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Gold has traded between $1,310 and $1,319 so far today…as of 8:15 am Pacific, bullion is up $1 an ounce at $1,316…Silver is off 8 cents at $20.79…Copper is up a penny at $3.17…Crude Oil has retreated 37 cents to $105.37 while the U.S. Dollar Index has tumbled one-quarter of a point to 79.81…this is a shortened trading week…there will be no Morning Mornings tomorrow as we celebrate Canada Day (all Canadian markets are closed)…regular postings resume Wednesday through the end of the week, but keep in mind that Thursday is only a half day on U.S. markets while all U.S. markets are closed Friday of course in observance of the Fourth of July…

Interestingly, Gold is now trading above its 10, 20, 50, 100 and 200-day moving averages (SMA’s)…bullion is headed for its second straight quarterly increase, the first time it has posted back-to-back quarterly gains since 2011…

Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, stood unchanged at 785.02 tons on Friday, according to data compiled by Bloomberg…assets are set to decrease this quarter and have dropped 1.7% this year…selling is clearly drying up and that’s a very positive sign…

What to make of this?…data released after the close on Friday showed hedge funds and other large Gold investors adding a record amount of ounces to their bullish positions…according to Commodity Futures Trading Commission data, bearish or short positions held by so-called “managed” money fell by nearly 25,000 contracts in the week to June 24…speculators added almost the same number of bullish or long positions, translating into a 61% net gain of 47,784 contracts or 4.8 million ounces – the biggest weekly increase since 2007, and apparently one of the largest increases on record…managed money appears to be anticipating an upside summer move in Gold, and that makes perfect sense, but as John’s chart showed yesterday the Gold market likely needs to digest recent gains and that means some immediate or near-term consolidation and testing of support prior to a potential strong move through important resistance…

Same applies to Silver which has gotten ahead of itself a little bit with a powerful June…managed money moved heavily into Silver in the week ending June 24 with net longs increasing almost four-fold by 19,623 contracts to 24,757, almost equaling the February high of 25,090 contracts, CFTC data shows…commercials really ramped up their short positions, however, and what that tells us is that Silver is headed for some mild consolidation at the beginning of Q3 before pushing higher again…John has three updated Silver charts at the bottom of today’s Morning Musings…

Today’s Equity Markets

Asia

China’s Shanghai Composite added 12 points overnight to finish the quarter at 2048…both the government’s official Purchasing Managers’ Index (PMI) for June and HSBC’s final PMI reading are due for release tomorrow…positive industrial production figures for May gave Japan’s Nikkei average a 67-point boost to finish at 15162…

Europe

European markets were mixed today…euro zone inflation came in at 0.5% year-on-year in June, unchanged from May…the reading comes ahead of an ECB meeting later this week…falling inflation has been a key concern for the central bank, due to fears it could derail the region’s recovery…

North America

The Dow is off 25 points as of 8:15 am Pacific…the major economic data this week will be Thursday’s jobs report from the Labor Department…expectations are for non-farm payroll growth of 215,000 jobs, consistent with recent results…the ISM Manufacturing Index will be out tomorrow…as we mentioned at the top, U.S. markets are open for just half a day on Thursday and closed Friday to celebrate the Fourth of July…

The TSX has gained 28 points while the Venture is off 2 points at 1021 as of 8:15 am Pacific…

The Venture has out-performed both the Dow and Gold during this second quarter with today of course the final day of Q2…we’re looking for an acceleration of a bullish Venture trend in Q3 with the Index breaking out above the mid-March high of 1050 and testing the next major resistance around 1150…within that environment, the highest quality and most active juniors with attractive share structures and discoveries in the making (i.e., Garibaldi Resources, GGI, TSX-V, and a host of others we’ve been mentioning) could perform incredibly well…

Second Quarter Gains Entering Final Trading Day of June

TSX Gold Index  6.6%

Silver  5.7%

TSX  5.3%

S&P 500  4.7%

Nasdaq  4.7%

Venture  2.8%

Dow  2.4%

Gold  2.3%

Venture-Gold Comparative

Over the past year, there has been an important pattern change in the relationship between the Venture Exchange and Gold…historically, the Venture has proven to be an exceedingly reliable leading indicator of the future direction of Gold prices – a great recent example being the Venture’s breakdown months before Gold peaked at just over $1,900 an ounce in September, 2011…this leading indicator pattern goes right back to the days of the Venture’s predecessor, the old Vancouver Stock Exchange…

Since late last year, we’ve repeatedly shown charts – a plethora of technical evidence – demonstrating that the Venture bear market ended in late June of last year when the Index touched 859…in October, the Index broke above a long-term downtrend line and then repeatedly tested that downtrend line as new support until late December when it finally took the path of least resistance and headed north…after hitting some headwinds at 1050 in mid-March, the Venture – not unexpectedly – retreated to a “comfort zone” where it successfully tested a very strong support band in the immediate vicinity of 970 which was critical resistance for many months last year…

The second quarter has seen a continuation of the trend with the Venture out-performing Gold…this updated 10-year monthly chart from John shows how the Venture’s out-performance vs. Gold is a bullish indicator for both…on the chart below, you’ll see three uptrend lines – one that’s currently in progress – and two downtrend lines…

The best time to be invested in the Venture (and Gold for that matter) is when the Index (the black line on this chart) is out-performing the yellow metal as it is now (staying at or above the red uptrend line)…this Venture uptrend vs. Gold has been established since the second quarter of last year and should continue for an extended period, during which time we also expect Gold to ultimately reverse higher…

West Point Resources (BLO, CSE) Update

We mentioned West Point (BLO, CSE) last Thursday during its first day of trading on the CSE, and the stock didn’t disappoint in its market debut as a leader in an important and needed technology that could benefit immensely from the growing acceptance and use of cannabis, for medicinal and other reasons, in North America…

BLO, which switched from the Venture to the CSE following a change of business, opened in the mid-teens last Thursday and climbed as high as 24.5 cents intra-day Friday before closing the week at 21.5 cents…it has a tight share structure and the media attention it has received to date (and will likely continue to receive as it’s such a compelling story) should keep interest in this company very high in our view in the coming weeks and months…we’ll be giving BLO plenty of attention at BMR over the summer as we perceive this company to be a very serious business and market opportunity, and what BLO is working on speaks directly to the concerns of many people in North America who don’t have a cavalier attitude toward the use of marijuana…the reality is, though, that marijuana use and “acceptance” are on the rise in our society, and that’s how BLO could BLO very big…

BLO is a first-mover in developing a roadside handheld breathalyzer to detect THC from an individual’s very recent use of marijuana…it has an exclusive North American license for patent pending marijuana breathalyzer technology, and pioneering world experts on THC breath testing are directly involved with the company…last week, we spoke with CEO Rav Mlait…management is very approachable and we encourage readers to reach out to them as part of their own due diligence…the President of BLO is Kal Mahli, a retired member of the RCMP who clearly understands the need for this type of technology for law enforcement to deal with the growing problem of drug-impaired driving…

Keep in mind, the current alcohol breathalyzer market in North America is worth in excess of $3 billion…the key for any successful business is to identify a niche and fill that need with an exceptional product or service…while of course speculative, West Point has massive upside potential in our view given the quality of its team, the unique product it’s developing for potential future widespread commercial use, the industry it’s in, and its attractive share structure…

BLO is off a penny at 20.5 cents as of 8:15 am Pacific…

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

The emotions of fear and greed drive markets, as do expectations…all three of those factors have been evident in the trading of Doubleview Capital (DBV, TSX-V) this year…

Expectations have lowered considerably for Doubleview over the last six weeks which in our view increases the potential for an upside surprise – the mirror image of the situation that existed in early May…

Important technical support around 15 cents has held in DBV, and John’s 3-year weekly chart that warned about Fib. resistance in the mid-30’s in early May is now showing evidence of a bottom and a reversal in its early stages…DBV, which commenced a fourth phase of drilling at its Hat Property in early June, closed at 17 cents Friday…

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

Calgary-based Contact Exploration (CEX, TSX-V), one of our favorite energy plays since it was trading in the 20’s last year, staged a confirmed breakout above Fib. resistance at 38 cents during this second quarter, and climbed as high as 48 cents earlier this month…the rising 50-day SMA at 40 cents is solid new support…note also the upsloping channel in place since last year – there’s no reason for CEX to break below that channel, at least not during the upcoming quarter, but watch for an opportunity within the lower half of that channel in the near future on a potential further unwinding of the recently overbought RSI(14) on this 2.5-year weekly chart…the bottom line, though, is that a strong primary uptrend remains in force…

CEX is up half a penny at 44.5 cents as of 8:15 am Pacific…

Blackbird Energy Inc. (BBI, TSX-V) Updated Chart

Blackbird Energy (BBI, TSX-V) has consistently found support at its rising 50-day SMA since first breaking above that level in late February, and after climbing as high as 31 cents in mid-May…

Below is a detailed 6-month daily chart from John…the SMA-20, currently at 25 cents, is now rising again, and RSI(14) has recently bounced off support…BBI looks poised for a strong Q3…as always, perform your own due diligence…

Silver Short-Term Chart

This 6-month daily chart shows recent extreme RSI(2) conditions that are now unwinding, and will likely need to unwind a little more…hence a mild pullback in Silver should be expected before the next push higher…John has outlined three Fib. retracement levels – $20.33, $20.08 and $19.82…

Silver 3-Year Weekly Chart

Silver’s support band between $17.50 and $19.50 is like the 970 support area for the Venture – it will hold, and Silver has now boldly pushed above that support band…the $19.50 area should hold on any near-term pullback…

Early this year, Silver broke above a downtrend line in place since late 2012 on this 3-year weekly chart…similar to the Venture pattern during the fourth quarter of last year, Silver has found support at the top of this downtrend line…overall sell pressure has been in decline since early 2013…slowly but surely, the metal is on its way higher but expect the pattern to be a couple of steps forward, one step back…

Silver Long-Term Chart

This 11-year monthly chart confirms that the metal has exceptional support in the high teens…note that there are two downtrend lines on this chart – Silver has closed above one of those downtrend lines, but barely…expect more activity in the immediate vicinity of that downtrend line before a decisive move above it at some point during Q3…

If and when Silver clears stiff resistance at $26, watch out – you’ll want to back up the truck and load up…the COT structure, as mentioned last week, has become very favorable, suggesting Silver is gearing up for a strong move over the summer…

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

 

TSX Venture Exchange and Gold

The CDNX snapped a 4-session losing skid with a 10-point gain Friday to trim its weekly loss to just 3 points.  With only one trading day left in June, the Index at 1023 is up 39 points or 2% for a month which historically is the weakest of the year for the Venture.  This bodes very well for the upcoming third quarter with the near certainty of a powerful breakout above the mid-March high of 1050, carrying the Index into a significantly higher trading range as one can see in John’s 5-year weekly chart.

Technically, the Venture has never been better positioned for a sustained advance in several years.  This is easier to see on the 5-year weekly chart with multiple indicators.  What’s particularly intriguing at the moment is the “squeeze” between the now-rising 300-day moving average (SMA) around 970 (an incredible support area) and the 500-day SMA which has now flattened out just slightly above 1050.  The Index will take the path of least resistance which in our view means a critical breakout is looming above the 500-day.  The last time the Index pushed through this SMA was at the beginning of 2010.

The current technical posture of the Venture is signalling that important fundamental events – new discoveries, takeovers, an unexpected rise in Gold, etc. – are on the horizon, triggers that will catch many investors by surprise and provide the necessary fuel for this market to commence an accelerated advance.  This is the mirror image of early 2011 when the Venture’s technical health sharply deteriorated and warning signs were flashing like a red light.

Venture 6-Month Daily Chart Update

The breakout above the short-term downtrend line in mid-June proved to be significant, as we pointed out at the time.  How soon the Index will surge past 1050 is impossible to predict – there will be some resistance along the way, and this effort may take more than one try.  But the bottom line is that this will occur, and the 1000 level (as opposed to 970) is now the new major support.

RSI(14) on this 6-month daily chart is looking very strong – climbing an uptrend line – with room to move higher at 66%.  Note the rapid acceleration in buy pressure this month as shown by the CMF.  The ADX trend indicator is further evidence that the bulls are in firm control of this market.

Venture 5-Year Weekly Chart

John’s long-term weekly chart shows 1150 – 1350 as a reasonable target range for the CDNX over the next 6-9 months, with a major acceleration in the bullish 2014 pattern to occur during Q3.

It’s important to point out that RSI(14) on this 5-year weekly chart found a “comfort zone” in the immediate vicinity of the 50% level, as expected.  A modestly overbought condition in the RSI(14) that emerged in March when the Index hit 1050 gradually unwound, with RSI(14) now on the upswing again at 59% (plenty of room to move higher).  The recent decline that took the Venture to important support at 968 May 20 came on light volume, and accumulation (CMF indicator) remains steady and strong – the most extended period of healthy accumulation we’ve seen, actually, in a few years.  This is a very bullish scenario, and includes a recent +DI/-DI crossover.  Those who have given up on this market recently have made a profound miscalculation.  Astute investors could cash in big on this market during the third quarter in particular.

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 carry out exploration or 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.

Gold

Gold finished unchanged last week at $1,315 after previous weekly advances of $39 and $24, respectively.  The first important area of technical support is $1,294 – $1,310, while a strong resistance band exists between $1,320 and $1,330 as shown in John’s 6-month daily chart.

RSI(14) at 67% is unwinding after becoming slightly overbought (it will likely need to unwind a little more).  The set-up for the third quarter looks very bullish, but Gold likely has to test new support levels first before powering higher as Q3 progresses.

Silver finished essentially unchanged last week, falling a penny to close at $20.87.  John will have updated Silver charts tomorrow morning – a short-term overbought situation has emerged in the metal, so the likelihood of a pullback in the next week or two has increased significantly.  Copper gained 6 pennies to $3.16.  Crude Oil fell by just over $1 a barrel to $105.74 while the U.S. Dollar Index tumbled by one-third of a point to 80.02.

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.  The June 2013 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.

 

Gold has traded between $1,312 and $1,323 so far today…as of 7:20 am Pacific, bullion is up $2 an ounce at $1,319…Silver is up a penny at $21.13…Copper is flat at $3.16…Crude Oil is down slightly at $105.74…Iraq’s southern oilfields, which produce most of the nation’s 3.3 million barrels per day (bpd), remain unaffected by fighting in the north and west…investors are still watching how the fight for control of Iraq’s largest refinery, the 300,000 bpd Baiji complex (110 miles north of Baghdad) unfolds…the U.S. Dollar Index has retreated one-tenth of a point to 80.12…

Anticipation of a dip in the price of Gold (in the local market) and rekindled interest in resurgent equities in India are holding back bullion buying in that country at the moment, according to traders.  “There is a feeling in the market that the import duty would be reduced from 10% to 4% in the upcoming budget,” said Sanjay Kothari, with a bullion investing firm. “If that happens and the rupee continues to remain strong, Gold prices can come down massively to $399 (Rs 24,000) from the current $449 (Rs 27,000) per 10 gram.”

Once the darling of mining investors venturing in Latin America, world’s top Copper producer Chile is becoming one of the most expensive countries to explore and mine…according to data from the country’s Copper Commission, the cost of producing a pound of Copper in Chile went from 63 cents U.S. per pound in 2004 (which was half of Africa and well below the world average at the time) to $2.50 last year – above the global average of $2.38…electricity costs in Latin America’s wealthiest economy have climbed 11% per year since 2000, making it one of the most expensive places in the world to secure energy for mining projects…the same study shows that only two mining jurisdictions last year were more expensive than Chile – Europe and Asia…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 2 points overnight to close the week at 2037…meanwhile, Japan’s Nikkei average tumbled 213 points or nearly 1.5% to 15095…Japan is having success pulling out of a deflationary cycle – fresh data today showed that core consumer prices in May rose at their fastest pace since 1982…

Europe

European markets are mixed in late trading overseas…

North America

The Dow is down 45 points as of 7:20 am Pacific…U.S. consumer sentiment rose in June as consumers remained optimistic the sluggish first quarter was due to difficult winter conditions, a survey released this morning showed…the Thomson Reuters/University of Michigan’s final June reading on the overall index on consumer sentiment came in at 82.5, slightly above expectations and up from 81.9 the month before…

The TSX has gained 11 points while the Venture, trying to snap a mild 4-session losing skid, is up 2 points at 1015 through the first 50 minutes of trading…

Fed’s Bullard:  “That’s Shocking”

The U.S. jobless rate will fall below 6% and inflation looks likely to rise back to 2% later this year, putting the economy closer to normal than most realize, a top Federal Reserve official said yesterday.  “You are basically going to be near normal on both dimensions basically later this year,” St. Louis Fed President James Bullard (not in the FOMC in 2014, considered a centrist), speaking in an interview on Fox Business Network. “That’s shocking, and I don’t think markets, and I’m not sure policymakers, have really digested that that’s where we are.”

Bullard reiterated his belief that raising rates by the end of the first quarter in 2015 will be appropriate, based on his forecast that U.S. growth will register 3% for the next four quarters…if data disappoint, he said, he will revise that forecast…later yesterday, Bullard spoke at the Council on Foreign Relations, saying that at the current 6.3% rate of unemployment, the United States is “way ahead of schedule” on its trajectory toward a normal labor market…he added that that Federal Reserve may be behind the curve if the unemployment rate drops faster than expected, but he is confident that it will act appropriately…he also said that he believes the U.S. is no longer in a low inflation environment, and that inflation will continue to tick higher and rise above 2% next year…

Copper Chart Update

Copper has rallied strongly since plunging during the first quarter to a low of $2.88 in mid-March…technically, the metal’s immediate challenge is to overcome resistance at $3.20 as you can see on this 2.5-year weekly chart…the Venture signaled earlier that Copper’s decline was nothing to worry about, and it’s telling us now that the metal should strengthen further in Q3 – perhaps challenging resistance around $3.40…

We have some interesting individual company charts to finish off the week – GSV, ICG, GGI, NAN and HBK…

Gold Standard Ventures Corp. (GSV, TSX-V) Update 

One reason we’re so bullish regarding the Venture’s prospects in Q3 is because of the multitude of individual stocks that have broken above long-term downtrend lines…Gold Standard Ventures (GSV, TSX-V), currently drilling its promising Railroad-Pinion Project in Nevada, is another classic example as you can see in this 3-year weekly chart…GSV could really take off if it’s able to break above a 14-month horizontal channel…

GSV is unchanged at 85 cents as of 7:20 am Pacific…

Integra Gold Corp. (ICG, TSX-V) Update

This chart comes at the request of a reader but it’s also another demonstration of what we just mentioned above – look what happened after ICG broke above its downtrend line early this year…it climbed as high as 42 cents before retracing all the way back to the top of its downtrend line which is new support…

As Integra continues to advance its Lamaque Property in Quebec, keep in mind the company is currently completing a financing which it has expanded to $10 million (expected to close any day now) through the issuance of up to 50 million common shares (20 cents per non-flow-through unit and 26 cents per flow-through share)…that’s significant dilution, and a financing earlier this year at at higher price would have made more sense (easier said than done perhaps), but those shares won’t become free trading until late October/early November…in the meantime, ICG should find support at the uptrend line with a good chance for a strong push higher during Q3…

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

Garibaldi has been delivering on the ground all year and there’s every reason to believe that’s going to continue, in both Mexico and northwest British Columbia…more results are expected shortly from the Silver Eagle target at Rodadero, which has all the earmarks of a significant near-surface high-grade discovery, plus GGI is also busy elsewhere in Mexico and with the highly prospective Grizzly Property in the Sheslay district…

This 10-year monthly chart for GGI says it all – Garibaldi has made an impressive move over the last year from a low of 4.5 cents to a recent high of 28 cents, but all the technical indicators (supported by developments on the ground) suggest GGI has a lot further to go on the upside…this type of scenario usually leads to new all-time highs…

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

Like GGI, NAN has proceeded according to script – it has been a star performer in 2014 with drilling now in progress at the company’s 100%-owned 100%-owned Maniitsoq Ni-Cu-PGE Project in southwest Greenland…a second rig will be put into action around mid-July…this group has put a powerful geological context together for Maniitsoq – now the “truth machine” is at work with a good chance for outstanding results…

NAN has staged a confirmed breakout above measured Fib. resistance at 51 cents…given normal market volatility, and the possibility of an “unwinding” of temporarily overbought conditions, NAN could test support around 50 cents which is also currently just above the rising 50-day moving average (SMA) which has underpinned the stock price since the beginning of the year…

NAN is off 7 cents at 54 cents as of 7:20 am Pacific…

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

Highbank Resources‘ (HBK, TSX-V) news yesterday morning was a little strangely “over the top” given the subject matter (mobilization of equipment and personnel), but nonetheless the company is moving closer to the production stage at its Swamp Point North aggregate project along tidewater near Stewart…HBK has performed very well over the last few months, climbing by more than 40% since we introduced it to our readers…

Technically, HBK is dealing with resistance around the 20-cent level as shown on this 10-year monthly chart…it’s unchanged at 21.5 cents as of 7:20 am Pacific…

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

 

Gold has traded between $1,305 and $1,319 so far today…as of 7:15 am Pacific, bullion is down $4 an ounce at $1,313…a strong support band ranges from $1,294 to $1,310…Silver has reversed, now up 2 pennies at $21.04…Copper is off a penny at $3.14…Crude Oil is down 85 cents a barrel to $105.65 while the U.S. Dollar Index has added one-tenth of a point to 80.31…in Iraq, militants seized control of the Joint Base Balad airbase yesterday, one of the country’s largest, as well as the Ajeel Oil site, located east of Tikrit…receiving less attention at the moment but of growing significance are increasing attacks by Islamic extremists (Bo Haram) in Nigeria…the five-year-old insurgency has the potential to spread beyond northern parts of the country and threaten Oil supplies, and Nigeria has the second-most sought after light crude (very high quality) in the world…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 13 points overnight to close at 2039…Japan’s Nikkei average, meanwhile, gained 42 points to finish at just over 15300…

Europe

European markets are down moderately in late trading overseas…

North America

The Dow has slipped 91 points through the first 50 minutes of trading…personal spending rose a less-than-forecast 0.2% in May, after holding flat in April, while personal income rose 0.4%…meanwhile, U..S. jobless claims declined by 2,000 to 312,000 last week, in line with expectations…

The TSX is down 1 point at 14974 while the Venture is also off a point at 1014 as of 7:20 am Pacific…

Very encouraging results from Adventure Gold (AGE, TSX-V) this morning from the first three holes of a 3,000-m drill program at its advanced-stage Val d’Or East Gold Project (Pascalis Property) which intersected mineralized dikes 150+ m west of the main dike hosting the Gold mineralization at the former L.C. Beliveau mine…hole PC-14-70 returned 12.4 g/t Au over 7 m at 11 m from the surface and 32 m grading 2.6 g/t Au at 142 m from the surface…meanwhile, hole PC-14-69 intersected 6 g/t Au over 4 m at 9.5 m from the surface, and 2.3 g/t Au over 8 m at 61.5 m from the surface…we’ve visited this property before, it has excellent potential as a future Gold producer and the 12.4 g/t Au over 7 m is one of the richest intercepts ever drilled on the property…the management/geological team is strong…AGE is unchanged at 18.5 cents as of 7:20 am Pacific…

West Point Resources (BLO, CSE) began trading on the CSE this morning – very interesting company that’s working on developing a marijuana roadside breathalyzer for commercial use by law enforcement…they’re at the leading edge of this technology, and it’s certainly a concept we can support…we’ll have more on BLO in the coming days…it’s off to a flying start on the CSE after switching from the Venture following a change of business…

Venture Updated Chart

The Venture has declined slightly each day this week but the mild pullback is healthy and fits nicely within the overall chart pattern…strong new Fib. supports exists at 1000, 4 points above the rising 50-day moving average (SMA)…RSI(14) is meeting support at an uptrend line on this 6-month daily chart…buy pressure remains strong, and the rising 10 and 20-day SMA’s (1013 and 1000, respectively) can be expected to provide excellent support…

Since the Venture broke above its long-term downtrend line last October, the successful strategy has been to buy into any dips on the Venture – but “nervous nellies” who simply don’t understand the “Big Picture” have been doing the opposite…but that’s okay…they’ll also be the ones jumping on the bandwagon and chasing stocks later this summer…

TSX Gold Index Long-Term Monthly Chart

The other day we posted a 20-year Gold chart…this morning, we thought it would be interesting to examine the TSX Gold Index going back 15 years…

We’ve noted how the Venture has broken above its long-term downtrend line, but this hasn’t occurred just yet in the Gold Index as you can see below…the Venture, generally, has proven to be a more reliable indicator of future Gold prices, so it’s not surprising it’s a step ahead of the Gold Index in this regard…

A few key points about the Gold Index:

1.  Note the RSI(14) uptrend following the bottoming pattern in 2013;

2.  There is major chart resistance at 210 which at the moment coincides with the downtrend line – KEY AREA for the Gold Index to break above;

3.  A bullish ascending triangle appears to be forming.

A confirmed move through the 210 area would suggest the next major target would be the Fib. 38.2% resistance level of 255, about a 30% jump from current levels…

Great Panther Silver Ltd. (GPR, TSX)

Just one of many reasons we’re encouraged by the outlook for Silver prices is the action we’re seeing in some Silver stocks, and Great Panther Silver (GPR, TSX) is no exception…

GPR, like Silver, broke above its long-term downtrend line early this year, and a bullish pattern has clearly developed in the RSI(14)…the ADX trend indicator was predominantly bearish from mid-2011 until reversing at the beginning of this year…

Quite simply, GPR is telling us that we’re going to see higher Silver prices in Q3…GPR is off 2 cents at $1.29 as of 7:20 am Pacific…

Cypress Development Corp. (CYP, TSX-V)

We like the direction of Zinc and Silver prices, so keep an eye on Cypress Development (CYP, TSX-V) which announced plans yesterday for a Phase 2 drill program to follow up on strong Phase 1 results at its 100%-owned Gunman Zinc-Silver oxide project in Nevada…the 1,140-acre property is located directly west of Barrick Gold’s (ABX, TSX) Bald Mountain Gold mine complex on the southern Carlin mineral trend in White Pine County…

On June 12, CYP reported results from a Phase 1 program that included RC hole GMRC-9 which returned a 175-foot downhole interval of 12% Zn  and 121 g/t Ag, and hole GMRC-5 which returned a 55-foot section of 21% Zn and 147 g/t Ag…

CYP is up half a penny at 3.5 cents as of 7:20 am Pacific…

Calibre Mining Corp. (CXB, TSX-V) Update

Calibre Mining (CXB, TSX-V) is very active with excellent geological prospects in Nicaragua including the Eastern Borosi Project which was recently optioned by Iamgold Corp. (IMG, TSX)…Eastern Borosi hosts Gold-Silver resources in two deposits and a series of well-defined low-sulphidation epithermal Gold-Silver targets…a 3,400-m drill program was recently announced and will commence next month…

CXB closed at 5.5 cents yesterday – 6 cents is the top of the a downtrend channel in place for two years, as you can see in this 2.5-year weekly chart…watch for a potential breakout (timing uncertain of course) above that important resistance…

Note:  John, Terry and Jon do not hold share positions in AGE, GPR, CYP or CXB.  Jon holds a share position in BLO.

Gold has traded between $1,310 and $1,323 so far today…as of 7:00 am Pacific, bullion is down $1 an ounce at $1,318…Silver has gained 6 cents to $20.98…Copper is up a penny at $3.13…Crude Oil is 38 cents lower at $105.65 while the U.S. Dollar Index has fallen more than one-tenth of a point to 80.17…Iraqi Prime Minister Nouri al-Maliko refused today to bend to international appeals to form a more broad-based government to curb the country’s Sunni Muslim insurgency…in a televised address, Maliko said calls to form what he described as a “national emergency government” represented a “coup against the constitutional and the political process.”

The head of the state-backed Shanghai Gold Exchange (SGE) said yesterday (source: Reuters) that China must have a bigger influence on the global Gold market as the top consumer of the precious metal, as the country targets establishing its own pricing benchmark…China, along with exchanges in Singapore and Hong Kong, are launching Gold contracts this year in a bid to tap a market looking for a viable alternative to the metal’s global benchmark that is under regulatory scrutiny…

There are no signs yet that physical demand is picking with Gold over $1,300 an ounce – reports are that Asian demand remains soft…the physical market will be important to watch in the days ahead…as John’s recent 6-month daily chart showed, current technical support for Gold is between $1,294 and $1,310…

Interesting report from Reuters this morning (certainly supports the case for a “melt-up” in various markets):

“Federal Reserve Chair Janet Yellen wants to see U.S. wages climb at a much brisker clip to boost consumer spending and help workers recoup ground they lost in the last recession, but she’ll have to fend off policymakers who fear that could cause inflation to surge.  As she seeks to maintain a consensus at the central bank, Yellen will have strong arguments in favor of nursing the recovery for longer and should be able to counter any calls for an early interest rate hike.  Research from the Fed’s staff and her own past academic work both suggest there may be more slack in the economy than inflation hawks believe, and that businesses in recent years have been slower to raise prices than they were previously.  If that is the case, then interest rates could remain lower for longer and inflation allowed to push beyond the Fed’s 2% target without fear of it losing control (our emphasis).  It’s a policy Yellen has indicated she is willing to pursue to encourage wage growth and bring as many workers as possible back into the full-time labor market.  

“The connection between faster wage gains and a healthy jobs market is emerging as a core principle for the new Fed chief, who has said she expects pay to accelerate to something close to the long-run growth rate of 3% to 4% a year from the current level of around 2%.”

Yellen:  “My own expectation is that, as the labor market begins to tighten, we will see wage growth pick up some to the point where…nominal wages are rising more rapidly than inflation, so households are getting a real increase in their take home pay,” she said last week, adding: “If we were to fail to see that, frankly, I would worry about downside risk to consumer spending.”

Today’s Equity Markets

Asia

Asian markets fell modestly overnight as concerns over Iraq overshadowed better-than-expected U.S. economic data…China’s Shanghai Composite fell 9 points to close at 2025 while Japan’s Nikkei average slipped 110 points…

Shanghai Long-Term Chart

The reason we’re showing this 20-year monthly chart of the Shanghai Composite is to demonstrate that the odds favor an upside reversal in this market in the near future, after softness since 2011, and that likely bodes well for commodities and the Venture Exchange…note how overbought the Shanghai became during 2007, which also coincided with a peak in the Venture…

Europe

European markets are under pressure and at three-week lows in late trading overseas – Iraq tensions cited as the main reason for weakness…

North America

After its sharpest decline in a month yesterday, the Dow is up 29 points as of 7:00 am Pacific…the Dow reversed in early trading following a report showing expansion in the service sector which countered worse-than-anticipated reports on the economy’s performance in the first quarter and an unexpected drop in orders for durable goods in May…

The U.S. economy contracted at a worst pace than previously estimated in the first quarter, marking its sharpest pullback since the recession ended five years ago…GDP fell at a seasonally adjusted annual rate of 2.9% in the first three months of the year, according to the Commerce Department’s third reading released today…that was the fastest rate of decline since the first quarter of 2009 when output fell 5.9%…

Meanwhile, a pullback in military spending dragged down overall orders for big-ticket items from U.S. factories in May with demand for durable goods – products like airplanes, cars and refrigerators that are designed to last at least three years – declining a seasonally adjusted 1% from April…the number was below expectations and marked the first decline in four months…

The TSX is up 29 points as of 7:00 am Pacific while the Venture is off 3 points at 1013…

America’s Best & Worst States For Business

CNBC yesterday unveiled results of its eighth annual list of America’s Top States for Business with Georgia ranking first, buoyed by its well-developed infrastructure and top-notch workforce…Texas, Utah, Nebraska, North Carolina, Minnesota, Washington, Colorado, Virginia and South Dakota rounded out the top 10…at the bottom of the list are New York, Vermont, New Jersey, Pennsylvania, Maine, Connecticut, Alaska, West Virginia and Hawaii…

Madalena Ventures Inc. (MVN, TSX-V) Update

John’s charts for Madalena Energy (MVN, TSX-V) late last year/early this year showed a Fib. resistance band between 81 and 95 cents, and sure enough MVN reached a multi-year high of 83 cents in mid-January before retracing…some large financings have out some pressure on the stock price, including a recent bought deal for $50 million at 51 cents, but to make good money in the market you need to buy when stocks are on sale – and right now there’s an “on sale” sticker attached to MVN according to this 2.5-year weekly chart…as always, perform your own due diligence…

RSI(14) at 38% in now at previous support on this 2.5-year weekly chart…in addition, it seems unlikely the 45-cent support is going to be broken, and that level also coincides with the rising 500-day moving average (SMA)…in other words, we expect a recovery in MVN over the summer…it’s also a good time to be bullish on the energy sector as a whole in our view…

MVN is off 1.5 cents at 49.5 cents through the first 30 minutes of trading…

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

Calgary-based Contact Exploration (CEX, TSX-V) has been one of our favorite energy plays since it was trading in the 20′s last year…Contact continues to accelerate its key Kakwa Montney asset, and is poised for further increases in production as East Kakwa pushes westward…total company reserves (net proved and probable) increased by 43% in the year ended March 31 while total company net present value (net proved and probable reserves discounted at 10%) increased by 69% to $174.4-million…

On June 5, CEX announced the closing of a non-brokered private placement of flow-through and non-flow-through common shares (at 44.5 cents and 39 cents, respectively) for total gross proceeds of just over $10 million…

Technically, Contact staged a confirmed breakout above Fib. resistance at 38 cents during this second quarter, and climbed as high as 48 cents earlier this month….the rising 50-day SMA at 40 cents is solid new support…note also the upsloping channel in place since last year – there’s no reason for CEX to break below that channel, at least not during the upcoming quarter…

CEX is up a penny at 44 cents as of 7:00 am Pacific…

Great Prairie Energy Services Inc. (GPE, TSX-V) Update

Another interesting oil and gas play worthy of our readers’ due diligence, as we’ve mentioned previously, is Great Prairie Energy Services (GPE, TSX-V) which closed yesterday at 49.5 cents…it has more than doubled so far this year, and the company reported net income of $1.4 million on total revenue of $5.3 million for its first quarter ended March 31…

GPE faces Fib. measured resistance at 52 cents…any pullbacks in GPE this year have stayed within the rising 20 and 50-day SMA’s, currently at 45 and 40 cents, respectively…there is also Fib. support at 40 cents…

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

 

 

Gold has traded between $1,313 and $1,327 so far today…as of 7:30 am Pacific, bullion is up $3 an ounce at $1,321…Silver has climbed 15 cents to $21.05…Copper is flat at $3.12…Crude Oil is slightly higher at $106.26 while the U.S. Dollar Index has gained nearly one-tenth of a point to 80.36…Zinc prices continue to march higher, hitting their highest levels since early 2013 on worries over diminishing supplies of the metal, which is used primarily to galvanize steel and make rust-resistant products…supplies are dwindling as demand from the construction industry is ramping up globally whiles mines shut down…

Holdings in global ETPs fell to 1,712.9 tons on June 20, the lowest since October 2009, data compiled by Bloomberg shows…we view this as a bullish sign, not a bearish one…investors have sold 49.9 metric tons from Gold-backed ETPs this year, compared with a record 869.1 tons that wiped more than $73 billion off their value in 2013…the selling compares with average annual purchases of 291 tons over the last nine years…sales of American Eagle Gold coins by the U.S. Mint have totaled 252,500 ounces this year, 60% less than in the first six months of last year and the lowest for the period since 2008, data on its web site show…even better, the median of 15 analyst and trader estimates compiled by Bloomberg by June 18 showed Gold will average $1,240 in the fourth quarter and $1,300 in the first three months of next year…by June 20, they were predicting $1,225 and $1,270 for the periods, not swayed by Janet Yellen’s outlook for low borrowing costs until Christ’s return…

We wouldn’t want to bet against Gold given the way the Venture is behaving and the posture of the 20-year monthly Gold chart that we are sharing with our readers today…

India Monsoon Season Update

About 80% of India has received deficient to scanty rainfall between June 1 and June 23, according to India Meteorology Department data, deepening concerns about the potential impact of a below-normal monsoon…things may not get better in the next few weeks – the extended range forecast from the Indian Institute of Tropical Meteorology says that monsoon activity over the country will be weaker until mid-July…India’s southwest monsoon runs from June to September…the rains have an impact on the Gold price as India’s rural farming areas account for about 60% of the country’s Gold purchases…a bad monsoon which leads to poor crops and rising food costs will hit farmers in their wallets, depriving them of money to buy Gold, as well as possibly forcing them to sell at least some of their existing Gold holdings…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 10 points overnight to close at 2034 as traders reflected on better-than-expected manufacturing data for June…Japan’s Nikkei eked out modest gains to hit a new five-month closing high for the second straight session…

Europe

European markets are mixed in late trading overseas…Germany’s Ifo business climate data missed forecasts and hit a fresh low for the year…meanwhile, Bank of England governor Mark Carney adopted a dovish tone in front of U.K. lawmakers today…he raised fresh concerns about low wage growth in the U.K. and the impact that this might have on the bank’s plans to raise rates this year…when the bank does raise rates, Carney said, the move would be limited and gradual…translation – another central bank caught between a rock and a hard place…

North America

Better-than-expected economic reports on housing and consumer confidence have been supportive of U.S. markets this morning…the Dow is up 21 points as of 7:30 am Pacific while the S&P 500 has hit another intra-day record high…the Dow has gone 32 months without a 10% decline, the fifth-longest run on record…meanwhile, the S&P 500 hasn’t closed up or down 1% in 46 days, the longest stretch since 1995…

The TSX is up 16 points through the first hour of trading while the Venture is unchanged at 1023…

Real Inflation

Below is an interesting table from David Stockman’s Contra Corner web site (www.DavidStockmansContraCorner.com)…Stockman was President Reagan’s federal budget director until, like most budget directors, he eventually lost his job (apparently he spoke a little too freely with the news media…

As pointed out at Uncommon Wisdom (www.uncommonwisdomdaily.com), one of our favorite sites, you’ll note that at the very bottom of the list are the two “official” inflation measures…you can see both ran well below the price increases of common consumer goods in the U.S. over the last 14+ years…CPI is nowhere near reality and PCE (Personal Consumption Expenditures, which the Fed uses) is even worse…oddly, the Federal Reserve did use CPI up until the year 2000…then-chairman Alan Greenspan decided PCE would be the benchmark going forward…

Gold 20-Year Monthly Chart

It’s very hard to study this chart and not come to the conclusion that Gold hit bottom last year around $1,180…

This 20-year monthly chart really puts the “Big Picture” in perspective…Gold retreated from an all-time high of just over $1,900 in September 2011 to a long-term support line around $1,200…what’s particularly interesting at the moment is that RSI(14) on this chart has broken above a downtrend line that started in late 2011…in addition, the SS has reversed to the upside after forming an important bottoming pattern and is now attempting to break above its downtrend line…

A key level for Gold to push above during the second half of this year is $1,400…

CRB Index Updated Chart

A 20-year CRB chart shows an important development at the beginning of this year with the Index breaking out above a downtrend line…RSI(14) bottomed at strong support at 40% and has cut through resistance at 50% like a knife through butter…commodities are looking bullish which correlates with what the Venture is telling us with a series of technically bullish indicators…

The 320 area (resistance) on the Reuters/Jeffries CRB Index is important to watch…could react at that level and digest its gains (consolidate) before eventually pushing through…

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

North American Nickel (NAN, TSX-V), armed with a very healthy treasury, has commenced its 2014 drilling season at its promising 100%-owned Maniitsoq Ni-Cu-PGE Project in southwest Greenland…two diamond drill rigs will be employed with the second one in action by about mid-July…

The first drill is focused on the Imiak Hill Conduit Complex (IHCC) and more specifically on the Imiak Hill zone, where previous drilling intersected 4.3% Ni, 0.62% Cu and 0.14% Co over 18.6 m in hole MQ-13-026 (see NAN Oct. 10, 2013 news release)…the zones at IHCC remain open at depth, and the 2014 drilling will test the down-plunge potential of these Ni-Cu-PGM systems…

The second rig will begin in the Pingo target area located approximately 25 km northwest of the IHCC…

All diamond drill holes will be surveyed using a 3-D (ZXY) borehole pulse electromagnetic system operated by Crone Geophysics and Exploration Ltd., which detects sulphide mineralization up to 100 m away from the hole…this method has been utilized over the last two years of drilling at Maniitsoq and has assisted the geological team in understanding the mineralized systems at IHCC…

Technically, the NAN chart is interesting in that the stock last Friday broke out above measured Fib. resistance at 51 cents (the next level is 72 cents) and momentum has carried it higher…RSI(14) on this 2.5-year weekly chart through yesterday shows overbought conditions at 77%, so the risk of a minor pullback for “cleansing” purposes clearly exists…

NAN is up 4 cents to 57 cents as of 7:30 am Pacific…

Highbank Resources Ltd. (HBK, TSX-V)

We’ve been closely following developments in Highbank Resources (HBK, TSX-V) the last few months after the company received its Notice of Work (NOW) approval in March from the British Columbia Ministry of Energy and Mines for its Swamp Point North aggregate project on tidewater south of Stewart…the company completed a $2.7 million convertible debenture financing and has been making steady progress toward advancing to production…

HBK staged an important breakout in mid-March above long-term resistance at 15 cents, and this morning it has touched measured Fib. resistance at 20 cents (keep in mind, Fib. levels are not price targets, just theoretical levels based on Fib. and technical analysis, but Fib. is nonetheless a valuable tool in an investor’s toolkit)…how HBK handles the 20-cent Fib. level over the immediate to near-term will be interesting…

RSI(14) on this long-term chart is showing strong up momentum…as always, perform your own due diligence…

Note:  John, Terry and Jon do not hold share positions in NAN or HBK.