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Gold has traded between $1,251 and $1,258 so far today…as of 7:30 am Pacific, bullion is up $2 an ounce at $1,254…Silver is 11 cents higher at $19.12…Copper, after falling 15 cents the last two weeks, is down another penny at $3.04 as concerns persist over suspected fraud involving metals stored at a Chinese port…Chinese authorities are investigating whether companies used the same Copper, aluminum and iron-ore stocks held in the port of Qingdao as collateral for obtaining multiple loans…Crude Oil is up $1.26 a barrel to $103.92…a mid-week OPEC policy meeting and a slew of energy agency reports are scheduled this week…the U.S. Dollar Index has gained one-quarter of a point to 80.66…

Good sign – hedge funds and money managers cut their bullish bets in Gold futures and options in the week to June 3 to their lowest level since mid-January, according to data from the U.S. Commodity Futures Trading Commission on Friday…meanwhile, commercial traders, who are seldom on the wrong side, have reduced their net short positions to levels not seen since early February…the COT structure is even more bullish in Silver with commercial shorts scaled back dramatically from mid-March to levels that existed just ahead of the big rally in August of last year…clearly, a significant upside move is brewing in Silver (it’s never wise to bet against the commercials), though slightly lower levels are still possible first, especially considering that June is typically a weak month…John has updated Silver charts at the bottom of today’s Morning Musings…

Technically, as John’s latest Gold chart showed over the weekend, bullion faces immediate resistance at $1,260 while a strong support band is in place between $1,220 and $1,240…

Today’s Equity Markets

Asia

China’s Shanghai Composite closed unchanged overnight at 2030…China’s central bank guided the renminbi higher by the most in 20 months today, prompting speculation Beijing has decided to reverse the biggest depreciation in the currency’s recent history…today’s appreciation signal came after China recorded its biggest monthly trade surplus in five-and-a-half years, according to official data released over the weekend…Chinese exports rose 7% in May from a year earlier while imports fell by 1.6%, suggesting weakness in the domestic economy…

Strong economic data lifted Japan’s Nikkei to a fresh three-month high, putting its gains over the past six trading sessions above 3%…revised Q1 GDP came in at an annualized rate of 6.7%, surpassing initial estimates of 5.9%…

Europe

Trading was thin in Europe today with public sector holidays in both France and Germany…European markets are aiming for their 10th straight week of gains…

North America

The Dow is up 19 points as of 7:30 am Pacific…the TSX has added 36 points while the Venture is 4 points higher at 991…

Canada’s largest annual oil and gas trade show gets under way tomorrow in Calgary in conjunction with an industry conference dedicated to heavy oil, which the country has in greater abundance than anywhere else on the planet…organizers estimate that more than 60,000 attendees will flock to Calgary from around the world to visit nearly 2,000 corporate exhibitors’ booths at the Global Petroleum Show…separately, some 1,100 participants are expected to register for the Society of Petroleum Engineers’ Heavy Oil Conference, a symposium for peer-reviewed technical papers…

Venture 3-Year Weekly Chart Update

The Venture continues to look very healthy from a technical standpoint with many factors in its favor at the moment, suggesting a strong Q3 is on the way despite the doom and gloom from various pundits…buy pressure remains strong, RSI(14) continues to follow an uptrend line and has found support around the 50% level, and the Index is out-performing Gold which is another bullish sign…the Venture’s rising 200-day moving average (SMA) has joined other strong support at 970, and an important reversal to the upside in the 300-day SMA appears likely over the next several weeks…this is not to the time to forget about this market and head to the Caribbean for the next six months, as Brent Cook is telling investors…there are some great opportunities entering Q3…selectivity, as always, is key…

True Gold Mining Inc. (TGM, TSX-V) Update

True Gold Mining’s (TGM, TSX-V) step-out drilling at the Karma Gold Project’s Nami deposit has intersected 29.5 g/t Au over 6 m and has extended the deposit 250 m north, along a corridor 150 m wide…this previously untested extension has the potential, TGM stated this morning, to add an additional 50% to the strike length of the current Nami deposit outlined in the Feasibility Study…the deposit remains open for further expansion…Gold mineralization at Nami exhibits the same intrusive-hosted, shallow-dipping structural style found within Kao and North Kao, Karma’s two largest Gold deposits, where continuity has been demonstrated over strike a length of 1.6 km…TGM is up 2.5 cents at 41 cents through the first hour of trading…

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

Our last update on Ceiba Energy Services (CEB, TSX-V) was a month ago (May 9), after a confirmed breakout above 60 cents, and since then CEB has performed according to script with a gain of nearly 30%…it closed Friday at 80 cents…a confirmed breakout has also occurred above the Fib. 61.8% level at 70 cents…some near-term consolidation is possible but watch for strong support around 70 cents and the 10 and 20-day moving averages (SMA’s)…Ceiba provides specialized environmental services for companies in the energy sector and achieved record revenues for the quarter ended March 31…CEB is unchanged at 80 cents as of 7:30 am Pacific…

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

Another hot energy play has been Grand Prairie Energy Services (GPE, TSX-V), worthy of our readers’ consideration…GPE 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 gained 6 cents last week to close at 48 cents…it’s unchanged at 48 cents as of 7:30 am Pacific and faces Fib. measured resistance at 52 cents…there is also Fib. support at 40 cents, just above the rising 50-day SMA…as always, perform your own due diligence…

Silver Short-Term Chart Update

Importantly, Silver continues to find support just below $19 at or just above the top of a downtrend line…this is similar to the Venture pattern during the fourth quarter of last year when it, too, found support at the top of a downtrend line…RSI(2) on this 3-year weekly chart hit extreme oversold levels recently and is currently at 40%…watch for a bottoming pattern in the SS…overall sell pressure has been in decline since early 2013…these are encouraging signs…the support band between $17.50 and $19.50 should therefore hold while the next major chart resistance is $22…

Silver Long-Term Chart Update

This 11-year monthly chart confirms that the metal has exceptional support immediately below $20…note that Silver has two downtrend lines it needs to break above…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 at the top of today’s Morning Musings, has become very favorable, suggesting Silver is gearing up for a strong move over the summer…

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

TSX Venture Exchange and Gold

For the week, the Venture finished 3 points higher at 987 with small gains each day after a 6-point loss last Monday.

There continues to be a “disconnect” between the malaise that is evident in the world of the junior resource sector and the highly encouraging underlying technical strength of the Venture Exchange.  But that shouldn’t be surprising.  Looking at the small turnout and some of the gloomy faces at last week’s Resource Conference in Vancouver, this is exactly the right time to get greedy – precisely when it makes sense to take a contrarian view and plant the seeds that will lead to a bountiful harvest.   The time to be fearful is when the crowd becomes greedy, when you have a Resource Conference at full capacity like the one in January, 2011, when everybody was bullish and there was a waiting list for booth space.  To really understand this sector and make good money at it as an investor, it’s almost essential to have a solid understanding of human psychology.  Emotions (fear, greed, impatience, etc.) certainly rule the market.  But that’s a chapter (or a few chapters) for another day.

What the charts keep telling us is that the bear market ended a year ago and the Venture is preparing for an explosive second half of 2014 that will catch many investors by surprise.  What the catalyst(s) will be for this, we’re not entirely sure but likely a combination of factors including an important new discovery somewhere.

Any investor who is “discouraged” by the fact that the Venture has fallen from its March high of 1050 to current levels simply doesn’t understand basic technical analysis.  The current situation is not unlike the one back in November/December when the Venture retreated from the 970’s to test new support (previous resistance) at the top of a downtrend line.  What we’ve seen in recent weeks is a very natural and healthy test of a powerful support band (also a higher low) that previously was strong resistance for many months last year.

While there could be some more churning within the support band in the immediate future, it’s important to point out that RSI(14) on John’s 5-year weekly chart appears to have 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 has gradually unwound.  The recent decline that took the Venture to a monthly intra-day low of 968 May 20 came on light volume, and accumulation (CMF indicator) remains steady and strong.

A couple of months from now, investors will look back at this correction from 1050 as an incredible buying opportunity.  The nervous nellies who have been sellers as opposed to buyers in recent weeks – well, they’re betting on the highly improbable which is a breakdown of superb Venture support.  Those are very poor odds in our view.  The Venture will take the path of least resistance which means a significantly higher market over the coming months – perhaps not the mainstream view, but you don’t make big money by following the crowd.

The Venture’s rising 200-day moving average (SMA) on this weekly chart is at 970.  This market should really start gaining fresh momentum as soon it pushes back above its 50-day SMA (currently at 995) and that moving average reverses to the upside – a technical event that should certainly occur during the last half of this month.  Patience is the key, as always.  The third quarter for the Venture is shaping up to be a very dynamic period.

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 survived two widely anticipated events – Thursday’s ECB meeting and Friday’s U.S. jobs report – to finish slightly higher for the week at $1,252.  A strong support band exists between $1,220 and $1,240, and bullion may yet have to test that a little more vigorously.  Resistance is around $1,260. For now, we see Gold being range-bound and keep in mind that June is traditionally bullion’s weakest month of the year.  A third quarter recovery is likely, just based on seasonality factors if nothing else.  The Venture, which has proven to be an excellent leading indicator of Gold prices, is telling us that bullion is not about to “tank”.

The 6-month daily Gold chart shows sell pressure in decline while RSI(14) is emerging out of oversold territory.  The recent bearish trend is weakening as demonstrated by the ADX indicator.

Silver jumped 20 cents last week to finish at $19.01.  Copper continues to be under pressure and fell another dime to $3.05.  Crude Oil was essentially unchanged ($102.66) while the U.S. Dollar Index hit resistance at 81 during the week and closed Friday at 80.43, a gain of less than one-tenth of a point for the week.

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 $1,245 and $1,259 so far today…as of 7:30 am Pacific, bullion is down $5 an ounce at $1,248…Silver is off 8 cents at $18.95…Copper has fallen a nickel to $3.05, a four-week low…Crude Oil is up 24 cents to $102.72 while the U.S. Dollar Index has gained more than one-tenth of a point to 80.49…

Important Gold levels to keep in mind – a strong support band exists between $1,220 and $1,240 (bullion fell to the top of that support this week) while resistance is at $1,260…for now bullion is range-bound between these levels…

Investors in India – retail, corporates, banks and foreign institutional investors – continue to exit Gold ETFs, new data show…the retail folio in Gold ETFs fell by nearly 7% during the second half of the financial year ended March 31, 2014, as compared to a 5% decline in the first half of FY14…the move away from Gold ETFs can be attributed to a strong showing by the Bombay Stock Exchange…the rally in equities has pushed India’s market capitalization share across the world to an 18-month high…the market cap has grown 14% so far in 2014, to around $1.4 trillion through June 4, which is the best showing in percentage terms across emerging markets as well as developed markets like the U.S. and Japan…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 11 points overnight to close at 2020 despite promises from the country’s banking regulators to maintain steady monetary policy and tighten supervision over shadow banking…reports that the People’s Bank of China will pump $11.7 billion into the market through money market operations was also unable to spur gains…the move would follow Beijing’s comments last week that it plans to increase lending to help rural communities and small and medium enterprises…meanwhile, the World Bank and the International Monetary Fund are urging China to focus on controlling risks from rapidly rising debt due to its reliance on credit-fueled growth…

Japan’s Nikkei average was off slightly overnight but still posted a strong weekly gain…interestingly – and we’ll see how this bodes for global equity markets in general – the Nikkei has broken out above a descending triangle in place since the beginning of this year as you can see in this 2.5-year weekly chart…the technically overbought conditions that emerged during the first half of last year have completely unwound…

Europe

Spanish blue chips led European stocks to their eighth straight weeks of gains today following the ECB’s announcement yesterday of a further easing of monetary policy…the ECB has turned the deposit rate negative for the first time as policy makers aim to boost inflation and encourage growth through increased bank lending and spending, among consumers and businesses…will it work?…

North America

The Dow is up 65 points as of 7:30 am Pacific…U.S. Non-farm payrolls continued to grow about in line with recent trends, rising 217,000 in May as the unemployment rate held steady at 6.3%, according to numbers released at 5:30 am Pacific by the Bureau of Labor Statistics…the fourth month in a row of above 200,000 job gains is encouraging and points to modest economic growth…most of the job gains came on lower-paying industries as wages rose modestly, increasing 5 cents an hour to maintain the modest 2.1% growth over the past 12 months…a broader measure of joblessness that includes those working part-time for economic reasons and those who have quit looking remained elevated at 12.2%, though that was a low for the year and the best “U6” measure since October 2008…

Keep in mind that in 19 out of the last 20 months, non-farm payrolls have been revised UP and by an average of 36,000…

The TSX is up 19 points while the Venture is flat through the first hour of trading…

SEC To Address Computer-Driven Trading

Long overdue – Securities and Exchange Commission Chairman Mary Jo White unveiled a sweeping set of initiatives yesterday to address mounting concerns about the impact of computer-driven trading on the stock market, including proposals that would extend oversight of high-frequency traders and dark pools…

No Fed Interest Rate Increase Until Mid-2015?

The U.S. Federal Reserve is likely to keep interest rates ultra-low well into next year, Fed Governor Jerome Powell said at a meeting in London today according to a report from CNBC.  “We’ve said that we will not raise rates or are unlikely to raise rates before a significant time after the end of the asset-purchase program, so we’re talking about the middle of next year at the earliest, assuming the economy stays on this track,” he said at the Institute of International Finance’s spring meeting. Powell said he expects asset purchases to end in the fourth quarter of this year and “market conditions seem to be well aligned with this guidance as well.” 

U.S. Household Net Worth Hits Record High

U.S. household net worth nudged up 2% to a record high $81.8 trillion in the first quarter as the stock market continued its upward climb and property values rose, data from the Federal Reserve showed on Thursday…the S&P 500 rose 1.4% in the first quarter as the Fed continued with a highly accommodative monetary policy for a recovering U.S. economy…for the year to date, the S&P is up 5%, and hit another new intraday record high yesterday…

Underfunded U.S. Public Pension Funds

Despite healthy gains from the ongoing stock market rally, U.S. public pension funds are still badly underfunded and the shortfall continues to widen…to try to close the gap, many states have shifted pension fund assets into stocks and alternative investments like hedge funds…but in doing so, they face a greater risk of being able to meet their long-term promises to pay retiree benefits, according to a new report from the Pew Charitable Trusts…As of 2012, the latest data available, states had set aside only $3 trillion to meet the more than $4 trillion in benefits earned by public workers…in New Jersey, Republican Gov. Chris Christie, a potential 2016 GOP presidential candidate, recently announced a plan to divert $2.4 billion in pension payments to close a $2.7 billion budget gap…in 2012, the state came up with just 39% of the annual contribution required to meet its estimated $47 billion pension liability…

Global Stock Holdings At Low Levels

Hard to imagine a huge market sell-off under these conditions…an authoritative new study published recently in the Financial Analysts Journal shows that all investors – individuals and institutions alike – are keeping the lowest percentage of their portfolios in stock in over half a century…according to three Dutch researchers – Ronald Doeswijk, Trevin Lam and Laurens Swinkels – investors held only 37.7% of the $90.6 trillion in global investable assets in stocks in 2012, the most recent year their data covered…

Updated Crude Oil (WTIC) Chart 

Crude Oil’s “moment of decision” continues to draw closer…below is an interesting 10-year chart from John…WTIC is in the middle of an ascending triangle with support around $95 and resistance around $110…a confirmed breakout above $110 would be a major development (the same with a break below the ascending triangle)…this long-term monthly chart shows a trend of declining volume and weakening buy pressure – that’s a pattern that needs to be watched closely…

Edge Resources Inc. (EDE, TSX-V) Update

Edge Resources (EDE, TSX-V), a rapidly growing Alberta-focused energy company, has enjoyed a strong week, importantly closing above a long-term downtrend line the past two sessions…fundamentally, this is a company with a lot of strengths and we suggest readers perform their own due diligence on EDE if they haven’t already…they’ve also produced one of the best corporate videos for a Venture company we’ve seen in a long time…

Technically, the question now is whether previous resistance at the long-term downtrend line (and a Fib. level) becomes immediate new support, as it theoretically should, or whether this process may take a little longer…keep in mind that RSI(14) is in overbought territory on this 4-year weekly chart where the stock has reacted previously, but the breakout above the downtrend line may provide some fresh fuel…EDE is off 2 pennies at 25 cents as of 7:30 am Pacific…

Source Exploration Corp. (SOP, TSX-V)

Encouragingly, Source Exploration (SOP, TSX-V) has been holding support around the 10-cent level, and we expect interest in SOP to pick up over the summer with the company now commencing another drill program at its promising Las Minas Property in Veracruz State, Mexico…the 2,000 m program will focus on expanding the higher grade skarn mineralization outlined by earlier drilling at the Santa Cruz area in preparation for an initial resource calculation…in addition, drill testing of high priority targets at the Juan Bran and Cinco Senores sites is also scheduled…

Below is a 3-year weekly SOP chart from John…RSI(14) appears to have found support at the 50% level and is now attempting to move higher…SOP closed at 10.5 cents yesterday…

Note:  John holds a share position in EDE.

Gold is pushing higher today…as of 8:15 am Pacific, bullion is up $10 an ounce at $1,254…it dipped as low as $1,240 and has traded as high as $1,259…Silver is up 24 cents to $19.04…Copper is down 2 pennies to $3.09…Crude Oil is off 28 cents to $102.36 while the U.S. Dollar Index has retreated after touching an intra-day high just above 81…it’s currently down slightly on the day at 80.58…

Gold is performing well in the wake of this morning’s European Central Bank announcement (this move by the ECB was already “priced in” by the markets) and bullion could get another lift tomorrow if the U.S. jobs report doesn’t meet market expectations…

The ECB reduced interest rates this morning and announced a series of other measures designed to boost bank lending as officials scramble to keep ultra-low inflation from gaining traction and derailing the euro zone’s fragile recovery…speaking at a news conference, ECB President Mario Draghi said he and his colleagues were prepared to take further “unconventional” measures if necessary…

The ECB cut its main refinancing rate to a fresh record low of 0.15%, from 0.25%, and its deposit rate from zero to -0.10%, as it becomes the first major central bank to venture into negative territory…

Banks will now need to pay to park cash with the ECB…the theory is that this will encourage banks to lend their cash to needy households and businesses instead…it’s also possible, though, that banks may respond by passing on the cost to their customers, or the negative deposit rate may actually encourage banks to hoard physical cash in vaults instead…who knows how this may work out…neither the Federal Reserve, the Bank of Japan nor the Bank of England have tried the measure, which the ECB hopes will lift inflation by weakening the euro and spurring lending in the bloc’s more unsettled periphery…

As Bloomberg reported this morning, Draghi stated in March that the euro is “increasingly relevant in our assessment of price stability” and policy makers blamed a strong currency for weakening price pressures…Nick Beecroft, senior market analyst at Saxo Capital Markets in London, said the euro may already reflect expectations for measures such as a 15 basis-point cut in ECB rates…now that Draghi has flagged the Governing Council’s concerns on the currency, a bigger drop may only be possible if officials take more dramatic steps to stoke inflation…

“The market has realized that the ECB is really focused on the euro, and they will want blood,” he said. “They’ll want deeper cuts in the deposit rate or quantitative easing before the euro weakens further.”

The Currency Race To The Bottom

The ECB is hoping to drive down the value of the euro, and of course it’s not the only central bank “talking down” its currency…Japan and others have been doing the same, and one has to wonder what this unprecedented central bank intervention on a global scale (which is distorting the markets) will ultimately lead to…

Canada is in the game, too…read this interesting statement yesterday from the Bank of Canada as it kept its key overnight lending rate at 1% for the 31st consecutive time – a span that stretches back to September, 2010 (the underlined parts are our emphasis)…

“Global economic growth in the first quarter of 2014 was weaker than anticipated…and recent developments give slightly greater weight to downside risks. The U.S. economy is rebounding after a pause in the first quarter, but there could be slightly less underlying momentum than previously expected. Globally, long-term bond yields have continued their decline, reflecting in part growing market anticipation that interest rates will remain low over the long term. This, along with buoyant stock markets and tight credit spreads, indicates that financial conditions remain very stimulative.

“The Canadian economy grew at a modest rate in the first quarter, held back by severe weather and supply constraints. The ingredients for a pickup in exports remain in place, including the lower Canadian dollar and an anticipated strengthening of foreign demand. Improved corporate profits, especially in exchange rate-sensitive sectors, should also support higher business investment in the coming quarters.“

Today’s Equity Markets

Asia

China’s Shanghai Composite reversed earlier losses to jump nearly 1% overnight, snapping a four-day losing streak and bouncing off yesterday’s two-week two-week low…data out in early trade showed growth in the country’s services sector fell to a four-month low in May…Japanese shares managed to end at a near three-month high, extending gains into a fourth straight session…

Europe

European markets were mixed today, finishing well off their highs of the day following the stimulative measures announced by the ECB…

North America

The Dow is up 44 points as of 8:15 am Pacific…the Federal Reserve’s Beige Book of regional business conditions found growth expansion in all of the Fed’s 12 districts while the ISM non-manufacturing index rose to 56.3 in May…that beat estimates and offset May’s ADP Report which saw the creation of 179,000 private jobs, below expectations for 215,000…the Labor Department will reveal May’s non-farm payrolls number tomorrow…expectations are for a gain of 218,000…

The TSX is down 13 points while the Venture is up 2 points at 984…Doubleview Capital Corp. (DBV, TSX-V) has announced that drilling has re-started at the Hat Property as the company further explores the Lisle Zone and the recently recognized Sheslay Red Stock syeno-gabbroic intrusion…

Venture Price-Volume Analysis Chart

More technical evidence of underlying bullish strength in the Venture…this is a 3-year daily price-volume analysis chart from John…volume is such a key indicator, and note how it was at its lowest when the Venture bottomed in June of last year at 859…

In October of last year, of course, the Venture finally broke above its long-term downtrend line…not unexpectedly, it then tested that downtrend line as new support before breaking to the upside at the end of December…the rising 200-day moving average (SMA) at 965 forms part of a huge wall of technical support around the 970 area which was major resistance for most of last year…

Open your eyes, everyone…many investors made the mistake late last year of not “buying the dip” to the downtrend line after the October breakout…they were fearful at a time when they should have been greedy…a similar situation has developed since the March high of 1050…the retracement since then has been perfectly normal and healthy from a technical standpoint with the Index re-testing strong support and putting in another higher low…the Venture is behaving in textbook technical fashion…

Magor Corp. (MCC, TSX-V) Update

Magor Corp. (MCC, TSX-V) continues to show momentum in building its client base…Magor announced this morning that New York-based Brook-Pro has selected Magor’s Aerus service delivery platform to support the delivery of an innovative new line of video-enabled service offerings for the financial services and higher education market segments…this follows two other announcements over the last couple of weeks regarding deals from Dubai to Texas…Magor is a “visual collaboration” company led by an all-star management team that includes some of the same key personnel that were at the helm of Newbridge Networks…MCC climbed as high as 37 cents Monday where it hit a Fib. resistance level, but technically the stock is looking much healthier with a near-term reversal to the upside in the 50-day moving average (SMA) very possible…MCC is up a penny at 31 cents as of 8:15 am Pacific…

Crude Oil – Seasonality Chart

Historically, at least going back over the last two decades, June and July are the strongest months for Crude Oil (WTIC) prices…below is a seasonality chart from John…

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 play, 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 to 10,643 thousand barrels of oil equivalent (mboe) while total company net present value (net proved and probable reserves discounted at 10%) increased by 69% to $174.4-million…

On May 26, CEX announced it’s proceeding with a non-brokered private placement of flow-through and non-flow-through common shares (at 44.5 cents and 39 cents, respectively) to raise total gross proceeds of up to approximately $10 million…

Technically, Contact has staged a confirmed breakout above Fib. resistance at 38 cents…that level, which also roughly coincides with the rising 50 and 100-day SMA’s, now becomes strong new support…below is a 2.5-year weekly chart…CEX is up 2.5 cents at 44 cents as of 8:15 am Pacific…

Discovery Ventures Inc. (DVN, TSX-V) Update

One of the advantages astute investors have in this current market is that most investors are slow in reacting to positive news – just the opposite, of course, to the situation in late 2010/early 2011…

Discovery Ventures (DVN, TSX-V) is a good example of this…on Tuesday, we alerted our readers to the fact that DVN (trading at 18 cents at the time) had released a very robust Preliminary Economic Assessment for its WillaMAX Gold-Copper-Silver Project in southeast B.C., an area known for high grades with a rich history of mining…the PEA came out last week and has many attractive aspects to it including a very low capex ($12.8) and a rapid payback with a 412% IRR…we encourage our readers to review that document as part of their own due diligence…quite simply, based on this PEA which commands attention as it shows this project has some serious strength to it, the Willa deposit has clear potential to become a major cash cow for DVN…between this higher-grade deposit and the company’s strategic acquisition of the nearby MAX mine and mill facilities, Discovery Ventures is looking more attractive than ever now that it is armed with a powerful PEA that should win the favor of the market in order to enable the Willa to go into production…

DVN is starting to grab increased attention as it jumped 3.5 cents yesterday on over 800,000 shares to close at 21 cents…John’s updated chart shows increasing buy pressure (CMF) and a series of higher lows since the summer of last year which is also very bullish…the 50-day SMA, not shown on this chart, has just reversed to the upside – so a highly favorable technical environment is emerging here to go along with strong fundamentals…DVN is unchanged at 21 cents through the first 90 minutes of trading…

Note:  Jon holds share positions in MCC and DVN.

Gold has traded between $1,243 and $1,250 so far today…as of 8:30 am Pacific, the yellow metal is down $1 an ounce at $1,244…Silver is up a penny at $18.82…Copper has hit a three-week low this morning, currently down 4 cents at $3.11…the metal has been pressured today by signs that the market isn’t quite as tight as was thought recently (significant drop in premiums for delivery into China the past week), and doubts about the outlook for demand from that country…traders are also concerned about disruptions to some shipments at China’s third-largest port of Qingdao, related to a probe into the use of the metal as collateral in financing…also pressuring Copper is an attempt to restart Copper concentrate exports from Indonesia, after a ban there…Crude Oil has added 66 cents to $103.32 while the U.S. Dollar Index is up slightly at 80.62…

The ECB is widely expected to offer stimulus tomorrow in order to spur inflation and jump-start the region’s sluggish economy, but ECB President Mario Draghi has disappointed the markets before and may not go far enough to meet some traders’ rather high expectations…most analysts expect the ECB to cut its main interest rates, while many think it could take further steps to boost liquidity and could even go as far as a program of asset purchases (QE)…if the ECB announces such new measures, the euro may weaken and the dollar may strengthen – a scenario for a further drop in Gold prices…however, the potential also exists for the opposite to occur as some sort of action by the ECB has already been priced into the market, with hedge funds even strongly shorting the euro last week, and anything that misses market expectations may actually bring buying into the euro and selling into the dollar…it’ll be an interesting day tomorrow…

Today’s Markets

Asia

China’s Shanghai Composite slipped 13 points overnight to close at 2025…Japanese shares managed to end at a fresh two-month peak for the third straight day following a choppy session of trading…the Nikkei closed up 34 points at 15068…

Europe

European markets were mixed today…the final reading of the composite Purchasing Managers’ Index (PMI) – which measures both the manufacturing and services sector – posted a figure of 53.5, down only slightly from April’s near-three year high of 54.0, according to data provider Markit…this signaled a continued recovery and growth in the region for the 11th month running…

North America

The Dow is up 6 points through the first two hours of trading…job creation in the private sector was disappointingly slow in May, with companies adding just 179,000 positions, according to the latest reading from ADP and Moody’s Analytics…economists in a consensus survey expected ADP’s national employment report to show the economy created 215,000 private payrolls in May, down from the prior month’s 220,000 figure…the number could cause economists to ratchet down the projections for Friday’s non-farm payrolls report from the Labor Department which is projected to show an addition of 210,000 positions for the month…

The TSX has gained 31 points while the Venture is down a point at 981 as of 8:30 am Pacific…

U.S. Dollar Index – Trend Change Under Way?

It’ll be very important to keep an eye on the U.S. Dollar Index through the balance of this week for confirmation that a bullish trend could be under way…again, news out of the ECB tomorrow and Friday’s jobs report will dictate which direction the dollar goes…traders have been anticipating a bullish outcome for the greenback in recent trading sessions – they could be right, or they may end up disappointed…the Dollar Index has rallied after touching long-term support at 79 last month, and has now broken above its 200-day moving average (SMA) for the first time since last fall…RSI(14) has also pushed above a downtrend line in place since last year…these bullish technical signs cannot be ignored…Friday’s Dollar Index close will be very important in terms of gauging whether a trend change is occurring here…

Euro Chart Update

The general consensus is that a stronger euro is Gold-bullish, so are there any technical clues as to where the euro is headed?…what’s interesting to note is that the euro is at a critical juncture as it meets resistance between 137 and 140…

As you can see on this 11-year monthly chart, the euro is threatening to break out above multi-year downtrend lines…whether it does or not remains to be seen, but the current upsloping channel is interesting, while the ADX indicator has given a clear bullish trend signal since the middle of last year…

Balmoral Resources Ltd. (BAR, TSX) Update

Balmoral Resources (BAR, TSX) has arranged a bought-deal flow-through financing through Canaccord Genuity Corp. at a price of $1.75 (a 59% premium to BAR’s seven-day volume-weighted average trading price, though of course this is a flow-through PP) for gross proceeds of $4 million…closing of the offering is expected on or before June 20…

Plans for BAR’s summer drill program at Martiniere on the Detour Trend are currently being finalized, with drilling expected to resume late this month or by early July…the focus will be on additional expansion and infill drilling along the northern segment of the Bug Lake Gold trend, additional testing of the newly identified steep along the southern extension, and testing of several other high-priority targets within the broader Martiniere Gold system…

Balmoral has been delivering some excellent exploration results and any consolidation in the stock price should be viewed as healthy in the context of a long-term bullish trend…BAR is up 7 cents at $1.25 as of 8:30 am Pacific…keep in mind that this 1-year weekly chart is showing overbought RSI(14) conditions that will need to unwind at some point, and Fib. measured resistance remains at $1.29…

North American Nickel (NAN, TSX-V)

North American Nickel (NAN, TSX-V) continues to be one of the few “shining lights” in the exploration sector at the moment…we expect an exciting summer for NAN as it carries out aggressive drilling at its highly prospective Maniitsoq Project (Ni-Cu-Co-PGE) in southwest Greenland…

Technically, NAN staged a confirmed breakout above 38 cents nearly a month ago and the next major resistance is a band between 47.5 cents and 51 cents as you can see in this 2.5-year weekly chart…there has been a strong increase in buy pressure during the second quarter, replacing the sell pressure that was dominant since late 2012, though this buy pressure is currently in decline…NAN is up half a penny at 45 cents as of 8:30 am Pacific…

Pilot Gold Inc. (PLG, TSX)

Fib. support levels have been holding for Pilot Gold (PLG, TSX) which recently raised $20 million in a bought deal at $1.53 after the company announced more very encouraging high-grade drill results from its promising Kinsley Mountain Western Flank target in Nevada…this project has tremendous geological potential, and we encourage readers to perform their own due diligence…a $6 million, 25,000-metre program resumed about a month ago with one core rig and two RC rigs after a successful winter program…

Below is a 1.5-year weekly chart from John outlining the Fib. retracement levels ($1.15 to $1.37) following the March 12 intra-day high in the $1.70’s…RSI(14) appears to have found support in the immediate vicinity of the 50% level…

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

Gold has traded between $1,239 and $1,249 so far today…as of 8:30 am Pacific, bullion is up $1 an ounce at $1,245 as it tries to snap a 5-session losing skid…Silver is up 2 cents at $18.78…Copper is down 3 pennies at $3.15…Crude Oil is up 22 cents at $102.69 while the U.S. Dollar Index is off one-tenth of a point at 80.54…

U.S. Mint sales of Gold bullion coins fell in May but sales of Silver coins were higher…combined sales of American Eagle and Buffalo coins last month were 48,000 ounces…this was down from 56,000 in April and 82,500 in May of 2013…however, the larger fall in the year-on-year comparison can be explained at least in part by the “buying frenzy” that unfolded at this time last year after Gold prices tumbled in the wake of the Cyprus crisis and hedge-fund selling…meanwhile, American Eagle Silver coin sales in May came to 3,988,500 ounces…this was up from 3,569,000 in April and 3,458,500 in May 2013…

With an ECB decision looming and a U.S. jobs report due Friday, volatility in Gold is likely to increase later in the week…technically oversold conditions have emerged with a strong support band between $1,220 and $1,240…historically, over the past couple of decades at least, June is Gold’s worst month of the year – so an important low could occur anytime over the next few weeks before a Q3 upswing…

Today’s Equity Markets

Asia

After Monday’s holiday, China’s Shanghai Composite finished 1 point lower overnight at 2038…China’s factory sector put in its best performance in four months in May as export orders rebounded although activity remained in contraction territory, according to an HSBC survey released today…the final reading of the HSBC/Markit PMI rose to 49.4 in May from 48.1 in April but was below an initial estimate of 49.7…Japanese shares hit a two-month peak for the second straight session, climbing 98 points to finish just above the 15000 level…

Europe

European markets were down modestly today…euro-area inflation slowed more than economists forecast in May, cranking up pressure on the European Central Bank to deploy measures as soon as this week to kindle prices and drive growth (the ECB meets Thursday)…the rate fell to 0.5% from 0.7% in April, the European Union’s statistics office in Luxembourg said today…the median forecast in a Bloomberg News survey of 38 economists was for a decline to 0.6%…the rate has been less than half the ECB’s target for eight months…unemployment in the EU was also reported today, coming in at 11.7% in April from 11.8% in March…

European stocks are at a six-year high, while the euro is sitting near a three-month low versus the dollar and nearly a four-month low against the Japanese yen…traders are positioned for further euro weakness ahead with the possibility of imminent action by the ECB…hedge funds and other large speculators built up a net $2.8 billion short bet against the euro last week, nearly doubling their bets against the currency from the previous week, according to Commodities Futures Trading Commission data…will this turn out to be a classic case of “selling the rumor” and “buying the fact”?…quite possibly, which means we could be in for some interesting volatility in the currency and Gold markets at the end of the week with the ECB decision Thursday and U.S. non-farm payrolls Friday…

North America

The Dow is down 37 points as of 8:30 am Pacific…the TSX is 28 points higher while the Venture has added 3 points to 981…

Venture-CRB-Gold Comparative Chart

Yesterday, we posted an important chart showing in very striking fashion how a new “uptrend” is well underway (started last year) in terms of the Venture’s out-performance vs. Gold, and you can see it again in a different way in this chart with the dotted line (CDNX relative to Gold)…

What’s also interesting at the moment is that the Venture has some catching up to do with the CRB Index…relative to the CRB, the Venture is at the same level it was at the end of the Crash in 2008…that relative performance peaked at the end of 2010 and has recently flattened or “bottomed” out…

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

Important and strong support at 15 cents has held in Doubleview Capital (DBV, TSX-V) which is gearing up for more drilling at the Hat Property…despite the sharp recent drop from an all-time high of 40 cents, keep in mind – from a long-term technical perspective – that DBV merely corrected to an area of exceptional support, just above rising 200 and 300-day moving averages (SMA’s)…geologically, drilling to date at the Hat has demonstrated large tonnage potential in the newly-named Lisle Zone…the key now for DBV is to deliver some higher grades and the potential for that clearly exists within the recently recognized Sheslay “Red Stock”…each of DBV’s three drill programs so far have moved this project forward, so we expect that pattern to continue with the upcoming fourth round…

DBV is off half a penny at 19.5 cents on light volume through the first two hours of trading…

Edge Resources Inc. (EDE, TSX-V) Update

Edge Resources (EDE, TSX-V), an Alberta-Saskatchewan energy play we started following when it was in the high teens, continues to gather steam…if you haven’t performed your due diligence on this one, we suggest we do – and a good place to start would be the company web site where Edge has posted a short but very informative/effective corporate video…EDE last month broke out of a basing channel between 10 and 16 cents, thanks to a turnaround in the company’s performance including its first million-dollar revenue month in February…so improving fundamentals (production increases, much stronger revenue and cash flow, higher reserves) are at work here along with bullish overall technicals…this low cost producer is becoming self-funding on the basis of a successful multi-well drilling program, so EDE is quickly developing into a very compelling story…

A long-term downtrend line currently intersects with Fib. resistance at 25 cents…it’s only a question of when, not if, EDE will break out above the downtrend line in our view…this looks very promising for both the near-term and the second half of 2014…

Petromanas Energy Inc., (PMI, TSX-V) Updated Chart

Petromanas Energy (PMI, TSX-V) is unwinding from a technically overbought condition after reaching Fib. resistance at 38 cents (it actually got as high as 40 cents intra-day May 25)…keep an eye on the rising 50-day moving average (SMA) which currently coincides with Fib. support at 27 cents…the 50-day has been a closely supporting SMA for PMI since December…

PMI is up 1.5 cents at 34.5 cents as of 8:30 am Pacific…

Discovery Ventures Inc. (DVN, TSX-V) Update

The recent uptick in Discovery Ventures (DVN, TSX-V) comes as no surprise, given the company’s very robust Preliminary Economic Assessment (PEA) released last week (interesting numbers, check them out) for its WillaMAX Project in the heartland of southeast B.C.’s Slocan Mining District…with an agreement to acquire the modern 500-tonne-per-day MAX mine and mill facility, located 135 km from the Willa Au-Cu deposit, the high net present value (NPV) and internal rate of return (IRR) and low CAPEX of $12.8-million, DVN should be on every investor’s radar screen as there is some real value here in our view…we’re confident DVN will secure the debt financing it requires to put the Willa into production, especially given the very positive PEA…

Below is a 2.5-year DVN chart from John…note the increasing buy pressure and the bullish trend reversal that occurred early this year…we’ll have more on DVN and its potential with the Willa deposit and the MAX mine and mill facility next week…as of 8:30 am Pacific, DVN is off half a penny at 18 cents…

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