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Gold is under pressure today, falling below both its 50 and 100-day moving averages (SMA’s)…as of 8:40 am Pacific, bullion is down $13 an ounce at $1,291…Silver is off 44 cents at $20.47…as per our 6-month Silver chart Monday, a normal retracement to Fib. support anywhere between $19.50 and $20.33 is a reasonable expectation (nothing to panic about)…Copper has climbed 6 cents to $3.25, its highest level in a week, following encouraging economic data out of China and the euro zone…Crude Oil has slipped 47 cents to $102.65 while the U.S. Dollar Index is up slightly to 80.86…

A slew of large and mid-cap Gold miners are set to release their full financial results next week…it’ll be interesting to see how effective they have been at reducing costs and what average all-in sustaining costs are at right now and where they’re headed…

As John’s 6-month Gold chart showed last weekend, Gold has strong Fib. support in the $1,280’s…geopolitical tensions should help limit any downside moves such as we’re seeing today…

Freeport McMoran Inc. (FCX, NYSE), one of the world’s top Copper producers, yesterday reported net income of $482 million (46 cents per share) during the second quarter of 2014, matching exactly its net income for the same period in 2013 (though net income per share was down from 49 cents)…Freeport says it’s aggressively pursuing increased Copper production in the U.S., specifically Arizona and New Mexico, due to easier labor laws and more reliable environmental and permitting regulations…the centerpiece of expansion efforts in the U.S. is Morenci, a sprawling 65,000-acre complex in the dusty hills of eastern Arizona on the border with New Mexico…an expanded mill started producing in the second quarter and full rates of production are expected by the end of 2014, Freeport said…Morenci is expected to produce almost a billion pounds of copper a year by 2015, making it one of the world’s biggest mines, up from 564 million pounds in 2013…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained an impressive 27 points overnight, extending gains into a fifth day, to close at a three-month high of 2105…China’s manufacturing rose in July to its highest level in 18 months, in a sign that mini-stimulus measures to shore up growth in the world’s second largest economy are taking hold…the preliminary HSBC PMI rose to 52.0 in July from 50.7, the highest reading since January 2013…the report said overall new orders and new export orders in China’s giant manufacturing industry rose faster in July than the month before…all other categories, including employment and output prices, also improved.  “The strength of this morning’s data from China and the euro zone offers some encouragement that there is some momentum building for the global economy at the start of the third quarter,” Mark Wall, European economist at Deutsche Bank, told CNBC this morning.

Japan’s Nikkei lost 44 points overnight…

Europe

European markets were up modestly today…a closely watched survey suggests economic growth in the 18-country euro zone picked up during July despite ongoing concerns over France, the currency bloc’s second-largest economy…financial information company Markit said today that its PMI rose to a three-month high of 54.0 in July from 52.8 in June…numbers above 50, of course, indicate expansion…much of the increase was due to ongoing economic strength in Germany, Europe’s largest economy…however, Markit also found businesses in the “periphery” countries outside of Germany and France expanding at their fastest pace since 2007…France was the laggard because of its stagnant services sector…overall, Markit says the euro zone is growing at a 0.4% tick, which equates to an annualized 1.6% rate…

North America

The Dow is up 20 points as of 8:40 am Pacific…first-time weekly jobless claims in the U.S. fell by 19,000 to a seasonally adjusted 284,000 during the week to Saturday, the Labor Department said this morning…that’s the lowest level of intial claims since February, 2006…

Meanwhile, some other economic data wasn’t so positive…sales of new U.S. single-family homes fell sharply in June and the prior month’s data was revised to show less robust growth, suggesting the housing market continues to struggle to regain momentum…the Commerce Department said today that that sales dropped 8.1%, the largest decline since July 2013…

The TSX is up another 21 points while the Venture is off 3 points to 1009…

TSX Updated 5-Year Weekly Chart

The TSX continued its string of record-high closes yesterday, finishing at 15394…this 5-year weekly chart from John shows the impressive upsloping channel the TSX has been in since the summer of last year with the continuously rising 50-day SMA acting as a close supporting moving average…

RSI(14) is currently at 75%, in overbought territory, but could remain O/B for a while yet…it’s following an uptrend line established last year…the question now is, will the TSX break out above the upsloping channel?…a squeeze is also occurring between the top of the channel and the 50-day SMA…

North Arrow Minerals (NAR, TSX-V) Update

North Arrow Minerals (NAR, TSX-V) has a superb management team, a strong balance sheet, and some exciting discovery opportunities in the diamond sector which is why we’ve been excited about this play since it really started to come to life late last year…

Last week, North Arrow announced announced that mobilization was under way for the commencement of a 1,000 m drill program at the Redemption Project in the Northwest Territories…the property is located in the Lac de Gras region, approximately 30 km southwest of, and 50 km west of, the Ekati and Diavik diamond mines, respectively…the drill program is expected to run through to the middle of August…a follow-up winter/spring program will be required to test ice-based targets…

As stated in the news release, the drill targets include various combinations of gravity, magnetic and electromagnetic geophysical responses that have been further prioritized based on their location with respect to the termination of the South Coppermine kimberlite indicator mineral (KIM) train, which represents one of the last well-defined and unsourced KIM trains in the Lac de Gras region…the discovery of even a single kimberlite from any of these top-priority targets would upgrade a number of the remaining prospective targets within the Redemption Project…

Technically, the key level to watch on NAR is the low 80’s – a breakout above this resistance would be significant…as you can see in this 1-year weekly chart, NAR has been trading essentially within a horizontal flag for the past eight months or so…it’s off a nickel at 75 cents as of 8:40 am Pacific…

Arctic Star Development Corp. (ADD, TSX-V)

North Arrow will be drilling Redemption under an option agreement with Arctic Star Development (ADD, TSX-V)…NAR can earn a 55% interest in the project by incurring $5-million in exploration expenditures prior to July 1, 2017…Arctic Star has performed well lately, climbing from a low of 11 cents July 14 to a fresh 52-week high of 19.5 cents yesterday…

ADD has completed the first tranche of a financing (a non-brokered PP for up to $1.3 million)…some of the proceeds are intended for a potential new project in Canada, the company stated…ADD is off a penny at 18.5 cents as of 8:40 am Pacific, but the technicals are quite encouraging – ADD is worthy of being on our readers’ radar screens with new support in the mid-teens…below is a 2-year weekly chart…as always, perform your own due diligence…

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

Not surprisingly, given some overbought technical conditions that emerged in late June as John pointed out, North American Nickel (NAN, TSX-V) has backed off from its all-time high of 65 cents to a support band between 45 and 50 cents…NAN started drilling its very promising 100%-owned Maniitsoq Nickel-Copper-PGE sulphide project in southwest Greenland in mid-June…

Technically, for the near-term at least, it’ll be important for NAN to hold support at the 45-cent level…somewhat disconcerting is the fact that NAN has broken below its 50-day SMA for the first time this year, and the 20-day has ended a months-long bullish pattern by reversing to the downside…what we’re witnessing now appears to be a healthy correction within a primary “big picture” uptrend…the long-term SMA’s (100, 200, 300) continue to rise…

This 2.5-year weekly chart shows the RSI(14) has unwound to 56%…chart and Fib. support levels are outlined…NAN closed at 47 cents yesterday and has yet to trade today as of 8:40 am Pacific…

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

Gold has traded between $1,304 and $1,312 so far today…as of 8:15 am Pacific, bullion is down $2 an ounce at $1,305…Silver is off 2 pennies to $20.95…Copper is unchanged at $3.19…Crude Oil is up 58 cents to $102.97 while the U.S. Dollar Index is flat at 80.80…

Geopolitical tensions continue to help keep Gold above $,1300 an ounce (its 100-day moving average is $1,304)…pro-Russian separatists have shot down two Ukrainian fighter jets over a town close to where Malaysia Airlines Flight 17 crashed last week, a Ukrainian defense ministry spokesman said, according to news reports overnight…two SU-25 planes were brought down near the town of Saur-Mogila, which sits close to the Russian border and is 20 km from Torez, where the civilian jet was brought down last Thursday, the spokesman said…Russia, meanwhile, is still reportedly massing troops on the Ukraine border while Fox News reported last night that senior U.S. intelligence officials have confirmed that the separatists are being trained in air defense systems at a Russian training facility in Rostov, near the Ukraine border…the officials also said that Russia has continued to help the rebels after the downing of the Malaysian civilian jetliner, providing additional tanks and rocket launchers…

Data from the China Gold Association confirms that physical demand in the country has softened from a year ago, according to UBS…the association reports that Gold consumption fell 19% year-on-year to 569.45 metric tons in the first half…Gold bar demand fell 62% to 105.6 tons while jewelry demand rose 11% to 426.2 tons. “These numbers aren’t surprising,” UBS says. “The H1 decline broadly fits into our own physical observations. Last year’s price decline clearly prompted a rush for physical bars, and the largely range-bound price action this year has not encouraged buyers.”

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 3 points overnight to finish at a new one-month high for the second straight day, underpinned by a rally amid financials…Japan’s Nikkei average, however, erased earlier gains as investors booked profits after yesterday’s nearly 1% rally…investors showed little reaction to comments by central bank deputy governor Hiroshi Nakaso, who said that Japan would likely achieve 2% inflation around fiscal 2015…

Europe

European markets were up slightly today…not surprisingly, and despite U.S. and Canadian hopes, the EU – in a worrisome sign of appeasement to Vladimir Putin – failed to announce tough sanctions against Russia yesterday in response to its continued destabilization of Ukraine and its complicit involvement in the downing of the Malaysian airliner…the EU did announce it would widen the list of individuals and companies targeted by asset freezes and visa bans…

The Bank of England’s minutes from its July 10 meeting were released today…all nine members of the bank’s Monetary Policy Committee voted to keep the benchmark rate at 0.5% and keep its $640 billion asset-purchase program unchanged…

North America

The Dow is down 9 points as of 8:15 am Pacific...Apple posted profits late yesterday that beat expectations…Microsoft, meanwhile, reported revenues that were better than expected though its earnings per share were lower…

The TSX has gained 65 points while the Venture is up a point at 1012 through the first 75 minutes of trading…

New Venture Chart Confirms Inherent Strength

Below is a new Venture chart from John that provides some fresh insight into the inherent strength of this market, and how it’s poised to continue its overall uptrend this quarter…

This chart may seem complicated to some, but there are a couple of simple and key “takeaways”…

First, the volume in advancing issues is on the rise once again after a recent dip…note the overall uptrend in this indicator since the second quarter of last year…

Second, pay particular attention to the ROC (Rate of Change indicator)…this indicator is momentum in its purest form…it measures the percentage increase or decrease in price over a given period of time…think of it as the rise (price change) over the run (time)…in general, when prices are rising, there is strength in the market, as long as the ROC remains positive…conversely, prices are in a downtrend when the ROC is negative…ROC expands into positive territory as an advance accelerates, while it dives deeper into negative territory as a decline accelerates…

There is no upward boundary on the ROC…the sky is the limit for an advance…there is, however, a downside limit…securities can only decline 100%, which would be to zero…even with these lopsided boundaries, ROC produces identifiable extremes that signal overbought and oversold conditions…

What’s particularly interesting at the moment is that the ROC on this monthly chart going back to 2005 (check the circled areas in blue at the top) is accelerating rapidly – at 96%, it’s well below levels attained in previous years but it has broken out above resistance and a sharp rise is under way…this is very bullish – more evidence that the Venture is gearing up for a big move though it may not feel that way to some investors at the moment…patience is the key, and remember that the trend is your friend…

Below is a shorter-term version of the above…again, the ROC is giving very positive signals as to the underlining health of this market, and the volume in advancing issues has picked up considerably this month…

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 is now under way as announced at the beginning of last week…the series of drill targets represent more than three kilometres of potential Gold-Silver-bearing structures within the tens of kilometres of potential structures which have been identified within this prolific district…

Earlier this month, CXB provided an encouraging update with regard to its Minnesota Gold Project JV in Nicaragua with B2Gold Corp. (BTO, TSX)…

Technically, John recently noted how CXB broke out above a 2-year downtrend channel – a very bullish development…RSI(14) at 62% continues to climb an uptrend line…sure enough, CXB has held up well and has traded between 7 and 8 cents over the last 10 trading sessions…it’s unchanged at 7 cents as of 8:15 am Pacific…

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

Canada Zinc Metals (CZX, TSX) had a strong move at the beginning of this year, became technically overbought and then retreated in very normal fashion to the Fib. 38.2% level which was also right around the rising 300-day moving average (SMA)…

CZX is yet another very interesting B.C. play…the company is a dominant landholder in the Kechika Trough (northeastern B.C.) featuring several known Zinc-Lead-Silver deposits including the company’s Cardiac Creek deposit which has a NI-43-101 resource…drilling commenced just over a month ago and the drill program was recently expanded as reported by CZX July 7…it’s expected to conclude by the end of the month…

CZX jumped 8.5 cents yesterday to close at 44.5 cents and is up another penny at 45.5 cents as of 8:15 am Pacific…

Constantine Metal Resources Ltd. (CEM, TSX-V)

Interesting drill results yesterday from Constantine Metals (CEM, TSX-V) – hole CMR14-54 returned 22.1 m grading 2.48% Cu, 4% Zn, 24 g/t Ag and 0.39 g/t Au in an intersection that represents a major expansion of the zone to depth at the company’s Palmer VMS project in Alaska…worth keeping an eye on as their 10,000 m drill program continues…CEM gained a nickel yesterday to close at 19 cents where it’s trading as of 8:15 am Pacific…

The current drilling is part of a $6.2-million (U.S.) budget for 2014 financed by partner Dowa Metals & Mining Co. Ltd. of Japan…Dowa is in the second year of an option agreement in which it can earn 49% in the Palmer project by making aggregate expenditures of $22-million (U.S.) over four years…

Below is a 2.5-year weekly chart from John…CEM is trading at levels not since seen 2011, a very bullish sign…there is measured Fib. resistance at 21 cents, followed by 31 cents (not shown on this chart)…

Phoenix Gold Resources Corp. (PXA, TSX-V)

Those who were on this one early have been very well as Phoenix Gold (PXA, TSX-V) has tripled over the last 12 sessions, and on decent volume…speculation and momentum have been carrying it higher after the company announced the start of a drill program at its Plumas Property at Battle Mountain, Nevada…Phoenix, which started trading in April after completing a qualifying transaction, stated that Plumas is an outcropping high-grade Gold mineralized system that is being drill-tested for the first time…

Below is a chart as requested by some readers…the technicals show that this still has room to advance but be careful, of course, in chasing stocks that have tripled in less than a month and, as always, perform your own due diligence…PXA climbed as high as 11 cents in early trading but is now down half a penny at 9 cents as of 8:15 am Pacific…

 Note:  John, Terry and Jon do not hold share positions in CXB, CZX, CEM or PXA.

Gold has bounced between $1,301 and $1,317 so far today…as of 8:15 am Pacific, bullion is down $6 an ounce at $1,306…Silver is off 4 cents at $20.89…Copper is up another penny to $3.20…Crude Oil is down 22 cents at $104.37 while the U.S. Dollar Index has climbed nearly one-quarter of a point to 80.78 (see updated Dollar Index chart at bottom of today’s edition)…

Holdings of the SPDR Gold Trust, the world’s largest Gold-backed ETF, fell 1.8 tonnes to 803.34 tonnes on Monday…

Nice find…more than 13,500 Gold and Silver coins have been recovered off the coast of South Carolina as Odyssey Marine Exploration (OMEX, NYSE) continues its search of the SS Central America shipwreck site…according to historical records, the SS Central America was caught in a hurricane on Sept. 12, 1857 and sank 160 miles off the coast of South Carolina…the ship was carrying 425 passengers along with a large consignment of Gold from ingots to freshly minted coins…

Investors are buying metals from Zinc to Aluminum at the fastest pace since 2009, betting demand gains will tighten supply…ETF’s in the U.S. backed by base metals have taken in new money this year equal to nearly 20% of their market capitalization, more than any commodity group, data compiled by Bloomberg show…Zinc is at a 2-year high while Aluminum is at its highest level since February 2013…TD Securities says it sees the Zinc and Lead markets as those most likely in the base-metals complex to experience issues with mine supply growth in the upcoming years. “Large-scale mining project losses will be replaced by smaller mining projects, and at a rate that struggles to keep pace with the increasing consumption demands of a growing U.S. and China,” TDS stated. “Therefore, the deficit situations in these metals, along with current declining above-ground inventories, will be a boon to the price action.”

Hedge funds are the most bullish on Copper in at least eight years, after spending March and most of April betting prices would drop…the Bloomberg Industrial Metals Subindex is heading for its biggest annual gain since 2010…the biggest gains among 22 raw materials tracked by the Bloomberg Commodity Index since March have been Nickel, Zinc and Aluminum…

Today’s Equity Markets

Asia

China’s Shanghai Composite reached its highest level since June 16, climbing 21 points overnight to close at 2075 as geopolitical concerns eased…the market shook off an estimate from Standard Chartered Bank that China’s debt has soared to two-and-a half-times its economy, highlighting the difficulties Beijing faces in balancing growth with the risk of bubbles forming in its economy…total financial credit has surged to 251% of GDP from 147% at the end of 2008, the bank said.  “The economy will continue to leverage up, and the market will remain concerned,” said Stephen Green, chief China economist at Standard Chartered…

Gold has traded between $1,309 and $1,319 so far today…as of 8:30 am Pacific, bullion is unchanged at $1,311…Silver is up 2 cents at $20.92…Copper has added 2 pennies to $3.18…Crude Oil has gained 82 cents to $103.95 while the U.S. Dollar Index is slightly higher at 80.56…

Holdings in SPDR Gold Trust, the world’s largest Gold ETF, rose 1.8 tonnes to 805.14 tonnes on Friday…they also stand more than 1% higher for the year overall after 2013’s sharp decline…the drying up of ETF selling is a major factor in Gold holding up better than most analysts expected…

Morgan Stanley characterizes Copper as the “most compelling metal” for the second half of 2014…the firm says the outlook has improved in recent weeks, with demand in Europe and the U.S. picking up pace against a backdrop of re-accelerating industrial activity…

OPEC said Friday that its Crude production and market share fell last year as a boom in U.S. shale dents demand for its Oil…in an annual statistical report, OPEC said its collective Crude production was down 2.5% during 2013 on an annual basis…its share of total global production in 2013 averaged 43.4%, down from 44.6% in 2012…global Oil production and demand rose last year but was largely captured by OPEC’s rivals, notably a rise in non-conventional U.S. production…the group said earlier this month that demand for its Oil will continue to decline next year, when it’s likely to fall by 300,000 barrels a day…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 5 points overnight to close at 2054…Japan was closed for a public holiday…

There are some positive indications from China that support global growth prospects…Chinese fiscal spending rose 26% in June, year-over-year…meanwhile, in a sign that the central government is attempting to stimulate the economy, Chinese banks lent out about 20% more than expected in June…Chinese economic data in July beat many projections from economists – most importantly was the surge in financing…money supply grew 14.7% against the 13.6% estimate and aggregate financing was 1.97 trillion yuan against a 1.43 trillion estimate…the higher than expected growth in financing may correlate into stronger demand for Copper due to economic expansion…

Europe

European markets were down modestly today with Ukraine in focus…European leaders threatened harsher sanctions against Russia over the weekend in the wake of the downing of Malaysian Airlines Flight MH17, departing from initially muted tones in reacting to the disaster but leaving uncertainty over how quickly they would be able to make good on their threats…EU leaders meet tomorrow in Brussels…the evidence is compelling that pro-Russian separatists, with assistance from Russian military personnel, shot down the plane, by mistake, with a Buk-M1 surface-to-air missile launcher from eastern Ukraine…not only is Russia complicit in this horrible act, but Vladimir Putin is cranking up his propaganda machine with the Kremlin brazenly asserting that it bears no responsibility whatsoever for how a civilian airliner and 298 bodies ended up strewn across eastern Ukraine…in addition, the handling of the crash scene – with rebels also preventing full access by investigators – has been disgusting to say the least…

British Prime Minister David Cameron didn’t mince words on who is to blame…in an op-ed in The Sunday Times, he called the plane crash and its aftermath “an outrage made in Moscow”…Putin fired back with a video statement posted on the Kremlin’s official website early today, arguing that his country has been pushing for peace in Ukraine…he criticized attempts to “politicize” the crisis…

The Wall Street Journal reported over the weekend that U.S. officials suspect that Russia supplied the rebels with multiple SA-11 anti-aircraft systems by smuggling them into eastern Ukraine with other military equipment, including tanks…WSJ also reported that officials believe the systems were moved back into Russia following Thursday’s crash, buttressing speculation that the Russians were attempting to remove evidence of their involvement in the tragedy…

U.S. Secretary of State John Kerry, speaking on news shows yesterday, said it was clear that Russia “supports the separatists, supplies the separatists, encourages the separatists, trains the separatists.”

Not surprisingly, Russia is getting some support from China…since the weekend, Chinese media have been highly critical of the approach of Western nations to this crisis, saying in editorials that these countries have been too quick to point fingers at Moscow-backed rebels and implicate Russia for escalating violence…

North America

The Dow is off its lows but down 84 points as of 8:30 am Pacific…the Consumer Price Index (CPI) is scheduled for release tomorrow, while it’s another important week for Q2 earnings…companies reporting this week include Haliburton, Apple, Biogen Idec, Facebook and Starbucks…

The TSX has shed 41 points through the first two hours of trading while the Venture has fallen 4 points to 1008…Condor Resources (CN, TSX-V) is off 3 pennies at 11 cents after the release of assay results from hole SD-012 at the company’s Soledad Project in Peru (under option to Mariana Resources Ltd.)…SDH-012 intersected 161 metres of mineralized quartz-tourmaline breccia (from 87 m to 248 m) that averaged 2.1 g/t AuEq (1.3 g/t Au, 13 g/t Ag, and 0.38% Cu) – encouraging, but those results and the lack of immediate additional drilling will chase away the speculators…Discovery Ventures (DVN, TSX-V) continues to look very solid and is up a penny at 25 cents on volume of more than 1 million shares as of 8:30 am Pacific…John will have an updated DVN chart tomorrow…

TSX Gold Index Relative To Silver

Gold/Silver stock investors have pplety of reasons for encouragement as this quarter progresses, given the behavior of the TSX Gold Index and the Venture Exchange…

Below is a new chart (1-year weekly) from John that shows the TSX Gold Index relative to the price of Silver…when the trend is bullish, like it is now, stock prices are outperforming the price of Silver…at present, the chart shows the start of Wave #3, usually the most powerful wave, with an end at a ratio of 12.35 (29% higher than Friday’s close)…RSI(14) is moving up from a bullish “W”, and note the rising MA(40) which is the 200-day SMA…

This chart doesn’t tell us what the TSX Gold Index will do today, tomorrow or later this week, but it serves as further confirmation that an overall bullish pattern is in place and stocks are likely to outperform metal (Gold-Silver) prices…

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

Highbank Resources (HBK, TSX-V) hit a new 7-year high of 38 cents this morning after announcing late Friday that it’s proceeding with the closing of the second tranche ($1.3-million) of a $4 million convertible debenture financing with “expressions of interest” for an additional $500,000…the company closed the first tranche of $2.7 million on April 15…the financing is going toward continued development of the Swamp Point North aggregate project on tidewater south of Stewart…

HBK has more than doubled since we introduced it to our readers in March after the company received its NOW permit approval for Swamp Point North from the Ministry of Mines…the initial breakout above long-term resistance at 15 cents was a key technical event along with the recent push through resistance at 20 cents…this is why technical analysis, combined with an understanding of fundamental factors impacting a company (positively or negatively), can be so useful…

John’s updated HBK 10-year chart shows Fib. measured resistance at 35 cents and 43 cents…after climbing as high as 38 cents in early trading, HBK is up a penny at 34 cents as of 8:30 am Pacific…

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

Garibaldi Resources (GGI, TSX-V) remains on a powerful trajectory, technically and fundamentally…despite a fabulous chart, what impresses us the most about GGI – and why we believe it’ll be a summer star on the Venture – is its highly compelling combination of fundamental factors related to management, share structure, and immediate/near-term discovery opportunities at no less than three different properties from Mexico to northwest British Columbia…

The really “sweet season” has now arrived for Garibaldi with the Sheslay district getting ready to heat up while projects in Mexico continue to gain momentum…in such a scenario, with the wind at its back in terms of a primary Venture uptrend, GGI is incredibly well-positioned in our view to reward shareholders handsomely (again) this quarter…Garibaldi gained 46% in Q1 and another 37% in Q2…it’s up 19% so far in Q3…the trend, as they say, is your friend…

Given the proven effectiveness of the company’s hyperspectral remote sensing technology, we’re anticipating a significant breakthrough at GGI’s Rodadero Project in central Sonora State, Mexico, where more drill results are pending…the first hole at the Silver Eagle target returned exceptionally high grades over a 7-meter intersection…if GGI can show that a well-mineralized near-surface system indeed exists at Silver Eagle – the first of only 8 targets tested at Rodadero – then the potential scale of Rodadero will really start to come into play…hyperspectral data, surface sampling and mapping have revealed intriguing targets over a NE-SW trending distance of 10 km…

Isaac Newton’s First Law of Motion is that an object in motion stays in motion until acted upon by an outside force…this concept can certainly be applied to the stock market…Garibaldi has been hugely successful because it has managed to stay in motion – on the ground and in the market – and that motion is accelerating with no outside force in sight to stop it…that puts GGI in an elite category…

Garibaldi continues to exhibit the perfect combination of characteristics that are found only in a small percentage of publicly traded junior resource companies:

• Superb management and geological group with focus and determination
• Outstanding properties/”blue sky” potential
• Proven record of success
• Financial strength
• Highly favorable share structure
• Market awareness and the ability to communicate

Yes, all of the above qualities are rarely found in a junior exploration company…these features separate the wheat from the chaff in this business, and investors who understand that point can build incredible wealth by selecting the right company…

This sector is littered with junk – poor management, share structures that have been obliterated, etc. – but there are nonetheless exceptional opportunities at the moment.  GGI is one of them…its success on the ground is accelerating…importantly, the company has also developed a brand and continues to deliver on that brand…

10-Year Monthly GGI Chart

A picture tells a thousand words and so does this long-term monthly chart…GGI is still significantly below measured Fib. resistance levels after a confirmed breakout above previous Fib. resistance at 25 cents…RSI(14) is at just 65% (plenty of room to move higher) and continues to climb an uptrend line…

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

We’ve been tracking Pine Cliff Energy (PNE, TSX-V) for more than a year now, and the company continues to progress with increasing production and record cash flow…Q1 earnings were $3 million on production of 6,276 barrels of Oil equivalent per day…last week, PNE hit a new all-time high after announcing that it has entered into a binding agreement to acquire certain shallow natural gas assets in Alberta and Southern Saskatchewan from a senior oil and gas producer for cash consideration of $100-million…the deal is expected to be financed by a combination of working capital and debt…

Below is a weekly PNE chart going back to mid-2012…note how the share price has been trading in an upsloping channel supported by a consistently rising 200-day moving average (SMA)…this bodes very well for the second half of 2014…PNE is off a nickel at $1.68 as of 8:30 am Pacific…

Silver Short-Term Chart Update 

This 6-month daily chart shows how extreme RSI(2) conditions persisted over nearly two weeks in June…RSI(2) is currently at a much more modest 39% but could still unwind a little more…chart support exists at $20.75 while John has also highlighted three Fib. support (retracement) levels – $20.33, $20.08 and $19.82…

Silver Long-Term Chart Update

Silver has broken out above one important downtrend line but remains susceptible to a minor pullback given temporarily overbought conditions…RSI(2), for example, closed last week at 75% with the metal still marginally below strong resistance around $22…Fib. support levels on the 6-month daily chart range from $19.50 to $20.33, so a retrace into that range is certainly possible…

Note how the SS is moving up from a low bullish “W” while the ADX indicator shows the growing potential for a bullish +DI/-DI crossover this quarter…bottom line – Silver is looking very attractive…

Note:  John and Jon both hold share positions in GGI.  Jon also holds a share position in DVN.

TSX Venture Exchange and Gold

The Venture continues to follow a predictable path, testing exceptionally strong support in an ideal “accumulation zone” in advance of what the technical picture is showing will be a very robust third quarter.  The Index fell 11 points last week to close at 1012, but held above 1000 where superb Fib. and chart support are limiting any pullbacks within this confirmed primary uptrend.

What’s interesting about this updated 6-month daily chart from John is the bullish “W” that has formed in the RSI(14) just below the 50% level – this is typically a highly reliable near-term reversal pattern, especially when it appears just after a successful test of strong technical support.  This is also a repeat of what occurred in late May when an RSI “W” formed after the Index revisited the 970 level.  What’s also notable is the pattern of higher Venture lows since early February.

The table is being set for a breakout this quarter above 1050, followed by an immediate acceleration of this bullish phase.

Venture 5-Year Weekly Chart

RSI(14) on this 5-year weekly chart (with Gold comparative) continues to follow an uptrend line which illustrates how the bulls are now firmly in control.  In addition, you’ll note that the 50% RSI level has held as support throughout 2014 after serving as resistance since mid-2011 (major trend change).  A modestly overbought condition in the RSI that emerged in March when the Index hit 1050 gradually unwound to that new support level.

The Q2 decline that took the Venture to massive 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 gave up on this market during the 8% retreat from 1050 made a profound miscalculation.  Astute investors have a great chance to cash in big over the next few months in particular before the possibility of a fourth quarter correction.

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

What a week for Gold.  After coming within just a few dollars of chart resistance at $1,350 at the end of the previous week, bullion got slammed right out of the gate Monday morning and that weakness extended into Tuesday, pulling the metal slightly below $1,300.  A couple of mysterious, large sell orders (manipulation attempts?) hit the market, but Gold showed resilience.  Particularly interesting is the fact that ETF investors rushed to buy as Gold dropped on Monday with assets in the SPDR Gold Trust jumping 8.7 tonnes to 808.7 tonnes – the largest daily gain since August 2011. Commerzbank analysts stated that “ETF investors clearly took advantage of the reduced price of Gold as an attractive opportunity to buy.”  Bullion strengthened as the week progressed, aided obviously by rising geopolitical tensions including, of course, the shooting down of a Malaysian airliner above Ukraine by Russian-supported rebels.   

A headline in today’s National Post said so much in so few words:

“Ukraine, Iraq, Syria, Gaza – Barack Obama, Where Are You When The World Is In Trouble?”

“Obama,” Adrian Humphreys wrote, “is increasingly facing questions on whether the American President is failing on the global stage as restive corners of the world threaten to implode.”

A United States withdrawing from the world stage – as it has during the Obama presidency – doesn’t make the world a safer place.  In fact, just the opposite is true.  As investors, one of the big “themes” we’ll have to deal with through the remainder of Obama’s term is an increasingly dangerous world with no Ronald Reagan or Margaret Thatcher to keep evil in check.  At the very least, these global wildfires will put a floor under the price of Gold, and could in fact trigger an unexpectedly big move to the upside.

Technically, Gold broke below a symmetrical triangle in late May and then recovered immediately with a very powerful June – that kind of action should have bears concerned, especially since June traditionally has been Gold’s worst month of the year.

Solid support for bullion exists from the $1,280’s to $1,300 while a band of important resistance stretches from $1,320 to $1,330.  If Gold can sustain a move above $1,330, look out.

For the week, bullion closed $28 lower at $1,311.

Silver fell 56 cents last week to finish at $20.89.  Copper lost 8 pennies to $3.17.  Crude Oil gained $2.30 a barrel to $103.13 while the U.S. Dollar Index added one-third of a point to 80.50.

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 eased modestly today, trading between $1,304 and $1,317 following yesterday’s strong rally fueled by the tragic downing of a Malaysian airliner over eastern Ukraine…while all the facts surrounding this incident are not yet known, early evidence strongly suggests that Russian-supported separatists shot down with a surface-to-air missile what they may have mistakenly believed was a Ukrainian cargo plane…this is highly problematic for Russian President Vladimir Putin, whose fingerprints are all over the destabilization of Ukraine, and clearly heightens tensions in the area and between the West and Russia…

Meanwhile, Israeli Prime Minister Benjamin Netanyahu ordered the military today to prepare for a “significant expansion” of its ground operation against Gaza militants…Netanyahu said the military’s primary goal would be to destroy underground tunnels used by Hamas to attack the Jewish State…the announcement came hours after Israeli ground troops and tanks struck more than 100 terror targets in Israel’s first major ground offensive in Gaza in just over five years…

Our words on Monday are worth repeating – geopolitical hotspots and a current U.S. President more incapable at handling foreign policy than Jimmy Carter will help underpin support for Gold in the months ahead, and indeed could be a driver for higher prices…U.S. Senator and former Presidential candidate John McCain (R., Ariz.), in a recent CNN interview, said the world is “in greater turmoil than at any time in my lifetime.” Those are significant words from McCain who has always shown a strong pulse for global threats…

As Wall Street Journal reporters Jay Solomon and Carl E. Lee wrote last weekend, “A convergence of security crises is playing out around the globe, from the Palestinian territories and Iraq to Ukraine and the South China Sea, posing a serious challenge to President Barack Obama’s foreign policy and reflecting a world in which U.S. global power seems increasingly tenuous. The breadth of global instability now unfolding hasn’t been seen since the late 1970s, U.S. security strategists say, when the Soviet Union invaded Afghanistan, revolutionary Islamists took power in Iran, and Southeast Asia was reeling in the wake of the U.S. exit from Vietnam.”  Will this have implications for Gold and Oil? – absolutely…

It’s amazing that a Canadian Prime Minister’s immediate response to a major international incident showed “big picture” clarity – his words reflected a principled stance and were unequivocally clear, while the American President – supposedly the leader of the free world – wasn’t quite sure what to say at first…Stephen Harper stated yesterday, “While we do not yet know who is responsible for this attack, we continue to condemn Russia’s military aggression and illegal occupation of Ukraine, which is at the root of the ongoing conflict in the region.”  Bang-on.  Meanwhile, the best Obama had to offer was a classic Carterism:  “It looks like it might be a terrible tragedy.”  Hopefully he’ll speak more forcefully today, but he always seems to be a few steps behind and lacks a “feel” for America’s role in the world…Russia, as it has in the past, is taking advantage of a vacuum of leadership on the international stage – in this instance, a vacuum created by Obama’s disengagement from the world (that approach, in all fairness, has had plenty of cheerleaders on both the left and the right)…but the American President has also even had trouble managing relations with the country’s closest friends and allies including Israel and North American partners Canada and Mexico – not a good sign…if you can’t even handle things well with your friends, how can you effectively deal with your foes?…

As of 8:15 am Pacific, bullion is down $11 an ounce at $1,308…Silver is 32 cents lower at $20.84…Copper has declined 4 pennies to $3.16…Crude Oil is off 43 cents at $102.76 while the U.S. Dollar Index is up slightly at 80.61…

Investor and industrial consumption of Silver has advanced at a healthy pace in 2014, reflected in the Silver price increasing 5% as of July 15 from the beginning of the year in a report issued this morning by the Washington, D.C.-based Silver Institute (www.SilverInstitute.org)…building on an impressive 2013, investors continued to boost Silver holdings in the first half of 2014…Silver ETF’s backed added 7 million ounces of Silver bullion through June; in contrast, Gold ETF holdings dipped by 1.4 million ounces ounces over the same time period…U.S. Mint sales of American Eagle Silver Bullion coins maintained near record level sales, totaling 24.1 million ounces for the first six months of 2014, just shy of the the 25 million  sold in the first half of 2013…industrial demand for Silver in critical sectors, such as ethylene oxide production, has increased significantly in the first half of the year and is expected to increase 23% this year to 8 million ounces, according to Thomson Reuters…

Another positive for Silver is growing global semiconductor sales…according to the Semiconductor Industry Association, semiconductor sales were up 8.8% May from a year ago…this increase is encouraging for Silver demand because the metal is used extensively in electronic products that contain semiconductors…semiconductor sales in the first quarter of the year totaled $78.5 million globally, the highest first quarter total on record…

Today’s Equity Markets

Asia

Asian markets held up quite well overnight despite events in Ukraine…China’s Shanghai Composite erased early losses and edged 3 points higher to snap a two-session losing skid and finish the week at 2059…Japan’s Nikkei average fell 155 points…

Europe

European markets were mixed today…

North America

The Dow is up 85 points as of 8:15 am Pacific after yesterday’s sell-off, triggered by the shooting down of the Malaysian airliner…

Fascinating investigative report just released by Bloomberg Businessweek that reveals details of a 2010 Nasdaq cybergrenade that never detonated…Russian hackers managed to slip a “digital bomb” into the Nasdaq – one with the potential to sabotage the stock market’s computers and wreak havoc on the U.S. economy…although it had been reported previously that hackers had snooped around the Nasdaq’s computer network, specific information about the attack had remained secret until this week…

The TSX has gained 55 points while the Venture is up 3 points at 1009 as of 8:15 am Pacific…Highbank Resources (HBK, TSX-V), one of our favorites, has hit a new multi-year high of 34.5 cents in heavy trading this morning…it’s up 4.5 cents at 32.5 cents as of 8:15 am Pacific…Pine Cliff Energy (PNE, TSX-V), meanwhile, is this morning’s runaway volume leader, up 22 cents at $1.60 after announcing a major deal yesterday with a senior Oil and gas producer…

TSX Gold Index Updated Chart

Gold producers fared well yesterday but have given up some of those gains in early trading today…however, the TSX Gold Index appears to be inching closer to a potential major breakout if you examine this 15-year monthly chart from John…

The key “takeaway” regarding this chart is how the Gold Index is threatening to push above a long-term downtrend line…the key level is 210 – a confirmed breakout above 210 would likely lead to a powerful immediate surge higher, perhaps to Fib. resistance in the mid-250’s…the overall bearish trend that emerged in 2012 as shown by the ADX indicator has been weakening significantly and a bullish +DI/-DI crossover could be in the works for this second half of 2014…

The Gold Index is down 4 points at 198 as of 8:15 am Pacific…

Abcourt Mines Inc. (ABI, TSX-V) Update 

Abcourt Mines’ (ABI, TSX-V) Elder Mine near Rouyn-Noranda, Quebec, continues to inch toward commercial production…the company has done an excellent job in systematically advancing this project in a very cost-effective, low-risk manner…

Technically, what’s very interesting is that ABI has finally broken out above a downsloping channel in place since 2012…the trend is your friend, and the trend is certainly in ABI’s favor now as you can see in this 2.5-year weekly chart…

ABI is off half a penny at 7.5 cents as of 8:15 am Pacific…

Condor Resources Inc. (CN, TSX-V) Update 

Condor Resources (CN, TSX-V) is an excellent example of what can happen to a stock (or an Index) when it breaks above a long-term downtrend line, as CN did earlier this month following results of drill results from its Soledad Project in Peru…the market is anxiously awaiting additional results (in particular from deep hole SDH-012) which will no doubt determine the stock’s next major move…

CN has been encountering resistance in the mid-teens, as expected, and no one has a crystal ball with regard to upcoming results – certain systems can be geologically quite complex, so a patient wait-and-see approach makes sense in this case…the overall technical posture is certainly bullish and that’s an encouraging sign…as always, perform your own due diligence…

CN is off half a penny at 14.5 cents as of 8:15 am Pacific…

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

Traders and investors should love a chart like this – it has been so predictable, and there’s every reason to believe the trend will continue…

Calgary-based Contact Exploration (CEX, TSX-V) has been a stellar performer this year and remains one of our favorite junior oil and gas plays…CEX’s 50 and 100-day SMA’s, currently at 42 and 39 cents respectively, have been close supporting moving averages since the summer of last year…a breakout has occurred above measured Fib. resistance at 38 cents, with the next Fib. resistance at 54 cents (not a price target, just a theoretical level based on Fib. and technical analysis)…

At 41 cents as of 8:15 am Pacific, CEX is hugging the bottom of the upsloping channel – an exceptionally strong area of support…

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