, and a down trendline above that (currently just under $30 an ounce)…if and when both of those events occur, things could get really interesting in the Silver market…RSI(2) has backed off to 51%…following the 2 previous periods when RSI(2) slipped into extreme oversold conditions (2008 and 2012), it quickly shot up to the overbought zone and stayed there for a while…this time we’re seeing a somewhat different pattern…it would be interesting if RSI(2) were to find support around current levels…as we mentioned, this is indeed an important week for Silver…

Today’s Markets

Japan’s Nikkei average posted a slight gain of 17 points overnight to close at 14405…China’s Shanghai Composite, which enjoyed a powerful run last week, fell a few points on profit-taking to close at 2231…

European shares hit 5-year highs today in a broad-based rally on the back of news that Summers had withdrawn his name from the race to succeed Bernanke as the next Fed Chairman…

The Dow is up 128 points to 15504 through the first 15 minutes of trading…in freshly released economic news this morning, the pace of growth in New York state’s manufacturing sector unexpectedly slowed in September, according to a report from the New York Federal Reserve…the New York Fed’s “Empire State” general business conditions index slipped to 6.29 from 8.24 in August, shy of economists’ forecast of 9.20…

The TSX is 97 points higher at 12820 while the Venture is flat at 942 as of 6:45 am Pacific…the Venture continues to find strong support at its EMA(20) which is bullish…

True Gold Mining (TGM, TSX-V) Updated Chart

Mark O’Dea’s True Gold Mining (TGM, TSX-V) has certainly bucked the trend of companies in this sector struggling to raise money…in May, TGM closed a $10 million financing with Teck Resources (TCK, TSX) at 33 cents and then recently completed the second and final tranche of a $23.5 million strategic investment with Liberty Metals & Mining Holdings LLC, a subsidiary of Boston-based Mutual Insurance…this included a 33-cent financing and the sale of a 2% net smelter return royalty on the company’s interest in the Karma Gold Project…

True Gold is developing 2 key projects in Burkina Faso, West Africa, where mining contributes 12% of GDP…8 Gold mines have been permitted there over the last 7 years…TGM’s 856 sq. km Karma Project includes 5 closely spaced deposits – Rambo, Nami, Kao, Goulagou I and Goulagou II – with a proposed central processing facility…the Karma project is currently undergoing a feasibility study, which entails the development of a fully engineered construction and operating plan for a proposed low-cap-ex, open-pit, heap leach mine…

We initially brought True Gold to our readers’ attention after the announcement of its financing with Teck…below is an updated 2.5-year weekly chart from John and it shows a lot of technical support in the low ’30’s which appears to be a very attractive entry point (certainly Teck and Liberty think so)…TGM closed Friday at 34.5 cents…if and when TGM clears important resistance at 40 cents, it could really accelerate to the upside…as always, perform your own due diligence…

Ashburton Ventures Inc. (ABR, TSX-V)

Mike England has enjoyed success recently with his Caribou King Resources (CKR, TSX-V), and speculative investors may wish to more seriously consider his Ashburton Ventures (ABR, TSX-V) as a result…England has been criticized by some for always playing the “closeology” game, but so many Venture companies aren’t doing ANYTHING these days – at least England is trying to generate some activity and excitement…we give him credit for that…Ashburton was quick to pounce on the Colorado Resources‘ (CXO, TSX-V) discovery last spring, acquiring ground in the Iskut area, and ABR also positioned itself in the Sheslay River Valley with the acquisition of the Hackett Property…it has scooped up some graphite claims in Ontario, and is also making some noise in the early going with its Sienna West uranium project in the Athabasca basin, approximately 40 km southwest of the Patterson Lake South discovery…an update on Sienna West came out this morning…so the company is basically in all the hot areas…ABR has 25 million shares outstanding and closed Friday at 6.5 cents…

Technically, we see some things we like in ABR – the 2-year chart is quite bullish, actually, and shows how an important bottom was likely formed in the stock between December and May…as always, perform your own due diligence…ABR will need to raise more money, of course, but it’s always easier for a company to do that when its stock is in an uptrend and there’s activity on the ground…

Note: John, Jon and Terry do not hold share positions in TGM or ABR.

TSX Venture Exchange and Gold

While the Venture erased most of its previous week’s gains, falling 13 points to finish at 942, it continued to show impressive resilience in the face of weakness in Gold which can certainly be construed as a positive sign for both the junior resource market and bullion.  At the moment, the Venture is trading between powerful support at its EMA(20), where it dipped below briefly Friday before staging a “hammer” reversal, and of course equally stiff resistance at the 970 level which it failed to push through during minor rallies in the spring.  “Decision time” is fast approaching and one catalyst, of course, could be this week’s upcoming Fed meeting (Tuesday and Wednesday).  Another line of strong defence for the Venture is around 925 where the rising 50-day SMA and the 100-day SMA, which has flattened out, intersect.

Results of a Wall Street Journal survey show that two-thirds of market participants expect the FOMC to announce tapering on Wednesday, likely by about $10 billion a month.  Many observers are expecting Gold to weaken as a result, but that really doesn’t make sense.  Expectations of Fed tapering by September have been one of the driving forces in pushing Gold down since the spring, so a “sell on rumor, buy on news” scenario is quite possibly in the cards.  One must also keep in mind that while being hawkish in one way (reducing monthly bond purchases and starting the process of weaning the baby off the bottle), the Fed could be dovish in another in terms of its language. Don’t forget, U.S. labor growth is still far from robust.  A slew of economic data released last week was also tepid at best – disappointing numbers for consumer sentiment, retail sales and business inventories.  In fact, business inventories posted their largest increase in 6 months.  The Fed also can’t ignore the potential impact of a stimulus withdrawal on emerging market economies, some of which are already feeling the pain (capital outflows) stemming from higher long-term interest rates in the U.S.  So Ben Bernanke has quite a balancing act to perform, and his post-meeting news conference will be interesting to watch.

There’s also the possibility, of course, that the Fed will surprise the pundits and not proceed with tapering just yet – Gold would then pop significantly to the upside along with other commodities.  The Fed wouldn’t mind to see inflation kick in a little bit.  No matter if the Fed tapers or not, we like the odds of Gold pushing higher.

As we pointed out yesterday, over the last couple of weeks we’ve seen 3 major 1-day drops in Gold totaling more than $80 an ounce including a $45 plunge the other day (Thursday).  Yet the Venture was actually up slightly on 2 of those days and declined just 4 points Thursday.  That’s a pattern – the Venture shrugging off a more than 5% drop in Gold – that we just haven’t seen over the last 2+ years.  Gold indeed is down 5% this month while the Venture is actually up 3 points.  What the Venture appears to be telling us is that it’s not expecting Gold to fall out of bed again.

Some positive exploration news, of course, would also help build confidence in the Venture.  In the current market environment, continue to focus on the 10% of Venture companies who have the working capital, the expertise, the properties and the drive to execute both on the ground and in the market, and make discoveries that majors may ultimately buy.

Below is John’s updated 3-month daily chart for the Venture.  Again, notice the support the EMA(20) has been providing since early July.  RSI(14) is flat and at previous support.  This is a slow-moving train at the moment but the gradual improvement in the Venture’s technical posture leads us to believe that an important bottom was formed in late June and a major breakout above 970 could occur by the end of the month or very early in Q4.  The market should let us know one way or the other very soon.  Continue to keep a close eye on support and resistance levels.

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

It was a rough week for Gold and some blame it on “manipulation”, and indeed that may have been part of the equation.  Forces are certainly at work – there has been a significant shift in physical Gold from West to East in recent months.  For the week, bullion was down $63 an ounce.  But it found support at $1,300 and reversed intra-day Friday to finish the week at $1,328, just slightly above the bottom of the support band that runs from $1,320 to $1,350.  The potential for an imminent scaling back of Q3 and the easing of tensions regarding Syria brought some selling into Gold last week, as did rumors that President Obama is about to nominate Larry Summers – his former economic adviser – as the new Fed Chairman (Bernanke’s term expires at the end of January).  However, Obama’s nomination must be approved by the Senate where Summers is guaranteed to get a rough ride – especially considering some key Democrats have already indicated they will oppose his nomination.  Summers is viewed as a confrontational figure in some circles in Washington.  The market would prefer to see continuity at the Fed with Vice-Chair Janet Yellin, who has been a strong advocate of a dovish monetary policy, nominated to succeed Bernanke.  Interestingly, no other Fed Vice-Chair has ever been promoted to Chairman.  We’ll see what happens.  Obama’s Presidency is weakening and he’ll definitely have a struggle on his hands if he chooses to nominate Summers.

Traditionally, September is bullion’s best month of the year, but a major turnaround during the last half of the month is going to have to occur in order for this trend to continue.  If Gold does take off and close above resistance at $1,400 by month-end, many traders/investors may come to the conclusion that the nearly 40% drop in the Gold price between September 2011 and late June this year was a much-needed correction that has indeed run its course.

Below is a 3-month daily Gold chart from John.  Chart support is at $1,320.  Fib. support levels are at $1,307 (touched intra-day Friday) and $1,277.  At 41%, RSI(14) is at previous support.  We were expecting a possible “hammer” Friday and that’s exactly what occurred – an encouraging sign for a very critical upcoming week with more volatility expected.

Silver, which typically follows Gold’s price movements to a disproportionate extent, fell $1.57 an ounce or 6.6% last week to close at $22.27.  Importantly, however, it held support at $22 (a significant support band exists between $22 and $23).  John will have updated Silver charts as part of tomorrow’s Morning Musings.  Copper fell 6 cents to $3.18.  Crude Oil slipped $2.32 a barrel to $108.21, but WTIC still looks strong technically which is also positive for Gold.  The U.S. Dollar Index climbed half a point to 82.15.

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 fell to a 5-week low overnight on continued speculation the Federal Reserve will begin to scale back QE3 beginning next week, and as Syrian tensions ease amid talks on a plan for that country to surrender its chemical weapons (or as bullion manipulation continues as suggested below)…as of 7:00 am Pacific, the yellow metal is off $2 an ounce at $1,319…it touched a low of $1,304 overnight…Silver, which was technically overbought and needed to correct somewhat, is headed for its biggest weekly drop since April…it fell below $21.50 overnight but is now up 15 cents at $21.89….on a weekly basis, we’ll see today if it can hold support at $22…Copper is off 2 cents at $3.17…Crude Oil is off 91 cents a barrel to $107.69 while the U.S. Dollar Index is up slightly at 81.59…

Check out the interesting article by Lawrence Williams at www.Mineweb.com this morning (“Gold Knocked Down…Again and Again”)…his main argument is that Gold is being manipulated at the moment in a similar fashion as it was in the spring…here’s an interesting excerpt from his piece this morning:  “Some even reckon China may be behind the manipulations which seem to be taking place after close of Asian markets and just ahead of opening of European ones. With the kind of Gold purchasing activity seen in that nation when the Gold price dropped so sharply back in April, perhaps this could be seen as yet another way of moving physical Gold from West to East as part of an ongoing pattern to corner the global supply of Gold. Certainly Western Gold inventories seem to be declining rapidly and no one is really sure how much physical metal actually remains in central bank coffers given their rather opaque accounting mechanisms. Who knows?”…do you think Williams is right or he is just engaging in “conspiracy theory” thinking…provide us with your thoughts in our comments section…if he’s right about manipulation, we have little doubt the Chinese have their fingerprints all over it…

Updated Gold Chart

So where do things stand technically with Gold given this week’s drop?…today indeed could be turnaround time, as John’s 3-month daily chart shows RSI(14) has hit previous support…don’t forget, there’s an important support band between $1,320 and $1,350 which held yesterday ($1,321) and could hold today as well on a closing basis…Gold landed on Fib. support at $1,307 overnight…

What’s just as unusual about the Gold price drop since post-Labor Day is how the Venture Exchange has managed to hold up so well, which we believe is a very encouraging sign for both the junior market and bullion itself…we’ve seen 3 major 1-day drops in Gold since last week, totaling more than $80 an ounce including yesterday’s $45 plunge…yet the Venture was actually up slightly on 2 of those days and declined just 4 points yesterday…that’s a pattern – the Venture shrugging off a more than 5% drop in Gold – that we just haven’t seen over the last 2+ years…there’s no manipulation behind that…so John went to work on a couple of very interesting charts…

2013 and 2010 Venture Comparative Charts

The similarities between the 2 charts below is quite remarkable, though we’re not suggesting the Venture is about to enter a 2010-type surge over the coming several months…what we are theorizing is that the current pattern is powerful additional evidence that the Venture hit an important bottom in late June and is slowly gearing up for a possible sustained recovery during the upcoming 4th quarter…

Notice the turnaround in July of this year when RSI(14) broke above 50 (now support), a bullish +DI/-DI crossover occurred, and sell pressure turned into buy pressure…importantly, the EMA-20 has provided consistent support during this move up…these technical patterns, interestingly, are virtually the same as they were during the summer of 2010 when the Index emerged out of a correction and started a massive run…it also shrugged off a temporary slide in Gold…again, we’re not anticipating a 2010-style move now – overall conditions, fundamentally and technically, are quite different, but the argument can certainly be made that both the Venture and Gold could finish the year on a much more positive note vs. what we’ve endured most of this year…

2013 Venture 9-Month Daily Chart

2010 Venture 8-Month Daily Chart

Media Reports: Obama To Nominate Summers As Fed Chief

Markets would have preferred to see continuity on this matter with Vice-Chair Janet Yellen selected to replace Ben Bernanke, but it appears almost certain now that President Obama, in his infinite wisdom, will nominate Larry Summers, his former economic adviser, as the new Fed Chairman to take over from Ben Bernanke who is expected to step down at the end of January when his term expires…Japan’s Nikkei newspaper (the English language version) reported this morning (quoting unnamed sources) that Obama “is set to” name Summers as early as late next week, though the White House this morning denies those reports and says Obama has yet to make a final decision…Summers is regarded in Washington as a confrontational figure and his nomination may not get an easy ride through the Senate…he has said little regarding monetary policy in recent years…

Today’s Markets

Asian markets were mostly weaker overnight with China’s Shanghai Composite retreating from a 3-month high, falling 19 points to close at 2236…Japan’s Nikkei average bucked the trend and gained 17 points to finish at 14405…Japanese media reported that Prime Minister Shinzo Abe will raise the 5% sales tax to 8% next April, and that Abe has ordered an economic stimulus package that could total as much as $50 billion to cushion the tax hike’s impact…governments never cease to amaze us…Japan has a spending program and hauling in more tax revenue just keeps feeding the monster…

European shares are flat today to finish the week…

North America

The Dow is up 63 points through the first 30 minutes of trading…U.S. consumer sentiment fell to 76.8 in September…economists polled by Reuters were expecting the index to fall to 81.8, compared to 82.1 the month before…the TSX is up 37 points while the Venture is off 4 points at 936…

Probe Mines Ltd. (PRB, TSX-V) Update

We’ve focused very much on high-quality discovery situations in recent months, companies with the working capital, the expertise, the properties and the drive to succeed both on the ground and in the market – companies that have the ability to make discoveries that majors will buy…that’s how great wealth will be built by many investors over the next couple of years, especially considering some current valuations…in northwest British Columbia, of course, we’ve targeted the Sheslay River Valley as the next major discovery area which could take the market by storm in the coming weeks…both Prosper Gold (PGX, TSX-V) and Garibaldi Resources (GGI, TSX-V), who control a combined 240 sq. km in the Sheslay River Valley, unquestionably fall into the category of the 10% of Venture companies who meet our criteria as described above…in northern Ontario, a situation we continue to find extremely appealing is Probe Mines’ (PRB, TSX-V) Borden Lake Gold deposit which has evolved enormously in recent months with the company drilling into a high-grade system to the southeast of the main deposit…this is a fabulous geological and market story…if you haven’t looked into Probe, we highly suggest you do as we see a strong possibility of a takeover of this company by Agnico Eagle Mines Ltd. (AEM, TSX-V) within the next year…

Below is an updated Probe chart from John…notice how the stock has significantly out-performed Gold since April, and there’s a good reason for that…John’s updated 2-year weekly PRB chart shows strong support around the $2 level…PRB closed yesterday at $2.05…it’s unchanged as of 7:00 am Pacific…

Canada Carbon Inc. (CCB, TSX-V) Update

Canada Carbon (CCB, TSX-V) gained fresh momentum after pushing through resistance at 25 cents Tuesday, and closed up 3 cents yesterday at 27 cents…it has doubled over just the last dozen trading sessions…this morning, the company released preliminary VTEM airborne survey results which have identified multiple anomalies over the 20.7 sq. km Miller hydrothermal lump/vein graphite property in Quebec…of greatest significance, CCB stated, is a large anomaly that extends from the previously announced (VN1) graphite vein discovery for 285 metres to the southeast and 15 m to the northwest…the company has been carrying out trenching on 40 m of the anomaly’s 300 m length…

Below is an updated CCB chart from John…new support now exists at 25 cents while Fib. resistance sits at 30 cents…cautionary note – RSI(14) is solidly in the overbought zone at 75%…it could remain there for a little while longer but at some point in the near future there will have to be an unwinding of that…CCB is unchanged at 27 cents through the first 30 minutes of trading…

Note: John, Jon and Terry do not hold share positions in PRB or CCB.  John and Jon both hold share positions in GGI while Jon also holds a share position in PGX.

Gold is under pressure again today, falling below $1,350 though it’s still within the $1,320 to $1,350 support band…today’s close will be interesting – we’ll see if bargain hunters jump in and provide a late-day reversal…as of 7:15 am Pacific, bullion is off $35 an ounce at $1,331…Silver is 97 cents lower at $22.25 – no surprise that it’s testing the $22 level where there is strong support…Copper is off a nickel at $3.19…Crude Oil is bucking the commodity trend today, up 72 cents to $108.26 while the U.S. Dollar Index is flat around 81.50…

While Gold’s recent move into the $1,430’s surprised Goldman Sachs as bullion went above their $1,300 an ounce forecast, the firm said yesterday it expects that Gold prices “will decline into 2014 on the back of an acceleration in U.S. activity and a less accommodative monetary policy stance.”

Goldman said Gold prices are already shedding the risk premium added on concerns of a military strike in Syria, particularly as a diplomatic solution to the problem may be in reach according to some pundits (who, we might add, are likely engaging in wishful thinking)…

For the September FMOC meeting slated for next Tuesday and Wednesday, Goldman said its economists expect a tapering of the Fed’s quantitative easing program…“This could prove the catalyst to push Gold prices lower although the looming debt ceiling may initially limit the downside to Gold prices until it is raised by the end of October,” they said…

There’s a belief in some quarters that the prospect of Fed tapering – an initial reduction of at least $10 billion a month in the bond-buying program – has already been baked into Gold prices, and bullion may go up next week no matter what the Fed decides to do…keep in mind that U.S. job growth continues to be lackluster and the jobless claims report this morning was more of a glitch than a sign of an improving U.S. labor market…

China’s Gold Appetite Continues

Even as the rather economically incompetent Indian government is seeking to further restrict Gold imports and is coming down hard on Gold loan companies across the country, China could well be on its way to import 1,000 tonnes of Gold for the whole year if recent buying trends continue…China imported 129 tonnes of physical Gold from Hong Kong in July, up from the 113 tonnes it imported in June, according to the Hong Kong Census and Statistics Department…this is the 2nd highest import level on record in a month and a year-over-year increase from 76 tonnes in July 2012…the July imports are also over and above the 518 tonnes of Gold imports the nation already brought in through the first 6 months of 2013, according to available data…

The largest Gold ETF in the U.S. holds just over 900 tonnes of physical Gold, and China has imported over two-thirds of that amount in just 7 months…

Overall Gold Demand Figures From Thomas Reuters GFMS

Thomas Reuters GFMS predicts that global Gold demand will fall during the 2nd half of the year as bar buying slips from a record and central banks add less to reserves…total demand will slide to 2,237 metric tons this half from 2,309 tons a year earlier and 2,533 tons in the first 6 months of 2013, the London-based researcher said today in a report…jewelry demand that reached a 6-year high in the 1st half on record buying in China will ease in the 6  months through December, it said…“Although an improving outlook for the U.S. economy has raised the probability that the Fed will start to scale back its stimuli after its September meeting, the majority of the negative factors have already been priced in,” GFMS said. “Demand in India is forecast to be some way short of the elevated level in the second quarter. Turning to China, the prospect for local demand is more promising, but growth is expected to cool down.”

Today’s Markets

Asian stocks were mixed overnight…Japan’s Nikkei average was down slightly but China’s Shanghai Composite gained 14 points to close at 2256…

European shares finished mostly flat today, recovering from earlier losses after the release of some weaker than expected economic data…industrial production data for July showed a 1.5% drop on a monthly basis, worse than the 0.1% expected…

The Dow is up 5 points as of 7:15 am Pacific…the number of new applications for U.S. jobless benefits fell below 300,000 for the first time since 2006, but the government attributed the surprising plunge to computer-related delays instead of a sudden improvement in the labor market…initial claims sank by 31,000 to 292,000 in the week ended Sept. 7, marking the lowest level since April 2006…yet a Labor Department official said 2 states made changes to their computer systems that resulted in some claims not being processed in time…the Labor Day holiday may have also skewed the report…as a result, initial claims are likely to rise in the following week and probably move closer to their prior range of around 325,000…economists surveyed by MarketWatch had expected claims to rise to 330,000 on a seasonally adjusted basis from an unrevised 323,000 in the last week of August…meanwhile, in other U.S. economic news, lenders initiated foreclosure action in August against the fewest U.S. homes for any month in nearly 8 years…

The TSX, hurt by weakness in commodities today, is off 84 points through the first 45 minutes of trading…the Venture is holding up quite well, considering the sell-off in Gold, as it’s currently down just 4 points at 940…

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

More positive results this morning out of the Patterson Lake South uranium discovery from Fission Uranium (FCU, TSX-V) and JV partner Alpha Minerals (AMW, TSX-V) which of course FCU will be taking over in a friendly deal, subject of course to shareholder approval of both companies…notably, the R780E high-grade zone continues to develop as shown in results from PLS13-082, located 15 m east and 10 m north of hole PLS13-080 (13.41 m of total composite “off-scale” – greater than 9999 cps)…multiple zones of mineralization were intersected within a 120 m section between 118.5 m and 238.5 m, ranging in width from 1.0 m to 35 m…the main interval of mineralization is over a width of 35 m (146.5 m – 181.5 m) which is characterized by variably weak to strong radioactivity throughout, with occasional narrow intervals…a total composite of 4.7 m of “off-scale” (greater than 9999 cps) radioactivity is present in several discrete intervals ranging in width from 0.2 to 3.0 m…

Also released this morning were results from PLS13-089, collared 15 m west of PLS13-082…multiple zones of generally weak to moderately radioactive mineralization were intersected in hole #89, ranging in widths from 0.5 m to 16.5 m, within a 126.5 m section between 97.5 m and 224 m…

Two things are very interesting about John’s updated 6-month daily FCU chart below…RSI(14) is bouncing off previous support, and the rising 50-day SMA continues to provide strong support…PLS is a major discovery and a potential future buy-out of Fission could come at a significantly higher price…as of 7:15 am Pacific, FCU is off 2 pennies at $1.14…

Dolly Varden Silver Corp. (DV, TSX-V)

Dolly Varden Silver (DV, TSX-V) gained a penny-and-a-half yesterday on encouraging initial results from its summer drill program, but volume was only very modest at 137,000 shares (the best volume though since August 26)…results for 10 additional holes are expected in the coming weeks…this is an attractive long-term story as Dolly Varden’s property hosts 4 historical deposits (2 that were mined) in stratigraphy that is similar to Eskay Creek…the company is currently focused on the expansion of historical resource estimates with the goal to ultimately re-start production in the Dolly Varden camp, and to explore a major untested Eskay Creek type precious metal rich target located on the property…this summer’s drilling is giving the company a better understanding of the overall system as distinct mineralization phases have been identified, including a late phase which introduces native Silver at Torbrit…as President and CEO Ron Nichols commented in yesterday’s news release, this fact represents an important breakthrough in understanding the formation, structure, and distribution of the highest-grade mineralization and will be extremely valuable in targeting future exploration…

Below is an updated DV chart from John, a 1-year weekly…resistance is at 20 cents while strong Fib. support exists between 14 and 16 cents (16 cents is also where the rising 100-day SMA currently sits)…through the first 45 minutes of trading, DV is up half a penny at 19 cents…as always, perform your own due diligence, and keep in mind that DV will certainly be impacted by Silver’s ultimate direction – up or down…

Eagle Hill Exploration Corp. (EAG, TSX-V)

Eagle Hill Exploration (EAG, TSX-V) showed some strength yesterday, closing 2 cents higher at 13 cents after hitting an intra-day high of 15 cents…the company continues to advance its now 100%-owned Windfall Lake Property in northwestern Quebec…John’s updated 6-month daily chart shows strong very support around 10 cents (it touched a low of 11 cents Tuesday) and important Fib. resistance at 14 cents…the trend is clearly bullish, so any near-term weakness presents an opportunity, in our view, with the possibility of an eventual breakout above the 14-cent resistance area…EAG is down half a penny at 12.5 cents as of 7:15 am Pacific…

Pine Cliff Energy Ltd. (PNE, TSX-V)

An energy stock we’ve been keep an eye on in recent months is Pine Cliff Energy (PNE, TSX-V) which has shown impressive growth since the beginning of last year…PNE has no bank debt and its production levels have risen to approximately 6,850 barrels of oil equivalent per day, weighted approximately 97% toward natural gas…technically, the stock is looking strong with an all-time high close yesterday of $1.20…what appears to be developing is a breakout above an ascending triangle but this requires confirmation as per John’s 6-month daily chart…PNE is down 2 cents at $1.18 as of 7:15 am Pacific…as always, perform your own due diligence…

Note: John, Terry and Jon do not hold share positions in FCU, DV, EAG or PNE.

Gold is steady so far today after hitting a 3-week low and testing strong support near $1,350 yesterday…as of 7:00 am Pacific, the yellow metal is up $1 an ounce at $1,365…Silver has added 19 cents to $23.16…Copper is up a penny at $3.25…China imported 388,000 metric tons of Copper and related products last month, which was a 6% decline compared to July…however, this was still firmly above the average monthly import levels of 350kt over the past 2 years…Crude Oil has added 28 cents to $107.67 while the U.S. Dollar Index is off one-fifth of a point at 81.62…

Easing fears of a potential imminent military strike on Syria drove Gold and Oil lower yesterday, but the way President Obama has handled this issue in our view has made him look weak on the international stage which ultimately may have bullish implications for bullion…last night, he asked Congress to postpone a vote endorsing a military strike – a vote he knows he’s likely to lose – on hopes that there could be diplomatic progress given talks between Russia and Syria that have the appearance of stalling tactics more than anything else…at a time when he should be focusing on the U.S. economy like a laser beam (“The economy, stupid,” was a successful phrase in Bill Clinton’s 1992 election victory), Obama has unnecessarily tangled himself up over a foreign domestic conflict (a civil war with 2 bad sides) that presents a no-win situation for the United States and the West…

On this the 12th anniversary of the terrorist attacks on the United States, a new Fox News national poll has found that nearly 4 voters in 10 (38%) feel the U.S. is less safe today than before 9/11…that’s up 5 percentage points from 2011 (the last time this question was asked), and is the highest number saying the country is less safe in any Fox News poll…

Gold prices could rise if the Fed does not trim its bond-buying program as much as market consensus expects, according to BofA Merrill Lynch Global Research…the firm says expectations are that the Fed will taper its monthly asset purchases by $10 billion to $15 billion…that view is already priced into the market…“If the Fed is more dovish than that, i.e., tapers by less or delays tapering entirely, Gold prices could rally in the short term.”

Technically, Gold is showing solid support at the top of a previous resistance band between $1,320 and $1,350…there’s also an uptrend line in place at $1,350 that has developed this summer…within that previous resistance band (now very strong support) is also the rising 50-day moving average (SMA) around $1,327…

Despite the fact official Gold imports by India (how much bullion is being smuggled into the country now?) crashed 95% in August, to a meagre 2.5 tonnes as compared to 47.5 tonnes in July, the Indian government is reportedly looking to impose a fresh round of duty curbs on the import of precious metals…

China Leadership To Push Ahead With Reforms

China’s economy is stable, local government debts are under control and the leadership will push ahead with reforms, Premier Li Keqiang said today, according to a report from Reuters…Li also told government leaders and company executives at a forum in the northeastern port city of Dalian that the country will keep its monetary policy stable even if capital markets show volatility…“China is at a critical stage of restructuring and updating its economy. China’s economic fundamentals are good and economic operations are stable,” Li said…he reiterated that the Chinese government will safeguard the lower limits of growth and employment, without giving specific numbers…while protecting growth, China will also speed up reforms, including liberalizing interest rates and increasing efforts to boost consumption, he added…

Today’s Markets

Asian markets were relatively unchanged overnight…China’s Shanghai Composite finished 3 points higher at 2241…

European shares are mixed in late trading overseas…

The Dow, which has gained nearly 270 points the last 2 sessions, is up another 28 points as of 7:00 am Pacific…the TSX is off 27 points while the Venture is up a point at 944, just slightly above its rising 20-day SMA…the rising 50-day SMA is currently at 925, providing additional support…Caribou King Resources (CKR, TSX-V) is one of today’s early volume leaders, gaining 2 cents to 7.5 cents and a new 52-week high on total volume (all exchanges) so far of 3.4 million shares…CKR reported this morning that ground-based electromagnetics (EM) has identified 4 significant conductors on the company’s 100%-owned Mulloy Graphite Property, located 10 km west of Zenyatta Ventures‘ (ZEN, TSX-V) Albany Project…

Zenyatta Ventures Inc. (ZEN, TSX-V) Update

Zenyatta Ventures (ZEN, TSX-V) felt the need through a news release yesterday to address the current slump in its share price, saying it “has become aware of recent misleading and inaccurate commentary in the marketplace regarding the company’s 100-per-cent-owned Albany graphite deposit which has negatively affected the share price. Although the company would prefer to stay focused on continued development of its exciting graphite project, it feels a need, from time to time, to set the record straight from malicious attacks.”

One can argue that ZEN is being a little bit over-sensitive as critics have their role to play, just as ZEN’s allies do…from a purely technical standpoint, the recent share price action in Zenyatta has really been quite normal as the stock unwinds a temporarily heavy overbought condition that had emerged during the last couple of months as you can see in John’s 6-month daily chart…interestingly, ZEN also touched its still-rising 100-day SMA yesterday where it has found consistent support since its big move started last year…as of 7:00 am Pacific, ZEN is unchanged at $3.25…

Teuton Resources Corp. (TUO, TSX-V) Update

Last month, we wrote about several different potential catalysts for Teuton Resources (TUO, TSX-V) when it was trading below 10 cents a share…TUO has been around for a long time and holds a large amount of ground in strategic areas around northwest British Columbia…it’s also currently drilling the interesting King Tut zone, 150 metres south of the border between its High Property and Pretium Resources‘ (PVG, TSX) Brucejack-Snowfield Project approximately 60 km north of Stewart…yesterday, TUO announced that it has sold its remaining interest in the Tennyston Property to Brigade Holdings Ltd., a Hunter Dickinson company, for $7 million, being $500,000 plus $6.5 million in subscription receipt units (shares and warrants) of Brigade…

Teuton hit an 8-month intra-day high yesterday of 19 cents before pulling back and closing up a penny-and-a-half at its 15-cent resistance level…if and when this resistance area will be overcome is anyone’s guess, but we do like the odds of that occurring at some point – sooner or later – given the overall technical posture of the stock as shown in the 15-month weekly chart below from John…as always, perform your own due diligence…TUO is up a penny at 16 cents through the first 30 minutes of trading…

Dolly Varden Silver Corp. (DV, TSX-V) Releases Assays From 1st Holes Of Summer Drill Program

Dolly Varden Silver Corp. (DV, TSX-V) has released assay results from the 1st several holes of the company’s 3,063-metre (14-hole) summer exploration program targeting extensions of the historically mined Torbrit deposit at its 64 sq. km Dolly Varden Property in northwestern B.C., 120 km SSE of the historic Eskay Creek mine…DV’s drilling is focused on confirmation and extension of mineralization from the Torbrit Mine, one of 2 historically mined high-grade Silver deposits on the property…TB13-03 provided the best intercept – 17.1 metres grading 509 g/t Ag (14.0 oz/ton)…the program this summer, according to DV, shows evidence that the Silver mineralization at the property was introduced in more than 1 phase, with a later native Silver rich phase adding significantly to the overall Silver grade…this is an interesting property with attractive potential and a strong geological team overseeing it…DV opened 2 cents higher at 19 cents this morning…after 30 minutes of trading, it has backed off and is now unchanged at 17 cents…

Ginguro Exploration Inc. (GEG, TSX-V)

We’ve avoided the temptation to get overly excited about recent channel sample results released by Ginguro Exploration Inc. (GEG, TSX-V) as GEG’s Pardo Property near Sudbury is far from being fully understood, and the company is also trying to complete financings at 10 cents and 15 cents…in situations like this, once the money is in the company’s till, it’s like someone taking their foot off the accelerator – the share price often retreats rather significantly, at least temporarily…

GEG’s 2.5-year weekly chart provides ample warning to investors who wish to chase this thing right now…GEG, which shot up as high as 40 cents Monday, is technically very overbought and prone to additional weakness after falling the last couple of days…it needs to consolidate and form a base…and of course the company needs to wrap up its financings…as of 7:00 am Pacific, GEG is down 1.5 cents at 30 cents…

Note: John, Terry and Jon do not hold share positions in TUO, DV, ZEN or GEG.

We are experiencing server issues this morning, so this is a very abbreviated edition of Morning Musings and with no charts as well due to the difficulties the host server is experiencing…we will attempt to post an updated version later in the day (likely after market close) when the problem is corrected…we appreciate your patience and understanding…this is one of the rare occasions our server has had this sort of an issue over the last 4 years…

Gold is under pressure today as concerns over a possible attack on Syria quickly fade but bullion is underpinned by strong technical support at $1,350, the top of a previous resistance band and where there’s also a rising trendline on the weekly chart…as of 7:00 am Pacific, Gold is down $28 an ounce at $1,359…Silver is 86 cents lower at $22.86 (strong support for Silver within the previous resistance band between $22 and $23)…Copper is flat at $3.25…Crude Oil has cooled off by $2.38 a barrel to $107.13 while the U.S. Dollar Index is relatively unchanged at 81.96…

The Syrian government has apparently accepted a Russian proposal to put its chemical weapons under international control to avoid a possible U.S. military strike, Interfax news agency quoted Syria’s foreign minister as saying this morning…how a regime such as Syria can be trusted, however (not to mention the Russians), is another question, so we’ll see how this plays out in the days ahead…this could take President Obama “off the hook”, though, as it appears there’s little appetite in the U.S. for punishing the Syrian regime with a missile attack for its use of chemical weapons and therefore inserting itself in an ugly civil war that has no “good” side…

The big driver for Gold prices at the moment of course is not Syria but the Fed and whether or not it plans to start scaling back its bond buying program as early as its upcoming meeting next week…it’s likely not a matter of when QE3 begins to wind down, but the timing and the extent of that…jobs data in the U.S. continues to be lackluster…the argument can be made that Gold will go up no matter what the Fed decides next week as a scaling back of QE3 has likely already been baked into the Gold price…

Today’s Markets

Asian markets were strong overnight with China’s Shanghai Composite gaining another 25 points to close at 2238, a 3-month high, following the latest release of economic data for August…industrial output rose 10.4% from a year ago, topping Reuters’ forecasts for a 9.9% rise…meanwhile, retail sales climbed an annual 13.4% and fixed asset investment grew 20.3% year-on-year from January to August, both slightly above market estimates…the strength in the Chinese market is highly encouraging as the Shanghai correlates well with both the TSX and the TSX Venture Exchange as John’s charts have shown…yes, the TSX and the Venture are both a little weak this morning but their overall trends remain bullish…

Japan’s Nikkei average jumped 218 points to finish at 14423…European shares, meanwhile, are up significantly in late trading overseas…

North America

The Dow has added 81 points as of 7:00 am Pacific after yesterday’s strong session…the TSX is down 59 points while the Venture has slipped 5 points to 947…the rising 10 and 20-day moving averages (SMA’s) are at 945 and 941, respectively…

Seabridge Gold Inc. (SEA, TSX) Hits High-Grade Copper At Depth At KSM Project

Interesting news from Seabridge Gold (SEA, TSX) this morning as it hit an impressive Copper-Gold intercept as part of deeper drilling at its KSM project near Stewart…the better part of the intercept in K-13-29 showed 69 metres @ 1.14 g/t Au and 1.78% Cu, starting about 642 metres downhole… this is what can happen in northwest B.C. by drilling at depth, which is why Pete Bernier’s Prosper Gold (PGX, TSX-V) is aiming to go as deep as 800 metres during its current initial round of drilling at the Sheslay Valley Cu-Au Porphyry Project…the average length of Firesteel Resources’ (FTR, TSX-V) 2 dozen holes drilled at the Star target at the Sheslay was only 174 metres, and 80% of those holes ended in strong Cu-Au mineralization…

In August, Seabridge announced it had discovered a higher grade zone (Deep Kerr) on its 100%-owned project which lies beneath the Kerr porphyry deposit (check out their August 20th news release) with wide intercepts containing approximately twice the per-tonne metal value of KSM’s proven and probable reserve…this morning’s results reveal an exceptional bornite-rich zone within the higher grade Deep Kerr…bornite is a Copper mineral generally formed at higher temperatures within a core zone and is typically found in larger, higher-grade Copper deposits…the company is now focused on expanding the bornite zone and finding where its expression is strongest…drilling continues with 5 core rigs…Seabridge is down 83 cents to $13.27 in early trading today due to general weakness in Gold stocks…

Bellhaven Copper & Gold Inc. (BHV, TSX-V) Drills 271 Metres Grading 1.23 G/T AuEq At La Garrucha

Bellhaven Copper & Gold (BHV, TSX-V) has delivered another 200 metre+ intercept averaging over 1 g/t Au at its La Garrucha Gold-Copper Prophyry Project at La Mina, Colombia…the company has now completed the 1st phase of drilling at La Garrucha…4 of the 6 holes collared on 2 sections delivered long intercepts containing over 1 g/t Au…BHV is now reviewing all data in preparation for a 2nd round of drilling at a later date…BHV is up 1.5 cents at 12 cents through the first 30 minutes of trading…this would be doing better if the market had more to speculate on at the moment…the company’s hasn’t indicated when the next round of drilling may begin…

Macro Enterprises Inc. (MCR, TSX-V)

Macro Enterprises (MCR, TSX-V) just keeps on advancing (has now moved above John’s projected Fib. level) and has doubled in price since we initially brought this company to our readers’ attention in late May…MCR specializes in construction and maintenance of pipelines in Alberta and British Columbia, and has been an earnings machine this year…it hit a new all-time intra-day high of $6.05 yesterday and is up 2 cents at $5.89 as of 7:00 am Pacific…

Gold has traded between $1,381 and $1,391 so far today…as of 5:30 am Pacific, bullion is down $2 an ounce at $1,387…Silver is off 27 cents at $23.57 (John has updated charts at the bottom of today’s Morning Musings)…Copper has added 3 cents to $3.27 on positive data out of Asia…Crude Oil has retreated 30 cents a barrel to $110.23 after a major surge Friday, while the U.S. Dollar Index has slipped one-quarter of a point to 82.03…

Syria, of course, may influence Gold this week, but it’s the Fed, and the question over when and by how much it may taper that is driving bullion these days…Friday’s weaker than expected jobs data out of the U.S. was bullish for Gold and may convince the Fed to keep the pedal to the metal for a while yet…there’s also the belief in some quarters that tapering has already been baked into the Gold price, and Gold will go up no matter what the Fed decides to do at its meeting next week…

Some interesting comments over the weekend from Christine Legarde, managing director of the International Monetary Fund…she said the Fed cannot afford to ignore the risk of fallout in emerging markets from the winding down of its $85 billion-a-month bond buying program…

“Very negative spill-over effects on the emerging market economies could very much backfire on other economies. So to assume that [the] domestic economy is totally isolated, that a country is an island, would not be the right approach,” Lagarde told CNBC at a forum in northern Italy…“Without necessarily changing the mandate, without reviewing the terms of references, and maybe without even acknowledging it, I cannot believe that central bankers do not take into account what’s happening elsewhere in the world,” she added…countries with large financing needs – because they have large trade gaps or budget deficits or because they’ve borrowed heavily abroad – like India, Turkey, Indonesia, South Africa and Brazil – have all suffered big market selloffs in recent weeks due to a reversal in capital flows…when U.S. interest rates were at historic lows, a wave of cash came into these emerging markets in search of higher yields…

Holdings in the largest U.S. Gold-backed exchange traded products dropped 1.8 metric tons last week after rising in the previous 3 weeks…

Today’s Markets

Robust economic data out of both Japan and China sent Asian markets sharply higher overnight…China’s Shanghai Composite gained 73 points or 3.4% to close at 2213…the Chinese economy found its feet in August, with inflation remaining subdued as exports rose more than expected, giving a rosier outlook for the 2nd half of the year…consumer prices rose 2.6% from a year earlier, just a touch below July’s 2.7% pace, the statistics bureau said today…inflation is unlikely to pass the 3% threshold in 2013, leaving it well within the government’s comfort zone and beneath its official “upper limit” of 3.5%…the data follow trade figures released yesterday that showed a 7.2% jump in exports and a 7% rise in imports for August, beating expectations and pointing to firmer Q3 growth than had previously been expected…meanwhile, producer price inflation, which has been negative since March 2012, improved, giving some hope to Chinese manufacturers struggling with slumping margins and excess capacity…

The Nikkei average climbed 344 points or 2.4% overnight…Japan’s economy grew at a much faster pace in the 2nd quarter than initially estimated, data showed today…the country’s Cabinet Office revised the April-June GDP data, saying the economy grew 3.8% on an annualized basis on strong capital investment…that’s up from a preliminary reading of 2.6% growth released a month ago, and much higher than the 2.5% expansion in the U.S. and 1.1% growth in the euro zone during the same period…the reading marked the 3rd straight quarter of growth…

European shares are off modestly in late trading…

North America

Stock index futures in New York as of 5:30 am Pacific are pointing toward a slightly higher open on Wall Street…

Venture Exchange – Is The Bear Market Over?

Below is a very revealing 3-year weekly chart from John…you can see how the Venture went from being in an extended overbought condition in late 2010-2011 to an extended oversold condition in the spring of this year…the ADX trend indicator clearly shows the bullish trend peaking in early 2011, and the bearish trend peaking in June of this year…

RSI(14) is currently at 43% and in a nice, gradual uptrend as it finally moved out of the oversold zone…buy pressure is increasing rapidly, and a bullish +DI/-DI crossover could soon be in the works…a bearish crossover in early 2011 heralded the start of the nasty bear market that sent the Venture down 65% (2465 to the late June low of 859, important Fibonacci support)…

The critical technical challenge for the Venture in the coming weeks is to overcome resistance at 970 and also climb above the downsloping wedge which is currently around 980…a huge wave of buying could enter this market if and when the Venture crosses these important barriers…the odds of this occurring, we believe, are quite high, given the range of technical signals that are flashing positive right now…the next couple of weeks are going to be very interesting…the Venture gained 16 points last week and closed Friday at 955…

WTIC Updated Chart

The strength in Crude Oil is also encouraging for the Venture…John called this one a while back – WTIC at $115 a barrel…a confirmed breakout has occurred above a pennant, and the next chart resistance after the $110 Fib. level is $115…below is a 6-month daily WTIC chart…note the bullish “W” pattern in the RSI(14) which has plenty of room to move higher…

CRB Index Updated Chart

The CRB Index appears to have bottomed out after falling about 30% from its 2011 high…this is also very positive for the Venture…below is a 20-year monthly CRB chart which shows that a bullish reversal is taking place in commodities…

Bottom-Fishing Opportunity:  Adventure Gold Inc. (AGE, TSX-V)

First off, Adventure Gold (AGE, TSX-V) is unlike most Venture companies – it’s actually well-run, they’ve outlined a deposit (inferred resource of nearly 800,000 ounces of Gold) on 1 of their properties, and they’ve got a legitimate shot at a significant discovery elsewhere…we’re quite familiar with the Adventure Gold team which is headed up by Marco Gagnon (President and CEO) and includes geologist Jules Riopel (VP, Exploration & Acquisitions) who is very good at his craft…we spent time with both of them during a site tour of the Pascalis Property near Val d’Or 2 years ago…given the strategic location of that deposit – very close to Richmont Mines‘ (RIC, TSX) Beaufor Mine and their Camflo Mill – and the geometry of it, Pascalis has good future potential as a low-cost producer…we also like the odds of AGE being able to add tonnage at Pascalis (inferred resource is 9.13 million tonnes grading 2.63 g/t Au for 770,000 ounces)…

Meanwhile, AGE controls 100% of 600 sq. km of very prospective Abitibi geology with its Detour Quebec and Casa-Cameron projects…a total of 618 line km’s of heli-borne VTEM-type surveys, 50 line km’s of IP surveys and 265 line km’s of detailed ground magnetic surveys have been completed on both projects since the beginning of this year…this work has led to the identification of many new promising drill targets within the favorable geological environment outlined by AGE’s previous exploration work and along strike of the proven Gold-bearing deformation zones…

Keep in mind that Detour Gold Corp. (DGC, TSX) continues to explore aggressively its large landholdings as it has recognized that the Lower Detour deformation zone has many similarities with the Sunday Lake deformation zone situated 5 km to the north which hosts the Detour Lake mine…the LDDZ major structural break is mainly controlled by Adventure Gold on the Quebec side and remains largely under-explored…

Adventure Gold has been trading at a 3-year low since late June – interestingly, at a support level it landed on in 2010 just prior to when it started its run all the way to 80 cents by early 2011…when AGE starts to pick up steam, it can move in a hurry…as the saying goes, buy low and sell high…for patient investors, this appears to be an ideal time for accumulation…AGE had $2.5 million in working capital as of April 30 (its most recent financials) and has 68 million shares outstanding…insiders took a piece of a small flow-through financing ($430,000) at 42 cents at the end of last year…

Below is a 15-month weekly AGE chart from John…the stock has been basing in a horizontal channel between 13 and 17 cents for the past 10 weeks…

Updated Silver Charts

Silver has been showing strong support at $23 (the previous resistance band between $22 and $23 is now support) while a temporarily overbought condition has been unwinding…for now, Silver appears range-bound between $22 and $24.50 as it catches its breath after a nearly 20% jump in August…

6-Month Daily Silver Chart

11-Year Monthly Silver Chart

As we indicated previously, the long-term chart is following a pattern similar to that following the 2008 Crash and the 2012 low…on both occasions, RSI(2) shot up rather quickly from very oversold conditions to overbought conditions…if that pattern holds, we should see higher Silver prices in Q4…there is major resistance, however, at $26 and the down trendline as you can see on this 11-year chart…if Silver can get above that down trendline, look out…

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