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Gold came under significant pressure overnight, giving many investors a Halloween scare by falling below the key $1,180 area this morning which triggered stop-loss orders and pushed the price down as low as $1,161 (see updated chart below)…as of 8:00 am Pacific, bullion is down $35 an ounce at $1,164…Silver, which has strong long-term support around $16, is off 54 cents at $15.92…Copper has lost 2 pennies to $3.08…Crude Oil is down $1.26 a barrel to $79.88 while the U.S. Dollar Index has surged nearly a full point to 87.04 and appears to be on track to test Fib. resistance around 88 as John’s charts have consistently shown…this could certainly come as early as next week, especially if Republicans gain control of the U.S. Senate…the greenback got an immediate boost late last night on unexpected easing measures from the Bank of Japan…the BOJ, worried about deflation, cited concerns that a decline in Oil prices would hurt consumer prices…that saw the yen weaken to a 6-year low against the Dollar, but Japanese stocks took off like a rocket…

Gold is set for its biggest weekly decline, about 5%, since June of last year – a time, actually, when it was smart to be a buyer, not a seller…hawkish comments from the Fed Wednesday and stronger-than-expected U.S. GDP data yesterday have hurt Gold’s appeal and the bears have definitely gained downside price momentum, but at some point – the big question is at what price – a sudden reversal in bullion will kick in…the market will be looking for evidence of a jump in physical demand from Asia to support prices…however, premiums on the Shanghai Gold Exchange, the main platform for physical trades in China, slipped today to less than $1 an ounce, even occasionally dropping to a discount against the global benchmark represented by the London spot price…

Reflecting bearish investment sentiment, holdings in the SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, fell to a new 6-year low yesterday of 741.20 tonnes – a bullish sign, however, if you’re a contrarian…

Today’s Equity Markets

Asia

Japan’s Nikkei average surged a whopping 756 points or 4.8% overnight to close at 16414…the Japanese central bank increased the pace at which it expands base money to about $726 billion per year…separately, Reuters reported that a government panel approved plans for the Government Pension Investment Fund (GPIF), the world’s largest, to raise its allocation of domestic stocks to 25% of its portfolio from 12% currently…just how smart (or foolish) that move proves to be – the world’s largest pension fund chasing a runaway stock market – remains to be seen…

China’s Shanghai Composite climbed 30 points or 1.25% to finish the week at 2421, the highest level since February of last year…earlier this week the government unveiled measures to boost consumption…

Europe

European markets are up sharply in late trading overseas, taking their cue from Asia and New York…euro zone inflation ticked up in October, bringing some much needed relief for the European Central Bank, although the rate remains well below its target of around 2%…consumer prices rose by 0.4% year-on-year in October, according to official statistics published by Eurostat this morning…the figure met analysts’ expectations, and marked a slight rise from September’s 0.3%…

North America

The Dow has jumped 172 points as of 8:00 am Pacific, hitting a new intra-day record…U.S. consumer sentiment rose in October to its highest level since in more than 7 years on growing optimism about the economy and more favorable personal financial expectations, a survey released this morning showed…the Thomson Reuters/University of Michigan’s final October reading on the overall index on consumer sentiment finished at 86.9, the highest level since July 2007, up from 84.6 at the end of September…

The TSX is up 144 points while the Venture is down 9 points at 762 after touching support at 760…it’s possible the Venture may have already “baked in” most of the downside moves in Gold and Oil…

Gold Updated Chart

A 2-year daily Gold chart gives a clear picture of where the next major support levels are for bullion – $1,150, $1,065 and $1,000 – in the event there is a confirmed breakdown, which appears quite possible, below $1,180…

TSX Gold Index Updated Chart

The TSX Gold Index has hit its lowest level in 13 years and has also fallen below an RSI(14) uptrend that was in place since the beginning of 2014…weak Q3 financial results out of Yamana Gold Inc. (YRI, TSX) and others didn’t help yesterday, and Barrick Gold Corp. (ABX, TSX) has fallen to a 20+ year low…

The Gold Index has long-term support around 137 – we’ll see if that can hold on a closing basis today…indeed, the Index is trying to rally after hitting a low of 131 this morning…it’s now off 5 points at 135 after frightened investors dumped their Gold stocks overboard (perhaps foolishly) at the opening bell this morning…but that’s how important lows are created…a bottoming process is occurring…we’ll see how this plays out next week…

CDNX Updated Chart

A negative divergence between RSI(14) and price is one clue in terms of identifying a potential reversal in the CDNX – in other words, a drop to a new low in the Index that’s not confirmed by a new low in the RSI(14)…a band of support exists between 760 and 770…if that is broken, it opens up the possibility of a re-test of the 2008 Crash low just beneath 700…

Diamonds In the Rough – North Arrow Minerals (NAR, TSX-V) Update

Any additional weakness in North Arrow Minerals (NAR, TSX-V), brought on by the current state of the Venture, should be considered an early Christmas gift, in our view, as diamond discoveries have kick-started the junior exploration market before and could do so again…North Arrow is working on numerous Canadian diamond projects (grassroots to advanced-staged), and the Pikoo play in Saskatchewan (winter drill program coming up) looks particularly exciting in terms of fresh district-scale possibilities with NAR leading the way and well-financed…with President and CEO Ken Armstrong, and Chairman Gren Thomas, among others, NAR features a highly respected management group and board – they’ve been responsible for the discovery of many kimberlites in Canada and Africa, including of course the Diavik mine in the Northwest Territories…

Results from a 1,500-tonne bulk sample from NAR’s important Q1–4 kimberlite at its Qilalugaq Project in Nunavut are expected during the first quarter of next year (at 12.5 hectares, Q1–4 is the largest kimberlite ever found in the eastern Canadian Arctic and includes inferred resources as well as extremely rare yellow diamonds found in a sampling program)…along with drilling at Pikoo, anticipation regarding results from this bulk sample could help give North Arrow a strong speculative lift…

Below is a very interesting 7+ year monthly NAR chart from John…note the long-term support at 50 cents, the rising 500-day moving average (SMA) at 54 cents, the long-term downtrend line, and the switch from sell pressure to buy pressure…given the technical posture here, and events on the ground, we see a strong likelihood of a major breakout in NAR (above the downtrend line) within the next 2-3 months…as always, perform your own due diligence…patient investors could score big with this one, and we’ll be focusing more on the Pikoo play during November-December…

NAR is up 4 pennies at 55 cents as of 8:00 am Pacific…

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

Gold has traded between $1,199 and $1,215 so far today, and may have to yet again test key support around $1,180 after yesterday’s unexpectedly hawkish tone from the Federal Reserve that sent the U.S. Dollar Index (see updated chart below) to its highest level since the first week of the month…as of 7:30 am Pacific, Gold is down $10 an ounce at $1,202…Silver has retreated 55 cents to $16.54…Copper is off 4 pennies at $3.07…Crude Oil is off $1.03 a barrel at $81.17 while the U.S. Dollar Index is relatively flat at 86.04…

As expected, the Federal Reserve ended its bond-buying stimulus program yesterday but also gave a somewhat unexpectedly upbeat assessment of the U.S. economy which sent the greenback soaring, putting pressure on bullion…the central bank largely dismissed financial market volatility, a slowdown in Europe and a weak inflation outlook as factors that might limit progress toward its unemployment and inflation goals…ending Q3, the bank dropped a characterization of U.S. labor market slack as “significant” in a show of confidence in the economy’s prospects…

In a reflection of investor sentiment, SPDR Gold Trust said its holdings fell 1.2 tonnes to 742.40 tonnes yesterday, a 6-year low…last week, the fund reported its biggest weekly outflow this year…

On a more positive note, the International Monetary Fund reported that several world central banks continued to stock up on bullion in September…Russia, Azerbaijan and Kazakhstan all raised their Gold holdings…Russia led the way by adding 1.2 million ounces last month, the IMF said…it would be interesting to know how much China is adding…

Former Fed Chairman Alan Greenspan (1 in 6 Americans actually believes he is still the Fed Chairman) had this to say regarding China and its accumulation of Gold through a recent op-ed piece (“Golden Rule: Why Beijing is Buying) in Foreign Affairs magazine, published by the Council on Foreign Relations.  “If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into Gold, the country’s currency could take on unexpected strength in today’s international financial system. It would be a gamble, of course, for China to use part of its reserves to buy enough Gold bullion to displace the United States from its position as the world’s largest holder of monetary Gold (as of spring 2014, U.S. holdings amounted to $328 billion).  But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest,” Greenspan wrote…

Today’s Equity Markets

Asia

One of the most bullish charts on the planet is China’s Shanghai Composite (see updated chart below)…it keeps climbing a “wall of worry” and jumped another 18 points overnight to close at 2391, its highest level since early last month…China’s State Council said it would boost consumption in key sectors like e-commerce, housing, tourism and education…railway shares were the top gainers after China Railway Corporation said all 64 railway projects planned for this year would start before year-end…

Japan’s Nikkei average gained 104 points to finish at 15658…

Europe

European markets are modestly lower in late trading overseas…Germany’s unemployment rate held steady at 6.7% in October, and joblessness fell more than expected…however, regional inflation data for the country came in slightly lower than forecast…

North America

The Dow has climbed 93 points through the first hour of trading…U.S. Q3 GDP came in higher than expected at 3.5%…

The TSX is off 83 points, dragged down by the energy sector and a new post-Crash low in the Gold Index, while the Venture is off 6 points at 775 as of 7:30 am Pacific…

Shanghai Composite Updated Chart

Strangely, China’s Shanghai Composite and the CRB Index have been moving in sharply opposite directions the last several months…John correctly predicted a breakout in the Shanghai in late July when it pushed above the neckline in an inverted head and shoulders pattern, and since then the Shanghai has gained more than 200 points or close to 10%…there’s every reason to believe it’s on its way to at least the 2500 level where it will meet Fib. resistance…

CRB Index Updated Chart

The Venture has been hurting simultaneously with the CRB Index which has plunged 12% since its late June high of 313.27…Crude Oil forms a big component of the CRB but of course metals have suffered significantly as well…

Is there any good news here?…well, the CRB is now at previous support while very oversold conditions have clearly emerged…the CRB’s immediate challenge is to overcome the very pronounced downtrend line, and this could happen in November which historically for some reason has been the best month in the last half of the year…

CRB Index Historical Monthly Trading

Good riddance to the month of October which historically, next to May, has been the worst month of the year for the CRB Index going back to 1995 as you can see in this 20-year seasonality chart…

U.S. Dollar Index Updated Chart

This very bullish 2.5-year weekly U.S. Dollar Index chart shows continued RSI(14) overbought conditions but the probability appears high that a challenge of Fib. resistance around 88 is in the cards near-term…fundamental factors could help the greenback next week in the event the Republicans take control of the U.S. Senate (polls suggest they could also pad their current majority in the House)…such an outcome would likely be Dollar bullish…

Blackbird Energy Inc. (BBI, TSX-V) Update 

The energy sector has been weak recently, of course, and a major factor in the Venture’s sharp decline…one bright light, however, has been Blackbird Energy (BBI, TSX-V) which fortunately also recently completed a large equity financing ($30 million)…on October 20, the company reported that it had spudded its first Middle Montney well at Elmworth…after completion of its first well, expected during the second half of next month, Blackbird will immediately commence the drilling of its second well at Elmworth targeting the Upper Montney…

Technically, BBI’s rising 100-day moving average (SMA) has provided excellent support since early this year…

BBI is off 2.5 cents at 36.5 cents as of 7:30 am Pacific…

Canada Carbon Inc. (CCB, TSX-V) Update 

Canada Carbon (CCB, TSX-V) announced a couple of interesting appointments this morning to its advisory board, while drilling continues at its Miller Graphite Project as reported a week ago…technically, CCB found strong support this month at a long-term uptrend line…this 3-year chart shows an overall bullish trend very much intact…

CCB is up a penny at 23 cents as of 7:30 am Pacific…

Note:  John, Terry and Jon do not hold share positions in BBI or CCB. 

 

Gold has traded between $1,220 and $1,232 so far today…as of 8:30 am Pacific, bullion is down $4 an ounce at $1,224…Silver is up 12 cents at $17.32…Copper is flat at $3.11…Crude Oil is up $1.11 a barrel to $82.53 while the U.S. Dollar Index has slipped more than one-tenth of a point to 85.25…the greenback and bullion will both be very sensitive today to language from the Fed as it wraps up its 2-day policy meeting…

A surprise, given obvious signs recently of a slowdown in global economic activity, would be a “hawkish” statement today from the Fed though the central bank is expected to conclude its current bond-buying program (QE4 can’t be ruled out in the future, though)…a new CNBC survey revealed that market participants have scaled back their expectation of an interest rate hike – they now expect a hike in July 2015, a month later than when the survey was conducted in September…even an increase in interest rates next July could be an optimistic forecast if global deflationary concerns continue to mount…

Interesting piece on Silver this morning from Kitco ace reporter Alex Létourneau (www.Kitco.com) in an interview with Mike DiRienzo, executive director of the Silver Institute.  “People look at Silver, and they know about it in jewelry and coins, but when they really learn about how 50% of overall demand goes into the industrial side, it kind of boggles their mind,” DiRienzo said.  “People don’t immediately relate the white metal with its uses in everyday technology and health care; Silver in clothing technology has also turned heads.”  At the U.S. Open tennis tournament from Aug. 25 to Sept. 8 in New York City, Ralph Lauren produced a polo shirt with bio-sensing Silver fibers, called the Polo Tech Shirt.  “The ball boys all wore these Ralph Lauren polo shirts that had tiny Silver threads embedded and served a duality and purpose,” he added. “It not only kept the shirts cleaner and fresher, because silver kills bacteria, but it also sent signals monitoring heart rate, blood pressure and distance traveled to either that person’s phone or to another device.”  These shirts are fashionable as well and will be available to the general public beginning next year…

Today’s Equity Markets

Asia

China’s Shanghai Composite put in another robust performance overnight, climbing 35 points or 1.2% to close at 2373…transportation stocks were the best performers…China can afford to cut its 2015 economic growth target to 7% and still keep its labor market healthy, the World Bank said yesterday, even as it urged Beijing to stop setting rigid growth objectives…

Japanese shares hit a 3-week high, resuming their gains after ending a 2-day winning streak yesterday…September industrial production data released before the market open also helped to boost sentiment, with factory output rising at its fastest pace since January…

Europe

European markets were up modestly today…

North America

The Dow is up slightly as of 8:30 am Pacific…the S&P 500 ended above its 50-day moving average (SMA) for the first time in almost a month yesterday…underpinning gains was data showing October consumer confidence hitting its highest level since 2007, though U.S. durable goods orders came in weaker than expected..

Updated Nasdaq Chart

Quite a dramatic reversal for the Nasdaq which has had 3 opening gaps in 9 sessions through yesterday…it’s down marginally in early trading today…Fib. support held at 4150 on the recent correction, and RSI(14) at 63% is showing powerful up momentum…it’s quite reasonable to expect a new yearly high in the Nasdaq very soon – 4890 is the next measured Fib. resistance…

The TSX is down 49 points while the Venture is up 2 points at 790 as of 8:30 am Pacific…

25% Graphite Over 24 Meters 

Deveron Resources (DVR, TSX-V), which has a highly attractive share structure (its best advantage), may have a significant though very early-stage Zinc/graphite find on its hands in northern Ontario…25% graphite over a 24 m section, using the graphitic-carbon-by-LECO analytical procedure…our belief, based on some quick research this morning that requires further confirmation, is that this intercept was quite shallow (less than 100 meters) which would be critical…

The material has been sent for mineralogical studies and, currently, preliminary metallurgical work is under way to identify the nature of the graphite and whether it can be processed to form an acceptable concentrate…1% combined Zinc plus Copper was noted within this graphitic argillite unit…this intersection is one of the more encouraging found in this sequence of Archean greenstone rocks over the last decade…potential for much higher Zinc grades (necessary for any economic deposit) may exist in this environment if this trail of mineralization leads somewhere or has a deeper source…Deveron announced this morning that it has acquired an option on the project from Greencastle Resources (VGN, TSX-V) and is planning a winter drill program to test this discovery…DVR has only 12 million shares outstanding, and a public float of only a few million, so this could pop quickly – especially if there’s aggressive near-term follow-up at the Rockstone Property and the company can effectively reach out to investors…DVR is up a penny at 15 cents as of 8:30 am Pacific…worth putting on the radar screen…as always, perform your own due diligence…

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

Calibre Mining (CXB, TSX-V) announced this morning that it has commenced a Phase 1 diamond drilling program (1,500 meters in up to 13 holes) on the Minnesota Gold project within the B2Gold Corp. (BTO, TSX) joint venture on the Borosi concessions, northeast Nicaragua…Calibre controls a 49% interest in the JV while B2Gold has a 51% interest and is project operator…BTO has the right to earn an additional 19% per cent in Borosi by spending $6 million in additional project expenditures over 3 years…

CXB has been consolidating recently, a healthy development after RSI(14) extended well into overbought territory while an important Fib. level (18 cents) was also reached…a very strong band of support exists between 9 and 12 cents as shown in this 2.5-year weekly chart…

CXB is off half a penny at 12.5 cents as of 8:30 am Pacific…

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

Highbank Resources (HBK, TSX-V) has held up extremely well over the past couple of months, despite the Venture’s plunge, which speaks to the revenue and profit potential from the company’s Swamp Point North Aggregate Project near Stewart…certainty on a final B.C. LNG tax framework (a revised and reduced tax regime) is also a positive development for Highbank which stands to benefit from a possible boom in LNG projects…

Highbank President and CEO Victor Bryant announced recently projected revenues of $27-million for fiscal 2015 while estimating first-year pre-tax profits at $11-million…those estimates are based on pending orders and quotes submitted over the past few months (refer to the company’s Oct. 14 news release)…

Technically, HBK has been forming a strong base around Fib. support at 26 cents…note the long-term uptrend support line…very bullish…

HBK is up a penny at 27.5 cents as of 8:30 am Pacific…

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

There has been a profound change in the technical posture of Garibaldi Resources (GGI, TSX-V) – what this may mean or lead to is anyone’s guess, but it cannot be ignored at this point…

The 3-year weekly chart shows a recent double bottom formation (just a whisker above the rising 500-day moving average (SMA), rapidly increasing buy pressure and RSI(14) up momentum, and a bullish +DI crossover…it’ll be very interesting to see how things unfold over the next week or so – technically and fundamentally, of course, with developments on the ground at Rodadero and elsewhere…

GGI is up half a penny at 23 cents through the first 2 hours of trading…

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

The Venture’s recent slide sliced Discovery Venture’s (DVN, TSX-V) share price by more than half, from a high of 41.5 cents at the beginning of September to a recent low of 16 cents…that’s the nature of these speculative, volatile markets…investors have to have a stomach for volatility and not confuse a drop in a company’s share price with diminishing prospects – that’s not always the case…

Technically, what John likes about DVN is how the long-term uptrend line was recently successfully tested…the current low in the SS matches that seen during previous important bottoms in the stock price…RSI(14) has bounced up from previous support…a bullish +DI crossover has not yet occurred which would confirm a reversal…

DVN has made significant progress this year in advancing its high-grade Willa-Max Copper-Gold Project, featuring a NI-43-101 resource and a Preliminary Feasibility Study, in southeastern British Columbia…

DVN is unchanged at 20 cents as of 8:30 am Pacific…

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

Gold has traded between $1,225 and $1,236 so far today as the Fed begins its 2-day policy meeting…as of 8:30 am Pacific, bullion is up $4 an ounce at $1,229 thanks to a weaker-than-expected U.S. durable goods report this morning…in addition, physical demand, particularly from Asia, has been giving underlying support to the metal…volumes for the benchmark spot contract on the Shanghai Gold Exchange are near a 2-week high set October 23…Silver has added 13 cents to $17.24…Copper is up 3 pennies to $3.11…Crude Oil is 21 cents higher at $81.21 while the U.S. Dollar Index is off one-fifth of a point to 85.35…

As usual, tomorrow’s statement from the FOMC will be very closely scrutinized by the market…most analysts believe the Fed will formally end its monthly bond-buying program but may also include some “dovish” language with regard to the future direction of monetary policy given fresh concerns regarding a slowing global economy…Gold will likely take its cue from how the greenback responds…

Gasoline prices have dropped below $3 a gallon at most U.S. gas stations, delivering a welcome lift to American consumers and retailers heading into the holidays…the U.S. economy is set to gain more than it loses from cheaper Oil…lower prices at the pump give drivers more money to spend on discretionary items and they reduce costs for many businesses…but lower Oil prices also threaten to slow the nation’s energy boom which has had a significant impact on the broader economy…

U.S. Durable Goods Orders Unexpectedly Drop

Orders for big-ticket manufactured goods in the U.S. fell for the second consecutive month in September, the latest sign of uneven improvement in the economy…purchases of durable goods – products like airplanes, cars, and heavy machinery that are designed to last at least 3 years – fell by 1.3% in September from the prior month to a seasonally adjusted $241.63 billion, the Commerce Department reported this morning..economists were expecting an increase of about 0.6% in durable goods orders…

Shifting Political Winds In U.S. 

Nearly 7 in 10 Americans are “angry” at the direction the country is headed and 53% of Americans disapprove of President Barack Obama’s job performance, troubling signs for Democrats a week before the mid-term elections, according to a new CNN/ORC International Poll…Democrats are in grave danger of losing their Senate majority while Republicans appear set to actually pad their majority in the House, giving them Congressional control which may reshape the U.S. legislative agenda…the potential impact of this, across various markets including of course equities and the U.S. Dollar, will be interesting to see…

Today’s Equity Markets

Asia

A powerful rally in China’s Shanghai Composite overnight as the Index shot up 2%, rebounding from an 8-week low yesterday and snapping a 5-session losing streak…data showed September industrial profits rising 0.4% on year, reversing a 0.6% annual decline in August…Japan’s Nikkei was off 59 points to close at 15330…sentiment was unable to get a boost after Finance Minister Taro Aso said that he will consider an economic package to support the economy after examining third-quarter data…

Europe

European markets were up significantly today…

North America

The Dow is up 66 points as of 8:30 am Pacific…U.S. consumer confidence rose more than expected in October, reversing the weakness seen in September, according to data from the U.S. Conference Board this morning…its Consumer Confidence Index rose to 94.5 from September’s revised reading of 89.0…in its initial reading, last month’s index was at 86.0…

The TSX has added 84 points while the Venture is off 3 points at 787 through the first 2 hours of trading…

Corvus Gold Inc. (KOR, TSX) Update

Corvus Gold (KOR, TSX) released robust drill results this morning from the Yellowjacket deposit at its North Bullfrog Project in Nevada…holes NB-14-400 and NB-14-401 returned broad intercepts of 36 m grading 17 g/t Au and 32 m o@ 5 g/t Au, respectively…(NB-14-400 is the best high-grade broad intercept drilled to date at the project)…these new results continue to fill a gap in the previous drilling in an area targeted for high-grade mineralization related to shoot development…15 other holes have been completed in this area (results pending) with another 10-12 holes planned as part of Phase 2 drilling…mineralization in this target zone occurs in the form of native Gold in quartz veins primarily within the stockwork zone around the main Josh Vein…this new high-grade zone, originally hit in hole NB-14-399, is expanding at depth with grades that are 5 to 15 times the average of the system overall and higher than the main Josh Vein…KOR is up 9 cents at $1.04 as of 8:30 am Pacific…

Kaminak Gold Corp. (KAM, TSX-V) Update 

Fresh drill results released this morning from Kaminak Gold’s (KAM, TSX-V) new Kona North Gold discovery at the Coffee Project in the Yukon…highlights included 3.12 g/t Au over 28.95 m from 64 m downhole…mineralization at Kona North has now been traced over a minimum strike length of 240 m with 10 holes completed to date…all holes have intercepted mineralization with estimated true widths ranging from 5 m to 25 m…Kona North appears to represent a broadly east-west striking, moderate to steeply south dipping mineralized envelope, which exhibits pinch and swell as observed at other Gold zones at Coffee…KAM is up 4 pennies at 71 cents as of 8:30 am Pacific…

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

Encouraged by a new surface discovery 150 m north of Silver Eagle discovery hole SE-14-01, and Phase 2 drill core that’s visually similar to Phase 1, Garibaldi Resources (GGI, TSX-V) definitely appears to have a “tiger by the tail” at its Rodadero Project in central Sonora State – especially with interest in Rodadero shown by at least 2 companies, 1 of them a leading international Silver and Gold producer as reported by Garibaldi late last week…while GGI also has other “irons in the fire” at the moment, including its La Patilla Gold Property in Sinaloa State and of course the Grizzly Project in northwest B.C., the shallow, high-grade and apparent widespread nature of mineralization at Rodadero clearly presents a unique opportunity for the company – especially considering the fact there are majors to the north and south of Rodadero with operating mines…

The discovery of a new mineral camp at Rodadero, a previously under-explored part of central Sonora State, could have company-changing possibilities for GGI…click on the arrow below for additional comments from GGI President and CEO Steve Regoci (Part 3 of our segment)…

Claude Resources Inc. (CRJ, TSX)

Technical analyst Clive Maund (www.CliveMaund.com) picked up on this one the other day, and John is seeing similar reasons for encouragement…fundamentally, the company achieved record Gold production of 20,614 ounces during Q3 at its 100%-owned Seabee Gold operation in Saskatchewan…the strong third quarter represents a 96% increase in production compared with the third quarter of 2013…year-to-date Gold production of 50,700 ounces is 63% higher than the first 9 months of 2013…on October 7, the company revised its 2014 production guidance upward to 61,000 to 64,000 ounces of Gold from the previous guidance of 50,000 to 54,000 ounces…the company’s strong performance this year has allowed it to continue to focus on generating earnings and reducing debt…Q3 financial results will be released pre-market next Monday…

Below is a 3-year weekly CRJ chart for our readers’ due diligence…note the double bottom pattern, the bullish +DI crossover and the reversal to the upside in the 200-day moving average (SMA), currently at 22 cents, during the summer…

CRJ is off a penny at 24 cents as of 8:30 am Pacific…

Zenyatta Ventures Ltd. (ZEN, TSX-V) Chart Update

Below is an updated 2+ year weekly chart for Zenyatta Ventures (ZEN, TSX-V) which has been showing some encouraging technical signs lately, though it does face some challenges including resistance around $2.25 since early July and a long-term downtrend line that currently intersects just above Fib. resistance in the $2.50‘s…

ZEN is unchanged at $2.20 as of 8:30 am Pacific…

Updated Copper Chart

Copper is at a very important juncture and must soon decide if it’s going to break above a long-term descending triangle or head lower, below important chart support around the $3 level…technically, as strange as it may seem, a substantial drop in Copper prices – as experienced in recent months in Crude Oil – can’t be ruled out – nor can a bullish advance in the event of a breakout above the triangle…these are unpredictable times…

RSI(14) at 42% is at previous support on this 13-year monthly chart…

Updated Crude Oil Chart

Crude Oil can be expected to remain under pressure given its breakdown earlier this month below long-term support…yesterday, Goldman Sachs predicted WTIC prices could fall as low as $70 a barrel by early next year…that possibility certainly exists given a combination of current demand-supply dynamics and the technical deterioration we’ve seen in the Oil chart in recent weeks…”smart money” will likely be selling into any rallies that will likely be capped in the mid-to-upper $80’s…

Below is a 6-month daily chart…sell pressure has been mostly dominant since early July…

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

Many energy stocks are suffering, and this has been a major factor in the Venture’s 20%+ plunge since the end of August…we warned about Contact Exploration (CEX, TSX-V) as soon as it confirmed a breakdown into the low 40’s below a long-term upsloping channel…there is likely more pain to come based on the posture of this 2.5-year weekly chart…

CEX is off 1.5 cents at 30.5 cents as of 8:30 am Pacific…

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

Gold has traded between $1,227 and $1,233 so far today…as of 7:00 am Pacific, bullion is down $2 an ounce at $1,229…Silver is off just 1 cent at $17.20 (see updated charts at bottom of today’s Morning Musings)…Copper is up a penny at $3.08…Crude Oil has fallen $1.44 a barrel to $79.57 on a Goldman Sachs downgrade while the U.S. Dollar Index has retreated nearly one-tenth of a point to 85.62…

The Gold market will be watching the outcome of this week’s Federal Reserve meeting (Tuesday and Wednesday) with great interest…bullion needs a catalyst to push through a stiff resistance band between $1,240 and the low $1,250’s, and whether the Fed can be that catalyst remains to be seen.  “It’s hard to judge the impact of the upcoming FOMC meeting on Gold, except to say its impact will likely be transmitted to the bullion markets via the reaction of the U.S. dollar,” bullion analysts at HSBC stated Friday…

Interesting note from Frank Holmes in his weekly Investor Alert at www.usfunds.com…severe droughts in the western United States may weigh heavily on mining companies operating in the region…in 2013, mining companies around the world spent $12 billion on water infrastructure, a whopping 275% increase from 2009…the extra costs incurred by maintaining water quality and quantity are problematic for the industry…

In a research note issued yesterday, analysts at Goldman Sachs are calling for WTI to fall as low as $70 a barrel during the second quarter of 2015 when it expects oversupply to be most pronounced (bullish for Gold producers in terms of cost savings)…

The Wall Street Journal reported this morning that a single buyer (believed to be a London hedge-fund manager that focuses on metals trading) has snapped up more than half the Copper held in London Metal Exchange warehouses, giving it control over a crucial source of supply and raising concerns among traders about the potential for higher prices…on several occasions in the last month, this buyer held as much as 90% of the world’s Copper stored in LME-licensed warehouses, equal to about 140,000 tons…as of last Wednesday, the buyer owned between 50% and 80% of Copper held in warehouses, according to the most recent exchange data…this would be worth anywhere from roughly $535 million to about $850 million…

Giant Gold Nugget

One of the largest Gold nuggets in modern times pulled from northern California’s Gold country has been sold to a secret buyer for approximately $400,000…the new owner of the so-called Butte Nugget and its exact price will both remain mysteries at the buyer’s request, the San Francisco Chronicle reported Saturday…however, Don Kagain, a coin dealer who brokered the deal, said that a “prominent Bay Area collector” paid about $400,000 for the nugget weighing 6.07 pounds…historically, prospectors found giant Gold nuggets in California during the 19th century Gold Rush days, including a 54-pound chunk found in Butte County in 1859…however, it has been decades since a report of anyone discovering a rock of 6 pounds or more in California…

Today’s Equity Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite fell for a 6th straight session, losing 12 points and hitting an 8-week low…Japan’s Nikkei, however, climbed 97 points to finish at a 2-week high…

Europe

European markets are down significantly in late trading overseas… a report by the influential Ifo think tank showed German business sentiment darkened in October, hitting its lowest level in almost 2 years…

North America

The Dow is down 65 points as of 7:00 am Pacific…the TSX has lost 149 points, thanks to weakness in energy stocks, while the Venture, also hurting by the drop in Crude, is off 8 points at 798…

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

Garibaldi Resources‘ (GGI, TSX-V) proven track record in Mexico surely has much to do with the unsolicited approaches the company has received, as reported last Thursday, with regard to its Rodadero North high-grade Silver-Gold Project which is looking more promising than ever as Phase 2 drilling continues along with extensive sampling and mapping throughout the 45 sq. km area…

Are the “dots” beginning to connect at Rodadero given the numerous well-defined targets that have been outlined north, east and south of the Silver Eagle discovery?…

Click on the arrow below for more comments from GGI President and CEO Steve Regoci from our interview Friday afternoon (to ensure high quality HD viewing, simply manually adjust your setting if necessary at the bottom right corner of the video)…

Updated GGI Chart

Some significant technical developments in GGI after last week’s reversal on Thursday’s news…RSI(14) on this 9-month daily chart has broken above a downtrend in place since July, and finished Friday at 54%…such a breakout is typically very bullish…the EMA(20) is now reversing to the upside, in a pattern similar to that seen in late April, -DI is falling quickly and sell pressure – dominant since August – has been replaced with buy pressure…this is a rather dramatic and potentially very significant turn…

GGI is up a penny at 22 cents as of 7:00 am Pacific…

Columbus Gold Corp. (CGT, TSX-V) Update

Columbus Gold (CGT, TSX-V) continues to show technical promise as well as progress on the ground with 3 drill rigs completing a Phase 2 program at the Montagne d’Or Gold deposit (Paul Isnard Project) in French Guiana…

Recent results from hole MO-14-167 (38.6 m grading 4.48 g/t Au) were highly impressive and demonstrate the potential for exceptional grades and widths in the principal UFZ zone…

The Montagne d’Or deposit hosts an inferred resource of 140.1 million tonnes grading 1 g/t Au for a total of 4.3 million contained ounces…an updated estimate is expected following completion of the current drilling which is being financed by Nord Gold NV…this is part of a minimum $30-million (U.S.) exploration and development program pursuant to which it can earn a 50.01% interest in Montagne d’Or and the Paul Isnard mineral claims by completing a bankable feasibility study no later than March 2017…

Meanwhile, keep an eye on CGT’s Eastside Gold Project in Nevada (news on that last Thursday)…starting in January, Columbus plans to drill more than 60,000 meters in 250 rotary holes (along with 2,576 meters in 10 to 12 core holes for detailed metallurgy) with the aim of establishing an initial resource calculation for Eastside by late 2015…

Late last month, Columbus completed a $5.36 million private placement with a “prominent” U.S. investor…

Technically, CGT has the advantage of a rising 200-day SMA…its immediate challenge is to bust out above the downtrend line in place since Q1 on this 2+ year weekly chart…strong support at 40 cents…

CGT is off 1.5 cents at 42.5 cents as of 7:00 am Pacific…

Probe Mines Ltd. (PRB, TSX-V) Update

It has been a while since we’ve done an update on Probe Mines (PRB, TSX-V), but extensive drilling, advanced metallurgical testing and environmental studies continue at the company’s multi-million ounce Borden Lake deposit in northern Ontario…no drill results have been released since July, so it’s reasonable to expect a progress report from the company in the near future…a Preliminary Economic Assessment for Borden Lake is being worked on, and keep in mind that the company still has over 60 km of previously unexplored strike length with the Borden Lake Belt to investigate…

Technically, Probe has been firming up recently after forming a strong base around the $2.20 level…the 50-day SMA at $2.35 is beginning to reverse to the upside, always a positive sign…clearly, PRB commands close attention entering the final 2 months of the year – the stock has generally outperformed Gold since the second quarter of last year…

PRB is up 3 pennies at $2.50 through the first 30 minutes of trading today…

Gold Long-Term Chart

Below is an interesting long-term technical outlook on Gold and how bullion could possibly take a run toward the $3,000 level in a powerful “Wave 5” move over the next few years…

The Gold price jumped 293% in “Wave 1” that lasted more than 7 years…”Wave 3” started in late 2008 and ended in late 2011 at at all-time high of $1,924…the “Wave 3” gain was 183% over a shorter time period…”Wave 5” has the potential to take bullion from around its current level to nearly $2,800 an ounce…

One concern with this 34-year monthly chart is the emergence of sell pressure after 12 consecutive years of buy pressure…just temporary, or exactly how long will that continue for?…

Silver Short-Term Chart

Silver’s immediate technical challenge is to overcome resistance around $17.40 (it attempted to do so last week) and push above RSI(14) resistance at 40%…this would also produce a confirmed breakout above the downtrend line on this 6-month daily chart…

Sell pressure has weakened considerably since peaking in late August/early September…in addition, the metal has emerged out of an extreme RSI(14) oversold condition that mirrored the overbought levels that dominated from mid-June to mid-July…

Silver Long-Term Chart

This long-term chart suggests that Silver is in the process of bottoming out but may not have found a final low just yet…next major support is at $16, and that may have to be tested…the 2008 and 2010 lows came on spikes to the downside – that’s something to watch for…

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

There can be no doubt about the rapidly growing possibilities of Garibaldi Resources Corp.’s (GGI, TSX-V) Rodadero high-grade Silver-Gold Project in central Sonora State following an important update late last week.

Investors responded favorably to new geological information, as drilling and sampling continue, plus the curious fact that a “leading international Silver and Gold producer”, and a privately-held Chinese company in the metals sector, both recently completed site visits (unsolicited approaches) and signed confidentially agreements with GGI.

With the likes of lead geologist Dr. Craig Gibson and advisory board member Dr. Peter Megaw, and an established presence in that country going back a decade, Garibaldi’s credibility in Mexico is significant to say the least.  The company was the first junior to use hyperspectral remote sensing technology on a large scale in Mexico and this resulted in GGI hitting the “jackpot” in 2009 with its Temoris option (sold to NYSE-listed Paramount Gold & Silver, PZG) that now forms the richest portion of Paramount’s high-grade San Miguel deposit.

As important as Temoris was to Garibaldi, President and CEO  Steve Regoci now views the situation at Rodadero as potentially much more prolific given the scale of the project – Rodadero North stretches 10 km north-south and 5 km east-west – and the widespread high-grade mineralization (Silver, Gold and base metals) found at surface including bonanza Silver grades in drill core at Silver Eagle, 1 of approximately a dozen targets identified to date.

Click on the arrow below for the first short excerpt of our interview completed Friday afternoon with Regoci (to ensure high quality HD viewing, simply manually adjust your setting if necessary at the bottom right corner of the video).

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

TSX Venture Exchange and Gold

The Venture stabilized last week, staying above support at 800, but still endured its 8th consecutive weekly decline – the smallest point drop, however, since the sell-off began at the beginning of September.  Last week’s 5-point loss left the Index at 805 Friday but sell pressure has weakened considerably since peaking around the middle of this month.  The Venture is just a couple of points below its 10-day moving average (SMA) – a reversal to the upside in that SMA could certainly occur this coming week, and that would give the Index some much-needed technical momentum to close out a very rocky month.

Below is a 3-month daily chart that shows how the Venture’s RSI(2) hit several low extremes during September and October.  The possibility of a sudden and powerful upside move certainly can’t be ruled out after what has occurred over the last 8 weeks, but neither can a potential retest of October 16 levels.

The good side to the wash out we’ve seen is that it has created some very attractive opportunities in high quality select situations, and there have been several excellent examples of that recently.  During periods of market weakness, nervous nellies with a herd mentality often make the mistake of doing the opposite of what they should do – they panic and actually indiscriminately sell stocks, some of which they instead should be buying at a discount.  Many of us spend a lot of time going from store to store searching to save a few dollars or a few hundred dollars on a particular product, but somehow we’re not as comfortable shopping for deals in the stock market that involve even more money and greater potential savings.  Human behavior at times is indeed very strange.  There are some really interesting individual companies at the moment that could gain serious traction in the days and weeks ahead, so in times like this it’s particularly important to focus on the “market within a market”.  It’s all about selectivity.

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 and therefore great opportunities for in Gold and quality Gold stocks – 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

The Venture has correlated more closely with Crude Oil than Gold over the last couple of months, so the combination of a stabilization of Oil prices and a breakout in Gold would be the best-case scenario for the Venture.

A key event this coming week will be the FOMC meeting Tuesday/Wednesday, and Gold traders will be closely analyzing the language coming out of that for any clues that the Fed may have become more dovish in recent weeks given strong evidence of a global economic slowdown.

After posting back-to-back weekly gains, and hitting a 6-week high early in the week, Gold eased off $7 an ounce last week to finish at $1,231.  The nearest chart support is $1,229.  Strong resistance exists in the mid-$1,250’s and that’s where bullion needs to push through in order to put the bears on the defensive.  There has been a modest pick-up in physical buying out of China and India in recent weeks.

This chart sure looks like an important bottom formed October 6.  Still waiting for sell pressure, dominant since late July, to switch to buy pressure.

Silver keeps attempting to break above resistance around $17.40.  It fell 6 cents last week to close at $17.21 (updated Silver charts Monday morning).  Copper added 3 pennies to $3.06.  Crude Oil sank another $1.75 a barrel to $81.01 while the U.S. Dollar Index ended a 2-week decline by advancing half a point to 85.70.

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 (air strikes won’t stop them) 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.