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October 11, 2014

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Independent Research and Analysis of Gold, Silver, Copper, the TSX Venture Exchange and Emerging Junior Resource Companies: Speculative Opportunities in Today’s Markets

Welcome to our site, or at least the initial version of it!  BMR has been online for more than five years and strictly through word-of-mouth we have built a loyal following.  We encourage reader feedback and the exchange of helpful opinions and ideas among investors in our forum.

We’re continuing with our plans to ultimately construct a very unique investment and money-management resource site that goes considerably beyond what we have now.  We focus a great deal on the Gold, Silver and Copper markets as well as trends in the global economy, in addition of course to the technical health of the TSX Venture Exchange (CDNX).  An important component of this site, as well, will always be original research on high quality junior exploration companies or small producers that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity, and we are being more selective than ever in the current market environment.  We look for companies with the ability to execute both on the ground and in the market, who are determined to build shareholder value, which actually excludes most Venture stocks.  However, investors must understand that the companies we do put forward for our readers’ due diligence are still highly speculative situations and entail considerable risk, volatility and unpredictability.

Our intent is to provide you with information that you can use as part of your own due diligence.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. Always perform your own due diligence and please read our disclaimer at the bottom.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perspective (His money that we have been given stewardship of), He will bless you.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

October 10, 2014

BMR Morning Market Musings…

Gold, on track for its best weekly performance in 4 months, has traded between $1,217 and $1,226 so far today…as of 8:00 am Pacific, bullion is down $3 an ounce at $1,221…Silver is off 4 pennies at $17.31…Copper is 2 cents lower at $3.05…Crude Oil, which has fallen below a key support level as per John’s chart earlier this week, is down another 74 cents to $85.03 (a level not seen since late 2012) while the U.S. Dollar Index is up one-third of a point at 85.89…however, its 12-week winning streak certainly appears to be over barring an unexpected major late-day move…

The outlook for the global economy has darkened in recent weeks, and the Venture has been speaking loud and clear with regard to that as its abrupt and sharp reversal since the beginning of September – the fact the Index effortlessly sliced through strong support at 3 critical levels – foreshadowed a broader global equity correction that could intensify this month…

Crude Oil has also fallen below important technical support thanks to a range of factors including Saudi Arabia actually cutting prices to customers last week (not a good sign)…given the weaker outlook for the global economy – heightened deflationary concerns in the euro zone, fears that Germany’s economy might fall into recession, Brazil in recession and China hinting at weaker growth – and U.S. Oil production at its highest in nearly 3 decades, Crude may have a tough time rallying back above $90 a barrel…soft Oil prices could also put a crimp in the U.S. energy boom…at $90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic according to a recent report by Goldman Sachs…while fracking costs run the gamut, producers often break even around $80 to $85…

One bright spot here – Gold producers stand to benefit from lower Oil prices which form a significant part of their cost structures…Canadian producers are also benefiting from a weak loonie…

All the talk about Federal Reserve “tightening” by as early as the spring or the middle of next year may not amount to a hill of beans as the U.S. obviously isn’t immune to global forces, and the American recovery has been less than robust to begin with – any major sell-off in equity markets won’t help matters…

Today’s Equity Markets

Asia

Asian markets were down significantly overnight with China’s Shanghai Composite retreating 15 points to snap a 7-session winning streak that took the index to its highest level since February 2013…caution set in ahead of a raft of September data next week…

Japan’s Nikkei average hit a fresh 2-month low, dropping for a 4th straight session ahead of a long weekend in that country…

Europe

European markets are down sharply in late trading overseas…remarks yesterday from ECB President Mario Draghi didn’t help stocks…speaking at the Brookings Institute, he reiterated that quantitative easing would not be effective without economic reforms, and warned of deflation risks…widely followed investor Dennis Gartman had this take on Draghi’s comments:  “As the world awaited a hoped-for clear and precise statement that the ECB was prepared to actually take action on monetary policy and become expansionary, it instead heard a lecture explaining that he and the others on the ECB’s monetary policy committee had done all that they could do to try to strengthen the economy there and that the real battle had to be waged by the political authorities to reform the sclerotic nature of the economies there.”

North America

The Dow is up 9 points as of 8:00 am Pacific, reversing earlier losses after touching its 200-day moving average (SMA) this morning for the first time since the August low…yesterday marked the third day the Dow has seen a move of more than 200 points, the longest streak since August 2011, a month marked by extreme stock market volatility due to the U.S. debt-ceiling crisis…after a streak of 19 straight sessions without a triple digit move, there have been 12 of them in the Dow’s last 18 trading sessions…meanwhile, the S&P 500’s decline yesterday was its worst in 6 months, pushing the index below its 150-day moving average (SMA) for the first time since November 2012…

The TSX has tumbled another 215 points as of 8:00 am Pacific where it may find support at its rising 300-day SMA (14107)…the Venture is down 13 points at 824 as it inches closer to the next major support level at 800…

VIX Chart Update

The “Fear Index” has generally been making higher lows since mid-July and yesterday broke above a resistance band between 17.50 and 18.00…the VIX is now up against RSI(14) resistance at 63% – a move above this area would certainly be negative for equity markets…

VIX6

CRB Index Updated Chart

A fresh look at the CRB (2.5-year weekly chart) reveals that this index is touching strong support – the question is, will it hold that support or crash below it?…with SS already very oversold and RSI(14) at its lowest level (30%) since the June 2012 low, one could argue that the CRB could be close to an important reversal – especially if it can break above the downtrend line in place since June…since then, the index has tumbled 12%…another view is that the CRB is at risk of falling further…support does need to hold at the lows of late last year and the beginning of January…

CRB121

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

All things considered, this has been a good week for Doubleview Capital (DBV, TSX-V) which on Monday reported its best drill results to date at the Hat Property in the Sheslay district, with the Lisle Zone remaining open for expansion in all directions…more drilling begins shortly to follow up on the discovery of higher grades (118 m of 0.55% Cu and 0.41 g/t Au in HAT-22) in the Sheslay red stock…the Hat continues to demonstrate robust geological potential – only 22 holes have been drilled at this new discovery – a few more holes could produce a major breakthrough, one that could also deliver a dose of much-needed confidence to the beleaguered junior exploration sector…

Technically, DBV is underpinned by strong support including rising 50 and 300-day SMA’s as shown on this 3-year weekly chart…patient investors could be handsomely rewarded by Doubleview’s tenacity and the spirited drive of their management and technical team…

DBV31

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

As we mentioned previously, when you see an exploration stock hold up well in the current Venture environment, you know you’re looking at a quality opportunity – so it should come as no surprise that Calibre Mining (CXB, TSX-V) recently attracted a major new investor (Peter Lassonde) to help it build on the success it’s enjoying in Nicaragua…

CXB has managed to overcome chart resistance at 15 cents and closed at a new multi-year high of 19 cents yesterday…it has backed off slightly this morning, down 1.5 cents at 17.5 cents through the first 90 minutes of trading…

CXB16

Benton Resources Inc. (BEX, TSX-V)

We encourage our readers to check this out – there was an innovative deal announced earlier this week by Benton Resources (BEX, TSX-V) which entered into an LOI with Nordmin Engineering Ltd, a private Thunder Bay-based company that has grown remarkably over the last decade…the aim of the deal is to advance toward production 4 of the 6 Gold deposits at Benton’s Cape Ray Project located in southwest Newfoundland, should the economic viability of the project be determined…

Nordmin President Chris Dougherty stated: “Nordmin is exceedingly pleased that we have been able to establish this partnership with Benton. This is, to the best of our knowledge, the first arrangement of this type made in the mining industry here in Canada (our emphasis).  By providing the engineering, construction and operational know-how to Benton’s renowned expertise in prospecting, exploration and geological development, we have established a formidable team that could become a model for other junior explorers. Creativity brings opportunity, and we are very pleased to be part of this opportunity.”

Benton, which had working capital of nearly $7 million at the end of March (latest financials), has approximately 80 million shares outstanding and closed yesterday at 6 cents…below is a 2-year weekly chart showing base support at a nickel and a 200-day SMA that has flattened out at 6.5 cents…as always, perform your own due diligence…

BEX

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

October 9, 2014

BMR Morning Market Musings…

Gold rose to its highest level in 2 weeks today on a falling dollar after yesterday’s minutes of the last Federal Reserve policy meeting drove markets to push back expectations for the likely timing of an interest rate rise…as of 7:45 am Pacific, bullion is up $7 an ounce at $1,228 after trading as high as $1,235…Silver has added 27 cents to $17.66 (a close above $17.60 would be technically bullish)…Copper has surged a nickel to $3.08 while the U.S. Dollar Index is up slightly at 85.31…it appears a record winning streak of 12 straight weekly gains is over for the Dollar Index which is obviously generating some short-covering in Gold…

In the minutes of the Fed’s Sept. 16-17 meeting, several officials expressed concerns that disappointing growth in Europe, Japan and China could restrain U.S. exports…meantime, the stronger currency – by reducing the cost of imported goods and services and putting downward pressure on commodity prices – could hold U.S. inflation below the Fed’s 2% objective…the Fed staff slightly reduced its projection for medium-run growth in part because of these concerns…

As we pointed out at the beginning of the week, the dramatic scaling back of net-short positions by commercial traders, as shown in recent COT reports, was a strong clue that Gold could be gearing up for a reversal…whether this is a true reversal, as opposed to a mere bounce out of oversold conditions, remains to be seen…another positive sign, from a contrarian standpoint, is that holdings in SPDR Gold Trust, the world’s top Gold-backed ETF and a good proxy for investor sentiment, fell 5.38 tonnes to 762.09 tonnes yesterday – the lowest since December 2008…initial demand out of China, following a one-week break for that country’s National Day holiday, was reported to be encouraging yesterday…

Interesting – the prospect of a harsh northern hemisphere winter, a potential OPEC supply cut and a volatile geopolitical picture may send Oil prices back toward $100 a barrel by the end of the year, according to a CNBC survey of strategists and traders…the average price of OPEC’s basket of 12 crudes has fallen below $90 a barrel for the first time in 2 years…

Today’s Equity Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite added another 6 points to close at 2389 while Japan’s Nikkei average slipped 117 points to finish at 15479…

Europe

European markets are mixed in late trading overseas…the Bank of England left its benchmark interest rate unchanged as expected today as wage growth and productivity remained surprisingly weak, lagging the country’s economic recovery…meanwhile, German foreign trade data this morning showed its biggest fall in more than 5 years…

North America

After yesterday’s powerful move, the Dow is down 125 points as of 7:45 am Pacific…Alcoa (AA, NYSE) kicks off the unofficial start of Q3 earnings season after today’s close as investor attention shifts from the Federal Reserve back to corporations, and what they have to say about the final quarter of the year and 2015…

The TSX is down 128 points while the Venture is off 3 points to 846 as of 7:45 am Pacific…

A valuable perspective shared yesterday by Sprott Global Resource Investments Ltd. and Michael Kosowan…

“Mergers and acquisitions (M&A) activity in the mining sector was anemic for most of 2013, but as the Cayden example (CYD, TSX-V) suggests, things are beginning to change. Deals are happening. In fact, according to data compiled by Bloomberg, deals valued at $11.2 billion total have been proposed and completed so far in 2014, the highest annual figure in three years.

“As deal-making revives, there is an opportunity for speculators and investors to capitalize – but they will need to keep a discerning eye.  It’s not going to be as easy as buying any company with ‘Gold’ in its name, like we saw in the Gold run-up of 2009-2011. It’s about hitting the ‘sweet spot’ by being selective and finding the most likely takeover candidates.

“Mergers and acquisitions in the Gold space typically happen at both market tops and market bottoms. They occur at tops because companies are flush with cash and are able to expand and buy assets.

“At market bottoms, they occur when larger companies with foresight purchase distressed assets. Companies recognize that they can bolster their ‘pipeline’ of future projects and/or upgrade their existing portfolios at attractive prices.

Few management teams have been given license by their boards to pursue mergers and acquisitions just yet, but those with strong balance sheets and a mandate to deploy capital are taking advantage of the low valuations across the sector.”

Gold Updated Chart

Below is an update to the chart we posted Tuesday…this is a bullish interpretation based on a 3-year weekly chart, and it assumes key support at $1,180 holds which it has (at least for now)…what we’ll be watching for on this chart as the month progresses is a quick reversal in sell pressure...the recent change from more than a year of buy pressure to sell pressure has to be a concern…the last switch from buy pressure to sell pressure occurred at the beginning of 2013, and we all know what happened over the next several months…on an encouraging note, RSI(14) formed a bullish low “W” at 30% and continues to move higher…

It’s very interesting that Gold did not break last year’s double bottom low despite a record run in the U.S. Dollar Index…

GOLD199

U.S. Dollar Index Updated Chart

After 12 straight weekly advances, the U.S. Dollar Index is finally starting to cleanse overbought conditions…at a minimum, it’s reasonable to expect an eventual drop to a support band (previous resistance) between 83.50 and 84.50…this would take pressure off the Venture which typically responds unfavorably to a sharply rising greenback as we’ve witnessed since the beginning of September…

USD145

The HGD – A “Mirror Image” Of The TSX Gold Index

Below is a 3-year weekly chart for the HGD on the TSX – the double-short ETF that tracks the S&P/TSX Global Gold Index (securities of global Gold sector issuers listed on the TSX, NYSE, NASDAQ and AMEX)…in effect, this is like viewing the TSX Gold Index in reverse…it provides another perspective…

Gold stock investors have to watch for 2 things in this chart:  Will the HGD break out at some point this quarter above the downsloping channel you see below, and will its 200-day SMA reverse to the upside? (sell pressure, dominant since early this year, is rapidly declining)…if both of those events occur, then Gold stocks will experience further weakness…we’ll revisit the HGD as the month progresses…

HGD3

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

Recently, we raised the possibility of near-term weakness in Contact Exploration (CEX, TSX-V) due to free-trading paper coming into the market and a chart that was showing some minor deterioration…

Yesterday, CEX broke below an uptrend channel in place since the summer of last year, while RSI(14) slipped below previous support – two clear indications of fresh technical weakness…there is Fib. support at 38 cents and strong chart support in the low 30’s…

CEX is unchanged at 42 cents through the first hour of trading – 2 cents above the still-rising 200-day SMA…

CEX24

Spectra7 Microsystems Inc. (SEV, TSX-V)

If the reality of the Venture hitting a multi-year low has you depressed, you may wish to immerse yourself in a more pleasing “virtual” reality with the help of Spectra7 Microsystems (SEV, TSX-V)…

SEV, a speculative tech play that made its Venture debut early last year, jumped 16 cents or 26% on news yesterday regarding the release of VR7050, what the company calls “the industry’s first chip capable of enabling lightweight, ultrathin active interconnects that achieve the requisite high speed and low latency for gesture recognition processing and motion control featured in the latest gaming and virtual reality products.”

No doubt SEV is involved in an interesting space with tremendous growth potential, and we’ll be watching with curiosity to see where investors take the stock during this fourth quarter…this morning, the company announced it has arranged a $4.75-million subordinate secured non-revolving loan facility which “will allow us to further strengthen our balance sheet to enable continued accelerated growth,” according to CEO Tony Stelliga…

“Enable” is one of the buzz words Spectra7 likes to use…it’s mentioned twice among 52 words in a long-winded sentence describing what the company is about under “What We Do” on its web site.  “Spectra7 Microsystems Inc. is a high performance analog semiconductor company delivering unprecedented speed, resolution and signal fidelity that enables ultra-light, high-speed, micro-thin interconnects which enable new classes of industrial design for market-leading consumer electronic products including Ultra-HD 4K Displays and Televisions, Virtual Reality, Wearable Computing and Tablets.”

For your own due diligence, here’s another statement from Stelliga taken from SEV‘s latest MD&A:

“Spectra7 is at the cusp of a new and exciting growth phase driven by the global growth of wearable computing, virtual reality and ultra thin high resolution displays.  Recent first market availability of leading consumer products featuring the company’s latest products underscore the company’s ability to rapidly deliver new products that enhance consumer experience. Our high performance analog signal processing capabilities and strong system expertise enable us to deliver on our vision of setting the industry standard for ultra light, micro thin extended interconnects capable of delivering ultra high resolution and dramatic consumer appeal of product industrial design. As a result, Spectra7 continues to demonstrate its ability to execute operationally to drive revenue growth and gross margin.”

Technically, there’s no denying that SEV is showing strength…below is a 2-year weekly chart from John…the key for SEV will be to overcome resistance in the mid-80’s…SEV climbed as high as 83 cents in early trading today but is now down 3 pennies at 75 cents as of 7:45 am Pacific…

SEV1

Note:  John, Terry and Jon do not hold positions in HGD, CEX or SEV.

 

October 8, 2014

BMR Morning Market Musings…

Gold has traded between $1,208 and $1,222 so far today as it continues to firm up modestly after Friday’s closing yearly low…as of 8:15 am Pacific, bullion is off its highs of the day but still up $2 an ounce at $1,210…Silver is down 3 pennies at $17.16…it needs to overcome resistance in the $17.50’s-$17.60’s in order to give the bears a strong push-back…Copper is unchanged at $3.03…Crude Oil is $1.65 a barrel lower at $87.20 while the U.S. Dollar Index is flat at 85.66…the Dollar Index was up almost 8% in the third quarter…a “slowing down” of the greenback’s move is likely during Q4, especially after a record 12-week run, though a test of strong resistance between 88 and 89 appears very possible…historically, only twice since the 1970’s has the Dollar Index posted back-to-back quarters of gains of 5% or better…

Some interesting comments this morning from respected precious metals analyst Larry Edelson (moneyandmarkets.com)…while he’s bearish short-term on metals, Edelson stated:  “All the underlying fundamental, cyclical and technical conditions for Gold and Silver’s long-term bull markets remain in place. The most important one: The rising tide of the war cycles and geo-political stress.  On that note, let me assure you, if you think the state of chaos in the world now is bad, you haven’t seen anything yet. The war cycles are still in the very early stages, with nearly six more years of ramping up to go.  In the months and years ahead, you are going to see domestic and international unrest that will make the current environment look like a walk in the park. This force, geo-political unrest, while also temporarily bearish, will invert and become the number one reason Gold and Silver soar.”

Leon Panetta, President Obama’s former Defense Secretary, told Fox News’ Bill O’Reilly yesterday that there’s no question the Obama administration’s decision to not maintain a presence in Iraq was a mistake, and the President needs to “develop the will to get into the ring and fight” against ISIS.  “Frankly it’s not going to work to do air attacks without people on the ground who know where the targets are and what’s going on,” he said. “Now if we have people we can trust on the ground that’s fine, but if the military thinks that we ought to have the special forces, boots on the ground to do what’s right I think that the President ought to be open to that kind of recommendation.”

Chicago Federal Reserve Bank President Charles Evans today again urged the U.S. central bank to be “exceptionally patient” on raising rates, noting downside risks to both growth and inflation…with longer-term inflation expectations falling near post-crisis lows, Evans said he was “concerned about the possibility that inflation will not return to our 2% target within a reasonable period of time.”

Today’s Equity Markets

Asia

Trading resumed overnight in China’s Shanghai Composite following the week-long National Day holiday break…the Index climbed 18 points, hitting a new 18-month peak…real-estate developers rallied significantly after Beijing last week announced new stimulus measures to boost property demand…other Asian markets were in the red overnight…

Europe

European markets continued their slide this morning to 6-week lows…the Organization for Economic Cooperation and Development (OECD) didn’t help matters when it said it expected the euro zone’s economy to slow over the coming months…

North America

The Dow is off 21 points as of 8:15 am Pacific…the Dow clearly appears to be in “correction mode” (the extent of that correction remains to be seen) after slightly overshooting the 17150 measured Fib. resistance level last month…at a minimum, it appears the Dow may once again test a strong support zone between 16300 and 16400 which would mean a slight drop (approximately 200 points) below the still-rising 200-day SMA currently at 16586…

This 6-month daily chart shows that near-term risks are skewed more to the downside…what we’re seeing could be the early stages of a potentially more significant correction…

DOW24

The TSX has fallen 111 points as of 8:15 am Pacific while the Venture is down another 13 points to 842…

Venture Updated Chart

The ease with which the Venture has sliced through solid support levels around 970, 920 and 860 – like a knife through butter – does not bode well for either commodities and/or equity markets in general…the Venture has proven to be reliable leading indicator and the message it has been delivering since the beginning of September has been a rather ominous one…this doesn’t mean it’s time to panic and throw stocks overboard – it just means investors must exercise even more caution than ever, while also watching for unusual opportunities that may open up in the coming days and weeks…volatility is clearly on the upswing…in 16 trading sessions since mid-September, for example, the Dow has had 10 triple-digit moves on a closing basis after NO triple-digit moves in the previous 19 sessions…

This 10-year Venture monthly chart outlines the next 3 major support levels for the Index – 800, 760 and 680…in terms of how this market looked technically at the end of August, with rising 200 and 300-day moving averages (SMA’s) and very strong layers of support in the high and low 900’s, the suddenness and intensity of this reversal is almost without precedent…we remind readers, however, that it was in the depths – and in the aftermath – of the 2008 Crash when fortunes were made by many investors, and the same will hold true during this slide…so this is no time to be discouraged…it’s rather a time to really get to work and find special situations that have been knocked down – and may get knocked down even further – before their turn comes to soar…

CDNX342

TSX Gold Index Update

The TSX Gold Index didn’t respond yesterday to a rise in Gold and is now flat at 159 after reaching 163 in early trading today…the 10-day SMA, currently at 166, has been resistance since nearly the beginning of September…

While the Gold Index is certainly due for a rally out of short-term oversold conditions, the risk of an eventual test of base support at 150 remains very high in our view especially considering the Venture’s drop to a fresh multi-year low…

This 15-year monthly Gold Index chart shows RSI(14) breaking below a trendline while the Index has also fallen below an ascending triangle…these are warning signs that while a bounce higher could be in the works, we may not have seen a yearly low yet in this Index which has plunged about 20% in just over 5 weeks…

SPTGD136

Goldcorp Inc. (G, TSX) Update

Goldcorp (G, TSX) needs to hold critical support at the $25 level, and the 1-year daily chart provides evidence that a rally from that level could be under way…

Goldcorp moved higher over the summer after forming a head-and-shoulders pattern on this 2.5-year weekly chart…however, a concern with this chart is that RSI(14) has broken below a trendline in place since last year which just isn’t a healthy sign…buy pressure was weak during the 30% summer jump…major resistance around $30…

G5

Eldorado Gold Corp. (ELD, TSX-V)

Eldorado broke above a downtrend line in June and soared nearly 50% before retracing recently to support at the rising 200-day SMA…like with Goldcorp, however, downside risks are evident on this 2+ year weekly chart…

Eldorado’s cash operating costs for Q2 averaged $489 per ounce (in the bottom quartile of the industry) and all-in sustaining cash costs averaged $829 per ounce…the company reported net profit of 5 cents per share in Q2 and expects to produce 790,000 ounces of Gold this year, slightly higher than original estimates…

ELD4

Richmont Mines (RIC, TSX) Update 

Small producer Richmont Mines (RIC, TSX-V) is clearly on the rebound, fundamentally, after going through a very challenging 2012 and 2013 with the share price tumbling by more than 90%…Richmont returned to profitably earlier this year and has also outlined a significant high-grade resource beneath existing workings at its operating Island Gold Mine in Ontario…

Any further sell-off in Gold stocks may open up a tremendous opportunity in Richmont between the rising 300-day SMA around $1.65 and Fib. support at $1.95…RIC is unchanged at $2.14 as of 8:15 am Pacific…

RIC5

Note:  John, Terry and Jon do not hold share positions in G, ELD and RIC.

October 7, 2014

BMR Morning Market Musings…

Gold has traded between $1,202 and $1,214 so far today…as of 8:30 am Pacific, bullion is up another $4 an ounce at $1,211 after yesterday’s rally…Silver is down 14 cents at $17.21…Copper is off 2 cents at $3.04…Crude Oil (see updated chart below) has fallen 97 cents to $89.36 while the U.S. Dollar Index is flat at 85.84…

Bullion enjoyed its its biggest 1-day gain in 2 months yesterday as the dollar rally paused and some physical demand emerged…it’s encouraging that over the past week, while the Dollar Index surged to a 4-year high while Chinese traders were largely absent due to the National Day holiday there (it ends today), bullion has held slightly above its 2013 double bottom low…current conditions are certainly a breeding ground for a potential major rally – sentiment toward Gold is very negative and short positions are high…meanwhile, the “smart money” commercial traders have been busy dramatically scaling back their net-shorts in recent weeks to levels that typically precede a significant upside move in bullion…the balance of October is going to prove to be very interesting…there are reasons for optimism but also caution…citing his Hulbert Gold Newsletter Sentiment Index, Mark Hulbert warns this morning that there’s not enough “absolute bearishness” at the moment in Gold to declare a significant bottom, and he may very well be right…

Silver has some work to do – significant technical resistance exists around $17.50…a close above last week’s high of $17.64 would bring some confidence back into that market…

The IMF has downgraded its global growth forecast for both this year and next as a divergence emerges between those economies that are recovering,  and those that are not…the organization, which represents 188 countries, now expects world growth to come in at 3.3% in 2014, down 0.1%  from its forecast in July…in 2015, it expects growth to pick up to 3.8%, though that estimate is down 0.2% from earlier…

Today’s Equity Markets

Asia

Japan’s Nikkei average fell 107 points overnight to close at 15784…trading in China’s Shanghai Composite resumes tomorrow after a week-long holiday break…

Europe

European markets were moderately lower today…German industrial production fell more than economists forecast in August in the latest sign that the outlook for Europe’s largest economy – and the euro zone in general – is deteriorating…production, adjusted for seasonal swings, dropped 4% from July, when it expanded 1.6%, the Economy Ministry in Berlin said today…that’s the biggest decline since January 2009 and compares with a median estimate of 1.5% in a Bloomberg News survey…

North America

The Dow is down 161 points as of 8:30 am Pacific…results from aluminum producer Alcoa (AA, NYSE) will kick off the latest slew of quarterly earnings tomorrow, and a further eight S&P 500 companies will post results before the week is out…also tomorrow, investors will be closely analyzing minutes that will be released from the recent FOMC meeting for a clearer picture on future policy…

Despite an improving economy and the lowest unemployment rate in 6 years, Americans’ views of President Barack Obama’s economic leadership stands at the lowest level of his presidency, according to the latest CNBC All-America Economic survey…

The TSX is off 14 points while the Venture is down another 6 points at 862, just 3 points above the June 2013 low…that’s also a 15.7% correction in just 26 trading sessions (22 losing sessions out of 26)…

Gold 3-Year Weekly Chart

Here’s one bullish view on Gold from John based on a 3-year weekly chart, and it assumes key support at $1,180 holds…what will be critical to watch for on this chart as the month progresses is a quick reversal in sell pressure…the recent change from more than a year of buy pressure to sell pressure has to be a concern…the last switch from buy pressure to sell pressure occurred at the beginning of 2013, and we all know what happened over the next several months…on an encouraging note, RSI(14) formed a bullish low “W” at 30% and is now moving higher…the balance of October is going to reveal how strong Gold’s support is at $1,180 and if physical demand can give bullion some needed traction…

GOLD198

Crude Oil (WTIC) Long-Term Chart

Crude Oil has been smacked hard the last few months and – very interestingly – has touched support at the bottom of an ascending triangle on this 12-year monthly chart….RSI(14) is at previous support, so this is really a critical period as well for WTIC…like with the 3-year weekly chart for Gold, increasing sell pressure has replaced an extended period of buy pressure, so that’s a red flag…WTIC needs to hold support…

WTIC15

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

The discovery of a new Cu-Au porphyry deposit in the Sheslay district of northwest B.C. is much more evident this morning following yesterday’s post-market release of assay results from the 7 latest holes drilled at the Hat Property by Doubleview Capital Corp. (DBV, TSX-V)…they included the best grades intersected so far at the Hat including a 118-m section in the last hole (HAT-22) that returned 0.55% Cu and 0.41 g/t Au within a much broader mineralized interval (404 m @ 0.40 CuEq)…tonnage is building at this property – just about every hole is returning long intersections –  now the key of course is to follow the trail of higher grade material while also continuing to expand the Lisle Zone which remains open in all directions…the distance between HAT-06 and discovery hole HAT-08 is a full kilometer, and there are numerous quality targets with geophysical and geochemical signatures surrounding the Lisle Zone that have yet to be drill-tested…

This is a fresh discovery on a proven trend that’s still in its early stages with huge potential upside after just 22 holes…more drilling is expected to begin shortly…we’ll be going into much more detail regarding the Hat Property, and the Sheslay district as a whole, in the very near future…

Not surprisingly, after 4 straight days of gains that preceded yesterday’s news, DBV is pulling back slightly in early trading today…it’s staying within technical parameters and there’s no big volume sell-off which is encouraging…DBV has slipped 2.5 cents to 18 cents as of 8:30 am Pacific…

Farshad at Anomaly C Outcrop

DBV President and CEO Farshad Shirvani investigates near-surface mineralization at Anomaly C, more than 2 km northwest of the Lisle Zone discovery holes (BMR site visit photo).

Ascot Resources Ltd. (AOT, TSX-V) Update

Ascot Resources (AOT, TSX-V) went on a major run in August thanks to results from its Premier Property in the Stewart area of northwest British Columbia, and the temporarily overbought technical condition that John pointed out has now cleansed itself…

Drilling has recently been focusing on the old Premier mine area, as reported August 22 – Ascot’s last update on the project…plenty of high-grade targets exist at this past producer…the system has a known strike length of over 1,600 m and a dip length of up to 1,200 m but a majority of the target area has only been loosely tested from underground, with most work dating back to the 1920’s to 1930’s…

In March of this year, Ascot released updated mineral resource estimates covering the Big Missouri, Martha Ellen and Dilworth areas at the Premier Property totaling 4.6 million ounces AuEq (see March 31 news)…

Technically, strong support has been forming in the $1.70’s, slightly above the still-rising 50-day SMA…the 20-day SMA went into decline during the last half of September but has now flattened out at $1.89…

AOT should be watched closely – while the chart is encouraging, we suggest waiting for the company’s next update which should provide investors with clear insight into the stock’s near-term direction…

AOT is down 9 cents at $1.81 as of 8:30 am Pacific…

AOT10

Two Interesting Non-Resource Charts

We’ve seen plenty of overall market volatility so far this month, and that was clearly evident in the trading of Cannabix Technologies Inc. (BLO, CSE) last week as it climbed as high as 19.5 cents and then dropped in half in just 2 trading sessions before stabilizing…Friday afternoon, we spoke with CEO Rav Mlait who confirmed the company is on track with all of its plans – in other words, there was no logical reason for that kind of a sell-off other than a few investors who may have had to raise some cash in a hurry…that’s the nature of these speculative and turbulent markets…that’s also how opportunities are created…

We see tremendous opportunities for BLO with its patent-pending marijuana breathalyzer technology, and interest from the U.S. in this company continues to grow which is a very positive sign…

Technically, BLO may have formed an important double bottom as you can see on this chart below…volume has picked up significantly in BLO on the CSE since mid-September, and trading volumes have been increasing in the U.S. as well…

BLO is up half a penny at 12 cents through the first 2 hours of trading today…

BLO10

Graphene 3D Lab. Inc. (GGG, TSX-V) Update

We first mentioned Graphene 3D Lab (GGG, TSX-V) in mid-August, shortly after it made its debut on the Venture and climbed from a low of 40 cents to more than $1 in the first two trading sessions…

This is just a chart update to help readers with their own due diligence – as always, we encourage investors to contact management and perform their own DD on any company they might be interested in…

After climbing as high as $2.56 in early September, GGG quickly retraced to the Fib. 38.2% level around $1.22 where the rising 50-day SMA currently sits…since then, GGG has been gradually climbing again and closed yesterday at $1.90…it’s up another 6 cents to $1.96 as of 8:30 am Pacific…

RSI(14) has unwound from extreme overbought conditions, finding support at the 50% level, and is now heading higher again…

GGG1

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

October 6, 2014

Hat Property Regains Momentum As DBV Cuts Into Higher Grades

Through shear grit and determination, technical expertise from distinguished mine-finders, and a little bit of luck which is always needed, Doubleview Capital Corp.’s (DBV, TSX-V) Hat Property is closing out the final quarter of 2014 with fresh momentum after the discovery of higher grades within the Sheslay “red stock” as reported by the company following today’s market close.

It’s important to point out that Doubleview has not been drilling a known deposit – this is a fresh, evolving discovery in the Sheslay district about 10 km southeast of the Star deposit.  And it’s going to get a lot more interesting when the next round of drilling begins imminently, especially since the last hole (HAT-22) returned the best grades yet including a 118-m section of 0.55% Cu and 0.41 g/t Au (0.80% CuEq) within a broader interval of 404.2 m @ 0.40% CuEq.  All 7 holes from this latest round of drilling “hit”, expanding the Lisle Zone to the north, the southwest and the east.

The “blue sky” over the Hat is as blue as ever – tonnage is building, grades are now trending higher (critical), and this system is wide-open in all directions.  Yes, a massive amount of work is still required here – lots of heavy lifting to come – but the Doubleview team has already managed to get this far in a relatively short period.  To use a football analogy, there’s every reason to believe they have what it takes to carry the ball into the end zone – wherever the “end” zone in this case might be because this field simply has no limits at the moment.

Keep in mind that less than a year-and-a-half ago, this property had never been previously drilled.  To take the Hat from that grassroots stage to where it is now, after just 22 holes, is a major accomplishment, particularly considering the challenging market environment.  Only a very dedicated, disciplined and talented team with immense faith in their project, and not afraid to take smart risks, could achieve that over these last 18 months.  This is why we’re convinced there is so much potential upside to the Hat Property and Doubleview itself.  President and CEO Farshad Shirvani, who has the likes of highly respected geologists Pat McAndless and Erik Ostensoe at his side, and others who are playing key roles, has shown the kind of courage and conviction required to give investors a legitimate shot at a huge win.

We’ve had our boots on the ground at the Hat – a site visit last April gave us the distinct sense that there is something special about this part of the Sheslay district.  Cu-Au porphyry systems are never easy to figure out, but the possibility that the Lisle Zone connects with other well-defined targets throughout the project has to be considered very real.  A broad range of data collected by Doubleview, combined with historical reports, are extremely encouraging for the discovery of a large-scale deposit.  And somewhere in this cooked-up system, rich grades could exist as they do in the “red stock” at the Red Chris.

More tomorrow.

Lisle Zone

An emerging deposit – the latest results from Doubleview Capital have elevated the potential of the Hat Property as the company prepares for another round of drilling.

 

BMR Morning Market Musings…

Gold has traded between $1,187 and $1,203 so far today…as of 8:00 am Pacific, bullion is up $10 an ounce at $1,201…Silver is 23 cents higher at $17.09…Copper has added 2 cents to $3.06…Crude Oil is down 78 cents a barrel to $88.96 while the U.S. Dollar Index, having advanced a record 12 straight weeks to its highest level in 4 years, has cooled off somewhat to begin the new week – it’s down nearly half a point to 86.24…

John has a very interesting 20-year monthly Gold chart this morning that bullion bulls should find comforting…no one can say with certainty at this point if Gold is going to hold its 2013 double bottom support at $1,180…however, there are some aspects to the long-term chart that are quite favorable and suggest that any breach of that support could be very brief…

Citi Research is looking for Gold to find support in the $1,130 to $1,160 area should the $1,180 support fail…the bank points out that the last time Gold fell this sharply, the jewelry sector responded vigorously with re-stocking. “This was particularly evident in the big rise in Gold imports into Hong Kong ahead of the 2014 Chinese New Year,” Citi stated. “As the Chinese New Year is now only a few months away, with its increased seasonal luxury goods demands, we expect that if Gold did fall sharply in October that there would once more be substantial buying ahead of that retail season. We therefore believe that Gold is likely to find at least temporary support in the $1,130-$1,160 range should it break its important $1,180/oz support level.”

Alan Greenspan, former Chairman of the Federal Reserve, articulated in an article in Foreign Affairs that China would see unexpected strength in the international financial system if it were to convert some of its foreign exchange reserves into Gold…clearly, there is speculation as to the advantages China could have if it were to purchase and hold more Gold – and that’s a long-term strategy Chinese authorities are continuing to carry out, it appears…

Today’s Equity Markets

Asia

Japan’s Nikkei average extended gains into a second session, climbing 182 points overnight, as a weaker yen boosted exporters…the currency traded in sight of a 6-year low of 110 against the greenback…China’s Shanghai Composite remains closed through tomorrow for the week-long National Day holiday that began last Wednesday…

Europe

European markets are up moderately in late trading overseas…

North America

The Dow is up 13 points as of 8:00 am Pacific…the TSX is 25 points higher while the Venture is off 8 points at 875…

Gold 20-Year Monthly Chart

What’s interesting about this 20-year monthly chart is that the current weakness in Gold is coming after RSI(14) several months ago broke above a downtrend line going back to the 2011 high…as we’ve seen with the both the Dollar Index and the Venture, RSI(14) breakouts/breakdowns can be extremely important indicators…the Slow Stochastics (SS) indicator also broke above its downtrend line and is now re-testing that level as support…so this is encouraging…

What this chart is telling us is that there is some inherent technical strength in Gold…one possible scenario, based on this monthly chart, is that bullion could spike lower (below $1,180) at some point during the next couple of weeks, and then quickly and violently reverse to finish the month above key support in the $1,180’s…the fact that the “smart money” commercial traders have dramatically scaled back their net-short positions in Gold in recent weeks suggests a near-term bottom in bullion is rapidly approaching, if we haven’t seen one already…

GOLD197

Venture 3-Year Weekly Chart

The Venture 3-year weekly chart has been a very reliable guide for more than a year now, so “warning signs” were flashing early last month as soon as RSI(14) dipped below its uptrend line in place since the summer of last year…RSI(14) then plummeted along with the Index which sliced through strong support levels (970 and 920) like a knife through butter…

Is the Index in the process of putting in a triple bottom?…that remains to be seen…the support band between the 2013 low (859) and 875 is critical – a confirmed break below that would lead to a further loss of confidence and the Index would have to search for a new low…

The abrupt reversal in the Venture since the end of August (the Index has plunged 13.8% over the last 24 trading sessions) and the intensity of that move suggests a couple of obvious possibilities – a) commodities have further to fall, or b) the broader equity markets are gearing up for a major correction…another possibility, of course, is that we’ve essentially seen the end of this Venture correction and critical support around 860 will hold…the two problems with the latter theory are the break below the uptrend support line around 920 and the fact that the Index’s 200 and 300-day SMA’s have suddenly started to decline, albeit very gently at the moment…

CDNX341

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

Doubleview Capital (DBV, TSX-V) was halted pre-market this morning, at the company’s request, pending news…we’re always nervous about trading halts as they tend to lift investors’ expectations beyond reasonable levels…however, in certain circumstances, sometimes they are necessary…in the case of Doubleview, this halt is obviously related to drill results as the company indicated a week ago that assays were expected in the “very near future”…DBV was halted on both previous occasions this year when drill results were issued…

While it would be nice to see a “glory hole” out of the Hat, we’re not expecting one – those are very rare…

Success for Doubleview, in our estimation, would simply be to show improvement over the last set of results in mid-May that the market didn’t react well to, in part due to poor communication…what we’re hoping to see is evidence of higher grade potential within “Anomaly B” which is now known as the Lisle Zone…will Doubleview deliver?…we’re anxious to find out…markets can be punishing, especially in the current environment, if a company can’t demonstrate that it’s moving forward in the right way…DBV needs to pass this test…

Technically, DBV has been showing momentum recently and rising 200 and 300-day SMA’s at 19 cents and 15 cents, respectively, are helpful…

DBV30

North Arrow Minerals Inc. (NAR, TSX-V) Update

Any additional weakness over the next couple of months in North Arrow Minerals (NAR, TSX-V) 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…

Below is an updated 1.5-year weekly NAR chart from John…resistance has been very strong around 80 cents since the end of last year…another resistance area is 65 cents…significant support in the immediate vicinity of the Fib. 38.2% retracement level (54 cents)…as always, perform your own due diligence…

NAR is off 2 pennies at 60 cents through the first 90 minutes of trading…

NAR6

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

Contact Exploration (CEX, TSX-V), one of our favorite oil and gas plays the last couple of years, has hit two important “contact” points on its 2.5-year weekly chart – the bottom of an upsloping channel in place since mid-2013, and RSI(14) support…

In late August, the company reported net income of nearly $1.1 million for the quarter ended June 30, more than double net income for the same period last year…recently, Contact also successfully completed drilling at three new Kakwa (Alberta Montney) wells, and these look promising…it’ll be interesting to see the initial 30-day production volumes (CEX holds a 25% working interest)…CEX remains very active on other fronts in the Montney and elsewhere…

Keep in mind that stock from a $10 million June financing (39 cents non-flow-through, 44.5 cents flow-through) has now become free trading – just something to be aware of, as we mentioned previously, as this could put some more downward pressure on the stock…potential good news from the Montney may drive enough volume in the stock to help clean up any paper that comes into the market from the PP…

CEX is unchanged at 45.5 cents as of 8:00 am Pacific…

CEX23

Short-Term Silver Chart

Silver plummeted to a fresh multi-year low on Friday in knee-jerk reaction following a better-than-expected U.S. employment report…for starters, Silver needs to gain traction above its 10-day SMA around $17.40, but the likely trading range for the metal over the coming weeks appears to be between chart support at $16 and previous support (now new resistance) around $18.60…

Since the beginning of last month, Silver’s RSI(2) on this 6-month daily chart has spent most of its time in oversold conditions below 30, reversing the extreme overbought situation that persisted through much of June…one encouraging recent sign is that we’re seeing higher lows in the RSI(2) while the price of the metal drops to new lows…

SILVER206

Silver Long-Term Chart

After failure of support around $17.50, the next obvious major support for Silver is $16 – a level it breached during the 2008 Crash but reclaimed as support in late 2009 as you can see in this 11-year monthly chart…interestingly, the Slow Stochastics indicator is at its lowest level in a decade – this is really a time to be bullish, not bearish, when one looks at the long-term “Big Picture” for Silver – what we’re seeing in the sentiment and technical indicators now is the mirror image of what emerged in early 2011 when metal raced to a high of nearly $50 an ounce with almost everyone jumping on the bandwagon…

SILVER205

Note:  Jon holds a share position in DBV.

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