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Gold has traded between $1,234 and $1,240 so far today…as of 5:00 am Pacific, bullion is up $1 an ounce at $1,236…Silver is down 9 cents at $18.60…Copper is off a penny at $3.16…Crude Oil is down 43 cents at $94.45 while the U.S. Dollar Index is flat at 84.09…

It’s an important day for equity and commodity markets with the Fed’s policy decision (11:00 am Pacific) and economic forecasts, followed by Janet Yellen’s news conference (11:30 am Pacific)…many market participants have been anticipating a more hawkish tone from the Fed today, hence the recent slump in Gold and commodity prices in general with the greenback going in the opposite direction…markets have been moving closer to a view that the Fed will drop a dovish phrase from its statement which says it would keep rates low for a “considerable time” – whether that occurs at today’s meeting or one in the near future, perhaps, remains to be seen…Wall Street Journal ace reporter Jon Hilsenrath, who is often correct on these matters, argues the Fed won’t announce any major changes today.  “Given the economic backdrop, they don’t want to send a signal right now that rate increases are imminent.  I think what they do, at the end of the day, is they qualify it.”

Gold Sector Profitability

Interesting comments from Randgold Resources‘ (GOLD, Nasdaq) CEO Mark Bristow in an interview with Kitco’s Alex Letourneau at the Denver Gold Forum when asked where the blame should be spread as the sector struggles with profitability.  “It’s going to be tough, right now we’ve seen the fund managers looking to management to fix it,” he said. “I think, to a large degree, the fund managers are joined in how we got there, culpable like management.

“Perhaps some of the fund managers should practice what they preach, and that is allocation of capital,” Bristow continued. “For Gold mining to be profitable, you have to take out a whole lot of Gold production. If you take out a lot of Gold production, everyone’s going to make more money including the host countries in which we operate.

“I think that’s what the industry needs and I still think the industry’s living in denial,” he added.

China Stimulus? 

Gold rebounded modestly yesterday on reports that China’s central bank is injecting 500 billion yuan ($81 billion) into the country’s five major state-owned banks as it moves to counter slower-than-expected growth in the world’s second largest economy…the move also gave the Shanghai Composite a modest lift today but falls short of a more sweeping effort, such as an interest rate cut, to lift the economy, showing that Beijing is continuing to use targeted measures…some Chinese bankers and executives doubt the measure will do much to help rev up economic activity, pointing to sagging demand for loans from businesses due to a lackluster economic outlook…

World’s Billionaire Population Increases By 7% Over 2013

The world’s billionaire population is at an all-time high, despite the sluggish global economy…a new survey shows that 155 new billionaires were minted this year, pushing the total population to a record 2,325 – a 7% increase from 2013…credit goes to the United States – home to the most billionaires globally – where 57 new billionaires were recorded this year, according to the Wealth-X and UBS Billionaire Census 2014 released this morning…

Today’s Equity Markets

Asia

China’s Shanghai Composite, after a rough session yesterday, reversed and posted a 12-point gain overnight to close at 2308…Japan’s Nikkei fell 23 points to finish at 15889…

Europe

European markets are up modestly in late trading overseas…

North America

Stock index futures in New York are pointing toward a slightly positive open on Wall Street…the Dow hit a new record high yesterday as it rallied 101 points to close at 17132, leaving it about 20 points below an important Fib. resistance level…the TSX closed at 15511 yesterday while the Venture was off 6 points to 976, 8 points above the May low…a very strong Venture support band exists between 970 and 980…

Copper Chart Update

“Decision” time for Copper soon…below is an interesting 3-year weekly chart for the metal…note how the RSI(14) has been climbing an encouraging trend line since Copper sank to just below $2.90 a pound in late March…RSI(14) is currently at 50%, testing support at the trend line, but it also faces resistance at 60%…a bullish downsloping flag has formed which would make a close above the $3.20 level significant…plenty of resistance, however, between $3.30 and $3.40…

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

From the first bold words last year on the Sheslay district from renowned geologist Dr. Dirk Tempelman-Kluit, to the encouraging, passionate words this morning from Garibaldi Resources‘ (GGI, TSX-V) President and CEO Steve Regoci, to the publicly available geological data on the key properties in the area, there’s ample evidence to conclude that this prolific yet under-explored part of northwest British Columbia has an excellent chance of imminently delivering an exciting “triple play” which could also give a boost of confidence to the entire junior exploration sector…

Some of the brightest geological minds in the country are convinced that the Sheslay district is destined to become a major new mining camp in northwest B.C. – a development, if it should occur, that could make investors at this early stage fortunes…the combined market capitalization of the three largest players – Garibaldi, Doubleview Capital (DBV, TSX-V) and Prosper Gold (PGX, TSX-V) – is only $36 million…just one of these companies could potentially be bought out for multiple times that amount if they’re able to prove up a substantial economic resource – no easy task, but this area has the right geology and some of the best people to figure everything out…

It doesn’t take a rocket scientist to understand that a potential avalanche of news from the Sheslay district – including drill results and news of more drilling – is likely just around the corner…all companies in the area have been holding their cards very close to their chests over the last few months, but you don’t even have to “read between the lines” of Regoci’s comments, from an exclusive interview with BMR, to know that there’s a growing sense of confidence…

“We’re enjoying a high success ratio down in Mexico and we expect that will translate to the Grizzly,” Regoci told us as GGI ramps up to first-ever drilling at the 262 sq. km property that has “exceptional high opportunity” targets over an area stretching at least 15 km NW-SE from Grizzly West to Grizzly Central…

“We’ve got up to 17% (Cu) on surface samples (Grizzly West),” stated Regoci, “so there are definitely higher grades to be had here.  You see the clustering at Grizzly West, the clustering of these Cu-Au porphyries at the Star, and we’re seeing evidence of that throughout the whole 30 km belt including of course Grizzly Central and Doubleview’s significant discovery.  There is certainly going to be more than one deposit found as far as the early evidence indicates.  So we’re very, very optimistic that we’re going to be able to leverage this in a very big way for our shareholders.  Leverage just isn’t a word.  It’s a function of how we operate and how we think.”

A “Heat Engine” and Parallel Trends  

Garibaldi, which has the longest history in the area, also has a reputation for knowing where to drill as demonstrated most recently with a high-grade Silver discovery from the first hole drilled at the Silver Eagle target (Rodadero Silver-Gold Project) in central Sonora State.

“We have a road map…we know what we’re looking for,” Regoci stated in reference to drilling at the Grizzly.   “It’s certainly a very pregnant system.  There has been a huge amount of pressure and fluids forced through this entire region.  You can debate about exactly the nature of that, and how it relates to the topographically dominant feature, the Kaketsa pluton – maybe a heat driver, a heat engine – but along the entire 30 km belt, from the northwest boundary to the southeast, you just see massive fracturing and fluids and mineralization of all styles throughout this whole region.  It’s going to become a very, very big story.  And it’s something we intend to lead in.” 

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

Great Prairie Energy Services (GPE, TSX-V) is another energy play we’ve been tracking closely in recent months…the second quarter and first half of the year are characteristically the company’s weakest due to spring breakup, so investors will be looking for stronger third and fourth quarter performances…as always, perform your own due diligence…

Technically, GPE is showing strong support in the immediate vicinity of the 40-cent Fib. retracement level while the rising 200-day moving average (SMA) currently sits at 35 cents…the share price is now right up against a downtrend line while RSI(14) has already broken above its downtrend line, and buy pressure has replaced sell pressure which has been dominant since June…

Cardiff Energy Services (CRS, TSX-V) Update

Cardiff Energy Services (CRS, TSX-V) pulled back very modestly late last week from chart resistance at 20 cents – not unexpected – but then blasted through that level yesterday on high volume as it closed up a nickel at 22.5 cents…the breakout above 20 cents (now new support) will likely draw in more momentum players…

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

Highbank Resources (HBK, TSX-V) has been a big winner for some of our readers since we first mentioned the company when it was trading in the mid-teens in March…as expected, a consolidation phase set in after the stock climbed to a multi-year high of 38 cents intra-day July 21…Fib. levels are indeed important to watch and support at 26 cents has held on the pullback…HBK closed down half a penny yesterday at 30 cents…the company came out with an update Monday on progress at its Swamp Point North aggregate project near Stewart which is moving closer to production…

A recently overbought RSI(14) condition on this 2-year weekly chart has unwound and a bullish “W” pattern has now formed…note the uptrend support line and the very consistent buy pressure…the overall trend here remains very positive…

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

 

Gold has traded between $1,231 and $1,243 so far today…as of 8:15 am Pacific, bullion is flat at $1,233 and hovering near an 8-month low as investors position themselves for tomorrow’s Fed decision and the timing of the first U.S. rate hike in 8 years…Silver is unchanged at $18.65…Copper is 2 pennies higher at $3.12…declines by Copper may be limited as workers are set to strike next week at Escondida in Chile, the largest mine for the metal…Crude Oil is up $1.11 a barrel to $94.03 while the U.S. Dollar Index is off slightly at 84.23…

The Fed’s meeting begins today and wraps up tomorrow…a growing belief among traders/investors that the Fed could signal it may begin raising rates sooner than mid-2015, the current consensus target, has helped the U.S. Dollar Index climb for 9 straight weeks – so a “sell on news” scenario could easily unfold tomorrow even if the Fed takes on a more hawkish tone by removing the reference to “considerable time” before any rate increase…the Dollar Index has shown resistance as predicted at the 84.50 Fib. level…at some point very soon it will need to unwind temporarily overbought conditions, though that doesn’t rule out one more spike to the upside before a healthy pullback sets in…the strength in the greenback has really put pressure on commodities over the last couple of months…in euro terms, Gold continues to perform quite well…

Signs of a modest pickup in physical buying from China – daily trading volume of 99.99% purity Gold on the Shanghai Gold Exchange hit a two-week high yesterday…premiums climbed to about $4-$5 an ounce, compared to $2-$3 last week…demand is also reportedly picking up in Thailand, Malaysia and Singapore…

Bloomberg reports that Hong Kong’s Chinese Gold & Silver Exchange Society has been given permission to set up a precious metals vault in Shenzhen, China, becoming the first non-mainland bourse granted onshore commodity warehousing access…

China’s foreign exchange reserves have nearly doubled to $4 trillion since April 2009 when the nation last announced changes to bullion holdings (1,054.1 metric tons), according to State Administration of Foreign Exchange data…while China holds the worst largest foreign exchange reserves, bullion accounts for only 1.1% of the total compared with about 70% for the U.S. and Germany…central banks have been net buyers of Gold for 14 straight quarters and the World Gold Council predicts they may increase holdings to 500 tons this year, aided mostly by emerging economies, after adding 409 tons last year…China is likely adding significantly to its Gold reserves as a plan to back up its currency…

China Courting India

The Wall Street Journal reported this morning that China’s president is expected to pledge billions of dollars in investments for India this week as Beijing looks to gain influence with a regional heavyweight at a time when Asia’s balance of power is in flux…during a 3-day trip to India, Xi Jinping will meet Indian Prime Minister Narendra Modi and lay the groundwork for a wave of Chinese money to build industrial parks and bullet trains in a country hungry for development…underlying China’s sharply rising interest in its neighbor is a fear that India could tilt too far toward Beijing’s rivals, namely Japan and the U.S., both of which have been also courting India’s new government…

More Chinese Millionaires Coming To Canada & The U.S.

Nearly half of Chinese millionaires plan to move out of the country in the next 5 years, a flight that could add to worries over the country’s economy, as more money moves offshore rather than being invested or spent in China…according to a study from Barclays and Ledbury Research, which polled more than 2,000 people worth $1.5 million or more from 17 countries, 47% of Chinese millionaires plan to emigrate, while another 20% said they don’t know if they will move…the study supports a finding from Hurun Report earlier this year, which said 64% of Chinese millionaires have either emigrated or plan to emigrate…

When asked why they are leaving China, 78% of respondents in the Barclays and Ledbury study said they were seeking “better educational/employment opportunities” for their kids; 73%  said they were looking for “economic security” and 72% said they wanted a “desirable climate”…their top destinations are Hong Kong, Canada and the U.S…that’s the highest rate of planned millionaire flight in the world, topping Qatar at 36% and Latin America at 34%…

Today’s Equity Markets

Asia

Asian markets were weak overnight with China’s Shanghai Composite tumbling 43 points or nearly 2% to close at 2296…weaker than expected foreign direct investment figures contributed to the sell-off…Hong Kong’s Hang Seng index fell for an 8th straight session while Japan’s Nikkei average dropped slightly to close at 15912…

Europe

European shares were down modestly today with investors looking ahead to the Fed meeting this week as well as Thursday’s referendum on Scottish independence…

North America

The Dow is off 5 points as of 8:15 am Pacific…the TSX is 18 points lower while the Venture, trading within a very strong band of support between 970 and 980, is off 5 points at 977…

U.S. producer prices were flat in August, pointing to muted inflation pressures that the Fed will no doubt be taking into consideration today and tomorrow…the Labor Department reported this morning that its PPI for final demand was unchanged as gasoline and food costs fell…producer prices had edged up 0.1% in July…economists had expected a 0.1% increase last month…in the 12 months through August, producer prices increased 1.8%…

The CNBC Fed Survey for September, conducted from Thursday through Saturday, ahead of a potentially contentious Fed meeting this week, finds the Street more optimistic on both economic growth and stocks and moving up its timetable for an interest rate hike…respondents now see the Fed starting a rate-hike policy in June 2015, up a month from the previous survey and the second survey in a row that has seen more rapid rate-hike expectations…

Updated Dow Chart

The Dow continues to look healthy from a technical standpoint, and the key development to watch for is a near-term confirmed breakout above important measured Fib. resistance at 17150…an RSI(7) support band has held since an unwinding of temporarily overbought conditions began late last month…

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

A recent important development with regard to Doubleview Capital (DBV, TSX-V) may have been overlooked by many investors…however, given DBV’s recent trading activity, some market participants have obviously picked up on the potential significance of this as highly respected and award-winning geologist Patrick McAndless recently joined DBV as a senior adviser to the company’s board of directors…this was the furthest thing from a “promotional” appointment…McAndless, who has been a valuable mentor to many in his field over the years, has been directly responsible for significant discoveries leading to producing mines in British Columbia and elsewhere…

As DBV reported August 15, McAndless has commenced analysis of the data on the Hat Property and will be involved with management’s geological team in developing an extensive and strategic exploration plan for the Hat…we strongly suspect that an individual with such a flawless track record of discoveries would step out of “retirement” (he was previously Vice-President, Exploration for Imperial Metals) and attach his name to the Hat Project only if he had an unusual degree of confidence that he could play a pivotal role in proving up an economic resource…we’ll have more on McAndless in the near future…

The latest DBV chart shows the emergence of a fresh bullish trend after a healthy basing period around strong chart and Fib. support in the mid-teens and the rising 300-day moving average (SMA)…new support is at 20 cents, and DBV could really get interesting with McAndless’s insight and proven ability to find higher grade zones as the company gears up for more drilling…

InZinc Mining Ltd. (IZN, TSX-V) Update

InZinc Mining (IZN, TSX-V) has closed a $600,000 private placement at 18 cents, and the chart pattern with this stock is quite remarkable…

InZinc is an emerging mid-tier Zinc producer with its 100%-owned West Desert Project in Utah…a positive PEA was released in May, and excellent opportunities for resource expansion exist…importantly, the project benefits from all-weather road access, on-site grid power, proximity to natural gas pipelines and is just 90 km from multiple transcontinental rail networks servicing western U.S. ports and major North American markets…

Technically, IZN formed a classic “cup with handle pattern” and continues to threaten to break out above the top of the cup…as of 8:15 am Pacific, IZN is unchanged at 20 cents…

Falco Resources Ltd. (FPC, TSX-V)

One of our astute readers mentioned this company in our comments section last night, and we’re glad he did…we’ve been keeping an eye on Falco Resources (FPC, TSX-V) for several months now, in part due to our familiarity with the Rouyn-Noranda area where FPC is very active with a lot of promising ground…if you’re looking for a quality play in the junior resource sector, this certainly fits into the top 10% elite category – and we’ll elaborate on that more in the coming days…

As always, perform your own due diligence…obviously Sean Roosen has, and he likes what he sees…last Friday, Falco appointed Roosen as a director and chairman of the board…the appointment followed an announcement by Osisko Gold Royalties Ltd. (OR, TSX) on Aug. 29 that it intends to increase its ownership interest in Falco to 14.99%…

We’re glad to see FPC has pulled back in early trading today after jumping as high as 78 cents yesterday…as of 8:15 am Pacific, FPC is off 2 pennies at 69 cents…below is a 2+ year weekly chart from John for some technical guidance…note the uptrend line, the rising and supporting 200-day SMA and the gap support in the mid-60’s…

Great Lakes Graphite Inc. (GLK, TSX-V)

We suggest readers perform their due diligence on Great Lake Graphite (GLK, TSX-V) which has caught John’s attention for technical reasons – this includes a significant pick-up in volume this month…it’s on our “radar screen”…GLK is up half a penny at 9.5 cents as of 8:15 am Pacific…

Endeavor Mining (EDV, TSX) Update

Endeavour Mining (EDV, TSX) is benefiting from lower cost production and the impact of continuing optimization programs…

Technically, EDV is facing resistance at its 50-day SMA (90 cents) with very strong support at the rising 200-day which also coincides with an uptrend line…rapidly increasing buy pressure and a dramatic change in the ADX indicator suggest that a breakout to the upside could be in the works…we’re keeping a close eye on the RSI(14) which is threatening to push above a downtrend line…

EDV is off 2 pennies at 86 cents as of 8:15 am Pacific…

Note:  Jon holds a share position in DBV.

 

Gold has traded between $1,231 and $1,239 so far today…as of 8:15 am Pacific, bullion is up $5 an ounce at $1,233…Silver is relatively unchanged at $18.60 (see updated charts below)…Copper is off a penny at $3.11…Crude Oil has recovered from negative territory early today and is now up 26 cents at $92.53 while the U.S. Dollar Index is up slightly but off its highs of the day at 84.22…

Gold is facing the prospect of its first quarterly loss of the year, thanks in large part to a surging U.S. Dollar Index that remarkably has risen for 9 straight weeks – its longest winning streak since 1997…near-term Fib. resistance is around 84.50, so it’s possible we could see a cooling off of the temporarily overbought greenback at some point during the last half of this month – perhaps as early as later this week if there’s a “sell-on-news” effect from the Fed meeting…signs of an improving U.S. economy have increased the odds that the Federal Reserve, which begins its two-day policy meeting tomorrow, may begin to raise interest rates sooner than the expected mid-2015…

About a third of Gold production is probably losing money when the price of the metal is below $1,250 an ounce, according to some analysts, so this fact alone should help put a floor on bullion at critical technical support in the immediate vicinity of $1,200…the behavior of the Venture Exchange, underpinned by rising 200 and 300-day moving averages (SMA)’s, suggests that Gold is not about to fall off a cliff…the Venture weakened considerably six months prior to Gold’s peak in 2011 and an important trend reversal has occurred over the last year with the Venture now out-performing the yellow metal…

The Bloomberg Commodity Index of 22 futures has fallen to its lowest level in more than five years since July 2009…in today’s Morning Musings, we have an updated chart on the CRB Index which is approaching a strong support area tested on a few occasions since the spring of last year…

National Mining Association President Hal Quinn says the #1 challenge to the U.S. mining industry is the domestic regulatory bureaucracy…while it typically takes seven to 10 years to permit a mine in the U.S., other countries with similar environmental standards do so within two to three years…bureaucracy in the U.S. continues to weaken the domestic mining industry…

Geopolitics

International support for the U.S.-led military campaign against Islamic State gathered strength over the weekend with the U.K. vowing to “destroy” the group after it killed a British aid worker, Arab states agreeing to participate in airstrikes and Australia pledging forces…

Islamic State militants, who once relied on wealthy Persian Gulf donors for money, have become a self-sustaining financial juggernaut, earning an estimated $100 million per month from Oil smuggling, human trafficking, theft and extortion, according to U.S. intelligence officials and private experts in a report carried by Associated Press…the extremist group’s resources exceed that “of any other terrorist group in history,” said a U.S. intelligence official…this is certainly no “junior varsity squad”, as President Obama referred to them earlier this year…

A report by CNN security analyst Peter Bergen states that, according to information obtained by CNN from the British Office of Security and Counter-Terrorism obtained, British citizens have volunteered to go to Syria to fight for ISIS at 25 times the rate that Americans have done so (500 vs. 100), taking into account the population differences between the two countries…also according to the British government, 700 fighters have traveled to Syria from France; 400 from Germany; between 200 and 500 from Belgium; 130 from the Netherlands; over 100 from Denmark; 100 from Austria; 80 from Sweden, and between 50 and 100 from Spain…

It’s also estimated that 100 Canadians have left Canada to “support or train with terrorist movements abroad…the majority of these are likely to be in Syria”…and it estimates that there are 60 Australians fighting in Syria and Iraq…this brings the total number of Westerners who have fought in Syria to between 2,620 and 2,870, according to the British Office of Security and Counter-Terrorism…

Today’s Equity Markets

Asia

Japan was closed for a holiday but China’s Shanghai Composite gained 7 more points overnight to close at 2339, despite a slew of economic data released over the weekend that raised fresh concerns about a weakening economy…August industrial output rose 6.9% on year, its slowest pace since 2008, while fixed-asset investment and retail sales both missed forecasts…

The options have certainly narrowed for Chinese Premier Li Keqiang:  stimulate or miss his 2014 growth target of 7.5%…the weakest industrial-output expansion since the global financial crisis, and moderating investment and retail sales growth, underscore the risks of a deepening economic slowdown in China led by a slumping property market…the PPI has been negative for 30 consecutive months and consumer inflation hasn’t exceeded 2.5% since November…some analysts are now cutting their forecasts for 2014 growth…

Europe

European markets were mixed today…

North America

The Dow is up 19 points as of 8:15 am Pacific…the OECD is lowering its growth forecast for the U.S. to 2.1% this year, down from its May projection of 2.6% growth…for 2015, the group expects the U.S. economy to grow 3.1%, down from earlier estimates of 3.5%…the euro area has also been downgraded, and the stubbornly slow growth in the region is the most “worrying feature” of the OECD’s projections…

The TSX is off 56 points while the Venture has retreated 3 points to 985 as of 8:15 am Pacific…

Venture 3-Year Weekly Chart

It was a bearish sign for both the Venture and Gold when a trend reversed and bullion started out-performing the Venture during the first half of 2011…beginning just over a year ago, that trend reversed again, and the Venture’s out-performance relative to Gold is now accelerating, as you can see in the chart below, which has to be considered a bullish contrarian indicator…

Below is an updated 3-year weekly Venture–Gold comparative chart from John…the 970 to 980 area is such solid support as it was stiff resistance for many months last year and has been tested successfully on numerous occasions since March of this year…it also coincides with the Venture’s rising 300-day SMA…

CRB Index Updated Chart – Turnaround Soon?

Thanks in large part to a surging U.S. dollar, the CRB index has fallen sharply (10%) since mid-June, erasing all of its yearly gains, after it hit a 52-week high of 313.27…RSI(14) is currently at previous support, so we’ll see if that holds…as of 8:15 am Pacific, the CRB is relatively flat at 281.86 (significantly below its rising 200-day SMA) after touching a low of 280.22…the next obvious chart support is 275…a turnaround in the near future appears to be in the cards…

Cannabix Technologies Inc. (BLO, CSE) Update

A confirmed technical turnaround last week in Cannabix Technologies (BLO, CSE) which went into a downward spiral, albeit (importantly) on low volume, after leaping out of the gate once it began trading on the CSE June 26…this chart shows how trading has evolved over nearly three months…BLO is up a penny at 16.5 cents as of 8:15 am Pacific…

Recently we met with BLO CEO Rav Mlait as part of our continued due diligence on this company which we’ve liked from the very beginning several months ago when it was born out of West Point Resources which acquired the exclusive North American license for patent-pending marijuana breathalyzer technology…BLO is a first-mover in developing a roadside handheld breathalyzer which would allow for detection of very recent intake of THC, the principle pyschoactive component in marijuana…

We all know the seemingly unstoppable trend, unfortunate in our view, with regard to marijuana becoming more socially acceptable in North American society, and this has also led to more “drugged drivers” on the roads with no effective tool for law enforcement to combat that problem…

Cannabix’s potential solution has many people excited, and Ken Malhi – the company’s President – is a retired member of the RCMP with a keen awareness of how “disruptive” this technology (initially developed in Sweden several years ago) can be…

A key point which also has us excited:  Cannabix has received a lot of Canadian media attention in particular (this is an easy story for people to understand), but just wait until the American media gets to know Cannabix…BLO is primarily a U.S. story and that’s where it’s aiming for market penetration, in terms of both the equity side and the business model…more in that in the near future…

In the meantime, we’ll leave you with this paragraph from the Globe and Mail, written by Jessica Leeder and published on May 20, 2014:

“There seems to be this lax view that smoking a joint and grabbing the car keys is okay. It’s mind-boggling,” said Marc Paris, the executive director of Partnership for a Drug Free Canada, a non-profit advocacy group. In a recent study, one-third of teenage respondents considered smoking marijuana before driving less risky than drinking. “To our surprise, one quarter of parents agreed,” Paris, said, adding: “At the end of the day, impaired is impaired.”

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

With an important district-scale high-grade Gold and Silver discovery unfolding in central Sonora State (more on that later this week), and first-ever drilling upcoming at the 260 sq. km Grizzly Property in the Sheslay district, there are few companies better positioned on the “discovery curve” at the moment than Garibaldi Resources (GGI, TSX-V), especially considering the fact that this group features the likes of Dr. Peter Megaw, Alain Charest and Dr. Craig Gibson – all are well-known for their contributions to major discoveries in Mexico…

GGI’s drilling hit ratio in Mexico has been remarkable this year (drilling continues at the Rodadero discovery) and the company will be applying that expertise shortly at the Grizzly Property where it has outlined “exceptional high opportunity targets”…GGI has the added benefit of having been able to compare drill results from adjoining properties with a broad array of geological data sets including critical geophysical and geochemical signatures…

In other words, being the third company to drill in the area has put GGI at a huge advantage…given the company’s track record of success in Mexico, combined with the overall known hit ratio in the Sheslay district, one has to consider the odds of a drilling discovery at the Grizzly to be unusually high…Garibaldi has spent several years studying this property intensely…

Below is John’s updated long-term monthly GGI chart…the key “takeaway” from this is that the primary trend is strongly bullish with the most steady accumulation in this stock since just prior to the 2006 explosion to 90 cents…RSI(14) at 58% is following an uptrend line in place since last year with plenty of room to surge higher as it did in 2006 and again in 2011…strong Fib. support at current prices with measured resistance at significantly higher levels as indicated on the chart…

GGI is up 1.5 cents at 25.5 cents as of 8:15 am Pacific…

Pure Gold Mining Inc. (PGM, TSX-V)

Speaking of discoveries, here’s another company quite capable of pulling one off…continue to keep this on your radar screen…

We initially brought Pure Gold Mining (PGM, TSX-V) to our readers’ attention in early July when it trading at 41 cents…since then, PGM has climbed gradually and has a good chance at a very strong finish to the year…

Pure Gold, formerly Laurentian Goldfields, recently consolidated its position in the prolific Red Lake district with the acquisitions of the Madsen Property and the adjacent Newman-Madsen Property…together, these properties make up a 50 sq. km land package of contiguous, primarily patented ground, collectively known as the Madsen Gold Project…Pure Gold now holds the third largest land package in the Red Lake region which includes two past-producing mines, existing mine infrastructure, current mineral resources, and multiple highly prospective exploration targets in a geological setting analogous to other modern high-grade discoveries in the Red Lake region…

PGM, which has just over 100 million shares outstanding, is well-funded and last month commenced a $4 million,  9,000-m drill program at Madsen (check out the August 22 news)…drilling is designed to test and expand the current mineral resource, while concurrently testing high-grade, 8 zone-style mineralization targets developed through continuing consolidation and evaluation of the large historic database…

Technically, as shown in this weekly chart, the trend is encouraging which points to the possibility of an eventual sustained breakout above Fib. measured resistance at 50 cents…the rising 50-day SMA, not shown on this chart, is at 45 cents…

PGM is off half a penny at 47 cents as of 8:15 am Pacific…

Silver Short-Term Updated Chart

Extreme oversold levels (3%) are now showing up in the RSI(2) in this 6-month daily chart…with SS also at low levels, the probability is high that Silver is close to an important low…it’s currently testing a support level around $18.60 which may or may not hold – we’ll have to see…

Silver Long-Term Updated Chart

Silver is still holding support at one downtrend line it broke above during the second quarter as shown in this “Big Picture” 11-year monthly chart…RSI(2) has plunged to 16% which is typically indicative that a turnaround is not far off…the 2013 low was $18.20 while the $17.50 level was strong support in 2010…

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

 

TSX Venture Exchange and Gold

It was a rough week for commodities, including of course Gold which tumbled another $40, but encouragingly the Venture stabilized and even gained 6 points Friday while major equity markets declined and the yellow metal dropped below $1,240.  For the week, the Venture was off 7 points to close at 988 (its 200-day moving average, and this SMA continues to rise which is important).  Thursday, the Venture reversed after falling as low as 977 – within the band of exceptionally strong technical support between 970 and 980.

Further testing of that Great Wall of Support is certainly possible, but the regular charts we update for The Week In Review And A Look Ahead give every indication that this month could end differently than how it has played out so far.  Fundamentally, potential catalysts could be a reversal in Gold and/or a much-needed new discovery somewhere – there’s nothing like a success story on the exploration front to give investors a jolt of confidence.

The 6-month daily Venture chart shows the formation of a bullish “W” in the RSI(14) which is a pattern often seen at a reversal point.  In addition, buy pressure has started to increase again while -DI (ADX indicator) appears to have peaked.  The rising 200 and 300-day SMA’s give us a level of comfort that the primary trend remains up.

Venture 5-Year Weekly Chart

Despite a 36-point or 3.5% drop through the first half of this month, the Venture still remains well within the parameters of a primary uptrend as shown in this updated 5-year weekly chart. The Index has also been out-performing Gold which is a positive sign, a clear change in trend from the period beginning in early 2011 to mid-2013.

RSI(14) on this 5-year weekly chart is once again testing the uptrend line around 50% which has held as critical support 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 this new support.  It’s very encouraging that despite the weakness during this first half of September, the RSI(14) uptrend line has not been violated.

The Q2 decline that took the Venture to superb support at 968 May 20 came on light volume, and accumulation (CMF indicator) has remained steady and strong since then.  The Index has actually experienced the most extended period of healthy accumulation in a few years.  This is a very bullish dynamic.  While September has been disappointing to date, it’s quite possible we could see a sharp reversal over these last two weeks of the month and a much better than expected October.

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

Continued strength in the greenback (the U.S. Dollar Index as risen for 9 straight weeks, the longest wining streak since 1997) put more pressure on Gold and commodities in general last week, with bullion dropping another $40 an ounce to $1,228.  Short-term technical indicators are beginning to flash “overbought” for the U.S. Dollar Index and “oversold” for Gold, though a brief near-term test of the $1,200 support area for Gold certainly can’t be ruled out.

The prospect of more hawkish language from the Fed at its upcoming meeting Tuesday-Wednesday has been a major contributor to this weakness in Gold and strength in the dollar – a classic potential set-up for a “sell on news” scenario for the greenback this coming week.  It’ll be very interesting to see what the Fed has to say and how traders react.

This 6-month daily Gold chart shows how oversold conditions are emerging in the RSI(14).  We suspect commercial traders are in the process of significantly scaling back their short positions, given bullion’s $60 drop the last two weeks, which would be a bullish indicator – upcoming COT figures should provide valuable insight with regard to that.

Silver fell 58 cents last week to finish at $18.61.  Copper gave up another 6 pennies, closing at $3.11.  Crude Oil fell $1.02 a barrel to finish at $92.27 while the red-hot U.S. Dollar Index climbed nearly half a point to 83.76.

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 and will continue to support prices.   Despite Gold’s largest annual drop in three decades in 2013, the fundamental long-term case for the metal remains solidly intact based on the following factors:

• Growing geopolitical tensions, fueled in part by the ISIS terrorist group and a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
• Weak leadership in the United States and Europe is emboldening enemies of the West;
• Currency instability and an overall lack of confidence in fiat currencies;
• Historically low interest rates
• Continued strong accumulation of Gold by China which intends to back up its currency with bullion;
• Massive government debt from the United States to Europe;
• Continued net buying of Gold by central banks around the world;
• Flat mine supply and a sharp reduction in exploration and the number of major new discoveries.

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 the bottom for Gold in our view. 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 and the reluctance of central banks to increase interest rates.

Gold has traded between $1,232 and $1,241 so far today…as of 6:45 am Pacific, bullion is down $5 an ounce at $1,235…Silver is off a dime at $18.57…Copper is flat at $3.11…Crude Oil has slid 22 cents to $92.61 while the U.S. Dollar Index is up one-tenth of a point at 84.38…the greenback continues to hold onto gains from a recent rally that has seen it strengthen by about 5% against a basket of global currencies since July, putting pressure on both Gold and Crude Oil…the Dollar Index is on target for its 9th consecutive weekly gain, its longest winning streak since 1997…it touched a Fib. resistance level of 84.50 this week and is certainly due for a pullback to help unwind temporarily overbought conditions…

Some analysts believe the Gold market is underpricing the possibility of instability flaring up in several hotspots around the globe…one of those hotspots, obviously, is Ukraine, but the cease-fire there continues to hold with Ukrainian officials reporting a pullback of Russian troops from its border…

With regard to another hotpot, a CIA assessment puts the number of ISIS fighters at possibly more than three times previous estimates…ISIS, the terror group that calls itself the Islamic State, “can muster between 20,000 and 31,500 fighters across Iraq and Syria,” a CIA spokesman told CNN yesterday…analysts and U.S. officials initially estimated there were as many as 10,000 fighters, including those who were freed from prisons by ISIS, and Sunni loyalists who have joined the fight as the group advanced across Iraq.  “This new total reflects an increase in members because of stronger recruitment since June following battlefield successes and the declaration of a caliphate, greater battlefield activity and additional intelligence,” the spokesman said.

Today’s Markets

Asia

China’s Shanghai Composite roared higher overnight, gaining 20 points to finish a positive week at 2332…central bank data showed that mainland banks made $114.55 billion worth of new loans in August, quickening from the previous month and matching expectations…

Japan’s Nikkei average, meanwhile, closed at an 8-month high today with exporters leading gains on a weak yen trading at a 6-year high of 107 against the greenback…

Europe

European stocks are mixed in late trading overseas with investors continuing to monitor developments in Russia and Scotland as well as looking ahead to an important U.S. Federal Reserve meeting next week…

North America

The Dow is off 53 points as of 6:45 am Pacific…the TSX is down 27 points while the Venture is flat at 982…

U.S. retail sales rose in August as Americans bought automobiles and a range of other goods, which should ease some concerns about consumer spending and support expectations for sturdy growth in the third quarter…the Commerce Department reported this morning that retail sales increased 0.6% last month after an upwardly revised 0.3% gain in July…the increase in retail sales, which account for a third of consumer spending, was in line with economists’ expectations…

The measured Fib. resistance level of 17150 has been an important number as the Dow has tried unsuccessfully on a few occasions since July to close above that level as you can see in John’s 6-month daily chart…RSI(7) on this chart has unwound and landed in a support zone with its SMA(25) still rising, so the conditions appear favorable for another attempt at a breakout through 17150…

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

Doubleview Capital (DBV, TSX-V) roared to life yesterday, jumping a nickel to close at 23 cents – its highest level since mid-May…this wasn’t totally surprising given the improving technical posture of the stock as John showed in a chart Monday, plus the fact it doesn’t take a rocket scientist to figure out that a potential abundance of news from the Sheslay district – including drill results and news of more drilling – is likely just around the corner…all companies in the area have been holding their cards very close to their chests over the last few months – is someone about to lay down a Royal Flush, or does Prosper Gold Corp (PGX, TSX-V) have Four of a Kind at the Star Project?…

Alix Resources (AIX, TSX-V), the largest landholder of all in the Sheslay district, was the Venture’s most active stock yesterday (8.5 million shares, all exchanges) with a massive surge in volume near the end of the day…Ashburton Ventures (ABR, TSX-V), advancing the Hackett Property contiguous to DBV’s discovery, perked up as well…

The entire area has an excellent chance of heating up again in a dramatic way, especially once Prosper and Garibaldi Resources (GGI, TSX-V) – companies with heavy bats – start swinging for the fences…

The exciting thing about a discovery area is that it can easily run counter to the market, just like what occurred in late January/early February when the Venture fell 5% from the mid-980’s to 940 but Doubleview soared on its Hat discovery, a staking rush ensued and all the Sheslay players caught fire…

Below is an updated DBV chart…it’s interesting to note that the 200-day moving average (SMA), once it reversed to the upside in the spring of last year, has dictated the primary trend in this stock through a series of roller coaster rides over the last 17 months…the rising 300-day (not shown on this chart but currently at 14 cents) provided great support for DBV over the challenging last few months…DBV is off 2 pennies at 21 cents in early trading, just above what appears to be new chart support, not unexpected after yesterday’s strong push…

Fairmont Resources Inc. (FMR, TSX-V)

Fairmont Resources (FMR, TSX-V) is worthy of our readers’ due diligence as the company is making headway with its advanced Buttercup Property in Quebec and its game plan of serving the lump titano-magnetite market…

What we like about this 5-year weekly chart is the confirmed breakout above a long-term downtrend line and the RSI(14) momentum and uptrend…measured Fib. support and resistance levels are indicated below…FMR is up 2 cents at 30 cents as of 6:45 am Pacific…

GoGold Resources Ltd. (GGD, TSX)

We suggest investors check out the Preliminary Economic Assessment GoGold Resources (GGD, TSX) released Wednesday for its Santa Gertrudis Gold mine in Sonora State, Mexico – quite robust numbers including a 1.7-year payback and an after-tax IRR of 58%…the proposed project is a 7,500-tonne-per-day heap leaching facility fed by several open pits, resulting in a projected 12-year mine life with total metal production of 671,000 ounces of Gold…start-up capital costs with a a 20% contingency are estimated at $32-million (U.S.)…this includes the development of a centrally located heap leach pad, CIL plant and ADR plant required for the start of mining operations…sustaining capital costs over the project’s life are projected to be an additional $16-million and total life-of-mine capital costs are estimated at $48-million…

Santa Gertrudis has an updated mineral resource of 23.3 million tonnes in the indicated category at 1.08 g/t Au, and 7.7 million tonnes of inferred at 1.02 g/t Au…production is estimated at an average of 56,000 ounces of Au per year (keep in mind that these are mineral resources and not mineral reserves)…

This 3-year weekly chart looks strong and shows RSI(14) moving up from a bullish “W”…rock-solid support around $1.40 which includes the rising 200-day SMA and a Fib. retracement level…GGD is up a nickel in early trading at $1.55…

Cannabix Technologies Inc. (BLO, CSE) Update

Cannabix Technologies (BLO, CSE) released some encouraging news this week and broke out of its 2-month downtrend with a powerful move yesterday…the 4-cent jump on high volume (1.3 million shares) is a strong technical sign that a new stage is underway in this promising opportunity…as we stated earlier this week, Cannabix is at the leading edge of the marijuana breathalyzer market which has massive growth potential…this is primarily a U.S. story, so when American eyes and media catch on to this – look out…

Cardiff Energy Corp. (CRS, TSX-V)

We’ve had a few requests for a chart on Cardiff Energy (CRS, TSX-V), an emerging oil and gas play that has performed remarkably well since the spring (Jack Ball took over as President late last year)…

Technically at the moment, Cardiff is up against chart resistance with an overbought RSI(14) at 87% on this 3-year weekly – so a note of caution as far as the near-term is concerned…we’ll keep a close eye on this one for a potential pullback to more attractive levels…

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

 

Gold has traded between $1,234 and $1,251 so far today as it hovers around $1,240 chart support…as of 8:30 am Pacific, bullion is down $12 an ounce at $1,237…Silver has retreated 31 cents to $18.63…Copper is 2 pennies lower at $3.11…Crude Oil hit a 17-month low this morning, near $90 a barrel, but has since reversed and is now up 61 cents at $92.28…the U.S. Dollar Index is flat at 84.23…the greenback has hit a 6-year high against the yen…

The Shanghai Gold Exchange will launch its international board on September 29 in the financial hub’s new free-trade zone, a widely anticipated move to open China’s tightly controlled Gold market to foreign capital…the board is China’s bid to deepen its influence over the global Gold market where China is the biggest producer and consumer but sees itself as lacking clout in pricing.  “This is our window to the world,” Shen Gang, the bourse’s deputy chief executive, said at an industry conference today according to a report in The Wall Street Journal…the yuan-denominated board will initially offer 11 contracts including physical Gold contracts of 100 grams and 1 kilogram…the Shanghai Exchange also plans to diversify into contracts for other precious metals including Silver and Palladium…

IEA:  Recent Slowdown In Oil Demand Growth “Remarkable”

Demand growth in the Oil markets will be more subdued than previously expected, according to the International Energy Agency, which has once again downgraded its projections for the rest of the year.  “The recent slowdown in demand growth is nothing short of remarkable,” the IEA stated in a new monthly report issued this morning.  “While demand growth is still expected to gain momentum, the expected pace of recovery is now looking somewhat more subdued.”

The IEA’s latest statistics show that demand growth has slowed to below 500,000 barrels per day in the second half of 2014 on a yearly basis, its lowest level in two and a half years, leading the organization to revise demand projections downwards for the third quarter. “U.S. production continues to surge, and OPEC output remains above the group’s official 30 million b/d supply target.” 

The euro zone was singled out for particular attention, with the IEA saying that the “macroeconomic malaise” experienced across much of Europe has been the dominant downside influence in terms of global demand…

Uranium Update

A new report by the International Atomic Energy Agency (IAEA) published today found that demand for uranium will continue to rise, despite declining market prices since the Fukushima Daiichi Nuclear Power Plant accident in Japan in March 2011 and lower electricity demand as a result of the global economic crisis…the Red Book, as the report is known, is a recognized global reference on uranium jointly prepared by the IAEA and the Nuclear Energy Agency of the Organization for Economic Cooperation and Development (NEA/OECD)…it found an increase in uranium supply, exploration and production…some 7% more uranium resources have been identified since the last report was published in 2012, adding almost 10 years to the existing resource base…

More than 20 countries around the globe produce uranium, with Kazakhstan, Canada and Australia as the largest producers, accounting for approximately 63% of world production…the reported growth in production is mainly driven by Kazakhstan, with smaller additions in Australia, Brazil, China, Malawi, Nambia, Niger, Ukraine and the United States…

Today’s Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite slipped 7 points to close at 2312, reversing from a session high of 2343 – its best level since March, 2013…annual consumer inflation eased to 2% in August, slower than July’s 2.3% rise…producer prices, meanwhile, continued their deflationary spiral, dipping 1.2% after falling 0.9% in July, a tad worse than the 1.1% fall expected….

Japan’s benchmark Nikkei index closed at an eight-month high today, rising for a fourth straight session (120 points) as the yen traded above 106 against the greenback…

Europe

European markets were down modestly today as concerns regarding U.S. monetary policy weighed on the markets…

North America

The Dow is off 48 points as of 8:30 am Pacific…the TSX has reversed and is up 23 points while the Venture has fallen 6 points to 978…

Long-Term Gold Chart

Often it’s helpful to step back and examine the very “Big Picture” of a particular market, technically speaking, without the clutter of the day-to-day noise…this is what we’re doing this morning in Gold, both in terms of the action in the metal itself and how some producers are trading to see if this provides us with fresh insight into what could unfold over the short and longer term…

Below is a 20-year monthly Gold chart, going right back to the beginning of the Gold bull market that really began to intensify 13 years ago today when the world changed on 9/11 (despite President Obama’s assertion last night, we are not “safer” today but we’ll address that issue separately below)…

Three things that are particularly interesting about this long-term Gold chart:

1) Check out the uptrend support line in place since 2001 that the metal is now testing (very strong support at $1,200);

2) RSI(14), interestingly, has recently broken above a downtrend line that started in late 2011 after Gold hit its all-time high of $1,924 – such a development is typically an indication of a bullish reversal;

3) SS has also reversed to the upside and is now above its downtrend line.

The “line in the sand” for Gold is really that Fib. retracement level of $1,185 which coincides with very strong chart support…

TSX Gold Index 3-Year Weekly Chart

Despite an unusually rough September so far (a nearly 10% drop), the TSX Gold Index is behaving quite normally based on this 3-year weekly chart:

1) The Index has retraced to its rising 200-day moving average (SMA) – slightly below it, actually – and is within a whisker of an uptrend line in place all of this year (additional downside potential appears limited);

2) It’ll be interesting to see if RSI(14) will reverse now that it has touched its uptrend support;

3) Buy pressure has actually been increasing during this low-volume correction.

Euro Chart Update

Gold struggles when the euro is weak, but this chart shows how the euro has become quite oversold (RSI is at 22%) and is rapidly approaching strong support at 128 on this 2.5-year weekly chart…a little more weakness in the euro is likely but a turnaround is not far off…

Geopolitics Cannot Be Ignored

Muslin extremism, embodied by the expanding ISIS terrorist group, represents an unprecedented global security threat and a direct threat against the national security of the United States and North America…the geopolitics of this situation – how it is handled by the American President and other international leaders – cannot be ignored by investors (it certainly won’t be ignored by us) as the potential ramifications for equity and commodity markets are profound in our view…

Last night, President Obama, knowing his declining poll numbers and leading from behind yet again, announced a significant escalation in the U.S. military campaign against ISIS in a televised address that was met with both tentative relief and reservations from Republican lawmakers…many expressed concern that the President’s plan (at least he has some sort of a “strategy” now) is not going far enough…it’ll be interesting, to say the least, how this all plays out in the coming weeks and months on Capitol Hill…

Remarkably, President Obama, clearly a reluctant warrior, spent the first minute of his speech last night bragging about how effective his administration has been at fighting terrorism (“we have consistently taken the fight to terrorists who threaten our country”) and that “America is safer” as a result today, ironically the 13th anniversary of 9/11…

The reality is that what consistently has occurred over the last several years is that this President has been disengaged from foreign policy and has grossly underestimated the growing threat of ISIS, which he even dismissed as a “JV” team earlier this year…he has overruled his national security team and even his former Secretary of State (Hilary Clinton) on action against ISIS in Syria and has allowed this Islamic terrorist group (he actually stated last night that ISIL is “not Islamic”) to flourish under his watch…he framed his argument not as a war against ISIS or a war against terrorism but as a “counter terrorism” mission with comparisons to American action in Yemen and Somalia…as Republican Senator John McCain stated after the President’s speech last night, “I don’t know any human being who agrees” that America is “safer today”…the world, in fact, is a more dangerous place than it has been in decades, due in part to a vacuum of American leadership on the international stage…we predict that the first political fallout of President Obama’s foreign policy failures will be a switch in Senate control this November from the Democrats to the Republicans, giving Republicans control of both houses of Congress entering the final two years of what will likely be a very rocky ride for the Obama Presidency…how this will impact the markets remains to be seen…

Two Producer Charts Provide Encouragement For Gold Sector

Agnico Eagle Mines Ltd. (AEM, TSX) Update

Agnico Eagle Mines (AEM, TSX) bottomed in the mid-$20’s last fall, climbed as high as $46 July 29 and has since corrected to its rising 200-day SMA and strong Fib. support…buy pressure remains strong…our prediction is that many investors will be chasing AEM (and the sector in general) at significantly higher prices in the not-too-distant future…this is a classic buying opportunity…

Imperial Metals Corp. (III, TSX-V) Update

The Vancouver Sun, among others, has done its best to malign Imperial Metals (III, TSX) over the Mount Polley tailings dam failure, though Imperial certainly hasn’t done itself any favors in the way it has handled this unfortunate accident…

Anyway, situations like this – bad press, weak markets – often present opportunities for investors as the “fear factor” comes into play and drives prices into deeply oversold territory…not surprisingly, the time to be bearish regarding Imperial was when everyone was bullish on the stock during the first quarter…it climbed to nearly $19 a share and extreme overbought RSI(14) conditions emerged…now we see the opposite…

As the saying goes, be fearful when others are greedy, be greedy when others are fearful…

Note:  John, Terry and Jon do not hold share positions in AEM or III.