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From Rouyn-Noranda, Quebec

Good day from frigid Rouyn-Noranda as we begin an eastern tour that will also take us to PDAC in Toronto…Gold has traded between $1,204 and $1,220 so far this morning on this final trading day of February…as of 8:45 am Pacific, bullion is up $8 an ounce at $1,217…Silver is 8 cents higher at $16.61…Copper is flat at $2.67…Crude Oil is up 92 cents at $49.09 while the U.S. Dollar Index is down slightly at 95.15…

Chinese and other Asian markets reopened earlier this week, following the week-long Lunar New Year break, and that has clearly brought some support into the Gold market as evident again today…trading volumes on the Shanghai Gold Exchange have been picking up and premiums have also been pushing higher…however, analysts at UBS noted that although demand is positive, it is “nothing exceptional”…

Recent data regarding China’s Gold imports from Hong Kong, 1 indicator of Chinese demand for the precious metal (though somewhat less reliable than it used to be), showed that shipments climbed to 71.8 metric tons in January from 58.8 tons in December…

Today’s Equity Markets

Asia

China’s Shanghai Composite and Japan’s Nikkei average each finished 12 points higher overnight…for the Nikkei, another new 15-year high…

Europe

European markets finished modestly higher today ahead of next week’s start of the ECB’s QE program…details of the scheme will be discussed at its planned meeting next week…

North America

The Dow is down 20 points as of 8:45 am Pacific…the TSX has gained 86 points, thanks to strength in Gold and Oil, while the Venture is 2 points higher at 703…key resistance at 707…

TSX Updated Chart

Interesting 6-year monthly chart for the TSX…the big “W” formation in the RSI(14) is a very bullish sign, and the next measured Fib. resistance is around 15800…new highs appear to be in the works for the TSX, and that also has to be considered bullish for the Venture…

North Arrow Minerals (NAR, TSX-V) Update

As recently as a week ago, we highlighted the fundamental and technical reasons behind a very bullish scenario for North Arrow Minerals (NAR, TSX-V) which has a dynamic team capable of pulling off another world class diamond discovery…

North Arrow was halted yesterday morning and released news later in the day regarding initial results from processing of its Qilalugaq Project bulk sample (1,500 tonnes)…importantly, the proportion of rare yellow diamonds increases, both by stone count and carat weight, as the diamonds move into the larger size classifications…this is what they were hoping for…

Initial diamond recovery data from approximately 46% of the sample have been compiled, and include 5,366 diamonds greater than plus-one DTC (about one mm) weighing 189.97 carats from 609 dry tonnes of kimberlite…this is looking good and the market is responding favorably this morning with NAR up 14 cents at 82 cents as of 8:45 am Pacific…

Technically, there were 3 key reasons for the bullish call on NAR:

1.  The breakout above the downtrend line

2.  The breakout above the horizontal channel and Fib. resistance at 55 cents

3.  The reversal to the upside last month in the 50-day moving average (SMA)

Other important positive factors include the RSI(14) uptrend and the bullishness in the ADX indicator…

Given the technicals and the prospects for both the Qilalugaq Project and the Pikoo Project (a 3,000 m drill program started there earlier this month), NAR is poised for a potentially huge success in 2015…

Rouyn-Noranda’s Rich Mining History

What built Rouyn-Noranda, which rests on the edge of Lake Osisko and has a current population of just above 40,000, was the rich Horne Copper and Gold Mine, 1 of Canada’s greatest orebodies…it was discovered by mining legend Edmund Horne in 1920 (Noranda was born shortly thereafter)…

Horne persevered – he got disappointing initial assay results from his visits in 1914 and 1917 – and his theory that the deposits of northeastern Ontario extended into Abitibi was proven correct…the rest, as they say, is history…the Horne mine was the highest Gold grade VMS deposit of its size in the world…in its 50-year history from 1927 to 1976, it produced 11.6 million ounces of Gold and 2.5 billion pounds of Copper…

Today, the old Horne mine is being reborn…Falco Resources’ (FPC, TSX-V) Horne Project area in Rouyn-Noranda (acquired in 2012) encompasses the former producing Horne and Quemont mines, as well as the Horne 5 deposit which sits immediately below sits immediately below the former producing Horne Mine…earlier this month, Falco commenced an inaugural drill program (16,000 meters, nearly $4 million budget) on the Horne 5 Gold-Silver-Copper-Zinc deposit…the program is intended to confirm historical drill data, upgrade the size and confidence level of the current mineral resource estimate (2.8 million inferred ounces of AuEq grading 3.4 g/t) and provide material for metallurgical testing…drilling, which will consist of 9 holes and 9 wedge holes, is expected to be completed by September…

Falco has performed very well so far this year, up more than 50% for a market cap in excess of $60 million…it was trading briefly for less than 30 cents when Gold touched $1,130 in early November…

Gold Bullion Development Corp. (GBB, TSX-V)

We viewed Gold Bullion Development (GBB, TSX-V) as a tremendous speculative opportunity in late 2009 when it was trading just above a nickel, and then a discovery in early 2010 propelled the stock to an all-time high in the mid-90’s by later in the year…the junior resource bear market that started in 2011 did some serious damage to GBB’s share price which fell as low as 2.5 cents last year…interestingly, though, the company has battled through the hard times in the industry and has been able to advance Granada on many fronts, making it in our view the most undervalued opportunity on the prolific Cadillac Trend given the near-term open-pit production scenario and the total ounces in the ground…

Granada, just 5 km south of Rouyn-Noranda, has measured and indicated resources of nearly 1 million ounces @ >2 g/t Au…add in the inferred resources, plus the excellent potential to build major additional tonnage within the LONG Bars Zone going east, west and north, and it’s easy to understand why GBB has to be considered a potential takeover target…rumors are beginning to circulate regarding GBB, especially with the uptick in M&A activity in the sector over the last few months…Gold Bullion has a current market cap of just $13.9 million…

For the first time since 2011 we are returning to the Granada Gold Property for a close-up look as the project is now on the verge of production, just 5 years after the initial major discovery…25 of 26 permits have been received, and the high-grade Stage 1 production scenario (Stage 1 is 3 years) features robust economics as per the Preliminary Feasibility Study released last year…

BMR Interviews Frank Basa

“We’ve done it before and we’re going to do it again,” GBB President and CEO Frank Basa told us in reference to a renewed focus on building shareholder value given the advanced stage of the Granada Project and Gold Bullion’s current market cap of only $13.9 million…

Below is the first short excerpt (approximately 2 minutes) of our interview with Basa as he talks about the advantages of the Granada Project…

Audio Clip – Click On Arrow

[audio:https://e8d59e.a2cdn1.secureserver.net/wp-content/uploads/2015/02/GBB-Frank-Basa-Feb-27.mp3|titles=GBB Frank Basa Feb 27]

GBB Updated Chart

This long-term monthly chart shows the GBB roller coaster ride that started in 2006…as always, the best time to jump on board is just before the climb up as in early 2006, late 2009, and again now in our view following the breakout above the long-term downtrend line and the recent “throwback” to that level which is typical at the beginning stages of a new primary uptrend…

Sell pressure is in decline and volume has increased over the last 2 months…GBB is currently in a horizontal channel, so another test of the top of that channel appears likely…a massive breakout would be triggered on a move above 8 cents…

Walker River Resources (WRR, TSX-V) Update

A few months ago Walker River Resources (WRR, TSX-V) acquired some strategic claims in northern Quebec, but it’s their Nevada asset that has us really excited about this opportunity going into March and over the longer term…

Walker has permits in hand and is gearing up to drill its Lapon Canyon Gold Property in Nevada where high-grade mineralization is being targeted in crosscutting shear structures…past underground activities on the property demonstrate its excellent potential to host high-grade vein-type mineralization…quite simply, Walker has some bulls-eye targets to go after in a system that has never been properly tested…this is a prime area for a discovery and we’ll outline why very shortly…a lot of geological thought has gone into this project…

Record volume and the recent breakout above the long-term downtrend line are two clear and typically highly accurate signals from a technical standpoint that something quite special (a “BLO“-type event) could be in the works here…below is an updated 2-year weekly chart…

WRR is unchanged at 4 cents as of 8:45 am Pacific…

Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update

Quick technical update from John on Cannabix Technologies (BLO, CSE) which continues to consolidate in the low 50’s on the CSE…significantly, what has been developing is a bullish pennant as you can see on this U.S. chart below (this is based on the OTC listing and of course in U.S. dollars as Stockcharts.com does not yet include CSE listed companies)…

BLO is off 2 pennies at 52 cents on the CSE as of 8:45 am Pacific…

Note:  John, Terry and Jon hold share positions in GBB.  John and Jon also hold share positions in BLO and WRR.

Gold has traded between $1,207 and $1,221 so far today…as of 8:30 am Pacific, bullion has backed off modestly from its morning high and is currently up $7 an ounce at $1,211…Silver is up 3 pennies at $16.56…Copper has climbed a nickel to $2.67 after surging as high as $2.70…Crude Oil is off more than $1.50 a barrel to $49.38 while the U.S. Dollar Index has shot up nearly a full point to 95.12…

According to the numbers compiled by the IMF, euro zone Gold reserves increased by 7.437 tonnes in January to 10,791.885 tonnes…however, the data does not show which central banks actually bought Gold as the data groups together all the central bank purchases including the ECB…

Demand for Crude Oil is growing, Saudi Arabia’s top Oil official said yesterday, amid new data showing the world is getting hungry again for petroleum products (low Oil prices must drive the environmentalists crazy) and potentially bolstering OPEC’s decision to maintain production in the face of a price collapse…Saudi Arabia Oil Minister Ali al-Naimi used his first public comments since December to note that the Oil market had become “calm” and chided anyone who would “rock the markets”…

In an interview with The Mining Report (www.aureport.com), Lawrence Roulston, respected industry writer and President of Quintana Resources Capital ULC, had these interesting comments regarding fresh money starting to come into the junior exploration sector:

“Certainly, in spite of all the complaining about moribund financial markets, a truly enormous amount of new money is coming into the junior mining industry. From Oct. 1, 2014, to Feb. 6, 2015, junior mining and exploration companies raised $3.5 billion.  About two-thirds of that money was raised in Canada. The balance was raised in Australia, the U.S., the United Kingdom and Hong Kong.  Breaking that down, $1.7 billion was new equity, which went into about 130 companies. Another 40 companies raised $1.8 billion in debt. Keep in mind, this was just the juniors. The larger companies, the likes of Capstone Mining Corp. and Lundin Mining Corp., raised several billion as well. There is no shortage of money for companies with good management teams that can win the confidence of the smart money investors. And there are billions of dollars sitting on the table waiting for the right deals.”

CRB Index Updated Chart

The CRB Index is well-positioned for a potential rally out of oversold conditions highlighted by the huge gap that exists between the current Index value and its long-term downtrend line, by far the largest gap seen since the bear market began in 2011…

The support band between 200 and 220 has held through the collapse of Oil prices as WTIC is such a significant component of the CRB…if Oil can start to gain traction above $50 a barrel, a rally will indeed kick in on the CRB which would also be bullish news for the Venture…

RSI(14) levels hit a long-term low in late December/early January, though the Index did manage to stay within its support band and held 5% above its 2009 low…one cannot rule out the possibility of a test of the 200 area or even a drop below that, but for now the Index could get into rally mode…

Today’s Equity Markets

Asia

Japan’s Nikkei hit a new 15-year high overnight, climbing 201 points to close at 18786…China’s Shanghai Composite was also hot, propelled by the financial and property sectors…the Shanghai surged 2.2% or 70 points to finish at a 4-week high of 3299…

Europe

European markets finished mostly moderately higher today…on the data front, the latest GDP numbers from Spain confirmed that the country grew 2% year-on-year in the last quarter…in the U.K., year-on-year GDP was confirmed at 2.7% while the German unemployment rate also stayed at a record low in February…

North America

The Dow is unchanged through the first 2 hours of trading this morning…

U.S. consumer prices in January posted their biggest drop since 2008 as gasoline prices continued to tumble, which could give a cautious Federal Reserve ammunition to keep interest rates low a bit longer…the Labor Department said its CPI fell 0.7% last month, the largest decline since December 2008, after slipping 0.3% in December…it was the third straight monthly decline in the index…in the 12 months through January, the CPI increased fell 0.1%, the first decline since October 2009…

Meanwhile, durable goods orders figures for January increased a more-than-expected 2.8%, after a 3.4% decline in the prior month, and this is what has given the greenback a lift this morning…

In Toronto, the TSX is up 59 points while the Venture has edged 2 points higher to 702 – just 5 points below critical resistance…

Doubleview Capital Corp. (DBV, TSX-V) has announced a financing this morning to raise up to $1.5 million (flow-through at 20 cents and non-flow-through at 15 cents) which we interpret as a very positive sign that there is increased confidence as to how the Hat Project is developing…

Venture Updated Chart

The Venture is taking a run at critical resistance (Fib. and chart) at 707…if that level is overcome, which certainly appears possible given the posture of John’s 2-month daily chart this morning, then a push up to the 750 area becomes increasingly likely…as always, confirmation of any breakout is required…

RSI(14) at 59% has momentum and plenty of room to move higher…throughout this month, the Venture has been supported by its rising 20-day moving average (SMA) and now the 50-day SMA is reversing to the upside which should give the Index some help…

Pretium Resources Inc. (PVG, TSX) Update

One of our favorite plays in British Columbia remains Pretium Resources (PVG, TSX) which continues to make progress advancing its high-grade Brucejack Project near Stewart to production…PVG has a partner with deep pockets in Zijin Mining Group Co. Ltd., China’s largest Gold producer…that is hugely significant…

Technically, Pretium is trading within an upsloping channel – TA shows that this is an ideal entry point as PVG is now coming off the bottom of the upsloping channel and RSI(14) appears to have found support at 50%…what’s also interesting is that PVG has been trading above its 500-day SMA since the beginning of the year, and this important long-term moving average has flattened out and could soon be ready to move higher…quality company with a fabulous project…

PVG is up 12 cents at $7.61 as of 8:30 am Pacific…

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

Garibaldi Resources‘ (GGI, TSX-V) acquisition of the La Patilla Gold Property nearly 2 years ago was a strategic attempt to create a cash flow scenario, and the company has put those wheels in motion with yesterday’s news that an agreement has been reached to send mineralized material (mill feed) to a gravimetric/flotation processing center just 40 miles to the southeast…last year’s drill results showed why artisanal miners have been active at this property for decades, to the present day, and the company was smart to negotiate a long-term exploitation agreement for La Patilla with the local community prior to commencing any work at the property…La Patilla is surrounded by excellent infrastructure, also enhanced just recently with the construction of a major dam project in the area…

It’s also quite apparent that La Patilla may contain some impressive high-grade Gold “shoots” as the company stated in yesterday’s news…the last hole drilled at the property, LP-14, returned an 82 g/t Au intercept over 1 m within a much broader interval of 3.1 g/t Au over 30 m…we’re confident that Dr. Craig Gibson, who found this property for GGI and believes passionately in it, will have been better success on the upcoming second phase of drilling…

Meanwhile, Garibaldi appears ready to fire some important bullets next week during PDAC with an update on its Mexican flagship Rodadero Project as referenced yesterday…should be interesting…

Technically, GGI has formed a classic triple bottom on declining volume during that consolidation…RSI(14) on this 3-year weekly chart has found support and is trending higher, another encouraging sign…

GGI is up half a penny at 17.5 cents as of 8:30 am Pacific…

Castle Mountain Mining Corp. (CMM, TSX-V) Update

We alerted our readers to Castle Mining Mining (CMM, TSX-V) on the morning of January 19 when the company reported some impressive high-grade drill results from its Castle Mountain Project in southern California…CMM took off from the upper 30’s and climbed as high as 55 cents that day – the 200-day SMA at the time – before consolidating at slightly lower levels…

Four weeks ago the company announced the start of a 9-hole follow-up drill program with 6 holes targeting the mineralization identified in CMM–060…that hole intersected 74 m of 9.1 g/t Au, including 35 m of 18.97 g/t, beginning at depths of approximately 280 m…this mineralization is deeper, higher grade over thicker widths than previous high-grade sections and bottomed in 2+ gram material…the company intends to test the extent of this mineralization laterally and at depth…

Technically, CMM is showing encouraging signs that may very well lead to a breakout above resistance, identified previously and again in this chart, in the 50’s which includes the 200-day SMA and 2 Fib. levels…

CMM is up 3.5 cents at 49 cents as of 8:30 am Pacific…

Xmet Inc. (XME, TSX-V) Update

Xmet Inc. (XME, TSX-V) has been gaining momentum, thanks to news on a couple of fronts over the last week…yesterday, the company announced the start of a 2,200-m drill program at its 100%-owned Grasset Project located along the Detour Sunday Lake deformation zone…importantly, it’s adjacent to Balmoral Resources‘ (BAR, TSX) Grasset Project…

Last Thursday, Xmet reported that “heavy and widespread sulphide mineralization was encountered over the majority of the lengths of all 4 holes” drilled at the company’s Blackflake West Property…no graphite was hit, but perhaps a VMS-style system…this has given the market something to speculate on…complete assays are pending, but keep in mind that a small batch of test assays consisting of 10 1-m sections from holes 1 and 2 returned low values of Zinc and Copper…doesn’t of course rule out the possibility of some sort of discovery but don’t mortgage the house…

Technically, XME pushed above resistance at 6 cents yesterday but this potential breakout requires confirmation today…it’s off half a penny at 6 cents through the first 2 hours of trading…

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

Gold has traded between $1,204 and $1,213 so far today…as of 7:15 am Pacific, bullion is up $4 an ounce at $1,205…Silver is up 21 cents at $16.52…Copper is off a penny at $2.61 after a strong session yesterday…Crude Oil is flat at $49.21 while the U.S. Dollar Index has slipped more than one-tenth of a point to 94.32…

The end of the Lunar New Year holiday period in China and other parts of Asia has brought some traders back into the Gold market, giving bullion a modest lift…overnight premiums on the Shanghai Gold Exchange hovered around $4 with good demand evident throughout the entire first session after the week long break…

Interesting words from Randgold Resources‘ (GOLD, Nasdaq) chief Mark Bristow who told Kitco in an interview that he sees an increasing number of merger and acquisition opportunities appearing in the mining industry. “The market is stressed, I don’t think it’s there yet but it’s getting more stressed by the day,” he said. “Never have I seen an opportunity like I feel is appearing in the market for M&A before, in 30 years.”

Ontario Moves Down, Quebec Moves Up In Fraser Institute’s Rankings

The Fraser Institute has published its annual mining survey, ranking Finland as the world’s best mining jurisdiction…Saskatchewan came second followed by Nevada, Manitoba and Western Australia…

Five Canadian jurisdictions finished in the top 10 globally – Saskatchewan, Manitoba, Quebec (6), Newfoundland and Labrador (8) and the Yukon (9)…the report said Quebec has rebounded after a 3-year period of increased red tape, higher royalties and regulatory uncertainty (B.C. is ranked 28th, up slightly from last year)…

“In addition to being blessed with an abundance of mineral potential, Saskatchewan gets credit for having a government with a transparent and productive approach to mining policy,” said Kenneth Green, the institute’s senior director of energy and natural resources and director of the survey.  “The province offers a competitive taxation regime, good scientific support, efficient permitting procedures and clarity around land claims.”

The uncertainty created by the Ontario Liberal government in its mishandling of First Nations consultation were cited by the Fraser Institute in its choice to drop the province from 9th place to 23rd…much of the blame is being placed on the regulatory and policy confusion created within the resource industry stemming from the province’s amendments to the Mining Act and in dealing with First Nations issues…

“In Ontario, the new Mining Act amendments regarding First Nations consultation have resulted in complete incomprehensibility of rights on all sides,” said Green.

By the way, Malaysia ranks as the least attractive jurisdiction for mining investment, followed by Hungary, Kenya, Honduras, Solomon Islands, Egypt, Guatemala, Bulgaria, Nigeria, and Sudan…

Today’s Equity Markets

Asia

Trading in China’s Shanghai Composite resumed overnight and it closed 17 points lower at 3230 despite some better-than-expected economic data…the flash HSBC Purchasing Managers’ index (PMI) rose to 50.1 from January’s 49.7 reading…

Europe

European markets are slightly lower in late trading overseas…investors have taken a breather from recent concerns over Greece…Athens yesterday presented a list of reforms that have met the approval of its creditors and euro zone neighbors, meaning Greece has secured a 4-month extension to its bailout program that was due to end in a matter of days…however, the IMF and the ECB who oversee the country’s bailout said the reform plans do need greater clarity…

North America

The Dow is down 12 points through the first 45 minutes of trading…investors are digesting comments from Federal Reserve Chair Janet Yellen’s testimony before Congress which began yesterday and continues today in front of the House Financial Services Committee…yesterday she was effective at hitting the ball down the middle of the fairway, satisfying both doves and hawks as she stated that the central bank was not in a rush to hike interest rates but the economy continues to improve and at some point the Fed will initiate a hike…FedSpeak at its finest…

The TSX has gained 42 points while the Venture is up 2 points as of 7:15 am Pacific…

NioCorp Developments Ltd. (NB, TSX-V) Update

NioCorp Developments (NB, TSX-V) released an updated NI-43–101 resource estimate this morning for its Elk Creek Niobium deposit…as a result of positive indications from the company’s continuing metallurgical testing and development program, Titanium (TiO2) and Scandium (Sc) have been added to the mineral resource statement…both of these metals can be recovered with simple additions to the existing process flowsheet, according to NioCorp, and would provide additional revenue streams that would complement the planned production of Ferroniobium…the company is currently assessing these prospective revenue contributions, and plans to announce the results of a preliminary economic assessment for the project shortly…

NB is responding well to the news, up 2 pennies at 91 cents through the first 45 minutes of trading…John identified an important technical breakout in NB recently, and it continues to look strong as shown in this 2+ year weekly chart…

Gold-Dow Comparative 

Gold and the Dow have been moving in opposite directions this month with that trend even more pronounced than it was in January…we’ll see if this continues into March which historically is 1 of Gold’s weakest months of the year…

The Dow has confirmed a breakout above resistance at 18041, and the the next measured Fib. resistance is 18659…bullion has so far managed to hold critical support between $1,180 and $1,200, and Friday’s close to finish the month will be important…

TSX Gold Index Updated Chart

Both the TSX Gold Index and the Venture have held up well this month in the face of Gold’s weakness, suggesting that bullion may indeed avoid a technically-driven free-fall…

Below is a 6-month daily chart for the TSX Gold Index…John identified 3 Fib. support levels on an anticipated pullback – 175, 166 and 158…so far, the first level has held with the Index consolidating around 175 (5 points above the rising 50-day moving average) over the last 6 sessions…

What’s interesting about this chart is how the Slow Stochastics (SS) is at oversold levels similar to what was seen just prior to the November and January moves in Gold…

A strong case can be made here that the Gold Index is gearing up for another move to the upside…

Newmont Mining Corp. (NEM, NYSE) Update

Evidence of a fresh push higher by Gold stocks is illustrated in a short-term chart for Newmont Mining (NEM, NYSE) which remains the only Gold company in the S&P 500…Newmont is making good on its commitment to improve operating costs and efficiencies, and the stock has been rewarded as a result…This 3-month daily chart for NEM confirms the bullishness we’re seeing in the TSX Gold Index…a breakout has occurred here above a 3-week pennant and Fib. resistance at $25.14…

Keystone Chaos

President Obama fulfilled a promise yesterday – he used his power to thwart the Republican-controlled Congress by vetoing a bill to approve the Keystone XL pipeline…

“The Presidential power to veto legislation is one I take seriously,” the President stated.  “But I also take seriously my responsibility to the American people. And because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest – including our security, safety, and environment – it has earned my veto.”

Yes, the Canada-U.S. economic relationship and North American energy security have “earned” this President’s veto…

President Obama has more than pleased his left-wing followers as he aims to secure some hogwash “climate change legacy”, putting that ahead of the most significant bilateral economic relationship in the world…not only is he offside with the majority of American opinion on this issue, and the will of Congress, but the President’s Keystone veto is yet 1 more example of his incredible indifference toward Canada ever since he took office – he simply doesn’t grasp the strategic importance of the continental relationship (it’s also not surprising that Obama also has 1 of the worst personal relationships any U.S. President has ever had with the leaders of both Canada and Israel, American’s 2 greatest friends)…he can’t even make friends in Congress – what’s wrong with this guy?…

John Boehner, Republican speaker of the House of Representatives, correctly called the veto a “national embarrassment”.  He added, “It’s embarrassing when Russia and China are plowing ahead on 2 massive pipelines and we can’t get this one no-brainer of a project off the ground.”

The Vice-President of the U.S. Chamer of Commerce’s Institute for 21st Century Energy, Matt Koch, said this:  “I think you (Canadians) should take this personally.  We have had a long relationship with your country as far as trade, been key allies for decades or centuries, and we have tried to highlight the importance of the relationship at the U.S. Chamber.  Some of it has been caught up in U.S. politics.  But we think that Canada is being singled out.”

The “activists”, however, who have such a twisted ideology and are using Keystone as a rallying cry against their hatred of Oil in general, couldn’t be more pleased with the President…

“This veto is conclusive proof that activism works,” 350.org executive director May Boeve said in a statement yesterday. “After 4 years of rallies, marches, sit-ins, and civil disobedience, we’re thrilled to see President Obama take an important first step by vetoing this love letter to Big Oil. As the President himself has argued, Keystone XL would worsen climate change, threaten the safety of farmers and landowners in America’s heartland, and create essentially no long-term jobs – all so a Canadian Oil company gets to ship dirty tar sands to the rest of the world.”

Yes, the “wisdom” of May Boeve (Al Gore and so many others) on a mission to “save the climate” is guiding this President…

Of course 1 of the many facts 350.org and the American President don’t get is that Crude Oil from Canada is replacing Crude Oils from other suppliers that have greenhouse gas emissions profiles as high as Canadian Oil sands, or even higher, such as traditional suppliers Mexico and Venezuela…data from the U.S. Energy Information Administration (EIA) backs this up…since Canada started producing from its Oil sands in 2003, imports from these 2 formerly large suppliers have declined sharply…EIA reports that the combined volume of Crude imported from Mexico and Venezuela to the Gulf Coast and Midwest refining regions in 2013 was 1 million barrels per day lower than in 2003, while Crude imported from Canada was 900,000 barrels per day higher, almost a 1-for-1 replacement…

2016 and the next Presidential elections can’t come fast enough…

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

Gold has traded between $1,191 and $1,205 so far today…as of 7:40 am Pacific, bullion is unchanged at $1,202 an ounce…Silver is up a dime at $16.42…Copper has jumped 6 cents to $2.64…Crude Oil is 49 cents higher at $49.94 while the U.S. Dollar Index is flat at 94.58…

This is a slightly abbreviated version of Morning Musings as we travel east for a visit later this week to northwest Quebec’s Cadillac Trend, specifically the Granada Gold Property which has the attention of IAMGOLD Corp. (IMG, TSX) (and some other major players no doubt) given its status as a near-term producer with a robust Preliminary Feasibility Study and a substantial and growing resource…

For comparative purposes, a short distance down the road along the “Golden Highway” is the Malartic CHL Project…yesterday, Abitibi Royalties (RZZ, TSX-V) announced it has sold its 30% free-carried interest in the project to Agnico Eagle Mines (AEM, TSX) and Yamana Gold (YRI, TSX) for $35 million in shares plus a 3% NSR royalty…Malartic CHL includes several early discoveries and 2 small deposits that have been drilled out and placed into a reserve category…Granada is much more advanced, features low start-up costs and has a valuation of only $13.5 million (“ridiculously low” in the words of 1 CEO of a producing company we spoke with yesterday) based on Gold Bullion Development Corp.’s (GBB, TSX-V) current market cap with GBB holding 100% of the project…the way properties are increasingly being scooped up these days, it wouldn’t surprise us if Granada is on a ‘target’ list and that’s 1 reason for our visit…

Gold & Central Banks

Kazakhstan increased Gold reserves for the 28th straight month in January while Ukraine added to holdings for the first time since August, according to the International Monetary Fund said…Russia, meanwhile, trimmed assets for the first time since March (but also sold a whack of U.S. Treasuries)…

Central banks have raised Gold reserves for the past 5 years, a reversal from 2 decades of selling since the late 1980’s…governments added 477.2 tons in 2014, the second-biggest increase in half a century, and purchases will be at least 400 tons this year, according to the London-based World Gold Council…bullion enjoyed its biggest monthly advance in 3 years in January but is trying to hold support at $1,200 as February draws to a close…

Gold Seasonality Chart

The pullback in Gold this month should not be surprising considering how strong January was…over the last 2 decades, bullion has posted an average gain of 3.1% during the first 2 months of the year…2015 is shaping up to be quite normal in that respect…

Below is a 20-year Gold seasonality chart from John…the weakest months for bullion are March, June and October…September, November and January are the strongest…

Oil Update

Nigeria will call an extraordinary meeting of OPEC if Crude Oil prices slip any further, the country’s Oil minister said in an interview with the Financial Times, in a sign of growing alarm over the impact of Oil’s collapse on Oil producing economies…

“We’re already talking with member countries,” said Diezani Alison-Madueke in the interview published yesterday…if the price “slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” she stated…almost all OPEC countries, except perhaps the Arab bloc, are “very uncomfortable”, she added…as OPEC President, she is responsible for liaising with member countries and the producer group’s secretary-general in the event of an emergency meeting…

Copper Update

“There is much debate about how much of the recent Copper move lower has been fundamental,” Goldman Sachs analysts said in a recent note. “We are strongly in the camp that it is fundamental, driven by sluggish demand growth, above-trend refined supply growth, and cost deflation.”

For Goldman, a key sign that Copper’s weakness is justified is the rising levels of inventories of the refined metal in Chile, the world’s largest Copper producer…Copper stocks there rose by as much as 170,000 tons in the second half of 2014 to their highest level in more than a decade, apart from a brief period in 2013, Goldman estimates…factoring in stocks held elsewhere in the world, that implies Copper output is running around 500,000 tons above demand on an annualized basis, the bank says…that is equivalent to around 2% of annual refined Copper production…

Goldman isn’t alone in forecasting an excess of Copper in 2015…the International Copper Study Group, comprising Copper-producing and consuming countries, forecasts that demand for the metal will grow this year, but only by 1.1%…production will rise 4.3%, the group expects, led by output increases in Africa, Asia and North America, leaving a surplus of 393,000 tons by the end of the year, the first positive annual balance since 2009…Copper supply estimates have been off before, however…

U.S. Dollar Index Updated Chart 

Will Janet Yellen say anything during her 2 days of Congressional testimony (today and tomorrow) that may put a “cap” on the greenback?…the Dollar Index has been consolidating recently but remains in a powerful uptrend that will clearly accelerate if it breaks above resistance at 96…the Fed is walking a tightrope…the more it attempts to prepare the market for the first interest rate hike in nearly a decade, the higher the dollar goes…a runaway dollar, however, directly competes against the Fed’s goal of boosting inflation while it’s also starting to negatively impact the bottom line of many U.S. corporations…Home Depot (HD, NYSE) this morning, for example, warned that it expects currency headwinds will impact 2015 earnings by about 6 cents per share…

Below is an updated 20-year monthly Dollar Index chart…note the massive breakout from the symmetrical triangle…if the 96 level is overcome, the next Fib. resistance is 101…RSI(14) at 78% is in overbought territory but can certainly remain there for a while yet before beginning to unwind…

One-Third Of Americans Living At Risk Of A Financial Crisis

According to a newly released report from Bankrate, 24% of Americans have more credit card debt than emergency savings, and 13% are not much better off – they don’t have credit card debt but they don’t have emergency savings either…put another way, more than a third of Americans are living at risk of a financial crisis (the same is probably true of Canadians)…

“Americans are woefully under-saved for emergencies,” said Greg McBride, chief financial analyst at Bankrate. “By not having emergency savings and using some of your available credit, your options in the event of unplanned expenses are much more limited.”

Today’s Equity Markets

Asia

Japan’s Nikkei average climbed to another new record high overnight, gaining 137 points…China reopens tomorrow after the week-long Lunar New Year holiday…

Europe

European markets are higher in late trading overseas…

In Ukraine, the government accused pro-Russian rebels of opening fire with rockets and artillery at villages in southeastern Ukraine yesterday, Reuters reported, dashing hopes that a ceasefire agreed last weekend would be held…despite the conflict with Russia, President Vladimir Putin told a reporter with Russian State TV company said Monday that war between the countries was unlikely (so count on it)…

North America

The Dow is up 59 points as of 7:40 am Pacific as investors have responded favorably to Janet Yellen’s comments so far this morning.  “The FOMC’s assessment that it can be patient in beginning to normalize policy means that the Committee considers it unlikely that economic conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of FOMC meetings,” Yellen said in prepared remarks before the Senate Banking Committee…

The TSX has gained 66 points while the Venture is off 2 points at 690 as of 7:40 am Pacific…

The Venture’s 39-Week Cycle

This is an update to an amazing chart we’ve posted before that shows how the Venture, for some unknown reason, tends to trade in 39-week cycles…in other words, approximately every 39 weeks or 9 months, the Index experiences an important “swing” in direction…and it’s happening again…this indicator points to a better 2015…

Critical Elements Corp. (CRE, TSX-V) Update

We’ve been tracking Critical Elements Corp. (CRE, TSX-V) since late spring last year when it was trading below 20 cents while the company continues to develop its Rose Tantalum-Lithium Project in the James Bay area of Quebec…last August, CRE hit a multi-year high of 40 cents which was the Fib. measured resistance level…after a healthy correction that brought it back below 20 cents, CRE is once again on the rise which could mark the early stages of a significant “Wave 5” move as shown in John’s 2+ year weekly chart…

CRE closed at 24.5 cents yesterday…buy pressure has increased significantly this month…

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

Calibre Mining Corp. (CXB, TSX-V) has clearly been one of the top Venture exploration stories since the spring of last year with the stock significantly outperforming the Index…the company is working strategically with strong partners in the prolific northeastern part of Nicaragua, and has some 100%-owned ground…

Overbought technical conditions in CXB last September/early October unwound during November and December…Fib. support between 9 and 12 cents has proven to be exceptionally strong, and that was demonstrated again just recently when CXB was knocked down as low as 12.5 cents on drill results from the Minnesota Gold Project (JV with B2Gold) that fell short of expectations…however, there are a number of targets in and around that project, and elsewhere on the joint venture concessions, that will be explored this year…

Meanwhile, on January 21, Calibre announced final assay results from Phase 1 drilling at the Eastern Borosi Gold-Silver Project being financed by IAMGOLD Corp. (IMG, TSX) under an option agreement…5 Gold-Silver vein systems were tested over a combined strike length of 3 km through 40 drill holes (5,500 m), and drilling encountered high-grade zones on each of the structures…results included 5.07 m grading 13.44 g/t Au (GP14–028) and 2.76 m @ 26.48 g/t Au (GP14–030), testing the down dip portion of the Guapinol and Vancouver structures…

IAMGOLD was encouraged enough by the results to decide to launch a 5,500-m Phase 2 program to commence shortly…

Investors who have embraced any weakness in CXB over the last 8 months have done well…below is a 2.5-year weekly chart…CXB is off half a penny at 14 cents as of 7:40 am Pacific…

Note:  John, Terry and Jon hold share positions in GBB.

Gold has traded between $1,191 and $1,210 so far today…as of 7:30 am Pacific, bullion is up $5 an ounce at $1,209…Silver, at $16.54, has added 27 cents…Copper is off a penny at $2.57…Crude Oil has retreated $1.54 a barrel to $49.26 on more supply concerns…a survey showed Friday that the number of rigs drilling for Oil in the U.S. fell by 37 last week, the smallest weekly drop this year…the overall rig count is now at its lowest level in more than 3 years, but U.S. production still hasn’t peaked…the U.S. Dollar Index is up one-quarter of a point to 94.58…

Gold could be impacted this week by comments from Fed Chair Janet Yellen during her biannual testimony before Congress…she starts tomorrow before the Senate Committee on Banking, Housing and Urban Affairs…the next day, she appears before the House Committee on Financial Services…one thing to watch for from Yellen (besides possible hints regarding a pending rate hike) is any talk regarding the strength of the U.S. dollar as it’s quite obvious that the surge in the greenback is counter productive to the Fed’s goal of boosting inflation, and the high dollar is also beginning to impact the bottom line of many U.S. corporations…the Fed doesn’t ignore charts, and it’s likely not interested in seeing the Dollar Index climb above the critical 96 level anytime soon…

Hedge funds and money managers cut their bullish positions in Gold futures and options to a 6-week low in the week to Feb. 17, U.S. Commodity Futures Trading Commission data showed on Friday…however, holdings in SPDR Gold Trust, the world’s largest Gold-backed ETF, rose 0.23% to 771.25 tons on Friday – its 2nd straight day of inflows…

The deadline for the Indian government to present its annual budget is quickly approaching and, at the same time, it’s expected the government will also announce a reduction in Gold tariffs.  Comments from Barclays:  “In our view, it is unclear whether a reduction in duty will lead to an immediate rise in imports, but it is likely to support interest in the coming months, particularly when seasonal buying resumes in April, and particularly if the cut is of a meaningful magnitude.”

Two Technical Perspectives On Gold

We have 2 Gold charts this morning that aren’t intended to predict the future but they should help immensely in terms of focusing investors on key levels and potential developments in the coming days and weeks…

20-Year Monthly Chart

What’s encouraging about this 20-year monthly chart is how Gold continues to maintain its uptrend support line going back to 2001…despite Gold’s weakness in November, and again during parts of December, the support line held…meanwhile, the RSI(14) and SS indicators actually broke above long-term downtrend lines last year…

As long as Gold’s uptrend line on this chart isn’t breached (based on the month-end price), then bullion is okay…$1,000 Gold (John’s 50% Fib. retrace) becomes a distinct possibility if the uptrend is broken…the $1,180-$1,200 area represents key support…the February monthly close is going to be important…

Gold 2.5-Year Weekly Chart

This look at Gold’s action over the last 2-and-a-half years is really fascinating…since the second quarter of 2013, Gold has been trading within a downsloping flag…eventually it will break either above or below that flag…

We emphasized this chart in November because when everyone was panicking as bullion tumbled to the $1,130 area, it was important to note that Gold would likely find support and rally from $1,130 as that level represented the bottom of both the downsloping flag as well as the RSI(14) channel…in fact, John postulated that a near-term move back up toward the top of the flag around $1,300 was a distinct possibility…of course that’s exactly what occurred in January…

The ease with which Gold fell through a support band between $1,240 and $1,260 this month is of concern…the $1,200 area (a support band between $1,180 and $1,200) is critical…this chart, like the one above, tells us that Gold is at a really very important juncture and it’s fair to say that downside risk has increased given the recent price action…from a fundamental standpoint, record valuations in global equities (and signs of even higher prices on the way) could act as a headwind for Gold going into the final month of Q1…

Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update

Cannabix Technologies (BLO, CSE, BLOZF, OTC) has been our favorite non-resource stock in the speculative sector since last summer, and its huge run this month should have come as no surprise as BLO edges closer to unveiling its marijuana breathalyzer prototype (and news about testing) as reported February 2…development has been proceeding as planned with the mechanical design, circuit board layouts, firmware and printed circuit board designs all nearing completion…BLO is clearly beginning to gain traction but the “gloves may really come off”, to use a hockey analogy, once investors (and the media) can actually see the feature-rich initial version of this device…

This is a company that from Day 1 has shown the ability to execute on all fronts which puts it into an elite category as far as CSE or Venture-listed companies are concerned, and it’s reasonable to speculate that the excitement around BLO’s product is still only in the early stages given the recent trading action…this is primarily a U.S. story and the American market, in all respects, is massive…Cannabix is the front-runner in developing a much-needed marijuana breathalyzer for law enforcement and the workplace…

This is a powerful story, the company has the cash it needs for now, and management knows what it’s doing…they’re very capable and focused, following the game plan they had from the beginning…this is the perfect recipe for business success and market success…

Technically, the uptrend in Cannabix started last November and a slow but steady climb began in January, tracking the rising 20-day moving average (SMA)…the temporarily extreme overbought technical conditions at the 77-cent high February 11 have unwound significantly…the Fib. cluster has provided support, and a bullish pennant now appears to be forming as you can see in the chart below…

BLO opened at 50 cents on the CSE this morning but is currently up a penny at 54 cents as of 7:30 am Pacific…

This chart is in U.S. dollars from the OTC listing as Stockcharts does not yet provide chart for CSE-listed companies…

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

As a follow-up to John’s chart January 30 showing Canada Carbon (CCB, TSX-V) poised for an imminent breakout, CCB enjoyed its highest volume day since October on Friday, gaining 3.5 cents to close at 28.5 cents…last Thursday the company reported that it was halfway through its first 1,500 m drill program at its Miller Property where it’s focused on expanding graphite mineralization and defining a resource…the company is also talking up the potential of Miller to host high quality dimensional stone…wide intersections of white marble were intersected in drill holes last year at the property, and this is being investigated further in the current program…

CCB is up a penny-and-a-half at 29.5 cents as of 7:30 am Pacific…

Silver Short-Term Chart Update

It’s an important week for Silver…this 9-month daily chart shows how the metal reacted in January at $18.50 (almost exactly at chart and Fib. resistance) and has been trading this month within a downsloping channel…it has now hit the bottom of that channel, so we’ll either get a breakdown here very shortly or a recovery back up toward the top of the channel…

RSI(14) is also now at support (the 50% level was resistance between August and November of last year), so that’s an indicator to watch closely as well…

In December, Silver finally staged a definitive breakout above a downtrend line that was in place since the summer (note how the downtrend line became new support in early December)…

The December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…as expected, superb support was demonstrated at $15 and is also evident around $15.60…

Silver Long-Term Chart Update

This 34-year monthly chart continues to give hope that Silver could be in the very early stages of a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)…the reasons for such a move are also not clear…

RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15…

One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressure…based on historical patterns, sell pressure could persist for a considerable time yet – though that doesn’t necessarily mean that the price can’t still trend higher…nonetheless, it would be encouraging to see this sell pressure begin to abate…

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

TSX Venture Exchange and Gold

This is a very important week for the Venture as the month of February draws to a close.  Despite a 4th straight weekly decline in Gold, which is desperately trying to hold important support around $1,200, and softness in Crude, the Venture gave up just 2 points last week to finish at 695.

What’s interesting at the moment is that the Venture’s 50-day moving average (SMA) is now reversing to the upside.  Reversals in this SMA are typically meaningful, as was the last one in September.  Investors who exited the market when the 50-day started moving south in early September were spared a huge drop in the Index.  This is an indicator that cannot be ignored; however it must be viewed in a broader context of where the Index is at overall technically and fundamentally.

The Key Levels To Watch

The Venture this month has traded in a tight range between 678 and 700, last week’s intra-day high.  We know that key resistance (chart and Fib.) is 707 and that the Index has not been able to close above 700 this year with the exception of January 2 when it finished at the 707 resistance and then declined to strong support around 660.  There is also solid support (Fib. and the 50-day SMA) around 680.

It’s critical for investors to stay focused on the above numbers and let the Index reveal where it wants to go.  A confirmed breakout above 707 would clearly imply increased bullishness and an immediate run higher to test the next important resistance around 750.   A break below 680 would be bearish.  Those are the simple facts.

Watching Oil and Gold

Keep in mind, the Venture has a very high correlation with Oil at the moment.  Another immediate spike down in Crude Oil, which can’t be ruled out in these volatile commodity markets, would complicate matters for the Index.  Likewise, a significant move in Gold, up or down, would also impact the Venture even though its correlation isn’t as high with bullion right now as it is with Oil.

We Need A Discovery, Some Excitement

If there was ever a time the Venture could use a major new discovery, it’s now.  But that’s made more difficult by the fact that there has been a continuing reduction in the number of companies actually drilling and carrying out significant exploration.  Some possibilities do exist, however, in various jurisdictions.

Venture 2-Month Daily Chart

This very short-term chart (2 months) shows a cluster of Fib. support between 654 and 680, with 680 really being the key in our view.  The 20-day SMA, currently 687, continues to rise which of course is positive.  RSI(14) has managed to hold above 50% the entire month and is starting to trend higher again at 55%.  Buy pressure (CMF) has picked up since the start of February and remains steady, albeit not robust.  The ADX indicator shows a sideways trend but +DI is still above -DI.

The Venture’s current state offers some encouragement but if this Index were a doctor’s patient, the doctor would feel more comfortable if this patient were able to take his overall health further away from the danger zone to a new level – the fitness reading that needs to be surpassed is 707.

Venture 6-Month Daily Chart

The Venture’s 6-month chart shows 2 important developments:

1.  A confirmed breakout above the 50-day SMA (this moving average is currently at 679 – Venture support) which is now beginning to reverse higher – more traction is needed in that regard in the coming week;

2.  A confirmed breakout (during the second half of January) above the downtrend line in place since September.

Bollinger Band Width remains low, which reflects minimal volatility and how the Venture is proceeding at the speed of a very slow moving train.

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 eventually create a supply problem and therefore great opportunities 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

Gold has declined for 3 straight weeks and is now trying to remain above important support around $1,200.  This week could be pivotal for the yellow metal, and we’ll show why in charts tomorrow.

Gold jumped $100 an ounce in January thanks in part to weakness in U.S. equity markets.  However, upside momentum has returned to U.S. stocks and that raises questions about what investors will be “chasing” in March.  The Dow posted its first record close of the year on Friday, while the S&P 500 ended the week at its third record close for the year.  The Nasdaq, meanwhile, is rapidly nearing its all-time high set 15 years ago.  Will March be a big month for stocks at the expense of Gold?

What’s disturbing about the 6-month daily Gold chart below is how RSI(14) at the beginning of February fell beneath an uptrend line in place since the early November “bottom”.  In addition, 3 Fib. support levels have been breached with relative ease this month.  This leaves the $1,180 to $1,200 support band as vital.  The long-term monthly chart that we’ll be posting tomorrow can be viewed with encouragement, so it would be premature at this point to suggest bullion is about to fall out of bed again even though downside risks have increased.  The coming week and the monthly close will be critical in terms of setting the tone for March.

Silver tumbled by nearly $1 an ounce last week to close at $16.27 (updated Silver charts tomorrow morning).  Copper fell 3 cents to close at $2.58.  Crude Oil slowed down after 3 strong weeks and finished at $50.81, a loss of nearly $2 a barrel.  The Dollar Index closed relatively unchanged at 94.31. 

Interestingly, the U.S. Dollar Index is also in a consolidation pattern at the moment.  Both Gold and the greenback have been moving in tandem the last few months which goes against the historical norm.  The next sharp jump in the Dollar Index (it’s in a powerful primary bull market) could also be accompanied by another move higher in bullion.  Gold and the greenback are the 2 strongest currencies in the world.

The “Big Picture” View Of Gold