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A Daily, Vibrant Voice Focused on Speculative Opportunities,
Commodities, and Economic & Political Trends Impacting
The Resource Sector & Equity Markets
 

"Market-Trouncing Returns Through Unbeatable
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May 10, 2014

The Week In Review And A Look Ahead

TSX Venture Exchange and Gold

The Venture fell marginally each day last week and has declined in 8 out of the last 11 sessions.  However, Friday’s intra-day reversal from a low of 975 to a close of 991 (23-point loss for the week) was yet another example of the resiliency of this market and its powerful wall of support in the immediate vicinity of 970 which previously was very stiff resistance for many months.

The Venture is in the early stages of a new bull phase that should carry it to significantly higher levels over the summer and into the fall as John’s charts have consistently pointed out over the last several months.  What’s looming prominently on the horizon – an important and highly bullish technical event we project to occur by the end of June – is a reversal to the upside in the 300-day moving average (SMA).  As an investor you don’t ever want to be on the wrong side of that equation, whether it’s an upside reversal or a downside one.

Below is John’s updated 5-year weekly chart.  The bear market bottom occurred during the second quarter of last year and RSI(14) has been climbing an uptrend ever since.  An exceptionally strong support band exists from the 940’s through the 980’s, and in the middle of that range is the rising 200-day SMA.  Interestingly, buy pressure is increasing here in the month of May as demonstrated by the CMF.  RSI(14) has retreated to 50% where it should find support – that level served as resistance on several previous occasions between 2011 and the end of last year.

Bottom line:  We saw a test of Venture support in late January/early February.  More tests in March, April and again this month.  This is normal and healthy, and these “tests” may not be over yet.  But the primary trend is bullish and smart money is accumulating on weakness in advance of an eventual major upside breakout.

CDNX177

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 bounced around again last week and closed Friday at $1,290, a loss of $11 for the week.  John’s 1-year daily chart (see below) shows strong support in the $1,270’s.

The $1,325 to $1,350 area is key resistance.  If Gold can overcome that hurdle with a confirmed breakout above $1,350, then the next stop is $1,400.  A solid case can be made for a big move in Gold to the upside over the summer (that’s what the Venture seems to be hinting at), and that would catch a lot of traders by surprise.

UBS recommends selling Gold on any price rallies, arguing bullion lacks the incentives to push higher, and more importantly, to maintain its “elevated perch”.   The bank’s analysts added that recent gains were aided by “nervous shorts”.  Similarly, Goldman Sachs argues that Gold’s recent gains are a result of transient factors, implying prices are expected to grind down from here.

Dundee Capital Markets’ chief economist Martin Murenbeeld, one of the most accurate Gold forecasters in recent years, believes bullion is likely to end 2014 at $1,367 per ounce, before climbing to $1,438 in 2015.

GOLD158

Silver fell 31 cents last week to close at $19.15.  Copper gained 2 pennies to finish at $3.08.  Crude Oil added 23 cents to $99.99 while the U.S. Dollar Index found support around 79 and rallied to finish the week up one-third of a point at 79.87.

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 Gold’s largest annual drop in three decades in 2013, the fundamental long-term case for the metal remains solidly intact – 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 at $4 trillion and still expanding, 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 had a lot to do with Gold’s plunge during the spring of 2013  below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew “momentum traders” away from bullion.  June’s low of $1,179 was likely the bottom for Gold.  Extreme levels of bearishness emerged in the metal last year.  With the long-term bull market remaining intact, we expect new all-time highs in Gold as the decade progresses.  Inflationary pressures should eventually kick in around the globe after years of ultra-loose monetary policy.

BMR eAlerts

We are in the process of updating our eAlert list, especially in light of recent exploration discoveries and the much improved Venture outlook for 2014.  If you wish to be included in the BMR eAlert system, which sends out occasional important and timely market information that’s not always posted on our site (or before it’s posted on our site), simply click on the “Contact Us” button you see in the top right hand corner of this page, type in “Alert” in the subject line, give us your first name, and hit the send button.  Your email address is not given out to any other party.

Again, use the “Contact Us” button you see in the top right hand corner of this page OR send us an email at:  [email protected]

IMPORTANT:  If you are already an eAlert subscriber, or if you’re about to become one, please ensure you add “[email protected]” to your email contact list.

Independent Research and Analysis of Gold, Silver, Copper, the TSX Venture Exchange and Emerging Junior Resource Companies: Speculative Opportunities in Today’s Markets

Welcome to our site, or at least the initial version of it!  BMR has been online for more than four years and strictly through word-of-mouth we have built a loyal following.  We encourage reader feedback and the exchange of helpful opinions and ideas among investors in our forum.

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.

May 9, 2014

BMR Morning Market Musings…

Gold has traded between $1,286 and $1,296 so far today…as of 8:30 am Pacific, bullion is down $3 an ounce at $1,287…Silver is off 11 cents at $19.04…Copper is unchanged at $3.07…Crude Oil is 50 cents higher at $100.78 while the U.S. Dollar Index has rallied more than one-third of a point to 79.83…Nickel, which climbed above $9 a pound this morning, is heading for its biggest weekly gain since June, 2010…Nickel prices are up 45% since January, making it by far the best performing industrial metal this year…

After rallying to three-week highs at the beginning of the week, thanks to elevated tensions in Ukraine, Gold has failed to maintain those gains after a softening in rhetoric from Russian President Vladimir Putin who said he was willing to negotiate with European officials over the crisis…pro-Russian separatists in eastern Ukraine have ignored a public call by Putin to postpone a referendum on self-rule, however, declaring they would go ahead on Sunday with a vote that could lead to war…there’s little doubt that Russia is doing all that it can to help destabilize Ukraine, so it’s hard to imagine this situation is not going to escalate in the weeks ahead which should – at the very least – limit any selling pressure in Gold…in comments that weakened bullion yesterday, ECB President Mario Draghi strongly hinted that the ECB will cut interest rates next month which helped the U.S. Dollar Index reverse at critical support at 79 (perhaps just a temporary reprieve for the struggling greenback)…

Where American Millionaires Are Putting Their Money

The first-ever CNBC Millionaire’s Survey, which polled 514 people with investable assets of $1 million or more (which represents the top 8% of American households), found that millionaires plan to put nearly half their new investment dollars into equities this year and only 14% in cash…since the top 10% of Americans own more than 80% of stocks, the positive mood of millionaire investors could bode well for the market…the online survey was conducted in March by SpectrumGroup on behalf of CNBC..it polled wealthy individuals from across the country that were split between Democrats, Republicans and Independents…the survey also found that wealthier investors (those with $5 million or more in investable assets) are slightly more bullish on stocks and the economy, and are more likely to invest in tech stocks…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 4 points overnight to close at 2011…China continues to battle with deflationary pressures…the country’s annual consumer inflation rose at a rate of 1.8% in April, slower than March’s 2.4% rise, data today showed…the reading was below expectations for a 2% rise in a Reuters poll…on a month-on-month basis, CPI fell 0.3%, below expectations for a 0.1% decline…meanwhile, producer prices fell for the 26th straight month, dropping an annual 2%.   “The continued downside surprise in CPI inflation suggests room for further policy easing,” stated Barclays Capital China economist Jian Chang.  “We maintain our view that the PBOC [People’s Bank of China] will likely ensure sufficient liquidity in the second quarter. We think interest rate cuts are likely if growth disappoints further in Q2, and that RRR cuts are likely but would require a further worsening in economic conditions.”

Japan’s Nikkei climbed 36 points overnight but still finished down 1.8% for the week…

Europe

European shares were modestly lower today to finish the week…

North America

The Dow is down 22 points as of 8:30 am Pacific while the TSX has shed 44 points…the Canadian economy unexpectedly lost 28,900 net jobs in April (the employment drop struck Quebec, New Brunswick, Newfoundland, Labrador and Prince Edward Island)…Stats Canada’s Labour Force Survey found the unemployment rate remained at 6.9% for the second straight month, suggesting that some Canadians had given up looking for work…economists had anticipated an increase of 12,000 jobs for April, according to Thomson Reuters…

Venture Updated Chart

The Venture has declined each day this week and is down another 15 points at 977 as of 8:30 am Pacific…but don’t let that rattle you…below is an updated 9-month daily CDNX chart from John…as we’ve stated repeatedly, this is a market underpinned by tremendous support – particularly within about 10 points of 970 which was key resistance for many months last year…the rising 100-day moving average (SMA) is currently at 985 which coincides with Fib. support at 982…a short-term downtrend line has formed, providing resistance around the 50-day SMA at 1013, but a superb support band stretches all the way from the 940’s through the 980’s….the key point is that the primary trend remains bullish while the Index tests support…

CDNX175

CRB Index Updated Chart

Like the CDNX, the CRB Index broke above a long-term downtrend line and is now consolidating with strong support…this 20-year monthly chart is very effective at showing the “Big Picture”…commodities do look bullish overall…

CRB110

Garibaldi Resources Corp. (GGI, TSX-V) Updated Chart

Sheslay Valley plays heated up again this week with Doubleview Capital (DBV, TSX-V) and Garibaldi Resources (GGI, TSX-V) posting the strongest gains…we’ll have more on DBV next week as well as Ashburton Ventures (ABR, TSX-V), Alix Resources (AIX, TSX-V), Romios Gold (RG, TSX-V) and of course Prosper Gold (PGX, TSX-V) which announced last night that it has closed a $3 million financing and is mobilizing for drilling…

As Garibaldi prepares to attack the Grizzly, one advantage it has over its Sheslay peers is ongoing drilling in Mexico which has already produced solid results from La Patilla…with momentum building in both Mexico and northwest B.C., and a tight share structure, the probability of a GGI breakout through resistance at 24 cents is clearly increasing not only for fundamental reasons, but given the current technical posture of the stock…below is an updated 10-year monthly chart that by every measure is exceedingly positive…GGI is unchanged at 22 cents as of 8:30 am Pacific…

GGI37

Midlands Minerals Corp. (MEX, TSX-V)

A company worthy of our readers’ due diligence is Midlands Minerals (MEX, TSX-V) which has optioned the Parlozi Project in Serbia from one of our favorites, Reservoir Minerals (RMC, TSX-V)…MEX is starting the first phase of an exploration and drill program this month…the 91 sq. km Parlozi Project covers an extensive area of ancient mining that has received limited modern exploration…the Phase 1 program will test two out of six targets at Parlozi, searching for high-grade, Silver-rich, Zinc-lead veins and larger replacement zones in carbonate rocks – including an area with historic resources…MEX is well-funded with nearly $3 million in its treasury…it also has nearly 200 million shares outstanding, but at just 2.5 cents there is certainly significant upside potential here for patient investors…

Below is a 4-year weekly MEX chart…buy pressure has recently replaced sell pressure (dominant through most of 2013) as indicated by the CMF…fundamentally and technically, MEX is showing good potential entering the summer…

MEX2

Ceiba Energy Services Inc. (CEB, TSX-V)

Energy stocks remain hot, and Ceiba Energy Services (CEB, TSX-V) is worth having on one’s radar screen after a confirmed breakout above 60 cents…the overall bullish trend is gaining strength as you can see on this 2.5-year weekly chart…CEB is down a penny at 62 cents as of 8:30 am Pacific…

CEB2

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

May 8, 2014

BMR Morning Market Musings…

Gold has traded between $1,285 and $1,297 so far today…as of 8:00 am Pacific, bullion is unchanged at $1,290…Silver is off 9 cents at $19.20…Copper is up 2 pennies at $3.06…Crude Oil is down 80 cents at exactly $100 while the U.S. Dollar Index has reversed higher, up one-tenth of a point to 79.35…

Gold posted its biggest daily fall yesterday since April 15 as traders frustrated by its failure to break above $1,315 took Russian President Vladimir Putin’s assertion that he was willing to negotiate over Ukraine as a signal to sell…Putin’s words can’t be taken at face value, though – one would think the market would have figured that out by now…

Despite yesterday’s price drop, buying interest among Chinese dealers on the Shanghai Gold Exchange was relatively muted overnight, according to Swiss bullion house MKS…

Keep an eye on the Gold/Silver ratio which measures the number of Silver ounces needed to buy an ounce of Gold…that ratio has edged back up to 67.1…last week, it hit its highest since August 2010 at 67.6, putting Silver at its cheapest compared to Gold in more than 3-1/2 years…

U.S. Dollar Index “Teetering”

Most analysts have been ignoring the precarious situation of the U.S. Dollar Index which has been in a downtrend since last September, providing support for Gold…it appears the question now is when, not if, the Dollar Index collapses below critical support at 79…

This morning, the Dollar Index got a reprieve – it briefly dipped below 79 and then rebounded as some short-covering likely came into the market…downward pressure is coming from declining moving averages while RSI(14), currently at 41%, is capped by a downtrend line and is still well shy of oversold levels based on John’s 2.5-year weekly chart…significantly, the dollar started under-performing relative to Gold in February after out-performing all of 2013…fundamentally, with the Fed likely to keep interest rates at record low levels for the foreseeable future, dollar bears hold the advantage in our view…

USD117

Nickel At Two-Year High

More supply concerns have driven Nickel to a 2-year high…Vale SA was told to suspend mining in New Caledonia after a spill, according to the island nation’s Southern Province government…Nickel has surged 40% this year after leading global miner Indonesia banned exports of raw ores in January…the potential for sanctions against Russia has also aided prices…

“Clearly with the nickel market already tightening on Indonesia and possible sanctions against Russia, this is adding to the general sense that the market is facing a supply shortage over the coming months, if not years,” Bloomberg quoted Robin Bhar, an analyst at Societe Generale in London…

Today’s Equity Markets

Asia

Asian markets were mostly higher overnight…China’s Shanghai Composite added a modest 5 points to close at 2015…China reported today that it posted unexpected gains in both exports and imports for April, beating estimates and creating a trade surplus of $18.5 billion…several analysts now expect the growth in exports to gain further momentum in the coming months, leading to a wider surplus and more appreciation in the yuan later this year…April’s exports rose 0.9% from a year earlier, swinging from a 6.6% fall in March and an 18.1% plunge in February, according to China’s customs statistics…meanwhile, imports in April rose 0.8% after a 11.3% decline in March…

Japan’s Nikkei rebounded overnight with a gain of 130 points…

Europe

European markets were up moderately today…the European Central Bank has left its benchmark interest rate unchanged at a record low of 0.25% amid growing signs that the economic recovery in the 18-country euro zone is gaining momentum…the bank’s 24-member rate-setting council made the decision today at a meeting in Brussels…however, in his news conference following the decision, ECB President Mario Draghi strongly hinted that a rate cut is in the cards for the next meeting in June…he indicated that the euro’s strengthening is a matter of “serious concern” – a significant stepping up of his verbal intervention…a rate cut could give growth a small boost in theory by lowering borrowing costs for banks and companies…it could also help lower the euro, which is near a 2 1/2-year high against the dollar at around $1.395…a weaker euro would help exporters and boost inflation, which at an annual 0.7% is well under the bank’s 2% goal…meanwhile, The Bank of England today held the size of its bond-buying program steady and left its key lending rate at a record low of 0.5%, where it has stood since March 2009…

North America

The Dow is up 49 points as of 8:00 am Pacific…an oddity yesterday…the Dow jumped 118 points while the Nasdaq fell 13 points…according to The Wall Street Journal, there have only been five occasions since the beginning of 2009 when the Dow rose by at least a half percent and the Nasdaq fell by a half percent in a single trading day…

The number of Americans filing new claims for unemployment benefits fell more than expected last week, snapping three straight weeks of increases…

The TSX is 10 points higher while the Venture is unchanged at 1001 through the first 90 minutes of trading…

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

With Nickel at a two-year high, the outlook couldn’t be better for North American Nickel (NAN, TSX-V) as it gears up to commence another drill program at its promising Maniitsoq Nickel-Copper-Cobalt-PGM Project located on the southwest coast of Greenland…geophysical work commenced over the Imiak Hill conduit complex last month in preparation for upcoming drilling which will follow up on some significant drill intersections last year including 24.75 m of near massive to massive sulphide grading 3.19% Ni, 1.14% Cu and 0.11% Co…NAN’s latest yesterday showed $6 million in the treasury at the end of December, so they’re in good financial shape…

Technically, NAN has been performing in textbook fashion with outstanding support at the 50-day SMA throughout all of 2014 so far…below is an updated 2.5-year weekly chart from John after the stock closed yesterday at 37 cents…note the change from sell pressure, dominant since last October, to weak buy pressure…it would be shocking not to see NAN heat up significantly over the summer, so accumulation around current levels now makes sense as opposed to chasing this at higher prices down the road (as many probably will)…keep in mind that VMS Ventures Inc. (VMS, TSX-V) owns 23.9% of NAN…

NAN6

Prosper Gold Corp. (PGX, TSX-V) – Ready To Pour Gas On The Sheslay Fire 

We haven’t heard much from Prosper Gold’s (PGX, TSX-V) Pete Bernier in recent months, but don’t interpret that negatively…one should view that in a very bullish context, actually…we see an interesting comparison between Bernier and a great former American President, Teddy Roosevelt (beyond their common love for hunting)…Roosevelt’s foreign policy motto was, “Speak softly, and carry a big stick”, and the strategy served him well…

Bernier has been speaking softly in recent months but he’s about to carry a whopper of a stick into the Sheslay district…regular readers know where we stand with regard to Prosper’s Star Project – it is first-rate and led by a superb team with Bernier steering the ship and Dirk Tempelman-Kluit, one of the brightest geologists in the country, at his side…given all the geological, geochemical and geophysical evidence, there’s every reason to believe that Prosper has a high probability of success in terms of being able to connect the advanced Star target with the untested Star North and Star East targets…the three targets are about a kilometre within each other…Prosper starts attacking the Star Project very shortly with step-out drilling, so get ready for a show…meanwhile, Pyrrhotite Creek, about 4.5 km southwest of the Star, is a distinct multiple-target area that has tremendous potential to emerge as a major discovery by itself in the next few months…it has all the classic signatures of a Cu-Au porphyry system…

Prosper’s “heavy lifting” on the ground is going to be an important catalyst for the entire Sheslay district…combine that with Garibaldi Resources’ (GGI, TSX-V) attack on the Grizzly, more drilling at Doubleview Capital’s (DBV, TSX-V) Hat discovery, plus the work of other players in the area including Ashburton Ventures (ABR, TSX-V), Alix Resources (AIX, TSX-V) and Romios Gold (RG, TSX-V), and what you’ve got is the most dynamic exploration camp in British Columbia…

In the meantime, below is a 2.5-year weekly PGX chart…the set-up here is very bullish as PGX has been consolidating in a narrow range since February with tremendous support between 45 and 50 cents (the rising 100-day SMA is 46 cents)…over the last month or so, buy pressure has replaced sell pressure which was dominant since last October…all PGX needs to zoom higher is a catalyst, i.e. – The Big Stick…

PGX8

Canada Zinc Metals Corp. (CZX, TSX-V) Update 

A good opportunity – one we’ve been waiting for – has opened up in our view in Canada Zinc Metals (CZX, TSX-V) which has backed off, as John suspected it would, to the Fib. 61.8% retracement level…CZX is yet another very interesting B.C. play…the company is a dominant landholder in the Kechika Trough featuring several known Zinc-Lead-Silver deposits including the company’s Cardiac Creek deposit which has a NI-43-101 resource…Cardiac Creek forms one of CZX’s two 100%-owned projects – the other is the Kechika Regional which holds significant exploration upside…CZX climbed as high as 60 cents in January before backing off, and now it’s resting just above its rising 200-day SMA at 37.5 cents…RSI(14) is at previous support…CZX is up half a penny at 42 cents as of 8:00 am Pacific…

CZX4

Highbank Resources Ltd. (HBK, TSX-V) Update 

Highbank Resources (HBK, TSX-V) continues to make progress with with its business plan after receiving all the necessary permitting recently to allow for production at its Swamp Point North aggregate project near Prince Rupert…on April 22, Highbank received written notice from Fisheries and Oceans Canada that it has accepted the company’s Dec. 4, 2013, proposal to construct a barge loading facility, comprising barge moorage, barge mooring dolphins and a pile-supported aggregate conveyor, as well as a barge landing ramp, on Portland Canal…site work is commencing prior to production…last month, the company closed the first tranche ($2.7 million) of a planned $4 million debenture financing…

Below is an updated 10-year monthly HBK chart from John…the confirmed breakout above 15 cents is significant as this area now provides new support…note how buy pressure also recently replaced sell pressure which was dominant since the beginning of 2012…HBK is off half a penny at 15 cents as of 8:00 am Pacific…

HBK6

Note:  John and Jon hold share positions in GGI, DBV and ABR.  Jon also holds share positions in PGX and AIX.

 

May 7, 2014

BMR Morning Market Musings…

Gold has traded between $1,293 and $1,316 so far today…as of 8:30 am Pacific, the yellow metal is down $10 an ounce at $1,298…Silver is off 18 cents at $19.37…Copper is down 3 pennies at $3.04…Crude Oil is up $1.17 a barrel to $100.66 while the U.S. Dollar Index is flat at 79.16…

Besides continuing tensions in Ukraine, bullion could be impacted by Janet Yellen’s testimony today before a Joint Committee of Congress, while the European Central Bank monthly monetary policy meeting will take place tomorrow with growing pressure on the ECB to implement further stimulus measures amid concerns about deflationary pressures in the EU…the euro is also at a multi-week high against the U.S. dollar…

Yellen stated this morning that the U.S. economy is on track for solid growth this quarter…however, she cautioned that housing activity has remained disappointing and that the labor market is still “far from satisfactory.” With many people out of work – the April non-farm payroll report showed that more than 800,000 Americans disappeared from the workforce, sending the labor market participation rate to its lowest level since 1978 – Yellen signaled that the central bank plans to keep short-term interest rates near zero for the foreseeable future…

Another day, another bearish prediction on the outlook for Gold prices…from a contrarian standpoint, this is bullish and it’s the mirror image of the situation we saw even after Gold had put in an all-time high in September, 2011, when an overwhelming number of analysts were still in the bullish camp and were calling for new highs or continued buoyant prices…Metals Focus – a new analytical rival for Thomson Reuters GFMS primarily set up by former GFMS employees – put out a new 60-page report on the Gold and Silver markets today…Gold prices have probably peaked this year, they stated, and could sink to their lowest since 2010 at $1,100 an ounce as the U.S. economic recovery gathers pace…weakness is likely to set in after an impressive start to the year, it said, when Gold rallied to six-month highs…but a replay of last year’s 28% plunge, triggered by the Federal Reserve’s tapering of extraordinary stimulus measures, is not on the cards, they say…the consultancy also forecast that an eventual easing of tensions in Ukraine (that’s an interesting assumption) would add to a bearish trajectory for the market…

The idea that Gold has not yet put in a low during this cycle in our view is simply not consistent with a number of indicators including the behavior of the Venture Exchange which is such a reliable leading indicator of the future direction of Gold prices…by every technical measure, the Venture has commenced a bullish new cycle – the reverse of the situation in early 2011 when a Venture bear market commenced a full six months before Gold peaked at just over $1,900 an ounce…

Today’s Equity Markets

Asia

Asian markets were weak overnight with investors concerned about escalating tensions in Ukraine…Japan’s Nikkei and ended at its lowest level since April 15, posting its biggest daily loss (424 points) since mid-March…a stronger currency weighed on manufacturers…

Europe

European markets were mostly modestly higher today…

North America

The Dow is up 36 points as of 8:30 am Pacific…U.S. non-farm productivity fell at its fastest pace in a year in the first quarter as severe weather took its toll, leading to the largest gain in unit labor costs in more than a year…productivity declined at a 1.7% annual rate after advancing at a 2.3% pace in the fourth quarter, the Labor Department reported today…it was the biggest drop since the first quarter of 2013…unit labor costs, the price of labor per single unit of output, surged at higher than expected 4.2% rate (the largest jump since the fourth quarter of 2012) after falling 0.4% in the fourth quarter…

The TSX is up 14 points as of 8:30 am Pacific while the Venture has slipped 3 points to 1002…

A sign of the times – in a research report just issued by SNL Metals and Mining, drilling activity in the first quarter of 2014 showed exploration is only at 56% of the year-ago level, and Q1 2013 drilling was just 62% of the first quarter of 2012…that’s the kind of drop-off one would normally expect at the bottom of a cycle…

Vancouver’s first “Greenrush Conference” takes place all day today at the Vancouver Convention Centre…the conference will feature speakers, government officials, health and industry specialists, public and private companies, fund managers, bankers, brokers, analysts, and media who all share a common interest in the medical marijuana, industrial hemp and alternative medicine industries…

Updates/New Situations

John has an updated chart on Balmoral Resources Ltd. (BAR, TSX-V), which has hit a Fib. resistance level, and a few other situations this morning including a couple of new companies we haven’t previously mentioned – Source Exploration Corp. (SOP, TSX-V) and Heatherdale Resources Ltd. (HTR, TSX-V)…

Balmoral Resources Ltd. (BAR, TSX)

Our last update on Balmoral Resources (BAR, TSX) was April 10 after a confirmed technical breakout above 67 cents…this morning, BAR hit the Fib. 91-cent resistance level John pointed out on that April 10 chart…BAR has a large portfolio of properties that includes an early-stage discovery at its Grasset Ni-Cu-PGE target on the Detour Trend in Quebec…below is an updated 1-year weekly chart…BAR is up a penny at 89 cents as of 8:30 am Pacific…

BAR3

GoldQuest Mining Corp. (GQC., TSX-V)

GoldQuest Mining (GQC, TSX-V) announced yesterday that it has commenced a 10,000 m drill program at new targets within its Tireo project concessions in the DR…the program will expand out but initially it’s designed to increase resources at Romero…GQC has put considerable time and expertise into nailing down drill targets, so we wouldn’t be surprised if they make another discovery…

GQC has a history of sudden, explosive moves to the upside as you can see in this 10-year monthly chart…the technical set-up here at the moment is quite bullish…major support is at 25 cents, resistance is at 40 cents…note that just prior to the last two major advances in the stock, there was a low %K/%D crossover in the SS (Slow Stochastics)…this crossover has occurred again…no guarantee of another potential surge but it’s a positive sign nonetheless…since about the middle of last year, GQC has been trading in a symmetrical triangle on this long-term monthly chart and a “time of decision” is fast approaching…we favor the possibility of an important breakout, but exact timing is uncertain…GQC is off a penny at 30 cents as of 8:30 am Pacific…

GQC116

Source Exploration Corp. (SOP, TSX-V)

Source Exploration (SOP, TSX-V) has some major strength behind it with Chairman David Baker (he managed and grew Goldbrook Ventures until it was ultimately sold in 2012 to its Chinese joint venture partners for approximately $100 million) and a solid geological team…Source recently reported some stellar drill results from its Santa Cruz target at its Las Minas Project 270 km east of Mexico City, and the company is in the process of completing a financing of up to $1.2 million at 12 cents per unit as it prepares for more drilling shortly…we’ll expand on Source in the near future…this company is very worthy of our readers’ immediate due diligence…

Below is a 3-year weekly SOP chart showing strong support around current levels…the stock has settled back slightly after recently touching its highest level (15 cents) since late 2012, and the overall bullish trend remains intact given its rising moving averages and according to the ADX indicator…SOP closed up a penny at 12.5 cents yesterday…

SOP4

Heatherdale Resources Ltd. (HTR, TSX-V)

Readers may wish to check out Heatherdale Resources (HTR, TSX-V) – the Alaska State Legislature has unanimously passed Senate Bill 99, which includes a provision authorizing the Alaska Industrial Development and Export Authority to provide up to $125-million in financing for infrastructure and construction costs at Heatherdale’s Niblack project, a potential Copper-Gold-Zinc-Silver underground mine on Prince of Wales Island in southeast Alaska…

HTR is off a penny at 7 cents as of 8:30 am Pacific…technically, however, the short and long-term charts are very compelling…below is a 2.5-year weekly chart from John…note the breakout above the cup-with-handle pattern…as always, perform your own due diligence…

HTR1

Canadian Dollar Update

The Canadian dollar is on the rebound – this could be technically driven, or perhaps it’s a sign of future commodity strength…with a bullish crossover in the ADX indicator, expect the loonie to test resistance around the 94-cent level…

CAD109

The Financial Post reported today that Gluskin, Sheff + Assoc. economist David Rosenberg believes the negative sentiment toward the loonie may be excessive…the most recent COT report from the Commodity Futures Trading Commission showed that for the loonie, the net non-commercial short position on the Chicago Mercantile Exchange has been reduced by more than half in the past six weeks, yet it remains very high at 31,917 contracts…Rosenberg stated, “In contrast, the speculative crowd is long the other commodity currencies up the wazoo.” He notes the Australian dollar has seen net long positions for four weeks straight for the first time since April, 2013, and net longs for the New Zealand dollar is at the high end of the historical range. “Only the Canadian dollar among the major commodity currencies is facing the ignominy of a net speculative short position – even the resources themselves are experiencing net long positions on the various exchanges,” stated Rosenberg, highlighting COMEX Gold, Silver, NYMEX Oil and Henry Hub natural gas on the CME…

Note:  John, Jon and Terry do not hold share positions in BAR, GQC, SOP or HTR.

May 6, 2014

BMR Morning Market Musings…

Gold has traded between $1,304 and $1,315 so far today…as of 8:35 am Pacific, bullion is down $2 an ounce at $1,310…Silver is up 3 cents at $19.61…Copper is flat at $3.06…Crude Oil is 81 cents higher at $100.29 while the beleaguered U.S. Dollar Index has plunged more than one-third of a point to 79.12…as we have repeatedly stated for months, the Dollar Index is in trouble (critical support at 79 may not hold) and that has to be considered bullish for Gold…

Gold’s safe-haven appeal is evident with a ramping up of the tense situation in Ukraine…thirty pro-Russia insurgents and four government troops have been killed in Ukraine during operations to expunge anti-government forces around a key eastern city, Ukraine’s interior minister reported today…

Gold needs fresh longs and can’t rely on short-covering to sustain higher prices according to UBS…any short-covering rally in Gold would have “limited longevity”, UBS contends…gross speculative shorts on Comex stood at 8.5 million ounces as of April 29, the cutoff date for the latest weekly report from the Commodity Futures Trading Commission…this means enough potential for “nervous shorts” to fuel a “decent” initial rally, according to UBS…still, the level is down from 13.5 million ounces at the end of last year, which led to a sharp short-covering rally in February, UBS stated…

One of the most accurate Gold forecasters over the years has been Martin Murenbeeld, Dundee Capital Markets’ chief economist…he outlined three possible scenarios for an average 2014 bullion price as one of the keynote speakers at the European Gold Forum in Zurich – Worst Case ($1,182),  Median ($1,307) and Best Case ($1,409), and came up with a weighted average price of $1,311…that makes him considerably more bullish than Goldman Sachs and some others…

Gold Recovered From 1857 Shipwreck

Close to 1,000 ounces of Gold, worth about $1.3 million dollars, has been recovered from an 1857 shipwreck off the coast of South Carolina…Odyssey Marine Exploration, Inc. (OMEX, NASDAQ), seen as a  pioneer in deep-ocean exploration, recovered the Gold recently during its first two-hour exploration dive of the SS Central America shipwreck site, the company announced yesterday…the Gold recovered included five Gold ingots and two $20 Double Eagle coins; one of the coins was minted in 1857 in San Francisco and the other coin was minted in 1850 in Philadelphia…

OECD Lowers Global Growth Outlook

The Organization for Economic Cooperation and Development (OECD) warned today that the global economy will grow by less than expected this year after it lowered its forecasts for the U.S. and China…the OECD now predicts the global economy will grow by 3.4% this year, down from its forecast of 3.6% growth last November…the OECD cut China’s growth forecast this year to 7.4% from 8.2% in November…meanwhile, the is forecast to grow 2.6% this year against last November’s 2.9% estimate…meanwhile, the OECD has urged the European Central Bank to cut interest rates, even as it said it expects the recovery in the euro zone to accelerate this year…

Today’s Equity Markets

Asia

Asian stocks were mixed overnight in holiday-thinned trade with markets in South Korea, Hong Kong and Japan shut…China’s Shanghai Composite added 1 point to close at 2028…

Europe

European shares closed modestly lower today on mixed earnings results…retail sales in the 18 countries that share the euro rose in March for the third straight month, a sign that consumer spending is set to aid the currency area’s modest economic recovery…also released Tuesday, business surveys indicated the euro zone’s economy grew at the fastest pace for almost three years in April, but manufacturers and service providers continued to cut their prices…the surveys also showed that growth became more balanced, with Spain and Ireland expanding most rapidly, and activity also picking up in Germany and Italy…

North America

The Dow is off 78 points as of 8:35 am Pacific…the TSX is down 61 points while the Venture is unchanged at 1010…Doubleview Capital Corp. (DBV, TSX-V) hit a new all-time high of 40 cents this morning as speculation heats up regarding the company’s recently completed first round of 2014 drilling at the Hat Property…on trend and just 1,000 m away from DBV’s discovery holes HAT-08 and HAT-11 is Ashburton Ventures Inc. (ABR, TSX-V) which is now active on the ground in the Sheslay Valley…ABR is unchanged at 6 cents as of 8:35 am Pacific after a 33% jump yesterday…meanwhile, Garibaldi Resources Corp. (GGI, TSX-V) is showing signs of potentially breaking out as it’s up 2 cents at 22 cents through the first two hours of trading…Prosper Gold Corp. (PGX, TSX-V), unchanged at 54 cents, is gearing up for the start of drilling at the Star Project…we’ll have more on that tomorrow…on the other side of the country, Gold Bullion Development Corp. (GBB, TSX-V) released encouraging preliminary feasibility study numbers this morning for a “rolling” production start at the Granada Gold Property in northwest Quebec with a 7-month payback period for the $6.7 million estimated to commence the rolling start…share structure, however, continues to be an obstacle in terms of GBB gaining serious traction in the market – plenty of “loose” stock from cheap financings still needs to be cleaned up…

TSX Updated Chart

The TSX is trading near the top of an impressive upsloping channel that has been in place since the beginning of last summer…strong support is at 14200, in between the rising 50 and 100-day moving averages (SMA’s) and at the lower end of the upsloping channel…

TSX14

BMO Junior Gold Index ETF Chart

Below is an interesting chart that provides additional evidence that the trend in the Gold stock sector has indeed reversed…the BMO Junior Gold Index ETF has gone through a 1-year bottoming pattern which could very well be an inverted H&S with the right shoulder still in development…the CMF indicator shows a reversal from sell pressure, dominant throughout most of 2013, to buy pressure with increasing accumulation…note how the 200-day SMA (MA-40 on this weekly chart) flattened out at the beginning of this year, after a long decline, and is now rising gently…

This ETF has been designed to replicate, to the extent possible, the performance of the Dow Jones North America Select Junior Gold Index…

ZJG3

Below are the top holdings in the Junior Gold Index…as always, perform your own due diligence…

ZJG1

Rackla Metals Inc. (RAK, TSX-V)

We’ve mentioned this one before and it’s worth having on your radar screen – Simon Ridgway’s Rackla Metals (RAK, TSX-V)…RAK has seen an uptick in volume over the past couple of months (9 months of selling pressure dried up by mid-March) while trading essentially between 3 and 4 cents…Ridgway, like many others, appears to have lost interest in the Yukon, so it wouldn’t surprise us if he were to put a new project (in a different jurisdiction) into Rackla…the company will need to raise more money but has no debt…bottom-fishing opportunity at current levels…RAK closed at 4 cents yesterday…

RAK4

Hidden Gem?  Mistango River Resources Inc. (MIS, CNSX)

The CNSX is drawing more interest these days, and one company that caught our attention yesterday is Mistango River Resources (MIS, CNSX) which had the good fortune of acquiring some strategic claims in Quebec thanks to a staking mess that ensued after one company apparently forgot to renew its claims…this was an interesting situation, and the Quebec Ministry of Natural Resources decided to award the claims to two companies (one of them being Mistango) with existing land packages and a long history in the area…this company has a strong working capital position and a lot going on, and keep in mind that the “new” Osisko will hold about 30% of Mistango which has only 38 million shares outstanding and no warrants…we like this company’s prospects and we’ll keeping a close eye on MIS in the weeks and months ahead…MIS is up 4 cents at 14 cents as of 8:30 am Pacific…

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

 

 

Technically Speaking: Ashburton Ventures (ABR, TSX-V) Update

Ashburton Ventures Inc. (ABR, TSX-V) roared to life yesterday as most of the Sheslay Valley plays heated up.  Doubleview Capital Corp. (DBV, TSX-V), with assays pending, was first out of the gate and finished the day at a new all-time closing high of 34 cents, up 8 pennies.

ABR actually recorded the biggest percentage gain, climbing 33% to 6 cents.  Ashburton has a clear plan of attack for its two Sheslay holdings, the Hackett Property contiguous to the Doubleview discovery (within 1 km of drill holes HAT-08 and HAT-11), and the recently acquired Grizzly West Extension Project attached to the western border of Garibaldi Resources Corp.’s (GGI, TSX-V) Grizzly Property.  ABR is commencing sampling and mapping programs and is also gearing up for drilling at the Hackett as announced by the company April 25.

ABR President Kyler Hardy has very intimate knowledge of the Sheslay district and over the last few years has had his boots on the ground from the Star Project, when it was known as the Copper Creek Property, to Teck’s Eagle Project in the south.

Below is a 2-year weekly chart that shows how technical analysis (TA) can be such a valuable tool.  In the case of ABR, TA reveals a few important things including how a significant breakout above a horizontal channel is drawing closer after the stock held critical support at 4.5 cents – just half a penny below the now-rising 100-day moving average (SMA).

Three specific matters of note with regard to John’s chart:  1) RSI(14) “W” formations  are generally a very bullish sign, and we have one here; 2) A major reversal in the CMF indicator occurred in late January with buy pressure suddenly replacing sell pressure that was dominant for more than a year.  ABR has been under strong accumulation for more than three months due to events in the Sheslay Valley; 3) The ADX indicator confirms an overall bullish trend.

While certainly speculative, as all junior resource stocks are, ABR has significant upside potential in our view given its strategic holdings in the Sheslay district, its intimate knowledge of the area, and its current modest market cap of only $2 million with just 36 million shares outstanding.  The Sheslay district has not yet reached “critical mass” but when it does, the “herd” could take a situation like this to much higher levels.

ABR 2-Year Weekly Chart

ABR Chart

Click on the link below for a more in-depth look at ABR.  As always, perform your own due diligence.

ABR Special Report

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

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