Gold has traded between $1,240 and $1,252 so far today to begin a new month…as of 7:15 am Pacific, the yellow metal is down $3 an ounce at $1,248…Silver is unchanged at $18.81…Copper has advanced 3 pennies to $3.18 on encouraging economic data out of China…Crude Oil is off slightly at $102.44 while the U.S. Dollar Index is up nearly one-tenth of a point at 80.50…
Gold fell 3.2% last week, finishing at a 4-month low, on an apparent easing of Ukraine-Russia tensions while both the Dow and the S&P 500 raced to new record highs…money managers cut their net-long Gold positions by 24% in the week to May 27, according to U.S. Commodity Futures Trading Commission data show, while short holdings surged 72%, the biggest gain in six months and probably a bullish contrarian sign though bullion seems destined over the immediate term to test a support band between $1,220 and $1,240 as John’s chart showed Saturday…resistance is around $1,260…a potential rate cut by the ECB later this week could be bearish for Gold (weakening the euro, strengthening the dollar), though it’s quite possible the market has already largely priced in that possibility given last week’s sell-off in Gold…
Today’s Equity Markets
Asia
Markets in China, Hong Kong and Taiwan were closed today for holidays…Japan’s Nikkei jumped to an 8-week high, gaining 304 points or 2% to close just 64 points below 15,000, thanks in part to positive PMI data out of China yesterday which showed the country’s factory activity expanded at its fastest pace in five months in May…
Europe
European markets are mixed in late trading overseas…data showed euro zone factories expanded at a weaker pace than predicted in May, as growth slowed in all nations apart from the Netherlands and Spain…Markit’s PMI for European manufacturing slowed to 52.2 in May, down from 53.4 in April and coming in lower than the earlier flash estimate of 52.5…traders are looking ahead to a meeting Thursday of the ECB’s Governing Council with the strong possibility that President Mario Draghi will announce new stimulus measures…economists are split on what policy action Draghi could unveil, with a cut to interest rates touted as well as some form of asset purchases – either in the public or private sector…
North America
The Dow is down 18 points as of 7:15 am Pacific…some weaker-than-expected economic data just out…the ISM manufacturing index came in at 53.2 (vs. 55.5 expected) while construction spending was up 0.2% (vs. 0.6% expected)…the important non-farm payrolls number will be released Friday by the Labor Department…on the whole, economists expect to see payrolls grow by 220,000, according to Reuters, which is about the average of the gains seen over the course of 2014…
The TSX is up 45 points while the Venture has fallen 3 points to 981…
Venture-Gold Comparative Chart
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 has been testing a very strong support band in the immediate vicinity of 970 which was critical resistance for many months last year…
Below is a fascinating new 10-year monthly chart from John that 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…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…
Updated Venture 3-Year Weekly Chart
Below is John’s latest 3-year weekly Venture chart that has proven to be such a useful guide since last fall…RSI(14) is finding support around 50%, and the RSI(14) uptrend remains intact…buy pressure continues to be steady, and the Venture’s out-performance vs. Gold is strengthening…the Venture’s support band stretches from the 940’s into the 980’s…we could see some more “churning” in this market over the next few weeks, but we do expect a decisive move to the upside by month-end/beginning of July to set the stage for a strong Q3…
Garibaldi Resources Corp. (GGI, TSX-V) Update, Silver Eagle Discovery Part 2 Interview
Importantly, there are some (albeit not enough) companies in the exploration sector who have been showing creativity in terms of the use of technology in the identification of potential new deposits, and one of those is certainly Garibaldi Resources Corp. (GGI, TSX-V) which was the first junior to use Hyperspectral Remote Sensing Technology on a large scale in Mexico (existing deposits were flown along with under-explored areas, allowing for the creation of a proprietary database)…this led to a big pay-off for GGI with the Temoris option which was sold to Paramount Gold and Silver (PZG, TSX & AMEX), filling GGI’s coffers to such an extent that the company hasn’t had to carry out a financing since early 2009…
This technology also played a key role in GGI’s latest discovery – bonanza grade Silver in the very first hole drilled at the Rodadero North Project in central Sonora State at the Silver Eagle target, as reported May 14…
“All of these (signatures at Rodadero) lit up like a light bulb,” stated GGI President Steve Regoci, in reference to the Hyperspectral data obtained from this project…significantly, mineralogy signatures at Rodadero picked up by the Hyperspectral (it reads from the air like a bar code at the grocery store) have been confirmed by boots on the ground through extensive mapping and sampling – hence we’re very confident that SE-14-01 (65 oz/ton Ag over 7 meters near-surface) was not a one-hole wonder…
“The targets that we have at Rodadero, including Silver Eagle, have been getting some exceptionally high grade numbers at surface from trenching and chip sampling. It was very, very exciting…to actually find those kind of numbers in drill core over that kind of width,” Regoci stated in a recent interview with Agoracom…
Below is Part 2 of our video interview with Regoci as he talks about GGI’s technological advantage in Mexico and how it applies specifically to Rodadero…note also in the pictures from Rodadero North the road access and electricity (a power line runs right through the project)…there’s also a nearby water source…
Click on the arrow below to view this two-and-a-half-minute piece…
Balmoral Resources Ltd. (BAR, TSX) Updated Chart
This chart for Balmoral Resources (BAR, TSX), a company we like a lot for fundamental reasons, underscores the importance of paying attention to Fib. levels…John’s recent measured Fib. resistance for BAR was $1.29…on May 20, the stock hit an intra-day high of $1.30 and has since retreated…this 1-year weekly chart shows overbought RSI(14) conditions, so expect further consolidation this month and a possible test of support around 90 cents or the rising 50-day moving SMA…BAR is unchanged at $1.10 through the first 45 minutes of trading…
Pilot Gold Inc. (PLG, TSX) Updated Chart
Bargain hunters should also keep an eye this month on Pilot Gold (PLG, TSX) which recently raised $20 in a bought deal at $1.53 after the company announced more very encouraging high-grade results from its promising Kinsley Mountain Western Flank target in Nevada…
Technically, a turning point for PLG came early this year when the stock broke above a downtrend line as you can see on this 1.5-year weekly chart…after climbing to a new 52-week high of $1.75 on Kinsley results March 12, and then announcing on that same day a $20 million financing at $1.53, PLG has gradually retraced and closed Friday at $1.24…a strong support band exists between 94 cents and the 200-day SMA at $1.15…PLG is up 4 cents at $1.28 as of 7:15 am Pacific…
TomaGold Corp. (LOT, TSX-V)
A reader requested a chart for TomaGold Corp. (LOT, TSX-V) which has not been able to break above its long-term downtrend line…whether support can hold at 12.5 cents is the big question – momentum is not currently in LOT’s favor, at least as far as its chart is concerned…LOT is off a penny at 12 cents through the first 45 minutes of trading…
Silver Short-Term Chart
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, recovered to 63%, and is now back down to 13%…SS appears to be forming a bottoming pattern, but the potential duration of this pattern is uncertain…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
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…
Note: Both John and Jon hold share positions in GGI.
