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Gold has bounced around on this final day of the month with some important U.S. economic data released ahead of an updated Fed policy announcement slated for 11:00 am Pacific…the FOMC is expected to continue to wind down its monthly bond-buying program but investors will be looking for any subtle changes in language…U.S. first-quarter GDP came in lower than expected at an annual rate of just 1.0% (well below the Q4 2013 rate of 2.6%) which gave bullion a boost after the yellow metal dipped as low as $1,285…as of 8:15 am Pacific, Gold off $2 an ounce at $1,294…Silver is down 20 cents at $19.24…Copper has lost 4 cents to $3.03…Crude Oil has slipped nearly $1.50 a barrel to $99.79 while the U.S. Dollar Index is off one-third of a point to 79.46…

In its Silver Yearbook 2014 issued Monday, commodities consultants CPM Group will “consolidate” this year with “limited” downside potential…the top three Silver producing nations – Mexico, China and Peru – contributed two-thirds of the 4.1% increase in mine production last year…Mexico recorded the highest level of growth with output rising by 9.6 million ounces…Canada and Russia showed declines in Silver output last year, down 1.9 million and 1.3 million ounces, respectively, according to CPM…investment demand for Silver fell 42% to 105.3 million ounces last year to the lowest level since 2008 when investors bought 64.8 million Silver ounces…nevertheless, 2013 was still the 10th highest level of annual net Silver investment demand since 1960, CPM noted…

Investors remain positive on Platinum group metals, with holdings in Platinum and Palladium ETFs hitting all-time highs as of early this week, according to HSBC…the bank cites Bloomberg data showing that holdings in the top seven Platinum ETFs were at a record high of 2.66 million ounces as of Monday, up from 2.51 million at the start of the year…holdings in the top eight Palladium ETFs hit a record high of 2.58 million ounces, up from 2.16 million at the beginning of the year.  “The gain in Palladium is largely attributed to the two newly created (South African) palladium ETFs, which have absorbed a total of 470,000 oz this year.  We remain bullish on the PGMs,” stated HSBC.

China Set To Pass U.S. As World’s Largest Economy Sooner Than Expected

The Financial Times reported this morning that the U.S is on the brink of losing its status as the world’s largest economy, and is likely to slip behind China this year, sooner than widely anticipated, according to the world’s leading statistical agencies…the U.S. has been the global leader since overtaking the U.K. in 1872…most economists previously thought China would pull ahead in 2019…

The figures, compiled by the International Comparison Program hosted by the World Bank, are the most authoritative estimates of what money can buy in different countries and are used by most public and private sector organizations, such as the International Monetary Fund…this is the first time they have been updated since 2005…with the IMF expecting China’s economy to have grown 24% between 2011 and 2014 while the U.S. is expected to expand only 7.6%, China is likely to overtake the U.S. this year…the figures revolutionize the picture of the world’s economic landscape, boosting the importance of large middle-income countries…

India becomes the third-largest economy having previously been in tenth place…the size of its economy almost doubled from 19% of the U.S. in 2005 to 37% in 2011…Russia, Brazil, Indonesia and Mexico make the top 12 in the global table…in contrast, high costs and lower growth have pushed the U.K. and Japan further behind the U.S. than in the 2005 tables while Germany improved its relative position a little and Italy remained the same…

Today’s Equity Markets

Asia

Japan’s Nikkei finished a weak month on a slightly positive note, climbing 16 points…as widely expected, the Bank of Japan left monetary policy steady by a unanimous vote in its first meeting since the consumption tax hike on April 1…

China’s Shanghai Composite gained 6 points overnight to close at 2026…trading was quiet ahead of a four-day weekend (China reopens Monday)…John’s 6-month daily chart for the Shanghai shows that the Index continues to find strong support between 1950 and 2000, and a rebound in May is likely after a 7% correction from the April high of 2147…

Europe

European shares were mixed today…euro zone inflation picked up in April, but remained below expectations, maintaining pressure on the ECB to stimulate the economy at its next monetary policy meeting…

North America

The Dow is relatively unchanged as of 8:15 am Pacific…the U.S. economy slowed in the first quarter to one of the weakest paces of the five-year recovery as the frigid winter appeared to curtail business investment and weakness overseas hurt exports…on an encouraging note, though, the closely-watched ADP National Employment report came out this morning and showed that the economy created 220,000 private sector jobs in April, a number well above market expectations…the Labor Department’s jobs report for April is due Friday…

The TSX is up 18 points while the Venture is in negative territory for the fourth straight day, down 4 points at 996…the Venture could still post a slight gain for the month of April after finishing March at 994…Doubleview Capital Corp. (DBV, TSX-V) reported this morning that it has completed an initial round of drilling to follow up on discovery holes HAT-11 and HAT-08 at its Hat Cu-Au Porphyry Property in the Sheslay Valley…results are expected by the end of May…the company has also raised an additional $575,000 from the exercise of warrants, bringing the total amount raised over the last three months to nearly $1.5 million…DBV is unchanged at 22 cents as of 8:15 am Pacific…

Probe Mines Ltd. (PRB, TSX-V) Drills 71 Metres Grading 3.5 g/t Au At Borden Lake

Probe Mines (PRB, TSX-V) reported a large batch of assay results (about 3 dozen holes from 19,000 metres of drilling) pre-market from its Borden Lake Project in northern Ontario…very solid results (BL14-611 returned 71 m @ 3.5 g/t Au) but nothing extraordinary in this morning’s numbers, and PRB is off 27 cents at $2.65 as of 8:15 am Pacific after opening at $3 and climbing as high as $3.10 in early trading…the winter drill program has expanded the high-grade zone by an additional 60% to over 1.6 km…significantly, this zone now appears to be leveling off where it’s still open to the southeast…the total strike length of the Borden Lake System is now a whopping 3.7 km…technically, Probe appears to be in a consolidation phase after a powerful 12-month climb from a low of $1.11 to a high of $3.95…John’s charts have shown a strong support area around $2.60, just above the rising 200-day moving average (SMA)…

Contact Exploration Inc. (CEX, TSX-V) Updated Chart

A breakout is occurring, as John’s latest chart indicated was highly likely, in one of our favorite energy companies, Contact Exploration (CEX, TSX-V)…Contact continues to accelerate its Kakwa Montney play, and is poised for further increases in production as East Kakwa pushes westward…technically, CEX has performed in textbook fashion – occasionally retracing to test the uptrend support – as you can see in our updated 2.5-year weekly chart…important resistance is around 38 cents, and CEX is now pushing above that to close the month…as of 8:15 am Pacific, CEX is up 4 cents to 42.5 cents…

Magor Corporation (MCC, TSX-V) Updated Chart

We continue to keep a close eye on Magor Corp. (MCC, TSX-V) which, quite simply, is changing the way people interact with video through its Aerus software platform…MCC is steadily increasing its client base and anticipates reaching the significant milestone of cash flow break-even during its upcoming fiscal year which begins tomorrow (May 1 through April 30, 2015)…

Below is a 1-year weekly chart update from John…since February, MCC has mostly traded within a horizontal channel between 28 cents and 37 cents (Fib. resistance)…given steady buy pressure and a positive overall trend as shown by the ADX indicator, a breakout above the horizontal channel appears to be the most likely scenario…a reversal to the upside appears to be brewing in the 50-day SMA, a potential bullish trigger…MCC closed at 35 cents yesterday…

Note:  John and Jon both hold share positions in DBV.  Jon also holds a share position in MCC.

Gold has traded between $1,286 and $1,302 so far today…as of 7:50 am Pacific, bullion is up $3 an ounce at $1,299…Silver is off 8 cents at $19.49…Copper is down a penny at $3.06…Crude Oil is up $1.20 a barrel to $102.04 while the U.S. Dollar Index has gained nearly one-tenth of a point and is trading at 79.77…

Holdings in the SPDR Gold Trust, the largest bullion-backed ETP, were unchanged for a fifth day yesterday at a 12-week low of 792.14 metric tons…in China, volumes for the benchmark spot contract in Shanghai shrank for a second day yesterday after reaching a two-month high on April 24…markets across Asia including those in China and India, the world’s largest bullion consumers, are closed for the Labor Day holiday on May 1…

The tense situation in the Ukraine should limit Gold’s downside…the U.S. imposed additional sanctions on Russia yesterday but how effective these measures might be is highly questionable…the latest measures target seven Russian officials and 17 companies the U.S. says are linked to President Vladimir Putin’s inner circle…

Fed Starts 2-Day Meeting Today

The FMOC is expected to largely stand pat when a two-day policy meeting wraps up tomorrow…if so, this could mean a limited reaction in the Gold and equity markets…
a post-meeting statement is scheduled for release at 11:00 am Pacific tomorrow…

Stock Tied To Football Star’s Earning Potential

At least a few investors are rooting for San Francisco 49er tight end Vernon Davis to have a very lucrative career…an unusual stock tied to Davis’ earning potential gained $1, hitting the $11 mark in its trading debut in the U.S. yesterday…San Francisco startup Fantex Inc. sold 421,000 shares in the IPO…this marks the first time a stock has been linked to the performance of a professional athlete, an intriguing, albeit risky, concept that highlights the confluence of sports and business.  “We think it’s historic, not just from a sports perspective, but from a finance perspective, too,” Fantex CEO Buck French stated in an interview…skeptics ridicule the Davis tracking stock as a ploy that preys upon the passions of sports fans.  “If you are a serious investor, you can’t be putting a lot of money in this,” said Ron Heller, a former NFL tight end who now runs his own investment firm, Peritus Asset Management. “You are probably not going to get much money out of it, unless you can sell it to someone dumber than you.”

Today’s Equity Markets

Asia

China’s Shanghai Composite rebounded overnight on upbeat earnings, gaining 17 points to close at 2020…Japanese markets were closed for a public holiday…

Europe

European shares were up significantly today as a slew of corporate earnings managed to offset weaker-than-expected U.K. economic figures…

North America

The Dow is up 79 points as of 7:50 am Pacific…economic reports this morning had a measure of consumer confidence coming in just below expectations in April…separately, the price of a single-family home rose in February, slightly beating expectations, according to a closely watched survey…coming up is the GDP report tomorrow and the Labor Department’s jobs report Friday…corporate earnings continue to exceed expectations…with 54% of the S&P 500 having reported first-quarter results through this morning, overall earnings per share are now seen rising 0.6% from year-ago levels, according to FactSet, versus expectations of a 1.2% decline at the end of March…revenue is seen growing 2.3% from last year, according to FactSet…

The TSX is up 48 points as of 7:50 am Pacific while the Venture is off 9 points at 1001…

Updated TSX Gold Chart

The TSX Gold Index has been trapped in a tight range between support at 180 (the rising 200-day SMA) and resistance at 190 (just below the slightly declining 50-day SMA) for the last 25 trading sessions…how this battle ultimately plays out we’ll see, but the Venture is outperforming the Gold Index at the moment as it did late last year prior to a major advance in the latter…the Gold Index is up a point at 185 as of 7:50 am Pacific…

U.S. Dollar Index Updated Chart

We’ve stated this consistently for more than six months – the U.S. Dollar Index looks technically vulnerable, and that’s a supporting factor for both Gold and the Venture Exchange – main trends in both often run counter to the primary direction of the greenback…below is a 24-year monthly chart for the U.S. Dollar Index…declining highs in the RSI(14) are bearish along with declining 100 and 200-day moving averages (SMA’s)…at the very least, we expect a vigorous test of the key 79 support…should that fail, the Dollar Index could plunge swiftly to the bottom of the symmetrical triangle in the mid-70’s…the ADX indicator still has a slightly bullish bias but the gap between +DI and -DI has narrowed significantly in recent months, raising the possibility of a bearish -DI crossover within the next 2-3 months unless the current trend reverses…

5-Year Performance Chart – U.S. Dollar, Crude Oil (WTIC), & Gold 

Below is an interesting performance chart going back five years comparing the U.S. Dollar (down 6%) vs. Crude Oil (up 96%) and Gold (up 42%)…reinforces how currencies are weakening…

Madalena Energy Inc. (MVN, TSX-V)

Energy plays are performing well and Madalena Energy (MVN, TSX-V), one of the few companies in this space that we’ve been tracking since last year, continues an impressive uptrend with remarkable support at its rising 100-day SMA (currently 67 cents) since late July last year…as reported by MVN this morning, the company’s Q4 2013 production averaged 1,271 boe/d (56% oil and liquids), an increase of 101% from Q4 2012…

MVN has a strong balance sheet (zero debt) after raising $23 million at 70 cents in February…it has unutilized credit facilities of $13 million and funds from operations throughout 2014 which will allow the company to meets its commitments and execute its business plan…Madalena has a large land base of approximately 200 gross (>150 net) sections of land (100,000+ acres, 78% average W.I.) encompassing multiple light oil and liquids-rich gas resource plays in the Paddle River area of west-central Alberta with increasing production and reserves on three horizontal plays…MVN also has very attractive assets in Argentina (albeit not our favorite jurisdiction) where it’s focused on the multi-billion barrel potential of large blocks within the “sweet spot” of that country’s prolific Neuquen basin…

Below is a 2.5-year weekly MVN chart from John…very strong support in the high ’60’s…the next Fib. resistance levels are at 81 and 95 cents…buy pressure has declined recently and accumulation has started to flatten…that raises the possibility of a potential correction to secondary support in the mid’50’s, in the immediate vicinity of the rising 200-day SMA…overall, however, MVN’s primary trend clearly remains bullish based on this long-term chart…as of 7:50 am Pacific, MVN is off 3 pennies at 72 cents…

Canadian Mining Company Inc. (CNG, TSX-V)

We urge readers to perform their due diligence on Canadian Mining Company Inc. (CNG, TSX-V) and the mineral Zeolite which is not plentiful in Canada but Canadian Mining Company (CNG, TSX-V) appears to have major supplies of it in the ground in B.C. near Princeton…Zeolite is particularly valuable in holding and slowing releasing valuable nutrients to plants…it promotes more efficient use of fertilizers, generating faster growth and increased yields…CNG’s Zeolite has caught the attention of some segments of the medical marijuana industry, hence the deal (MOI at this point) announced recently between CNG and Thelon Capital Ltd. (THC, TSX-V)…

CNG President Ray Paquette is working hard to gain traction with his company’s Zeolite story which appears to have potential…at the moment, CNG faces stiff resistance at 3 cents based on this 6-year weekly chart but rising 100 and 200-day SMA’s around 1.5 cents are encouraging…speculators may have a good chance on this one, looking out over the next several months, with accumulation on any weakness…CNG is unchanged at 2.5 cents as of 7:50 am Pacific…

Note:  John, Jon and Terry do not hold share positions in MVN or CNG.

Gold has traded between $1,292 and $1,306 so far today…as of 8:00 am Pacific, bullion is down $10 an ounce at $1,294…along with events in the Ukraine, some of the data Gold investors will plug into this week include the monthly jobs report, first-quarter U.S. GDP and the latest word out of the Federal Reserve which meets tomorrow and Wednesday…Silver is off 21 cents at $19.52 (John has updated Silver charts at the bottom of today’s Morning Musings)…Copper is up a penny at $3.08…Crude Oil is is relatively unchanged at $100.74 while the U.S. Dollar Index is off slightly at 79.69…

China’s Gold imports from Hong Kong dropped in March as local prices fell below the international benchmark in London for the first time in more than a year…net imports totaled 80.6 metric tons last month, compared with 111.4 tons in February and a record 130 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today…exports to Hong Kong from China rose to 25.3 tons in March from 15.8 tons in February…mainland China doesn’t publish such data…bullion for immediate delivery on the Shanghai Gold Exchange was $1.02 an ounce below the price in London on a monthly average basis in March, the first time that has occurred since September 2012, according to data tracked by Bloomberg…

Keep in mind that China, as Mineweb reported last week, has started to allow Gold imports through its capital Beijing, in a move that would help keep purchases by the world’s top bullion buyer more discreet at a time when it might be boosting official reserves…the opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong’s pole position in China’s Gold trade, as the mainland can get more of the metal it wants directly rather than through a route (Hong Kong) that discloses how much it is buying…

Rising Chinese Jewelry Consumption

As you can see in the chart below from www.usfunds.com, since 2004 the volume of Gold jewelry consumed in China has tripled…what’s more, China surpassed India as the world’s largest consumer and manufacturer of jewelry in 2013…according to a recent Reuters’ article, Gold jewelry sales in India slowed by 10% since import restrictions were imposed on the country last year – a likely factor placing China in the top spot…

Updated 5-Year Weekly Gold Chart

Below is an updated 5-year weekly Gold chart from John…note the overall rising trend in RSI(14) since late June last year and what could develop as new support around the 50 level…buy pressure is also trending higher…since early 2013, Gold has traded in a horizontal channel essentially between $1,200 and $1,400, so a move outside of that channel would be significant in terms of momentum…the 200-day moving average (SMA) is flattening out after being in decline since the second quarter of last year…there are many reasons to believe (including how the Venture has behaved) that the bottom in Gold was reached last June at just below $1,200…

U.S. Money Supply Growth

More insight from www.usfunds.com…signs that inflation has likely bottomed are now showing up and should stoke inflation expectations in support of Gold…the Federal Reserve’s M2 money supply growth is running at an annualized rate of 7%, a multiple of Gold’s long-term supply growth of around 2% annually…similarly, U.S. bank loans have accelerated to levels not seen since 2007, with commercial and industrial loans rising at a 16.1% rate over the past 18 weeks…similarly, average hourly earnings for American workers now run consistently above a 2% annual growth rate…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell for the fourth straight session, losing 33 points overnight to close at 2003…that’s the lowest level on the Shanghai since March 20…President Xi Jinping stated Friday that current fiscal and monetary policy would remain unchanged, according to state media reports…

Europe

European shares were up moderately today, boosted by M&A activity, but bullish sentiment was kept in check due to ongoing concerns regarding Ukraine…

North America

The Dow has gained 115 points through the first 90 minutes of trading…the TSX is 14 points higher while the Venture is flat at 1014 after touching a high in early trading of 1021…

Heating Up In Mexico:  Garibaldi Resources Corp. (GGI, TSX-V) Update

Two “Perfect Storms” are now brewing for Garibaldi Resources Corp. (GGI, TSX-V), one in Mexico where drilling continues and the other in the Sheslay Valley, northwest B.C., where a very “pregnant” Cu-Au porphyry district could soon attract national attention…no wonder the Garibaldi multi-year chart is looking so attractive…the fundamentals are quickly lining up, especially after the news regarding La Patilla at the end of last week…

It’s important to remember that in Mexico, GGI has a track record of delivering value for shareholders…in 2009, GGI sold its Temoris option in a significant deal that has allowed the company not to have to carry out a financing since that time…few companies on the Venture can lay claim to the fact that they haven’t diluted their stock in the last five years…that’s a hugely important factor for Garibaldi and its shareholders entering this summer given the intense market activity that could easily emerge over the Sheslay Valley (not to mention Mexico)…there is little paper “overhang” that can hold GGI back on one or more catalysts…

As most readers know, we just recently returned from a Sheslay area visit…the scale and potential of this district are truly enormous…we’ve seen it from the air and the ground…the Sheslay district is breathtaking in its scope and we believe it’s going to produce the most exciting area play British Columbia has witnessed in many years, perhaps since the days of Eskay Creek…we continue to compile information for special report coverage in May…every company in the area offers something unique and exciting…Garibaldi’s distinct advantage (besides share structure) is that it controls more than half of the mineralized “corridor” identified to date as it begins to ramp up toward first-ever drilling…

In the meantime, things are getting HOT for GGI in Mexico…

Drilling Discovery At La Patilla – 10.4 g/t Au over 8.5 m in LP-14

When a Gold property is drilled for the first time, and returns thick intercepts of mineralization near-surface including some high-grade, this demands attention…five holes out of six “hit” within 40-50 meters of surface in first-pass drilling at the La Patilla vein system, and the intercepts closely approximate true width (important) along a strike length of 75 meters…one can easily see how a modest deposit, but potentially quite significant for a junior such as Garibaldi, could come together at La Patilla if the next phase of drilling builds on the tonnage that is already evident…

Besides LP-14, other intercepts included 38.9 m @ 0.8 g/t Au (LP-03); 31.6 m @ 0.8 g/t Au (LP-10); 13.7 m @ 0.9 g/t Au (LP-02); and 10.8 m @ 1.9 g/t Au (LP-12)…these results represent a highly encouraging start for Garibaldi at La Patilla…they have something to build on and an important trail to follow…

Is there a deeper, even higher-grade source for this near-surface mineralization?…that’s an unanswered question at the moment but Garibaldi is anxious to find out…that’s one reason why La Patilla is being quickly moved along to the Phase 2 drill stage (Rodadero and Iris are also being drilled for the first time, Rodadero right now)…

Based on these initial results, with first-pass metallurgical testing now in progress, Garibaldi is clearly on track with its goals for La Patilla but market expectations will be higher for the next phase…keep in mind that this property features easy access and relatively flat terrain at low elevations and is surrounded by excellent infrastructure in an established mining district…Garibaldi has also negotiated a long-term agreement with the local community to allow for any potential future metal extraction on the property by the company…

A drilling discovery has been confirmed at La Patilla…this appears to be a stockwork vein system and it’s currently open in all directions for expansion…between developments in both Mexico and the Sheslay Valley, there is now some serious action in GGI that’s likely going to continue non-stop for the foreseeable future…as always, perform your own due diligence…

GGI Updated Chart

This 10-year monthly GGI chart is really quite phenomenal as it paints the “Big Picture” so clearly…RSI(14) is climbing an uptrend and at 53% has plenty of room to move higher…note the uptrend support line on the chart and the now-rising 500-day SMA (the MA-17 on this chart)…while past results are no guarantee of future performance, the last time GGI’s 500-day reversed to the upside, the stock ran from current levels to a high of nearly 60 cents in early 2011… the ADX indicator shows a bullish main trend in place since the middle of last year…GGI is half a penny higher at 17 cents as of 8:00 am Pacific…

Doubleview Capital Corp. (DBV, TSX-V) Updated Chart

Important support held on the recent pullback in Doubleview Capital (DBV, TSX-V) – much of that weakness attributed to warrant selling pressure as DBV pulled the trigger on an acceleration clause related to warrants issued in December 2012 (those warrants have now either been exercised or have expired)…the stock firmed up at the end of last week and is trying to hold at or above the 50-day SMA at 24 cents…a very strong support band exists between 15 and 20 cents while there is measured Fib. resistance at 34 cents…the overbought RSI(14) condition that persisted for a couple of months through the early part of March has largely unwound…DBV is off half a penny at 24 cents as of 8:00 am Pacific…

TNR Gold Corp. (TNR, TSX-V)

Readers may wish to perform due diligence on TNR Gold Corp. (TNR, TSX-V) as John has spotted some interesting technical behavior…for whatever reason, there has been growing accumulation in this play since late last year with the stock basing in a channel between 2.5 cents and 4 cents…RSI(14) is climbing an uptrend and is above 50…what potentially could occur here, given the technical clues, is a breakout above the downsloping channel in place since late 2012/early 2013…a short-term trading strategy for some investors would be to accumulate below the downsloping channel and then sell on the breakout…in any event, it’s an interesting chart…TNR closed Friday at 4 cents…

Silver Short-Term Chart Update

Importantly, Silver found support last week below just below $19 at the top of the downtrend line as predicted…RSI(2) became quite oversold and has since recovered to 31%…Silver’s support band ranges from $17.50 to $19.50 while the next major chart resistance is $22…

Silver Long-Term Chart Update

This 11-year monthly chart confirms that the metal has exceptional support just below $20…sell pressure has been dominant since early last year but is weak…if and when Silver breaks above the main downtrend line, watch out (there are two downtrend lines to take note of)…RSI(2) has unwound from above 80% to 37%…

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

TSX Venture Exchange and Gold

It was an impressive week for the Venture as some key short-term technicals swung positive and the Index confidently pushed through the 1000 level again, as predicted, and also overcame resistance at 1007.  The Venture closed up 17 points or nearly 2% for the week to finish at 1014.  It’s important that investors grasp this critical point:  Based on many measures of technical analysis (TA), this is a powerful-looking market right now and it’s underpinned by tremendous support.  In our view, all the ingredients are coming together, technically and fundamentally, for a Venture explosion to the upside over the summer.

As John’s 1-year daily chart showed Friday, the Venture has regained momentum after a mild correction of just under 7% between March 11 and April 15 when the Index fell from a high of 1050 to an intra-day low on the 15th of 979.  TA correctly called the closing low of 985 on March 27.  There is a highly impressive degree of technical strength supporting this market, and a confirmed breakout has now occurred above the 1007 resistance.  The current “Wave 5” – no precise timeline just yet – has a target of 1150, a 13% climb from current levels which is the kind of environment within which some top performing plays can easily double or triple.

Let’s now take a look at the longer-term bigger picture with a 5-year weekly chart.  The rising 200-day moving average (SMA) has now joined up with superb support  around 970 which was resistance on the Venture for most of last year.  This support is made that much stronger given the fact that the 970 area was such stiff resistance over such a long period.  The downside, then, from the current level of 1014 is very limited.  The potential upside, as you’ll see, is huge.  Ultimately, we see a high probability of the Venture challenging resistance this year anywhere between 1350 and the Fib. 50% retracement level just below 1650.  Buy pressure is increasing, +DI remains above -DI on the ADX trend indicator, RSI(14) found strong support at 50 and is moving higher, and important moving averages are in bullish alignment.  It appears that by about the middle of June – just over six weeks from now – the 300-day SMA will reverse to the upside.  Historically, that has proven to be a hugely bullish event and the last time we saw this occur was in late 2009 into early 2010.

5-Year Venture Weekly Chart

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 in 2013 is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations.  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 (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe).   Ultimately, all of  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, grades have fallen significantly just over the past decade.

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 are strong financially, have superior exploration prospects, competent management and clean share structures.

Gold

Gold staged an impressive intra-day turnaround Thursday, falling as low as $1,268 – within a strong support band – and closed the week on a powerful note at $1,304.  That was a slight gain for the week and what we see on the 1-year daily chart is an encouraging switch from sell pressure – dominant since late March – to buy pressure.  The first key hurdle for bullion to overcome is the downtrend line just above the April high, and then the second hurdle will be the chart resistance at $1,350.

Clearly, events in the Ukraine are lending support to Gold and how that’s going to play out, no one really knows – but the Russians are up to no good and Vladimir Putin knows that Western leadership is weak, especially at the Obama White House.  American bashers can’t understand this, but the world is a more dangerous place when the United States is not leading and demonstrating strength on the international stage.  The geopolitical situation now seems comparable to what it was when Jimmy Carter occupied the White House in the late 1970’s.

1-Year Gold Daily Chart

Gold has traded between $1,290 and $1,306 so far today, after yesterday’s impressive intra-day turnaround following a test of strong support around $1,270…Silver is off 4 cents at $19.61…Copper is up a penny at $3.07…Crude Oil is down 60 cents at $101.35 while the U.S. Dollar Index while Crude Oil is off slightly at 79.73…

The Russia-Ukraine crisis continues to intensify – who knows what may develop over the weekend – and that’s certainly helping to underpin bullion…reports of a pick-up in Chinese demand in recent days is also encouraging as far as Gold is concerned…

Ukraine’s prime minister said today that Russia “wants to start World War III” and Moscow’s veiled threats of military action could start an armed conflict in Europe…Arseniy Yatsenyuk made the comments a day after Russia said it had been “forced” to start fresh military drills just over the border because of increased activity by NATO and the Ukrainian military…

Russia’s central bank boosted interest rates today in a surprise move aimed at reining in inflation while the confrontation with the West over Ukraine escalates…the decision followed hot on the heels of a downgrade of Russia’s credit rating to one notch above junk by Standard and Poor’s Rating Services, which turned up on the pressure on beleaguered Russian assets…Russia’s already-slowing economy has been hard hit by capital flight during the Ukraine crisis…when the central bank lifted rates by 1.5 percentage points in March, it said the move was temporary.  “The probability of inflation exceeding the 5% target at the end of 2014 has increased substantially,” the bank said, pointing to the weaker currency as a contributing factor…

Holdings in the SPDR Gold Trust, the largest Gold-backed exchange-traded product, were unchanged for a third day yesterday at 792.14 metric tons…

Goldcorp Inc. (G, TSX) Updated Chart

This Goldcorp (G, TSX) chart from John is telling us that the fun may have just begun in Gold stocks which were despised by so many investors just a few months ago…with no less than three bullish reversal patterns (double bottom, cup-with handle and inverted H&S), the Goldcorp chart is a great example of how encouraging this sector looks at the moment (the inverted H&S is not shown on this 15-month weekly chart for simplicity purposes)…Goldcorp is up 18 cents at $27.26 as of 8:30 am Pacific…

Palladium Soars

Deutsche Bank says it continues to favor Platinum group metals, even though a lengthy South African strike has not meant materially higher Platinum prices yet…the bank cites several supportive influences, including the 13-week-old strike, political crisis surrounding Ukraine which has led to worries about sanctions against key PGM producer Russia, the launch of two Palladium ETF’s in South Africa and robust sales of motor vehicles, which use PGMs for catalysts…

This 2.5-year weekly chart from John shows how Palladium (outperforming Platinum) really broke out earlier this month…Russia is the world’s largest palladium producer, accounting for roughly 40% of supply…

Today’s Equity Markets

Asia

China’s Shanghai Composite ended the week at a three-week low of 2037, falling 21 points overnight to close at 2037…Japan’s Nikkei gained 24 points…

Europe

European shares were down moderately today on concerns over Ukraine…Germany in particular has heavy exposure to Russian companies…

North America

The Dow is off 128 points through the first two hours of trading…U.S. consumer sentiment rose in April to a nine-month high as views on current and near-term conditions surged, a survey released this morning showed…the Thomson Reuters/University of Michigan’s final April reading on the overall index of consumer sentiment came in at 84.1, beating an expectation of 83.0 in a Reuters survey and up from 80.0 the month before…the preliminary April reading was 82.6…the headline number was the highest reading since July 2013…

The TSX has shed 55 points while the Venture is down just 2 points at 1013 as of 8:30 am Pacific…

Venture Updated Chart

The Venture has regained momentum after a mild correction of just under 7% between March 11 and April 15 when the Index fell from a high of 1050 to an intra-day low on the 15th of 979…John’s charts correctly called the closing low of 985 on March 27…there is a highly impressive degree of technical strength underpinning this market, and a confirmed breakout has now occurred above the 1007 resistance…“Wave 5” has a target of around 1150…

Sheslay Shakeup

Interesting developments in the Sheslay district this morning…Ashburton Ventures (ABR, TSX-V) has taken out Victory Ventures‘ (VVN, TSX-V) position contiguous to the western border of Garibaldi Resources‘ (GGI, TSX-V) Grizzly Property…Victory is going for the pot (new participant in the medical marijuana chase) while Ashburton is going for the pot of Gold and Copper, so to speak…ABR, showing a good sense of timing, has completed a transaction to acquire Victory’s two claim blocks (“Victory 1” and “Victory 2”) totaling just over 1,700 hectares, and is calling them the “Grizzly West Extension Project”…this ground covers about half (6 km) of the north-south distance of the Garibaldi western border…ABR is now within about 2 km of GGI’s well-defined Grizzly West porphyry target that has yet to be drilled but is open in all directions based on a large geochemical anomaly with promising geophysics…ABR noted that historical data for this area has been reviewed extensively by its geologists, leading us to believe they may have developed some new theories surrounding the Kaketsa pluton and the apparent Pyrrhotite Creek-West Kaketsa-Grizzly West connection…meanwhile, Ashburton also holds the highly strategic Hackett Property contiguous to Doubleview Capital Corp.’s (DBV, TSX-V) Hat Property, and we’ll be exploring the potential of that opportunity for ABR in more detail next week…ABR is up half a penny at a nickel as of 8:30 am Pacific…

Garibaldi Mexico Update

While it’s gearing up for a major exploration/drill program in B.C.’s hottest camp, GGI continues to advance its operations in Mexico…late yesterday, GGI released solid first-ever drilling results from the La Patilla Gold Property in Sinaloa State…five of six holes in the La Patilla vein system hit broad zones of mineralization including some impressive high-grade shorter intervals…the system is open in all directions, so there is both tonnage and grade potential here…we’ll be reviewing the numbers and the drill map over the weekend for a more detailed interpretation in Monday’s Morning Musings, but La Patilla is clearly showing potential in these early stages to develop into a small-scale producer which would be another very significant development for this company…GGI is already carrying out first pass metallurgical testing and is lining up targets for follow-up drilling at La Patilla…meanwhile, GGI is also now drilling at Rodadero (high-grade Silver target) in Sonora State and is also preparing to carry out first-ever drilling at the Iris Project which is in the heart of a robust mining and exploration camp in Chihuahua State…GGI is up 2 cents at 17.5 cents as of 8:30 am Pacific…

Doubleview Capital Corp. (DBV, TSX-V) – Part 4 Of Video Interview With John Buckle

Doubleview is finishing the week on a strong note with warrant selling pressure having ended, and as speculation begins to mount regarding drilling that started at the Hat more than three weeks ago to follow up discovery holes HAT-08 and HAT-11…DBV is up 4 cents at 25 cents as of 8:30 am Pacific…

During our recent Sheslay Valley and Hat Property visit, we had the opportunity to meet Doubleview Capital (DBV, TSX-V) consulting geologist and geophysicist John Buckle who has played a critical role in selecting drill targets at the Hat…through our hundreds of hours of Sheslay Valley research, one thing is certainly clear – geophysics has been and is going to continue to be instrumental in drill target selection for all companies throughout this district…the dots are connecting, so to speak, with regard to certain signatures…

Below is the fourth excerpt of our interview with Buckle which took place inside one of the camp units, hence some occasional background noise and movements…Buckle started his career in 1972 with Teck…former president of the Canadian Geophysical Society, and also former president of the Association of Professional Geoscientists of Ontario, Buckle has worked in 10 countries and has several discoveries under his belt…he specializes in porphyry Copper, Gold, Nickel, kimberlite and polymetallic exploration…

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

Gold traded as low as $1,268 this morning but has staged a significant reversal…as of 6:45 am Pacific, bullion is now unchanged at $1,284…keep in mind that Gold is one of the best performing financial assets so far in 2014 with a gain of nearly 7%…technically, it hit an area of very strong support this morning along with Silver which briefly dipped below $19 an ounce…Silver is now up 4 cents at $19.49…Copper is 3 cents higher at $3.04…Crude Oil is trading just below $102, up nearly 50 cents, while the U.S. Dollar Index is relatively unchanged at 79.87…

A Dubai based Chinese mafia appears to be playing a key role in Gold smuggling incidents, especially in South India, according to customs officials in India as reported by Mineweb.    “Though it sounds incredulous, investigators have come across enough evidence to indicate that Chinese gangs are hiring operators in other countries and smuggling Gold into Hyderabad, Kerala and other Indian cities,” said Kalyan Revella, Assistant Commissioner, Customs and Central Excise, at Hyderabad…how incredulous that is, we’re not so sure, but India’s flawed policy on Gold imports was the genesis of the smuggling problem…it’s not surprising that India’s Commerce Ministry has now come out in favor of axing restrictions on Gold imports.  “The present Gold import policy is workable only for a short distance,” Commerce Secretary Rajeev Kher told the media yesterday.   “When this policy was conceptualized, it was for a limited objective.  The Department of Commerce has taken a very clear decision that this policy is not sustainable in the long run.”  He added that the policy needed to be appropriately amended…in order to check India’s rising current account deficit, the government significantly raised import duties on bullion while the Reserve Bank of India imposed additional curbs on the import of the metal to jewellery exporters…

The crisis in the Ukraine continues to heat up which should lend support to Gold…Ukrainian authorities said this morning that five pro-Russian militants have been killed outside an eastern city in Ukraine…Russian President Vladimir Putin, meanwhile, says the use of the army against Ukrainian civilians is a “serious crime” by Kiev…the real crime, however, is being carried out by the Putin regime which is clearly doing all it can to destabilize Ukraine as a pretext for what could be a potential invasion…

Today’s Equity Markets

Asia

China’s Shanghai Composite closed at its lowest level in three weeks, falling 10 points overnight to finish at 2057 despite the announcement of further economic reforms…the State Council said yesterday that it would ease restrictions on private sector investments for infrastructure projects in railway, telecommunications, clean energy and pipelines…

Japan’s Nikkei average slipped 141 points to close at 14405…

Europe

European markets are mixed in late trading overseas…Greece has achieved a primary surplus in 2013 – what’s left when interest payments are stripped out, while Portugal has easily tapped bond investors for 10-year cash…

North America

The Dow is off 4 points as of 6:45 am Pacific…Apple dazzled investors with a big earnings beat last night (quarterly net profit of $10.2 billion) while Facebook also reported better than expected earnings…the number of Americans filing new claims for unemployment benefits increased more than expected last week; however, orders for long-lasting U.s. manufactured goods in March exceeded expectations while a measure of business capital spending plans surged, bolstering views of an acceleration in growth in the second quarter…

The TSX is up 10 points through the first 15 minutes of trading while the Venture has added 1 point to 1012…the Venture appears to be poised to confirm a breakout above resistance at 1007…

TSX Gold Index Updated Chart

The TSX Gold Index, which surged nearly 50% from the end of December to a seven-month high of 216 in mid-March, has found consistent support at its 200-day moving average (SMA), currently at 180, and reversed higher after touching 182 in very early trading…a very strong support band, which includes Fib. levels, exists between 175 and 182 and it would be surprising to see that not hold given chart patterns as well as the strength underpinning the Venture which is such a reliable leading indicator of future Gold prices…below is a 6-month daily Gold Index chart…

CRB Index Updated Chart

The behavior of the CRB Index, as demonstrated by this 20-year monthly chart, is additional evidence that the Venture is in a bullish new phase…there are several interesting aspects regarding this chart including the fact that RSI(14) has broken above long-term resistance at 50 which had been in place for more than two years since late 2011…the Index has also blasted through a downtrend line…commodities are headed higher as the year progresses – that’s what this long-term chart is telling us…

Contact Exploration Inc. (CEX, TSX-V) Update

The energy sector is hot as evidenced by yesterday’s announcement from Crescent Point Energy Corp. (CPG, TSX) that it has entered into a $1.1 billion deal to acquire all of the issued and outstanding shares of a privately held southeast Saskatchewan oil and gas producer with a large Torquay land position and production of approximately 10,000 barrels of oil equivalent per day (boe/d)…

One of our favorite energy companies is Contact Exploration (CEX, TSX-V) whichstaged an important breakout in December above a horizontal channel in place for more than a year…Contact continues to accelerate its Kakwa Montney play, and is poised for further increases in production as East Kakwa pushes westward…

Technically, CEX has performed in textbook fashion – occasionally retracing to test the uptrend support – as you can see in John’s 2.5-year weekly chart…important resistance is around 38 cents, yesterday’s closing price, and a near-term breakout appears quite possible based on the posture of this chart…CEX is unchanged at 38 cents as of 6:45 am Pacific…

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

Speaking of energy plays, another rapidly growing company we’ve been tracking is Pine Cliff Energy (PNE, TSX-V) which reported a 775% increase in fourth quarter 2013 production of 6,443 boe per day as compared to 832 boe per day during the same period in 2012…it’ll be interesting to see how PNE handles resistance at current levels, but any pullback in the near future to cleanse an overbought RSI(14) condition on this 5-year weekly chart should be considered an opportunity…if you believe in energy, this is certainly a company worthy of your due diligence…PNE is off 2 pennies at $1.58 as of 6:45 am Pacific…

Doubleview Capital Corp. (DBV, TSX-V) – Part 3 Of Video Interview With John Buckle

During our recent Sheslay Valley and Hat Property visit, we had the opportunity to meet Doubleview Capital (DBV, TSX-V) consulting geologist and geophysicist John Buckle who has played a critical role in selecting drill targets at the Hat…through our hundreds of hours of Sheslay Valley research, one thing is certainly clear – geophysics has been and is going to continue to be instrumental in drill target selection for all companies throughout this district…the dots are connecting, so to speak, with regard to certain signatures…

Below is the third excerpt of our interview with Buckle which took place inside one of the camp units, hence some occasional background noise and movements…in this segment, he discusses the 11 holes completed before the start of this current program and provides some insight into what could be shaping up at the Hat…Buckle started his career in 1972 with Teck…former president of the Canadian Geophysical Society, and also former president of the Association of Professional Geoscientists of Ontario, Buckle has worked in 10 countries and has several discoveries under his belt…he specializes in porphyry Copper, Gold, Nickel, kimberlite and polymetallic exploration…

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