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Gold is shooting higher this morning, which shouldn’t be surprising given how U.S. politicians – by votes of 82-18 in the Senate and 285-144 (congratulations to the 162 in Congress who stood up for change) have once again, at the 11th hour, kicked the debt can down the road and have pushed off difficult and long-term decisions about the country’s fiscal health for another day…this is completely fine with the President whose train wreck of a health care plan, a proven jobs-killer, remains fully intact and will continue to inflict economic damage on the country…what last night’s deal almost ensures is that the Federal Reserve will keep the printing presses running overtime well into next year, especially with Janet Yellen at the helm beginning at the end of January…U.S. job growth will remain tepid amid continuing political, fiscal and regulatory uncertainty in the nation, and the near guarantee of another fight on Capitol Hill when the next debt ceiling deadline arrives in just a few months…as one Senator said, this deal is just another promise to work on the problem tomorrow…Obama, a strong believer in Big Government, has no serious interest in tackling the U.S. debt problem and overall dysfunctional fiscal policy, and neither do most U.S. Senators…enough Republicans gave up on their fight last night to allow the legislation from the Senate to pass the House…they will try and re-group for another battle down the road…

Last night’s agreement extends U.S. borrowing authority until February 7, although the Treasury Department would have tools to temporarily lengthen its borrowing capacity beyond that date if Congress failed to act…the deal will also fund government agencies until January 15, ending a partial government shutdown that began with the fiscal year on October 1…

Oh, and in case you missed it, politicians of course couldn’t help but throw some pork into last night’s deal (with just about no chance for public review)…one section of the bill hikes funding for projects along the Ohio River, portions of which flow through Illinois and Kentucky, states represented by Sen. Dick Durbin, D-Ill., and Senate Minority Leader Mitch McConnell, R-Ky…the bill boosts money for the projects by $2.1 billion, from an original $775 million…Arizona Senator John McCain called this “disgraceful” but still voted for the deal…what’s a couple of billion dollars,  anyway, when you’re already running a deficit close to $1 trillion?…Washington is just not serious about dealing with its spending problem…at some point, there WILL be a default and at that point the nation will finally wake up…

The greenback is getting hammered this morning and deservedly so…Macroeconomic Advisors reckons that lower discretionary spending caused by fiscal policy uncertainty has reduced U.S. output growth at about 0.7 points a year since 2010 – a painful amount when total growth is in the range of 2.5%…“It feels like this is just kicking the can down the road,” Larry Fink, CEO of BlackRock, one of the world’s largest investment firms, told CNBC…“It’s going to have a lasting damage to consumer confidence, a lasting damage to CEO behavior in terms of job creation and, importantly, it’s going to create a marginal change in foreign investors’ behavior in investing in U.S. Treasurys.” In turn, Fink said, he expects a “pretty weak fourth quarter” and a slow start to the 1st half of next year…he also suspects that another budget fight will prompt the Federal Reserve to continue its quantitative easing program…

There is no shortage of polls showing that Americans are fed up with their elected officials…a recent recent CNN/Opinion Research Corp. poll showed that 63% of respondents were angry at Republicans for their handling of the shutdown, 57% were mad at Democrats and 53% expressed disappointment with Obama…a more light-hearted poll from Public Policy Polling last week may be even more telling, as pollsters pitted Congress against everything from Wall Street to witches…among the things that bested Congress, according to respondents: dog poop (47%-40%), hemorrhoids (53%-31%), jury duty (73%-18%), toenail fungus (44%-41%), cockroaches (44%-42%), the IRS (42%-33%), the respondents’ mothers-in-law (64%-20%), potholes (47%-36%) and zombies (43%-37%)…

Anyway, the good news is, Gold may finally be getting its legs back…for now it seems, the U.S. dollar’s leading role as the pre-eminent international reserve asset and settlement currency for much of world trade and investment has been tarnished…as of 7:30 am Pacific, bullion is up $30 an ounce at $1,313…Silver is 45 cents higher at $21.87…Copper is off 3 pennies to $3.25…Crude Oil is down 53 cents to $101.76 while the U.S. Dollar Index has fallen two-thirds of a point to 79.88…

The U.S. Dollar is ready for the garbage heap…we noted a few weeks ago how it had broken an uptrend in place since 2011…below is a 6-year U.S. Dollar Index monthly chart from John…expect a test of the support band between 78 and 79 – this should mean higher Gold prices…

Today’s Markets

Asian markets were mixed overnight…Japan’s Nikkei average finished 119 points higher at 14587…China’s Shanghai Composite slid 5 points to 2189…European shares, meanwhile, were down modestly today…

In New York, the Dow is off 71 points through first 60 minutes of trading…the TSX is up 10 points – on the edge of an important breakout – while the Venture has encouragingly jumped 18 points to 944 after successfully testing critical support…the next couple of trading sessions for the Venture are going to be extremely important for confirmation that this sudden fresh momentum is for real…we believe it might be…

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

Probe Mines (PRB, TSX-V) came out with more solid results this week from its Borden Lake Gold deposit in northern Ontario…as we’ve been explaining in recent months, what’s exciting about Borden Lake is how Probe is developing a high-grade zone to the southeast of the original lower-grade deposit…Probe’s priority continues to be to delineate and define this high-grade area in order to incorporate those results into an updated overall resource calculation…Borden Lake has been re-classified by the company as a more traditional high-grade, Archean lode Gold system, amenable to underground recovery, which is also bounded by significant ancillary lower-grade mineralization, the latter ideally suited to potential open-pit mining techniques…this week’s results have extended the high-grade zone further to the southeast between sections 1550 m SE and 2000 m SE…highlights included 31.3 m @ 4 g/t Au (BL13-477), 12.4 m @ 10.9 g/t Au (478), 15.7 m @ 5.2 g/t Au (479), 24.2 m @ 4.1 g/t Au (485), 42 m @ 3.1 g/t Au (488), 30.4 m @ 3.3 g/t Au (490), 15.3 m @ 3.5 g/t Au (493), 17.9 m @ 3.7 g/t Au (498) and 13.9 m @ 5.6 g/t Au (507)…drilling in the high-grade zone continues…

Technically, Probe has shown some slight weakness recently but has very strong support around the $2 level with a nicely rising 100-day moving average (SMA) at about $1.90…PRB has significantly outperformed Gold since May, right around the time Agnico-Eagle Mines Ltd. (AEM, TSX) took a position in the company…

Contact Exploration Inc. (CEX, TSX-V)

Contact Exploration Inc. (CEX, TSX-V) is an emerging energy play with strong potential as we’ve pointed out in recent weeks…it had a powerful day yesterday with a gap-up to 26 cents, a level it held throughout the day, with a close at 27 cents (up 3 pennies) on total volume (all exchanges) of 1.7 million shares – it’s busiest day of the year…Contact announced the successful completion and testing of its 4th Montney well in Alberta…the total drill depth was approximately 70 to 100 metres vertically deeper and 2 miles farther west than any other Contact-operated Kakwa well, extending the scope and magnitude of the company’s East Kakwa Project…

Below is a 2.5-year weekly chart from John…since October of last year, CEX has traded in a horizontal channel between 18 and 28 cents…watch for a potential breakout above this 28-cent resistance area which obviously would be an extremely bullish development…RSI(14) is in a nice uptrend and can support a healthy move higher in the near future…CEX is off half a penny at 26.5 cents on light volume as of 7:30 am Pacific…

Zenyatta Ventures Ltd. (ZEN, TSX-V)

How the mighty can fall so quickly…Zenyatta Ventures‘ (ZEN, TSX-V)  consistent, powerful uptrend since last year showed clear signs of breaking down in late September, and now the stock is going to have to fight very hard to prevent a near-term reversal to the downside in the 100-day SMA…support around the $2 level really needs to hold – if it doesn’t, and the odds right now don’t look great given the downside momentum, then the next major support level is in the $1.60’s as shown in John’s 6-month daily chart..ZEN is holding critical support so far this morning, rebounding from a low of $2.06, which is positive…again, the $2 level is key support…

Run of River Power Inc. (ROR, TSX-V)

There are some companies on the Venture actually making money…we pointed out Macro Enterprises Inc. (MCR, TSX-V) to our readers in May when it was trading around $3 a share and it has more than doubled since then thanks to continued earnings momentum…another emerging “earnings” play worthy of our readers’ due diligence is Run of River Power (ROR, TSX-V)…we’ll have more on this one next week…in the meantime, below is a 5-year weekly chart from John…ROR has doubled since early September and is currently over-bought technically with strong support at 7 cents…it closed up 2 cents yesterday at 10.5 cents…expect some near-term consolidation which may provide a better entry point…definitely worth keeping on the radar screen…

Note: John, Jon and Terry do not hold share positions in PRB, CEX, ROR or ZEN.

Gold has traded between $1,270 and $1,291 so far today as U.S. lawmakers continue to attempt to strike a deal on the debt ceiling impasse…there’s renewed optimism in the Senate this morning but the House, so far at least, is the fly in the ointment…markets will remain volatile…as of 7:25 am Pacific, bullion is down $7 an ounce at $1,274…Silver is off 6 cents at $21.24…Copper is flat at $3.26…Crude Oil is up 44 cents at $101.65 while the U.S. Dollar Index is relatively unchanged around 80.50…

For the 2nd time in just over 2 years, the U.S. government is nearing the point of default if Congress fails to raise the debt ceiling in time…the brinkmanship in 2011 brought the U.S. a credit downgrade from rating agency Standard & Poor’s…others have cautioned they could follow this time around…in our view this is largely a problem of the President’s making as Obama has stated he will not negotiate over the debt ceiling or a re-opening of the U.S. government which is in partial shutdown…Republicans in the House may call his bluff, if that’s what it is…there is a strong contingent in the House that was elected by the American people to curtail spending and stop the dangerous practice of automatically increasing the debt ceiling without a proper plan to start reigning in that debt…if it takes a crisis for the U.S. to start taking its debt problem seriously, and begin to shrink the size of government, then some House Republicans are obviously prepared to see that crisis begin to unfold…the House budget fight has amplified a long-standing rift between conservatives willing to upend traditional ways of doing business in Washington to slow the growth of federal spending and dismantle the 2010 health law, and other, more seasoned lawmakers who see these actions as damaging to the party…no one is exactly sure when the U.S. Treasury could actually default, but the general consensus is sometime between next week and month-end, so the political wrangling could continue for a while yet…it’s not inconceivable that the U.S. could default – even for just a short period – sparking a crisis that could finally clear the political logjam, or for now a majority may find a way to kick the can down the road…you can’t blame Republicans for wanting to keep the spending impulses of Obama and other Democrats in check…having said that, politicians on both sides of the aisle are responsible for the debt fiasco the U.S. has put itself into over the last 3 decades…

U.S. Debt As A Percentage Of GDP

Four consecutive $trillion+ federal deficits under Obama’s watch have helped bring the U.S. to its current debt ceiling limit of $16.7 trillion…that may seem like a manageable number as a percentage of GDP in the context of a low interest rate environment, but the irresponsibility of the accumulation of so much debt will manifest itself when interest rates inevitably begin to rise…House Republicans are right to take a stand now and say enough is enough, especially when the President wants the debt ceiling increased without conditions…

Fitch Ratings has warned it could strip the U.S. of its top credit rating, in the latest sign that the brinkmanship in Washington is eroding investors’ confidence in U.S. institutions…Fitch placed its triple-A rating on the U.S. on “rating watch negative” yesterday, saying a downgrade is possible by the end of the 1st quarter next year…even if Congress reaches a short-term deal to avoid defaulting on U.S. debt, Fitch said the budget impasse has undermined confidence in the effectiveness of the U.S. government and economic policy…

“The prolonged negotiations over raising the debt ceiling, following the episode in August 2011, risks undermining confidence in the role of the U.S. dollar as the pre-eminent global reserve currency, by casting doubt over the full faith and credit of the U.S.,” said Fitch.

The agency added: “Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.”

Updated Gold Charts

Gold had a volatile day as expected yesterday, dropping as low as nearly $1,250 an ounce before rebounding sharply late in the day to close above critical support around $1,270…so far, we’ve seen a normal Fibonacci retracement (38.2%) based on the move between the June low of $1,179 and the August high of $1,434…below is a 3-month chart from John…yesterday’s Doji candle on higher volume was bullish…no one has a crystal ball with Gold at the moment given the very uncertain political dynamics in Washington, but a near-term explosive move to the upside in bullion would be consistent with the pattern we’ve seen since late June…

3-Month Daily Chart Chart

20-Year Monthly Gold Chart

One could also make the argument that there is still more downside risk in Gold…while the secular trend chart shows support in the $1,270’s, a normal Fib. 50% retracement of the move from $253 in 1999 to $1,924 in 2011 would take Gold down to $1,088…even that, however, would not kill the long-term bull market which would remain firmly intact…note how RSI(14) on this chart in late June nearly hit the same level it did in 1999 when bullion touched $253…

Today’s Markets

Asian markets were generally under pressure overnight with China’s Shanghai Composite losing 40 points or nearly 2% to close at 2193…Japan’s Nikkei average bucked the trend with a slight gain…European shares turned higher late in today’s trading session…

In New York, the Dow has climbed 173 points as of 7:25 am Pacific…the TSX is up 20 points while the Venture is off 2 points at 927…

Contact Exploration Inc. (CEX, TSX-V), which we have been mentioning recently, has successfully completed its 4th horizontal Montney well in Alberta which extends the scope and magnitude of the company’s East Kakwa Project…CEX is up 3 cents at 27 cents as of 7:25 am Pacific on total volume (all exchanges) of nearly 700,000 shares…

Cornerstone Capital (CGP, TSX-V) was halted prior to the open this morning, pending news…the company recently reported impressive preliminary assay results from the 1st hole of a drill program at its Cascabel Cu-Au Porphyry Project – unfortunately, it’s in northern Ecuador which is not one of our favorite jurisdictions…the company was on the 3rd hole of its program according to its update last Thursday, and news just crossed the wire regarding final results for the 1st hole which marginally upgraded some of the Copper intersections…CGP closed yesterday at 7.5 cents and could open higher following the halt…

Keep an eye on Walker River Resources (WRR, TSX-V) which is looking a lot more attractive now after falling from a high of 17.5 cents about a month ago…the company is working on an interesting high-grade Gold project in Nevada, and some drilling could occur before year-end as long the as the U.S. government shutdown ends soon (this has affected the permitting process)…WRR closed at 8.5 cents yesterday…

Zenyatta Ventures (ZEN, TSX-V) has tumbled from an intra-day high of $3.28 last Thursday…the stock has broken below its 100 and 200-day moving averages (SMA’s) with critical support around the $2 level as John’s most recent chart has shown…that’s also in the immediate vicinity of the rising 300-day SMA…ZEN fell as low as $2.06 in early trading today but is now up 12 cents at $2.40…

Declan Resources (LAN, TSX-V) has rebounded nicely from a 2.5-cent low the end of August…the company has completed a $750,000 private placement after recently acquiring 2 Saskatchewan uranium properties…LAN is unchanged at 10 cents through the first hour of trading today…

A reader brought this one up yesterday – Starcore International (SAM, TSX-V) which actually made $1.5 million in fiscal Q3 ending April 30…the company has eliminated all the debt it accumulated over the last 7 years or so from developing its St. Martin mine in Mexico, and now they are starting to put some of the earnings from the operation into exploring the large land package around the mine with the intent of increasing reserves and resources…in Q4 (May through July), St. Martin produced 6,315 Gold equivalent ounces and July featured the highest monthly production from the mine since 2007…even at current Gold prices, St. Martin is generating positive cash flow for SAM…the stock closed yesterday at 21 cents…technically, SAM is looking healthier these days than it has in quite some time…there is important resistance at 24 cents…as always, perform your own due diligence…

Tinka Resources Ltd. (TK, TSX-V) Updated Chart

Tinka Resources‘ (TK, TSX-V) stock price is still higher than it was at the end of 2010 and 2011 – most Venture companies wish they could say the same…Tinka hasn’t been without its struggles in 2013, however, with its share price tumbling from an all-time high of $1.25 to a recent low of 40 cents…however, a recovery appears to be underway and the company recently announced the re-starting of drilling at one of its Silver projects in central Peru…below is a 2.5-year weekly chart from John…TK is down 2 pennies at 50 cents as of 7:25 am Pacific…it seems reasonable the stock could test previous strong support (now resistance) around 70 cents in Q4, so at the very least this could be a short-term trading opportunity…

Arianne Phosphate Inc. (DAN, TSX-V)

Patient investors looking for a high-quality play outside of the precious metals sector may wish to consider Arianne Phosphate Inc. (DAN, TSX-V) which is developing its advanced-stage Lac a Paul Project in Quebec, a potential open-pit phosphate mine that may make Arianne an attractive takeover target in the not-too-distant future depending on the economics…a feasibility is expected to be completed this quarter…technically, DAN has traded in a horizontal channel over the last 2 years in a range between about 80 cents and $1.45…the rising 200-day SMA at $1.20 has been providing very strong support, and there is also strong Fib. support between $1.15 and $1.24 as shown in John’s 6-month daily chart…as of 7:30 am Pacific, DAN is unchanged at $1.26…

Note: John, Jon and Terry do not currently hold share positions in CEX, CGP, WRR, ZEN, LAN, SAM, TK or DAN…

4:00 am Pacific

Gold is under pressure early today on signs of an emerging U.S. budget deal in the Senate…the deal would apparently raise the debt ceiling until early February, reopen the government until January and include a mechanism to force lawmakers into longer-term budget discussions…however, resistance in the Republican-controlled House of Representatives could scuttle, or at least stall, anything that emerges from the Senate…many House Republicans have insisted that any deal include further spending limits…

As of 4:00 am Pacific, Gold is down $19 an ounce at $1,254…a close below important support at $1,270 would suggest a potential near-term test of chart support at $1,200 as John outlined over the weekend – intra-day, Gold could be quite volatile…Silver is off 67 cents at $20.60…Copper is down a penny at $3.26…Crude Oil is 50 cents lower at $101.90 while the U.S. Dollar Index is up one-third of a point at 80.66…this is shaping up to be a politically-driven, volatile week on the markets…Gold could suddenly explode to the upside, or in fact be pushed lower to test $1,200 or even the late June low…

The buzz continues regarding the mysterious $640 million Gold trade Friday morning that led to a 10-second trading halt and a $25 drop in the price of bullion in just 2 minutes…some traders are saying the 5,000 contract sale was a deliberate attempt to manipulate the market…who would have been behind that size of an order and why would they simply sell at market?…each contract controls 100 troy ounces…5,000 contracts were dumped on the market at 8:42 am Eastern (for maximum visibility)…1 theory is that it was a predatory high-frequency trading algorithm meant to force a boatload of stops under $1,280…

Rising Demand For Metals In Europe – Copper Demand Expected To Rise 2% in Q4

Europe is the world’s 2nd largest consumer of base metals after China, so a recent increase in demand in that region is highly encouraging…in fact, according to a Wall Street Journal report over the weekend, European metals producers and industry analysts are tentatively calling a bottom to the market amid signs that demand in the region is starting to pick up…rising demand for metals such as Aluminum and Copper – used in everything from smartphones to air-conditioning units – reflects improving economic conditions in the euro zone, relieves pressure on producers and could also lend some support to depressed base metal prices…European demand has plummeted in recent years as the financial crisis suppressed economic activity in the region…

European demand for Aluminum rose 1.3% to 2.1 million tons in the 3rd quarter of 2013, compared with the same period last year, and is projected to rise 1% in the 4th quarter to 1.9 million tons, according to metals and mining consultancy CRU Group…for Copper, demand rose 1% in the 3rd quarter to 922,000 tons…CRU forecasts it will rise nearly 2% in the 4th quarter to 935,000 tons…the growth, while tepid, compares with a 3.8% fall in European Aluminum consumption last year, according to CRU, and a 4% fall in demand for Copper…

China’s Energy, Base Metals Imports Rise Strongly In September, Q3 GDP Figures Due Friday

China’s imports of energy and base metals rose strongly in September, driven by a seasonal pickup in manufacturing and restocking ahead of the October Golden Week holiday, according to Barclays…meanwhile, thanks to loftier food prices, China’s consumer price index for September rose 3.1% compared with a year earlier, accelerating from August’s 2.6% year-on-year increase, according to National Statistics Bureau data released yesterday…the government has identified an “upper limit” for annual inflation of 3.5% and a “lower limit” for economic growth of 7.5% cent, and has said it will act if either of these limits is breached…data scheduled for release Friday are likely to show that China’s economy expanded by between 7.5% and 8% in the 3rd quarter, after modest stimulus measures helped avert fears of a slowdown over the summer…double-digit property price rises in major cities show that China’s housing market is back with a vengeance, underscoring the government’s dilemma of how to dampen the sector without abruptly choking off overall investment…

Stronger Demand Needed To Counter Boost In Copper Supply

Stronger than expected economic growth in China, the euro zone and the U.S. over the next year, and therefore higher than anticipated demand for Copper, will be needed in order to offset the expected increase in Copper supply…according to data from Barclays and the International Copper Study Group in Lisbon, the global Copper surplus (currently around 90,000 tons) is expected to triple in 2014 as Codelco and Freeport-McMoRan, the world’s largest producers, are among those scheduled to add supply next year, and this could keep Copper prices under pressure…new mines or expansions to existing pits from Mongolia to Indonesia to Chile will boost output as producers respond to prices that more than tripled in the past decade…however, keep in mind that supply regularly gets disrupted by everything from strikes to landslides – so there could be surprises on the supply side, just as there could be on the demand side…

CRB Index Updated Chart

There are several encouraging signs in this long-term (20-year monthly) CRB Index chart…the Thomson-Reuters/Jeffries CRB Index comprises 19 commodities (with different weightings) including Crude Oil (23%), Gold (6%), Copper (6%), Natural Gas (6%), Silver (1%) and Nickel (1%)…if the CRB has indeed hit bottom, as John’s chart appears to be telling us, then it’s likely the Venture Exchange has found a bottom as well…historically, there has also been a strong correlation between China’s Shanghai Composite (SSEC) and the CRB…

The CRB’s RSI(14) support and the low position of the SS (Slow Stochastics) suggest that the next major move in the CRB Index is up, not down…in addition, the -DI trend indicator has been weakening gradually since the middle of last year – if it were trending higher, that would certainly be cause for concern…it’ll be important to keep a close eye on the CRB through the remainder of the year…

Today’s Markets

Asian markets were relatively quiet overnight…China’s Shanghai Composite fell 4 points to close at 2233 while Japan’s Nikkei average posted a slight gain (37 points) to finish at 21442…European shares are strongly higher as of 4:00 am Pacific while in New York, stock index futures in New York are pointing toward a positive open on Wall Street after 4 straight days of gains totaling 525 points or 3.6%…a relief rally or the start of a new bullish trend?…

Canadian markets of course were closed yesterday for Thanksgiving…the TSX finished Friday at 12892 while the Venture closed at 929, finding support at its 100-day moving average (SMA) which has flattened out…a support band stretches from 907 to Friday’s close…

Magor Corp. (MCC, TSX-V)

While we focus almost entirely on Gold, Silver and Copper and the junior exploration sector at BMR, occasionally our attention is drawn to a company in a completely different space that has exceptional management and a unique product or service that’s simple to understand with a model that can drive revenues and healthy profits…Macro Enterprises Inc. (MCR, TSX-V), a maintenance and service provider to the energy and resource industries, was one such company that we pointed out in May when it was trading around $3 a share…since then, MCR has doubled in price as its impressive revenue and earnings growth continues…

There’s a company in the tech area we like a lot, and that’s Magor Corp. (MCC, TSX-V) which started trading on the Venture in March after raising $6 million in an IPO…

First off, and most importantly, the people behind Magor are phenomenal…President and CEO Mike Pascoe is well known for his ability to build shareholder value in the telecommunications industry…he has led several very successful deals, recently and in the past, including of course Newbridge Networks which was bought out by Alcatel for $10 billion in 2000…Sir Terry Matthews is the Chairman of Magor and his record is impeccable – he founded Newbridge and co-founded Mitel…he’s also the founder and current Chairman of Wesley Clover, an investment vehicle and holding company that has interests in a broad range of next-generation technology companies, real estate, hotels and resorts…Wesley Clover also holds a sizable chunk (approximately 30%) of Magor…

Magor – Taking Video Conferencing To The Next Level

Magor could be well on its way to changing the landscape of video conferencing and collaboration…they are a serious potential “disrupter” in this industry as they’ve eliminated the expensive infrastructure currently used by many of their competitors…quite simply, traditional video conferencing cannot provide Magor’s level of interaction combined with its clear, high-definition video on the Internet...they’ve managed to create an environment for their users so that they feel they’re communicating and working as if they were sitting beside each other in the same room – even though they’re in different cities or countries…it’s an amazing system and we’ve seen it in action…

Magor’s first 6 months as a publicly traded company haven’t been easy, at least for investors – the stock has slipped from a high of 69 cents, shortly after it started trading, to a recent low of 23.5 cents…in its fiscal year ending April 30, Magor reported a net loss of $8.5 million but Q4 revenues grew substantially to $847,000 – nearly half of the total for the entire fiscal year ($1,964,000)…the loss was due to increased operating expenses in the areas of sales, marketing, and research and development as the company continued to prepare for the launch of its Aerus cloud-based services this fall…it takes money to roll these things out, and Magor has made wise use of shareholder funds so far…there are challenges and risks, of course, but MCC’s strategy has a great chance of paying off big-time…

Aerus – Magor’s Catalyst?

The next few quarters are going to be key for Magor with the launch of its Aerus platform this fall…Aerus enables people to engage collaboratively in high-quality visual conversations by simultaneously sharing, viewing, and editing relevant material on desktops, laptops, tablets, smartphones, whiteboards and other devices…Magor has been successful at securing requests for service trials with more than 20 carriers and solutions integrators around the globe, and the list continues to grow…how these “service trials” work out is obviously going to be key…

“Aerus is looking very strong as the traction with carriers and service providers at this stage is significantly exceeding our expectations,” stated Pascoe in a news release September 26…in order to accelerate the growth opportunity associated with Aerus, Magor completed a $1.5 million financing last week at 25 cents a share which also attracted some new institutional investors to the Magor story…after a 59-cent IPO, it’s disappointing that this financing had to occur at 25 cents…

Interestingly, Magor also appears to be making some inroads into China – the company announced Sept. 27, without going into details, that it has entered into a “joint venture agreement” with 3 Chinese parties – Harbin Venture Capital Management Co. Ltd., Harbin Aobo Venture Capital Management Co. Ltd., and Harbin Kaifu Investment Consulting Co. Ltd…

Effective software solutions often have high profit margins…if the Aerus launch is relatively flawless and Magor can gain the kind of market penetration and traction it expects with this technology, then MCC has huge upside potential from current levels over the next several quarters given Friday’s 28-cent close and total market cap of $14.5 million…MCC now has 51.7 million shares outstanding…if Aerus succeeds the way Pascoe and others believe it can, MCC could easily command a market cap 10 or 20 times where it is now…

Below is a 6-month chart from John that goes back to when MCC first started trading…there’s good reason to believe MCC bottomed at 23.5 cents…keep an eye on the Fib. levels in John’s chart in addition to the 50 and 100-day moving averages (SMA’s) – once they reverse to the upside, and those Fib. levels are cleared, MCC will have some serious technical momentum on its side…fundamentally, Aerus needs to be embraced by a demanding market but we like the odds…we’ll be watching closely for more news in the coming weeks…we find the risk-reward ratio with MCC to be very attractive at current levels with the opportunity for a “home run” between now and sometime in 2014…as always, perform your own due diligence…

What Does It Take To Make A Junior Exploration Company Successful?

Looking at the big picture, and how events could unfold over the next year, we’re convinced there are historic opportunities in the beaten-down junior resource sector at the moment – stocks that ultimately will increase 10-fold, 20-fold and more…when almost everyone is bullish, as was the case in late 2010 and early 2011, that’s the time to be fearful…the time to be bold is NOW when so many investors are too scared to jump in or have given up on the market completely…

The key, however, is to be selective as an astounding number of Venture companies are poorly run and have decimated their share structures over the last couple of years…during the 2003 to 2007 Venture bull market, followed by the powerful 2-year run after the Crash of 2008, a serious market problem also emerged that is now much more visible – an infestation of “lifestyle” companies…a Venture “lifestyle” company is a company that exists merely to perpetuate the comfortable lifestyles of those who are running it…they’re not serious about exploration or the business they’re engaged in…management will carry out enough promotion from time to time to keep the “printing press” running so they can complete an occasional financing in order to continue to collect their monthly salaries…they’re not interested, though, in really building a company – that would require too much work which, of course, would disrupt their comfortable lifestyles…this is clearly abuse of a publicly traded company but examples are plentiful (half the listings on the Venture?), and things are rigged in such a way that it’s almost impossible for shareholders to get rid of these individuals…we could write a book about how some of these Venture companies are run, but suffice to say it’s critical to take the time to perform your own due diligence and get to know – as best you can – the key people behind any company you’re looking at investing in…just a simple phone call could save you from making a serious mistake, or lead you in the direction of a home run opportunity…

Separating The Best From The Rest

The companies that WILL be successful going forward (short-term and longer-term) are the ones with the working capital, the expertise (management and geological), the share structure, the properties (legitimate discovery opportunities) and the drive/desire/ to build shareholder value…by our estimate, only about 10% of Venture companies at the moment possess those 5 critical pillars of strength…within that group, as one zooms in even more, is where you will find those juniors with 10-bagger or better potential…if you identify and invest in even 4 of those companies, chances are that 1 or 2 will succeed and hit it big…with that kind of leverage, all it takes – just like in baseball – is a .300 batting average to make a fortune…you can be wrong 70% or more of the time and still bag huge overall returns…

No matter how challenging the market environment might be, a company that makes a legitimate and significant discovery will be rewarded (we’ve seen this demonstrated countless times over many years including last spring when Colorado Resources – CXO, TSX-V – became a 10-bagger in a month)…in fact, when markets are soft, a company that reports a whopper of a drill hole has little competition and can instantly become “the only game in town”…two things have hurt Colorado which climbed as high as $1.74 in May and closed Friday at 26.5 cents – it’s a company run by geologists, and it hasn’t been able to repeat the success of its 1st hole (momentum problem)…investors are impatient and fickle…management must deliver consistently…

Which brings us to Prosper Gold (PGX, TSX-V), Garibaldi Resources (GGI, TSX-V) and the Sheslay Valley, an area about 60 miles west of Iskut in northwest B.C. that has large scale and exceedingly strong potential – not simply because of the right geology, but due to the skill of the individuals examining those rocks and the business/market leaders at the helm of these 2 companies…there are other players in the Sheslay Valley, too, including a major that could end up swallowing both Prosper Gold and Garibaldi in the event this area produces the kind of discovery that some people believe is actually quite likely…

Prosper Gold Corp. (PGX, TSX-V)

Prosper Gold (PGX, TSX-V) is an incredibly synergistic group that importantly has exceptional business and market savvy at the top in Pete Bernier and one of the best geologists in the country in Dr. Dirk Tempelman-Kluit…together, they took Richfield Ventures from pennies in 2009 to a $500 million buy-out by New Gold Inc. (NGD, TSX) in 2011 thanks to the discovery at Blackwater…these 2 individuals complement each other extremely well as Tempelman-Kluit described in our recent interview (click on the forward arrow to listen to this 1-minute excerpt – requires Adobe Flash Player version 9 or above):

[audio:https://bullmarketrun.com/wp-content/uploads/2013/10/Dirk-PGX-Clip-4.mp3|titles=Dirk PGX Clip 4]

Prosper Gold could be just 1 drill hole away from a rocket-launching boost…on September 30, PGX reported the first 3 holes of a Phase 1 program at the Sheslay…each hole produced long intersections of Copper and Gold mineralization, with grades comparable to the reserve grades at Red Chris…these results confirmed the historical numbers reported by Firesteel Resources (FTR, TSX-V) which drilled about 2 dozen holes between 2004 and 2007 (only 2 were drilled to lengths of more than 300 metres)…what’s different about these next 3 holes at the Sheslay is that they were drilled to depths never previously tested on this property…

As stated in PGX’s Sept. 30 news release, “Pending drill holes have confirmed Copper-bearing porphyry-style mineralization to a depth of 598 metres from surface. This is the deepest confirmed mineralization to date.”

The visuals must have been good or Prosper never would have drilled that deep in the first place…they’re too smart to take that kind of a risk at this stage…assay results for holes S027, S028 and S029 could come anytime during this last half of October…

Tonnage possibilities at the Sheslay are enormous if Prosper is able to tie together the 4 Cu-Au porphyry bearing targets – Star, North Star, East Star and Copper Creek – clustered within a 12 sq. km area…in addition, there’s also Pyrrhotite Creek, nearly 5 km southwest of the Star target and immediately east of the important Kaketsa pluton (two-thirds of which rests on Garibaldi’s massive Grizzly Property as GGI holds the largest land position of any junior in the area)…Prosper Gold describes Pyrrhotite Creek as a “second distinct multiple target area” with a 2,000-metre long copper-in-soil anomaly with associated elevated molybdenum values.”

A picture tells a thousand words – a little further below is a BMR-produced map, from Google Earth, which we’re posting again for reference purposes…the Star target is where Prosper drilled 6 holes…core photos from drilling at the Star show strong evidence of a robust hydrothermal system with multi-directional veins and multi-generations of veins…

Garibaldi, meanwhile, is sampling in the northwest corner of the Grizzly where historical technical reports describe alteration and mineralization as very similar, if not identical, to that seen at Pyrrhotite Creek…preliminary results from GGI’s recent airborne survey have confirmed multiple targets over a distance of 15 km from Grizzly West to Grizzly Central…GGI has identified 2 parallel faults that appear to be related to Cu-Au occurrences on both the Grizzly and the Sheslay…

Hopefully our readers are getting a feel for the SCALE of this – and the map below is not the entire Sheslay area…Teck Resources Ltd. (TCK, TSX) has staked a huge position – 612 sq. km – right up to the southern border of the Grizzly, while Doubleview Resources (DBV, TSX-V) is getting ready to once again drill the Hat Property contiguous to the eastern border of the Sheslay…

Quite simply, what you’re looking at below, in our view, is going to be British Columbia’s hottest exploration area that will generate an immense amount of news and investor attention over the next 12 months and beyond…

The Importance Of Share Structure

Poor share structure can severely limit the upside potential of any discovery play…Prosper Gold has just 25 million shares outstanding, and more than 6 million of those shares are in the hands of Bernier and Tempelman-Kluit…in the event of a “glory hole” in the immediate future, investors will be scrambling as most of those 25 million shares can’t even be traded right now due to the 4-month hold on the financing, completed at the end of August, and the CPC 36-month staged release escrow…

As for Garibaldi, it’s one of the few Venture companies that has NOT had to do a financing in more than 4 years…and with nearly $4 million in working capital, it’s not in a position where it has to do a financing anytime soon…that’s a huge advantage given that so many companies’ share prices are being held down because of an over-supply of paper in the market due to cheap private placements (flow-through and non-flow-through) over the past couple of years…in a lot of cases, investors are selling PP stock immediately after it becomes free-trading – even at at loss – and are content to just ride their warrants…that problem doesn’t exist with GGI…

We’ll have more with Garibaldi President and CEO Steve Regoci later in the week – check out some audio excerpts from our interview with him that were posted Friday…Regoci, a former broker, heads up a stable, solid team of seasoned business and geological leaders who have the ability and the desire to take this company a long way over the next 12 months and beyond…not only is GGI the dominant landholder among juniors in the increasingly important Sheslay Valley exploration camp, but the company is extremely well-positioned for more success in Mexico with 3 significant projects (1 of which has been generating cash flow since February and includes a graphite discovery) and a recently acquired strategic Gold property that has the potential to quickly develop into a small-scale low-cost producer…GGI has shown that near-surface coal seams in Mexico can efficiently be exploited for profit to the company…if they have a Gold property with enough near-surface mineralization at favorable grades for efficient small-scale exploitation, who knows – they may be able to go another 4 years without having to do a financing…

Updated Silver Charts

Long-Term Chart

Short-Term Silver Chart

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

TSX Venture Exchange and Gold

Happy Thanksgiving to our Canadian readers!  We hope you’re enjoying a pleasant long weekend with friends and loved ones.  Despite frustrating markets, we do have much to be grateful for.  Canadian markets are closed Monday for Thanksgiving, so there will be no postings tomorrow.  Morning Musings returns Tuesday with a pre-market posting at approximately 4:00 am Pacific.  Tomorrow is Columbus Day for our friends in the United States but stock markets there remain open (Treasury market is closed).

The Venture declined in 4 out of 5 sessions last week after touching resistance at the end of the previous week at 955.  As we noted, buy pressure needed to increase in order for the 955 wall to come down, on yet another attempt, but this did not occur.  The Index fell in lockstep with Gold, declining 26 points (2.7%) to finish at 929 – right at its 100-day moving average (SMA) which has flattened out (this SMA has provided support since late August while the 50-day continues to rise which is positive).  Gold, by comparison, lost 2.9% last week.  The TSX Gold Index slid 3.9%, while both the TSX Composite and the Dow each finished a volatile week up about 1% – a particularly impressive performance by the TSX given the weakness in commodities.

So where do things stand with the Venture?  The Index did suffer some technical damage last week and the EMA(20) is now in decline.  Strong support exists from the early August low of 907 to Friday’s 929 close.  Gold’s direction will be key – bullion is at important support and could go one way or the other, depending of course on political developments in Washington with regard to the debt ceiling issue.  So far, Gold doesn’t seem to be taking a potential U.S. default very seriously given its $63 loss over the last 2 weeks – we’ll see if that changes over the next few days.  And it didn’t help last week when Goldman Sachs came out and said Gold is a “slam dunk sell”.  Keep in mind, though, that Goldman Sachs’ 2nd-quarter regulatory disclosure showed the addition of a significant portion of Gold to its holdings – rather strange (or maybe not) when their research analysts keep telling investors that Gold is headed south.

Below is a 3-month daily Venture chart from John.  There have been 4 failed attempts since August to push through resistance at 955.   Interestingly, while the Venture has outperformed Gold over the past couple of months, it’s up 8.1% from its late June low of 859 while bullion is up 8% from its low at the same time of $1,179.  The TSX Gold Index is up 5.8% from its low.

Two things that would benefit the Venture immediately – higher Gold prices and a stunning drill hole from somewhere.

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 (at least most of them) to start 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

Bullion is at critical support on a short-term basis, and it will be fascinating to see what unfolds this coming week.  It seems we’re either going to have a pre-Halloween scare, or a pleasant sharp reversal to the upside.  John’s 6-month daily chart shows the bearish trend has been gaining strength this month.   The bullish trend started at the end of June, after Gold touched $1,179, and momentum continued until it peaked in late August.  So far, we’ve seen a normal retracement in the $250 move to the upside from late June to late August.  But that changes if Gold can’t hold Fibonacci support in the $1,270’s and chart support around $1,270.  Gold closed Friday at $1,273, down $38 for the week.

Thursday saw the SPDR Gold Trust – the world’s largest ETF by value in late 2011 – shed a further 1.8 tonnes, taking the volume of Gold bullion needed to back its shares to a new 57-month low beneath 897 tonnes.

Silver fared a little better than Gold last week, losing 44 cents or 2% to close at $21.34 (John will have updated Silver charts Tuesday morning).  Copper fell 2 pennies to $3.26.  Crude Oil slipped $1.82 a barrel to close at $102.02 while the U.S. Dollar Index gained a quarter of a point to 80.41.

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 $3.5 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, deflationary concerns around the globe and the prospect of Fed tapering by the end of the year 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 $1,179 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.

Forward Looking Statements:

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

Gold is under pressure again today…as of 8:00 am Pacific, bullion is off $19 an ounce at $1,267…strong Fibonacci support exists in the $1,270’s, so we’ll see if that can hold on a closing basis today…Silver is off 45 cents at $21.23…Copper is up penny at $3.24…Crude Oil is down $1.20 a barrel to $101.81 while the U.S. Dollar Index has slipped more than one-tenth of a point to 80.34…

European central banks have sold the lowest amount of Gold this year – 5-1 metric tonnes – since they agreed to limit sales in 1999, according to data from the World Gold Council…globally, central banks – which hold 18% of all the Gold ever mined – will add as much as 350 tons this year valued at about $15 billion, the Council estimates…“Central banks have lost their appetite for selling Gold,” said James Murray, a spokesman for the council. “Gold remains a hugely important part of their portfolios and this has been the case for the past few years.”

President Obama and House Republican leaders appear to be moving toward an agreement to extend the nation’s borrowing authority even as they remain at odds over terms for ending the partial government shutdown…they met for 90 minutes at the White House yesterday after House Speaker John Boehner said he would offer a measure to postpone a potential U.S. default to Nov. 22 from Oct. 17, a step back from the brink that was enough to trigger the biggest single-day jump in U.S. stocks in 9 months…

Only 18% of Americans are satisfied with the way the country is being governed according to a new Gallup poll released yesterday, the lowest satisfaction rating since Gallup started asking the question in 1971…the new low is down 14 percentage points from last month’s 32% rating recorded before the partial government shutdown began…the previous low of 19% was recorded in September 2011 shortly after DC lawmakers reached an agreement that prevented a government default…before 2011, the lowest satisfaction rating was 26%, recorded in September 1973 during the Watergate scandal…

Today’s Markets

Asian markets were strong overnight, following up on the strength in U.S. markets…Japan’s Nikkei average shot up 210 points while China’s Shanghai Composite hit a new two-and-a-half week high, climbing 37 points to close at 2278, after Premier Li Keqing hinted of a positive 3rd-quarter GDP report due October 18…sentiment also rose on news that Beijing has launched a currency swap deal with the euro zone in the country’s latest push to transform the yuan into a major world currency…meanwhile, China passed the United States last month as the world’s biggest net oil importer, driven by faster economic growth and strong auto sales, according to U.S. government data released this week…Chinese oil consumption outstripped production by 6.3 million barrels per day, which indicates the country had to import that much to fill the gap, the Energy Information Administration said this week…

European shares were modestly higher today…

In New York, Dow is up another 18 points as of 8:00 am Pacific…U.S. consumer sentiment has deteriorated in October to its weakest level in 9 months as the first federal government shutdown in 17 years undermined Americans’ outlook on the economy, a survey released this morning showed…the Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment fell to 75.2 in October, down from 77.5 in September…this was the lowest figure since January…

In Toronto, the TSX is holding up well today despite weakness in commodities…the Index is down 12 points at 12882 after the first 90 minutes of trading…the TSX this year has repeatedly been trying to push through key resistance around 12900 and get above the 13000 level for the first time in 2 years…below is a 2.5-year weekly chart from John…the bulls would certainly take charge if the Index can overcome this hurdle at current levels…

Updated CDNX Chart

The Venture is off 6 points at 930 as of 8:00 am Pacific…it has found support this week at the 100-day moving average (SMA) of 928 which has flattened out after being in decline since early this year…the Venture is underpinned by strong support but also faces a stiff resistance band between 955 and 970…RSI(14) has been in the 40-80% range since mid-June and is currently at 45% (after yesterday’s close), bouncing off previous support…expect support and resistance levels to continue to be tested…the 50-day SMA is still rising gently which is encouraging…

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

North American Nickel (NAN, TSX-V) yesterday reported significant intersections of high-grade Nickel from 3 drill holes at its Imiak Hill discovery in Greenland… the company is finding stronger grades and widths at depth, and assays are still pending from the deepest hole drilled (MQ-13-028, below MQ-13-026) this year…not surprisingly, trading was volatile yesterday with NAN opening higher at 43 cents before pulling back to an intra-day low of 33 cents…the stock then rallied at the end of the day, closing 1.5 cents higher at 39 cents (just above its rising 20-day SMA which has been providing excellent support) on total volume (all exchanges) of 3.3 million shares…

Below is an updated 2.5-year weekly chart from John…note the pennant formation…a breakout above the pennant would be a very bullish development…as of 8:00 am Pacific, NAN is off 3 cents at 36 cents on volume of over 1 million shares…it opened at 40 cents on a big bid…clearly there is strong interest in this play, but continued volatility can be expected…

Garibaldi Resources (GGI, TSX-V) Update

As NAN has shown over the past couple of months, discovery plays offer tremendous leverage, even in sideways or negative markets, and when you have a company like Garibaldi Resources (GGI, TSX-V) with immediate discovery potential in 2 jurisdictions – northwest B.C. and Mexico – along with a healthy working capital position ($4 million), management and geological expertise, outstanding projects, and the drive to succeed both on the ground and in the market, you typically have the right recipe for success…in a situation like this, when the current market cap is barely above working capital, you back up the truck and load up because the bandwagon jumpers will be clamoring for your inventory in due course…that’s how you make money on the Venture – always stay ahead of the crowd, don’t follow the crowd…

Mark our words – there’s a Big Show coming up in the Sheslay Valley in northwest B.C. because the geology is telling us that, and the audience for this is going to grow exponentially in our view…Pete Bernier and Dr. Dirk Tempelman-Kluit have done it before, and we predict they will do it again with Prosper Gold (PGX, TSX-V), but the junior with by far the largest land position in the Sheslay Valley – right in the heart of it – is Garibaldi where multiple targets have been identified over a distance of 15 km from Grizzly West to Grizzly Central…the scale of this is important to understand…more results are pending from current exploration…GGI is focusing on the northwest part of the property where alteration in some parts has been described in technical reports as “spectacular“…

We’ll have more on GGI in the coming days (on both B.C. and Mexico) with President and CEO Steve Regoci, but below are 3 additional excerpts from our interview that our readers will find useful as part of their own due diligence which we always encourage…

As GGI announced September 30, the preliminary interpretation from a recently completed airborne survey over northwestern portions of the Grizzly is highly encouraging, and Regoci is eagerly anticipating additional results (click on the forward arrow to listen to this one-and-a-half minute excerpt – requires Adobe Flash Player version 9 or above):

[audio:https://bullmarketrun.com/wp-content/uploads/2013/10/Regocci-Clip-3.mp3|titles=Regocci Clip 3]

Regoci on the Kaketsa pluton, an important Sheslay Valley geological feature – a potential “heat engine” that may have impacted much of the area:

[audio:https://bullmarketrun.com/wp-content/uploads/2013/10/Regocci-Clip-4.mp3|titles=Regocci Clip 4]

Regoci on the original acquisition of the Grizzly claims in 2006:

[audio:https://bullmarketrun.com/wp-content/uploads/2013/10/Regocci-Clip-5.mp3|titles=Regocci Clip 5]

Critical Elements Corp. (CRE, TSX-V) Updated Chart

Critical Elements (CRE, TSX-V) has backed off from the low-20’s, as expected, as a “cup with handle” pattern starts to take shape…keep an eye on this one as the “accumulation” zone, as John sees it, is between 16 and 19 cents…the rising 100-day SMA is currently at 14.5 cents, providing additional support…between late June and late September, CRE more than doubled from a dime to 23 cents…a normal retracement is now occurring with the Fib. support levels between 16 and 19 cents…

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

Gold continues to find support around the $1,300 level…as of 8:00 am Pacific, the yellow metal is down $7 an ounce at $1,300 after falling as low as $1,293…Silver is up a nickel at $21.94…Copper has added 2 pennies to $3.23…Crude Oil is 80 cents higher at $102.42 while the U.S. Dollar Index has gained one-tenth of a point to 80.48…

Some interesting findings in a report by the World Gold Council which commissioned consulting firm PwC to analyze the total direct economic impact of Gold toward the global economy…the report is the first to take into account the entire value chain of Gold, including Gold mining, refining, fabrication and consumption, in order to understand the role that Gold plays in economic development…PwC found that the Gold sector contributed more than $210 billion in 2012…the world’s 15 largest Gold-producing countries employed an estimated 529,000 people in the industry last year…

Of the total Gold supply of 4,477 tonnes, two-thirds came from mining, with the other third, perhaps surprisingly, coming from recycled Gold…PwC estimated the total value of Gold recycling to be between $23.4 billion and $27.6 billion…on the demand side, jewelry accounted for nearly half, 43%, with total jewelry fabrication and consumption across the top 13 Gold-consuming nations estimated at $69.8 billion…bars, coins, and Gold-backed ETP’s represented 35% of demand, central bank purchases 12%, and Gold used in manufacturing processes amounted to 10%…Gold’s impact on some developing nations is very significant…while Gold mining generates about $8 billion in Gold-producing nations Australia, Russia, Peru and the United States, it represents a whopping 15% of GDP in Papua New Guinea, 8% in Ghana, and 6% in Tanzania…

“If one were to add in the indirect value created by the Gold industry, the value delivered would likely be significantly larger; indeed quantifying this ‘multiplier effect’ would merit its own research report,” said Randall Oliphant, executive chairman of New Gold Inc. (NGD, TSX) and the recently-named chairman of the World Gold Council…

Short-Term Debt-Ceiling Deal In The Works?

Is a stopgap fix coming to the debt ceiling stalemate?…politicians certainly love kicking the can down the road…reports are circulating that both sides in Washington might be open to a short-term extension of the $16.7 trillion borrowing limit, giving them more time to resolve their differences while a partial government shutdown remains in effect…multiple House Republican members are preparing a proposal to raise the U.S. debt ceiling temporarily, for a period of 4 to 6 weeks, in order to buy time for lawmakers to nail down the specifics of a longer-term deal…the GOP is sending an 18-member House delegation to the White House tomorrow for a meeting with President Obama…the Associated Press reported just a short while ago that House Speaker John Boehner is planning to ask the House of Representatives to introduce a bill that would call for a short-term increase in the federal debt ceiling with no conditions attached…these developments are contributing to stronger equity markets today…

TSX Gold Index Updated Chart

Below is a 2.5-year weekly TSX Gold Index chart from John that shows an interesting double bottom pattern that potentially could be completed later this month…note the upsloping RSI(14) trendline which is encouraging…RSI is also currently at trendline support…the Gold Index hit an intra-day low of 164 yesterday before bouncing back to close at 169 (the late June low was 154, just above the 2008 Crash low)…as of 8:00 am Pacific, the Gold Index is unchanged at 169…

Today’s Markets

The Nikkei average jumped 157 points overnight to close at 14195 on the back of positive economic data out of Japan…China’s Shanghai Composite, however, slipped 21 points to finish at 2191…European markets finished sharply higher (as much as 2%) today…

The Dow and TSX are both up strongly so far today…as of 8:00 am Pacific, the Dow is up 200 points while the TSX has gained 130 points…the Venture is relatively quiet, up a point at 934…

Northern Gold Mining (NGM, TSX-V) is one of the Venture volume leaders through the first 90 minutes of trading…NGM reported results this morning from 21 holes at its Garrcon deposit (Golden Bear Project) east of Timmins, and higher grade mineralized intercepts below the existing NI-43-101 resource show potential for overall resource expansion…hole GAR-12-213, in particular, was encouraging, as it returned an 8-metre interval grading over 1 opt (38.35 g/t Au) at a depth between 287 m and 295 m…NGM is up a penny at 4.5 cents on nearly 4 million shares (all exchanges) as of 8:00 am Pacific…

Kaminak Gold Corp. (KAM, TSX-V) has discovered a new oxide Gold zone, referred to as Sumatra, at its Coffee Project in the Yukon…drilling intersected shallow, oxidized Gold-bearing structures over 500 metres of mineralized strike including 15.78 g/t Au over 3.05 m…the Coffee drill program is ongoing and over 50,000 m have been completed so far this year…many Gold-in-soil anomalies remain untested, and the company has had success targeting those areas as the discovery at Sumatra has shown…KAM is unchanged at 75 cents as of 8:00 am Pacific…

Gold Standard Ventures (GSV, TSX-V) continues to push higher…as we noted Monday, new drill results plus a technical breakout above 70 cents were very positive developments…the stock is up for the 7th consecutive trading session at $1.02 as of 8:00 am Pacific…

Updated statistics just out on Venture financings…year-over-year, they fell to $172-million last month, down from $415-million in September 2012…year-to-date, Venture companies have raised a total of $2.4-billion, down from $4.2-billion in 2012 and $8.6-billion in the heydays of 2011…

North American Nickel (NAN, TSX-V) Update

North American Nickel (NAN, TSX-V) this morning reported significant intersections of high-grade Nickel from 3 drill holes at its Imiak Hill discovery in Greenland…the company is finding stronger grades and widths at depth, and assays are still pending from the deepest hole drilled (MQ-13-028, below MQ-13-026) this year…initial reaction to the results was positive as NAN opened higher this morning (43 cents) but the stock has been under selling pressure since touching a high of 43.5 cents…through the first 90 minutes of trading, NAN is off 1.5 cents at 36 cents as momentum has waned – at least temporarily…

MQ-13-026 returned a 25.1-m interval grading 3.25% Ni, 0.48% Cu and 0.11% Co (from 149.81 to 175.32 m)…the best interval from MQ-13-024, starting 136 m downhole, was 14.9 m grading 2.67% Ni, 0.39% Cu and 0.09% Co…MQ-13-019, meanwhile, returned an 8.68-m section of 1.51% Ni, 0.43% Cu and 0.06% Co starting 118 m downhole…

NAN CEO Rick Mark stated, “We believe the Maniitsoq project is unique in the world. It is considered a greenfields exploration project, but it is a district-scale, Nickel sulphide project that has mineralization starting at, or near, surface containing high grades of Ni-Cu-Co and it is located adjacent to ice free, deep tide water suitable for year round shipping.”

Very good grades definitely exist at Maniitsoq…this is a significant discovery but the challenge for the company going forward is to demonstrate tonnage potential and that will obviously require considerably more drilling in 2014…

NAN is currently trading between 2 important Fib. levels (30 cents and 51 cents) as outlined in John’s most recent chart…since its discovery was first reported in late August, NAN’s 20-day moving average (SMA) – currently at 38 cents – has provided consistent support, so that’s a trend to watch closely to see if it continues…

Pretium Resources Inc. (PVG, TSX) – Too Many Cooks (Geologists) In The Kitchen?

If you were to gather 5 geologists in a room, you’d get 10 different opinions…Pretium Resources Inc. (PVG, TSX) got caught between 2 geological consulting groups yesterday…a disagreement between Strathcona Mineral Services Ltd. and Snowden Mining Industry Consultants over how a bulk sample should be handled ultimately resulted in over $100 million being wiped out in the company’s market cap yesterday…in our view, clearly an over-reaction by the market but an important lesson for all companies in how careful they need to be in the communications area especially at a time when there are so many nervous investors as well as computerized trading that can exaggerate downside as well as upside moves in a stock…

A degree of sanity is returning to the PVG market this morning with the stock up 31 cents to $5.18 as of 8:00 am Pacific…

Joseph Ovsenek, Pretium’s Chief Development Officer, told Mineweb that Pretium was caught in between the two QP’s (qualified persons or independent auditors of Pretium’s geological disclosures) which had disagreed over how to compare a 10,000 tonne bulk sample to Pretium’s resources at the Valley of the Kings deposit, part of the wider Brucejack Project…Snowden, which produced Pretium’s latest resource estimate on the Valley of the Kings, wants results from the whole bulk sample to be used as validation, Ovsenek said, whereas Strathcona (which was managing the bulk sample program) preferred a series of smaller, representative “tower” samples…

Pretium came out with more news this morning in an apparent attempt to refocus investors…the company released additional underground drilling results from the bulk sample program, and results from exploration drilling in the Valley of the Kings to the west and north of the program area…Hole VU-279 returned a bonzana-grade half-metre intercept of 3,190 g/t Au and 1,485 g/t Ag…this intersection was 38 m southeast and 18 m above the Valley of the Kings discovery hole SU-12 intercept (reported earlier) which graded 16,948 g/t Au uncut over 1.5 m…

Pretium hopes its bulk sample will produce 4,000 ounces of Gold…he company will then use the bulk sample to complete a Brucejack feasibility study…

Contact Exploration Inc. (CEX, TSX-V)

An oil and gas play we’ve mentioned previously that appears to be on a very positive long-term growth curve – both in terms of its fundamentals and its chart – is Contact Exploration (CEX, TSX-V)…its rising 300-day moving average (SMA) at 22 cents provides strong support…the stock, which closed yesterday at 25 cents, has been trading in a horizontal channel between 18 cents and 28 cents since late last year…CEX is worth keeping on the radar screen for continued positive developments on the ground and, at some point, a potential breakout in the stock above that horizontal channel…sell pressure has been declining significantly over the last few months…as always, perform your own due diligence…

Note: John, John and Terry do not hold share positions in NGM, GSV, NAN, PVG or CEX.

Gold has traded in a range between $1,302 and $1,324 so far today…as of 7:00 am Pacific, bullion is down $13 an ounce at $1,306…Silver is 32 cents lower at $21.08…Copper is off a nickel at $3.22…Crude Oil is down over $1 a barrel to $102.40 while the U.S. Dollar Index has surged half a point to 80.45…

As President Obama steps up his rhetoric about the dire consequences of not raising the debt limit, increasing numbers of Congressional Republicans are disputing that forecast, as well as the timing of when the Treasury might run out of money and the implications of a default, further complicating the negotiating situation for Obama and Speaker John Boehner who must find a way out of the impasse…

“It really is irresponsible of the President to try to scare the markets,” said Senator Rand Paul, Republican of Kentucky. “If you don’t raise your debt ceiling, all you’re saying is, ‘We’re going to be balancing our budget.’ So if you put it in those terms, all these scary terms of, ‘Oh my goodness, the world’s going to end’ – if we balance the budget, the world’s going to end?  Why don’t we spend what comes in?”

“If you propose it that way,” he said of not raising the debt limit, “the American public will say that sounds like a pretty reasonable idea.”

The market’s growing uneasiness over the debt ceiling issue is being reflected not just in the recent performance of equities, but in yields for short-term Treasury bills…ones that mature in October and November have risen above 30 basis points this week, a level not seen since late 2008…risk aversion was certainly in evidence yesterday when the Treasury sold new 1-month bills at a yield of 35 basis points, a 3-fold increase from the prior week and just shy of the 2-year Treasury yield of 0.38%…

Yellen To Be Nominated As Fed President

No surprise here after President Obama’s apparent preferred choice, Larry Summers, recently withdrew his name for nomination, as Fed Vice-Chair Janet Yellen will be named later today by Obama to succeed Ben Bernanke when he steps down at the end of January…if confirmed by the Senate, which is widely expected, Yellen will become the first woman to head the central bank in its 100-year history…her views are considered to be closely aligned with those of Bernanke…

As Wall Street Journal ace reporter Jon Hilsenrath and colleague Victoria McGrane wrote this morning, “Her willingness to push boundaries to goose a listless economy reflects her intellectual heritage as a protégé of the late Nobel laureate James Tobin, a Yale University economist who advised presidents Kennedy and Johnson. Mr. Tobin’s work built upon the ideas of Depression-era economist John Maynard Keynes and supported government action to combat problems such as high unemployment and poverty.”

Over the spring and summer, the market was expecting the Fed to start tapering as early as September…of course that didn’t happen…with Yellen at the helm early next year, one cannot rule out the possibility of NO tapering until at least then, and perhaps even the unthinkable – what if economic conditions weaken – at least somewhat – and the Fed’s next move is actually to ramp UP its bond-buying program?…the Fed is in a trap that it won’t easily be able to crawl out of, and Yellen will have the difficult task of dealing with that mess…

Some market observers believe Yellen will pursue an ultra-loose monetary policy that will push beyond the current unemployment threshold of 6.5% and ultimately drive inflation higher…

Fed watchers today will be paying close attention to the publication of the September Fed minutes…given the current political stalemate in Washington, however, and economic dynamics that potentially could change significantly in the coming weeks, those minutes might be largely irrelevant…

Today’s Markets

Asian stocks cheered the news regarding Yellen and climbed higher overnight…Japan’s Nikkei average jumped 143 points to 14038 while China’s Shanghai Composite gained 14 points to close at 2212…European shares were mixed today…

After having fallen in 11 out of the past 14 sessions (860 points or 5.5%), the Dow is trying to rebound today…as of 7:00 am Pacific, it’s up 15 points…

The Dow is still prone to additional weakness which may mean a near-term test of a strong support band between 14400 and 14550 as shown in this 15-month weekly chart from John…RSI(14) divergence with price over the summer was a clue that the Index was gearing up for a correction…it found support yesterday at the rising 200-day moving average (SMA)…a temporary break below the 200-day occurred twice last year but has yet to occur so far this year…

The TSX is up 27 points through the first 30 minutes of trading, despite the weakness in commodities, while the Venture has lost 5 points to 934…the Venture could be headed for its first 3-session losing skid since August 19-20-21 when it dipped as low as 925 (solid support with the 100-day SMA currently at 928) before rebounding…

Fission Uranium Corp. (FCU, TSX-V)

More very positive results this morning from Fission Uranium (FCU, TSX-V)…PLS13-099, the easternmost hole of the R945E  Zone, intersected 144 metres of total composite mineralization including 8 m of off-scale radioactivity…this new hole represents the largest accumulation of mineralized intervals in any drill hole at PLS to date, and it extends on trend the strike length of this high-grade system to just over 1 km…on Monday, FCU announced an 11-hole, 3,700-metre expansion of the summer program to test highly prospective land-based targets to the west of the initial discovery zone (ROOE)…

FCU is up 4 cents to $1.20 as of 7:00 am Pacific…

Based on yesterday’s close of $1.16, Fission is off by more than 20% from its all-time high of $1.48 at the end of August…however, a reasonable interpretation is that it’s merely catching its breath after announcing a takeover of its JV partner (Alpha Minerals, AMW, TSX-V) and a flow-through financing at $1.50 that was expanded to $11.25 million last week…Fission is primed, in our view, for a take-out by a major at some point down the road (at a significantly higher price) and much of that money would likely flow into other juniors that are active with good prospects in the area – one of those is Aldrin Resource Corp. (ALN, TSX-V) which we’ve been mentioning since the spring when it was trading just below a dime…

Aldrin Resource Corp. (ALN, TSX-V)

Aldrin (ALN, TSX-V) enjoyed a solid day yesterday, jumping 1.5 cents to finish at 12.5 cents on volume of more than 4 million shares after the company announced it has arranged a $1 million private placement at 10 cents per share…the company also acquired a 100% interest in the 49,000-hectare Virgin Uranium Property on the south-central margin of the Athabasca basin…the company’s exploration focus over the winter will be to drill its Triple M Property adjacent to the PLS discovery…

Technically, ALN has solid support at 11 cents which was important resistance up until the end of July…ALN has fallen below its rising 100-day SMA at 12 cents for the 1st time since it resumed trading in May…

Discovery plays, from the uranium situation in Saskatchewan to North American Nickel’s (NAN, TSX-V) Maniitsoq Project in Greenland to the rapidly emerging Sheslay Valley Cu-Au porphyry district in northwest British Columbia, offer tremendous leverage even in challenging overall market conditions…

Probe Mines Ltd. (PRB, TSX-V)

Another discovery play we continue to like a lot is Probe Mines‘ (PRB, TSX-V) Borden Lake Project in northern Ontario where a robust high-grade zone is being delineated to the southeast of the original deposit…Probe has performed remarkably well in recent months, thanks to the discovery of this expanding high-grade area…keep in mind that Agnico Eagle (AEM, TSX) took a 9.99% position in the company in the spring…future take-out by AEM?…

Below is a 2.5-year weekly updated Probe chart…PRB has built solid support at the $2 level and – based on the geology at Borden – still has strong upside potential despite doubling in price since the end of May…PRB is up a penny at $2.16 through the first 30 minutes of trading…

Gold Standard Ventures (GSV, TSX-V)

Speaking of discoveries, Gold Standard Ventures (GSV, TSX-V) has bucked the market trend this week…as mentioned Monday morning, GSV came out with interesting news last week regarding its Railroad Project in Nevada…the first hole drilled by GSV at a target (Bald Mountain) 1500 metres southwest of North Bullion intercepted Gold and Copper mineralization in oxidized material – the most significant Gold oxidized mineralization found to date in the northern Railroad Project area…GSV jumped another 11 cents yesterday to close at 85 cents…it has advanced for 5 consecutive sessions, so it is prone to a slight pullback…GSV is up about 50% over just the last 7 sessions…

However, GSV’s breakout above 70 cents (now strong new support) and a downtrend line in place since last year was significant…combined with developments on the ground, this one is certainly worth watching closely in the weeks ahead…next major chart resistance is $1.20…note the bullish crossover in the ADX indicator – definitely a change in trend…as of 7:00 am Pacific, GSV is up a penny at 86 cents…

Note: John, Jon and Terry do not hold share positions in FCU, ALN, PRB or GSV.