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TSX Venture Exchange and Gold

Editor’s Scheduling Note:  Canadian markets are closed Monday for the Victoria Day holiday.  We’ll be posting Monday evening with regular BMR Morning Musings returning Wednesday to allow most of our crew an extended long weekend.

The Venture has shown exceptional support through the first 4-and-a-half months of this year, and has managed to stay at or above its gently rising 100-day moving average (SMA) since early April.  The question is, what will give this market the “escape velocity” it needs to overcome key resistance just above 700?  Some individual company success stories in the junior exploration space would help immensely in terms of restoring investor hope and confidence.

The Venture, which added 4 points for the week to close at 695, has been stuck in a 28-point range between support at 680 and resistance at 708 for the last 31 trading sessions.  It seems highly likely that at any point over the coming several weeks, the Venture will take the path of least resistance which we speculate will be a breakout to the upside based on numerous indicators including the bearish trend that has emerged in the U.S. Dollar Index since its mid-March high.

Further gains in the CRB Index are also likely between now and the end of the summer, as John has shown in recent charts, and Copper (a reliable leading indicator) is looking very interesting as well from a broad perspective.  Crude Oil likely found its bottom in the low $40’s while strength in Gold producers suggests a 3-year correction in the yellow metal may indeed have ended last November.  So the Venture’s upside potential as this quarter progresses exceeds its downside risk, a very different scenario than the one that existed last September when the Index simply fell apart technically, driven largely by the collapse in Crude prices.  Yes, the resistance just above 700 is frustrating but the Venture has also been building a strong base over the last 5 months.

Interestingly, sell pressure in this 5-month daily chart is the strongest we’ve seen since late December, yet the Venture has managed to hold key support (the critical Fib. cluster of support is between the 650’s and 680) while RSI(14), SS and other indicators are giving positive signals.  A rapid decrease in sell pressure, like we saw at the end of December, would be a strong clue that a Venture breakout is imminent.

Gold

Weaker-than-expected U.S. economic data and global government bond market jitters propelled Gold to a 3-month high last week.  Bullion closed Friday at $1,223 for a weekly gain of $35 an ounce or 2.9%.

Gold faces important resistance in the $1,220’s (repeated attempts since late February to push through the $1,220’s have failed) and then at $1,240.  The 50-day SMA, currently at $1,189, is now reversing to the upside, and this does increase the odds of additional near-term gains and a locking in of support at $1,200.

Below is a 6-month daily chart that outlines the Fib. levels to keep an eye on.  The latest 2.5-year weekly chart, which we posted in Thursday’s Morning Musings, gives a valuable “Big Picture” look at the Gold market and the critical resistance it faces at the top of a downsloping flag which is currently cutting through the $1,270’s.  Last week’s move was encouraging but a more difficult test lies ahead.

Indian Gold Demand Picks Up

Gold imports by India, the world’s second-largest consumer, exceeded 100 metric tons for a 2nd month in April as easing of state curbs boosted demand for everything from necklaces to bangles and rings.

Shipments totaled 111 tons last month (a 78% jump in value terms to $3.13 billion) and are about 60 tons so far in May, India’s Revenue Secretary stated on Friday.  Imports in March more than doubled to 125 tons from a year earlier because of seasonal demand and a drop in prices.

Shanghai Gold Exchange withdrawals were 857.7 metric tons as of May 8, a sign of steady demand from China, while German investors increased their buying of Gold coins and bars by 20% during the 1st quarter, the highest rate in a year, as a hedge against European Central Bank (ECB) policy and the threat of a Greek default.

Silver, Copper, Crude & Dollar Index

Silver posted its 3rd straight weekly gain, surging more than $1 an ounce to $17.49.  The metal broke above a downsloping channel with next major resistance at $18.  Copper finished unchanged at $2.90.  Crude Oil tested the low $60’s (strong band of resistance between $60 and $65) before closing the week up 50 cents a barrel at $59.96.   The U.S. Dollar Index tumbled a point-and-a-half on some weak U.S. economic data, and finished at 93.23.   The Dollar trade got very crowded in March and now momentum has clearly reversed.  Any bounces higher toward the now declining 50-day SMA will be met with strong resistance.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices.   Despite Gold’s largest annual drop in 3 decades in 2013, the fundamental long-term case for the metal remains solidly intact based on the following factors:

Gold has traded between $1,211 and $1,226 so far today…as of 8:45 am Pacific, bullion is up $2 an ounce at $1,223 after hitting a 3-month high yesterday on signs that U.S. inflation remains muted, bolstering the case for the Fed to delay raising interest rates…Silver has added a nickel to $17.49…Copper is unchanged at $2.90…Crude Oil has slipped 47 cents to $59.41 while the U.S. Dollar Index has slid to 93.26…

The World Gold Council (WGC) continues to see some bright spots in the Gold market, despite an overall decline in demand in the first 3 months of the year…according to the latest WGC report, looking at Q1 Gold trends, world Gold demand fell 1% in the first quarter to 1,079 tonnes, compared to the same period in 2014…

A bright spot in Q1 was demand from India which increased 15% compared to the first quarter of 2014…the jump in Indian demand came after the government removed import restrictions at the end of the year…meanwhile, globally, investment demand saw an increase of 4% in the first quarter of 2015 while Gold-backed exchange traded funds had positive net inflows of 26 tonnes, the first positive quarter since the fourth quarter of 2012…

“Anecdotally, I can tell you that I have seen a shift in investor sentiment. People haven’t necessarily turned bullish again, but they are certainly not as bearish as they were,” said Juan Carlos Artigas, director of investment research with the WGC, in an interview with Kitco news (www.Kitco.com)…

Today’s Equity Markets

Asia

China’s Shanghai Composite closed down 1.6% overnight, despite attempts by the country’s securities regulator to calm market jitters regarding new share listings..Japan’s Nikkei gained nearly 1%, meanwhile, to finish the week at 19733…

Europe

European markets finished lower today, though there were signs that stability is returning to bond markets after a recent rout…

North America

The Dow is down 15 points as of 8:45 am Pacific…U.S. industrial production fell for a 5th straight month in April, weighed down by declines in mining and utilities output, pointing to a lack of momentum in the economy at the start of the 2nd quarter (the Fed is running out of weather excuses)…industrial output slipped 0.3% after a revised 0.3% in March, the Federal Reserve stated this morning…economists polled by Reuters had forecast industrial production edging up 0.1% higher last month after a previously reported 0.6% fall in March, which was the biggest drop since August 2012…

Meanwhile, economists cut their forecasts for U.S. economic growth in the 2nd quarter and full year, and trimmed expectations for labor market gains….economists see the economy growing at an annual rate of 2.5% in the current quarter, according to the Philadelphia Federal Reserve’s quarterly survey of 44 forecasters, released this morning…in last quarter’s survey, released in February, growth for this quarter was forecast at 3%…

Dow 6-Month Daily Chart

The Dow has broken above the 18205 Fib. level…RSI(14) has been following an uptrend line since March on this 6-month daily chart, and appears poised to push above resistance…next measured Fib. resistance is 18900, so it appears equity markets could remain robust while the threat of a Fed rate hike anytime soon has diminished considerably…

In Toronto, the TSX is up 6 points while the Venture is flat at 692…

GoldQuest Mining Corp. (GQC, TSX-V) Update

We continue to keep a very close eye on GoldQuest Mining Corp. (GQC, TSX-V) which is threatening to break above a long-term downtrend line…nearly 3 weeks ago, the company released a revised and more robust PEA for its Romero and Romero South Gold-Copper deposits in the Dominican Republic…GQC’s exploration upside in the DR remains huge – more discoveries are very possible despite a string of disappointing results the last couple of years…by itself, this is a company that in the past has boosted overall market sentiment with some spectacular drill holes…can they do it again?…

As expected, on a recent pullback following a powerful run from 8.5 cents to 20 cents in just 5 trading days, GQC found support at its 200-day SMA which has flattened out at 13.5 cents…what to watch for with GQC is this – a potential decisive move above the downtrend line shown below…

GQC is up half a penny at 18 cents as of 8:45 am Pacific…

International Montoro Resources (IMT, TSX-V) Update

Montoro Resources (IMT, TSX-V) is in the early stages of what could prove to be an important Nickel-Cu-PGE find – the first-ever – in the Elliot Lake area of northern Ontario, west of Sudbury (Elliot Lake is known for its Uranium and Rare Earth deposits, but not Nickel-Cu-PGE)…

So far, theories based on abundant geophysical and geochemical evidence are holding up as drilling in the first 2 holes at the Pecors anomaly has hit the favorable host rock geologists were hoping to see below the Huronian sediments…significantly, there is strong evidence that a remobilization process has occurred in this magmatic system…Pecors is on the radar screens of not only investors but many curious geologists, including those at the OGS (Ontario Geological Survey), and various companies as well…

Technically, IMT has found strong support at the Fib. 7-cent level while RSI(14) has turned higher again, a bullish sign…IMT’s 2nd hole has gone deeper than the first – and there must be good reasons why…

IMT is unchanged at 7.5 cents as of 8:45 am Pacific…

North Arrow Minerals (NAR, TSX-V) Update

North Arrow Minerals‘ (NAR, TSX-V) bought deal flow-through financing at 95 cents for gross proceeds of $4 million is expected to close by the end of this month…the company is in the process of completing a formal diamond valuation of the Q1–4 kimberlite at its promising Qilalugaq Diamond Project in Nunavut…

NAR has backed off from a 3+ year high of $1.34 April 22, but that’s merely a healthy retrace to a strong zone of support within the context of a bullish overall trend…since the beginning of January, NAR has held support at its rising 50-day moving average (SMA) which is currently 92 cents…

This 8-year monthly chart demonstrates the significance of the breakout above the horizontal channel around 80 cents in mid-April…

NAR is off 3 pennies at $1.05 as of 8:45 am Pacific…

Reservoir Minerals Inc. (RMC, TSX-V) Update

Another high-quality situation that should be on everyone’s radar screens – Reservoir Minerals (RMC, TSX-V)…

Reservoir, which had $35 million in working capital as of the end of February, is in a JV with Freeport-McMorRan (FCX, NYSE) at its Timok Project in Serbia…the major is the operator (assuming all expenses) and an $18.7 million U.S. budget has been approved to advance this project in 2015…

Reservoir climbed as high as $7.43 last year before falling by more than half as the overall market tanked in Q4…very oversold conditions (September to early November) mirrored the overbought conditions that emerged in February/March 2014 when it was a good time to take profits…

RMC has regained its footing and appears to be gearing up for a solid balance of 2015 that could include a test of last year’s high or, potentially, even a breakout to a new all-time high…

Sell pressure has been declining steadily, and the stock is now breaking above a downtrend line and its 200-day SMA…

RMC is unchanged at $4.60 as of 8:45 am Pacific…

Note:  Jon holds a share position in IMT.

One overlooked  junior focused exclusively on Quebec, sporting a tiny market cap, has found success on the permitting front and is preparing to push product to market.

Click on the arrow below to learn more in just 60 seconds about President and CEO Michael Dehn’s strategy to differentiate Fairmont Resources Inc. (FMR, TSX-V) from the rest of the “crowd” as he positions a company with key logistical advantages as an emerging supplier of high-grade industrial minerals.

Note:  Jon holds a share position in FMR.

Gold has traded between $1,212 and $1,228 (3-month high) so far today after yesterday’s strong move…as of 9:00 am Pacific, bullion is up another $8 an ounce at $1,223…Silver has climbed 29 cents to $17.38 (see updated Gold and Silver charts below)…Copper is off 2 pennies to $2.90…Crude Oil is down nearly $1 a barrel to $59.63 while the U.S. Dollar Index almost touched 93 this morning, its lowest level since the launch of euro zone quantitative easing in January as concerns mount that the U.S. economy has not just been suffering from a winter chill…the Dollar Index is rebounding modestly and is now off just one-tenth of a point at 93.60…

As John’s charts have been pointing out since late March, the Dollar Index is clearly in a corrective phase that could easily take it down into the upper 80’s…this helps explain why we’re seeing a shift into commodities, which of course bodes well for a Venture breakout above 707…

Bullion is also benefiting from government bond market jitters given the wave of turmoil that has swept through these markets across the world…it’s estimated that investors are nursing approximately half a trillion dollars in paper losses in 2 weeks in what has been one of the most dramatic bond market moves in recent years…rising yields can be a healthy development if the global economy is picking up speed…it’s a different matter, however, if they suddenly jump at a time of sluggish growth and disappointing U.S. figures…

The S&P GSCI index, which tracks the prices of 2 dozen commodities, is near its highest level since December, as raw materials such as Crude Oil, Copper and sugar have bounced from multi-year lows…Copper is up 14% from its March bottom…the rebound in assets such as the euro, Oil and other commodities began after a spate of weak U.S. data made it appear increasingly unlikely that the Federal Reserve would raise rates in June (in fact, will the Fed raise rates at all in 2015?)…this has reduced the appeal of the dollar as an option for investors seeking assets with a respectable yield…with the dollar expected to languish, perhaps for several more months, many traders have been shifting into assets that had been flattened by the dollar’s record run from last summer to March…

Updated Gold Chart

Gold has broken out above resistance at $1,200 and the next key area is the $1,220’s which it’s trying to fight through now…what’s becoming increasingly apparent is that bullion could be in the process of taking another run toward the top of the downsloping flag formation that it has been trapped in for the past 2 years…the top of that channel is currently around $1,275 as you can see below…RSI(14), 51% entering today on our 2.5-year weekly chart, may also test resistance at the 60% level…

Keep in mind, as we pointed out Tuesday, Gold has posted 3 straight months of losses, the longest slump since December 2013, but bullion took off to the upside after that previous 3-month slide and quickly shot up by about 15%…contrarians will also point to last Friday’s largest drop of the year in reserves in the SPDR Gold Trust, the world’s biggest Gold-backed ETF, as a bullish sign…the bears are being put on the defensive and short-covering could intensify this move…

Updated Silver Chart

Silver will confirm a breakout today above a downtrend line as shown in this 9-month daily chart…next Fib. resistance is just below $18, and momentum is in Silver’s favor to test that level in the near future…

How Governments Can Destroy Wealth

Ecuador’s socialist President, Rafael Correa, said yesterday he was not planning any additional overhaul of the country’s mining laws, disappointing investors who have been pushing for lower taxes…the government has introduced a series of reforms since 2009, but foreign Gold, Silver and Copper mining companies say heavy taxation works against Ecuador’s aim of attracting $5 billion worth of mining investment over the next 5 years…

“If to render mining investment attractive I have to give away the country’s natural resources, go look for another country,” Correa stated yesterday…

Well, that’s exactly what many companies and investors have done and will continue to do…

Meanwhile, over in Alberta(stan), the newly-elected NDP isn’t backing away from its election pledge to review the province’s energy royalty structure…this is spooking the industry…Premier-designate Rachel Notley said Tuesday the royalty review will go ahead in this term of the incoming NDP government, though the exact timing is uncertain…the review is intended to determine whether Albertans, as owners of the resources, are receiving an “appropriate share” of the benefits from Oil and natural gas…the first sentence of the NDP platform criticized the PC’s for “refusing to implement realistic Oil royalties that the people who own the resources – all of us – deserve…the people of Alberta as a whole are deprived of much of the benefit of our own resources.”

Really?…that’s very strange…how can that possibly be when Alberta has been the engine of economic growth across the nation since the Ralph Klein days with no debt, no provincial sales tax, and extremely low unemployment rates? (despite the fact the PC’s in recent years strayed off course in many ways)…

Whenever governments (typically socialist ones) start talking in terms of “our people are being deprived of much of the benefit of our own resources”, it’s almost always a recipe for disaster…one company in Alberta is already publicly threatening to invest elsewhere (Saskatchewan or B.C.) because of the NDP’s upcoming review, and many more are sure to follow…unfortunately, the NDP mindset in Alberta is the same as NDP thinking elsewhere in Canada, historically and presently…Notley’s incoming band of union leaders, environmentalists, “community organizers”, students, social workers, teachers and yoga instructors are not focused on the creation of wealth, but the redistribution of it and a major expansion of government – an approach that ultimately destroys wealth…Albertans should brace for tough times ahead with this group at the helm of a province blessed with 173 billion barrels of Oil…human and investment capital are guaranteed to flow to more attractive jurisdictions…

Today’s Equity Markets

Asia

China’s Shanghai Composite was relatively unchanged overnight, closing at 4379, while Japan’s Nikkei fell 1% to 19570…

Europe

European markets were up significantly today…

North America

The Dow has climbed within less than 90 points of a new all-time high…it’s up 155 points as of 9:00 am Pacific…a gauge of U.S. business prices fell in April, the latest sign of persistently low inflation across the economy…the PPI for final demand, which measures prices that businesses receive for their goods and services, decreased a seasonally adjusted 0.4% last month from March, the Labor Department said today…core prices, which exclude volatile food and energy categories, fell 0.2%…when excluding food, energy and trade services, the index rose 0.1%…economists surveyed by The Wall Street Journal had expected both overall and core prices would increase 0.1%…

In Toronto, the TSX is up 30 points while the Venture has edged 3 points higher to 696…

Gold Standard Ventures (GSV, TSX-V) Update

Gold Standard Ventures (GSV, TSX-V) has a big drill program lined up and also just announced a $16 million financing with OceanaGold Corp (OGC, TSX), expected to close by the end of next week…this will give GSV just under $20 million in working capital, a large war chest to rapidly advance and derisk its Railroad-Pinion Project in Nevada…OGC is subscribing for 25 million units of GSV at 65 cents per unit which will give it approximately 14.9% ownership of GSV on an undiluted basis…

Technically, GSV has broken out above resistance at 60 cents and appears poised to finally claw its way above a downsloping channel in place since 2013 on this 2.5-year weekly chart…accumulation in GSV since February has been impressive as indicated by the CMF…

GSV is up 3 pennies at 69 cents as of 9:00 am Pacific…

Integra Gold Corp. (ICG, TSX-V) Update

Integra Gold Corp. (ICG, TSX-V) continues to make significant progress with its high-grade Lamaque Gold Project in Val-d’Or…the pace of activity is impressive…since the beginning of the year, Integra has completed 44,500 m of diamond drilling in 99 holes with up to 8 drill rigs operating on several key targets…of this drilling, approximately 11,668 m in 21 holes has been completed at the Triangle deposit where 5 rigs are active…more results from Triangle were released recently and included 14.32 g/t Au over 4.5 m (TM-15–7) in the T-10/C4 zone, approximately 190 m west of the closest previous intersection…the company has expanded its 2015 drilling plans from 50,000 m to 75,000 m…

ICG was able to hold critical base support (15 to 17 cents) late last year when markets were getting pulverized, and support is currently strong in the low-to-mid-20’s which includes a Fib. level (24 cents) and the rising 200-day SMA (25 cents)…keep in mind, stock from a late December flow-through financing became free-trading at the beginning of May…as long as volume and buy pressure remain strong, soaking up loose paper from that PP shouldn’t be a major problem but that is still a process…

ICG is off half a penny at 27 cents as of 9:00 am Pacific…

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

As Doubleview Capital (DBV, TSX-V) gets set to resume drilling at the Hat Project in the Sheslay district, the stock’s technical posture has improved dramatically since the middle of April with a confirmed breakout above a downsloping flag and resistance at 15 cents (now support)…the 200-day SMA, currently at 15 cents, is also reversing higher, a sign that a major trend change is in its early stages…strength in Gold and Copper can only help DBV and other juniors working on promising discoveries…

DBV is off 2 pennies at 15.5 cents as of 9:00 am Pacific…

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

Gold has traded between $1,191 and $1,220 so far today…as of 9:00 am Pacific, bullion has surged $21 an ounce to $1,214 with the greenback under pressure this morning…Silver has added 60 cents to $17.08…Copper is off slightly at $2.90…Crude Oil is 40 cents higher at $61.15 while the U.S. Dollar Index has tumbled a full point to 93.53…

HSBC observed in a note yesterday, “The question facing Gold is will bullion derive more upwards thrust from a weaker dollar or will rising yields sap and possibly reverse the rally?  It appears that the currency markets are more influential in aiding bullion, at least near-term, although Gold is running into resistance at the $1,200 an ounce psychological level.”

Meanwhile, HSBC analysts, in an updated outlook for Silver released Monday, stated that half of all industrial demand for the metal this year could come from solar applications.  “The long-term demand for solar power – and with it Silver for photovoltaic and other applications – appears to be positive. According to two 2014 reports from the International Energy Agency, solar power could be the world’s largest source of electricity by 2050.”

Chinese Debt Could Contribute To Worse Than Expected Slowdown

It shouldn’t be a surprise that China is injecting its economy with all sorts of stimulus from rate cuts to infrastructure spending to an equity market on steroids…according to a senior Morgan Stanley investment strategist, the worst of the Chinese economic slowdown is likely still ahead because of the nation’s debt…obviously it’s this potential for a “hard landing” that has convinced Chinese authorities to get very aggressive on stimulus, which has potential positive implications for commodities – this helps explain the move in Copper, for example, as China consumes 40% of the world’s supply of that metal…

“China, to try and sustain its growth rate in the post-financial-crisis era, has engaged in the largest credit binge of any emerging market in history,” said Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management…he was speaking yesterday at the Global Private Equity Conference in Washington, D.C., and predicted that the Chinese credit boom would cause problems…whenever a country increases its debt to GDP sharply over 5 years, in the following 5 years there’s a 70% chance of a financial crisis and a 100% chance of a major economic slowdown, according to Morgan Stanley research…

Oil Update

U.S. Crude inventories fell by 2.2 million barrels in the last week, compared with analysts’ expectations for an increase of 386,000 barrels, according to a report this morning by the Energy Information Administration…Crude stocks at the Cushing, Oklahoma, delivery hub fell by 990,000 barrels, EIA reported…

$54 was the key breakout level for Crude Oil as John’s charts showed during the 1st quarter, and what seems increasingly likely is that WTIC may challenge its declining 200-day moving average (SMA) in the upper $60’s…there is Fib. resistance at $60.41 and $64.26…at this point, given Crude’s technical posture and historical patterns, it certainly appears as if the $42.41 low in mid-March was a final bottom…strong new support at $54 which is also just above the rising 50-day SMA…

Macro Enterprises Inc. (MCR, TSX-V) Update

Macro Enterprises (MCR, TSX-V), based in British Columbia, is a company that specializes in pipeline and facility construction and maintenance…we followed its powerful run from below $2 a share in early 2013 to an all-time high of just over $7 last year when it was a good time to sell given Fib. resistance levels and very overbought technical conditions…

The collapse in Oil last fall then took the stock to extreme oversold conditions that persisted from late last year into February…now MCR is making a comeback and appears very attractive once again below $2.50…keep in mind, this is a company that has over $40 million in working capital and has reported its 14th consecutive profitable quarter (Q4 2014) with net income of $3.7-million in what is a cyclical industry…

This 2+ year weekly chart shows strong technical support (Fib., 200-day SMA) around the $2.40 level…just beneath that is the rising 50-day SMA…if current trends hold up, the 200-day should start to flatten out and then reverse to the upside over the course of the summer…

MCR is off 2 cents at $2.43 as of 9:00 am Pacific…

TSX Gold Index Updated Chart

The overall trend continues to be positive for Gold producers with the TSX Gold Index once again attempting to clear resistance in the mid-160’s, which it should be able to accomplish…what’s beginning to unfold right now is a reversal to the upside in the 50-day SMA…we’re also seeing increasing buy pressure, and a bullish SS cross has occurred as well…this suggests that we could see an important near-term breakout in the Gold Index with a strong final half of May…

The Gold Index is up 3 points at 170 as of 9:00 am Pacific…

Today’s Equity Markets

Asia

Japan’s Nikkei posted a nearly 1% gain overnight while China’s Shanghai Composite closed down 25 points to 4377…a fresh batch of economic indicators from China came in just shy of expectations…

Europe

European markets were mixed today…growth figures for the euro zone came in at 0.4% for the 1st quarter of 2015, below market estimates…individual country data today showed that France’s economy was gathering pace, while Germany’s growth figures came in below expectations…elsewhere, Greek figures showed that the struggling nation was back in a technical recession…

North America

The Dow has reversed earlier losses and is now up 3 points as of 9:00 am Pacific…retail sales data in the U.S. for April was disappointingly flat, with the ex-autos figure up just 0.1% despite the warmer weather…this was below estimates of a 0.5% gain…

In Toronto, the TSX has lost 61 points while the Venture is flat at 692…

Bitgold Inc. (XAU, TSX-V)

Bitgold Inc. (XAU, TSX-V) begin trading on the Venture this morning and is off to a good start…the company has some big-time backers, including George Soros and Sprott Inc., and is the first serious financial services platform ever built around Gold…the on-line service allows users to buy Gold, store Gold, and pay for goods and services around the world using Gold as the currency…

Equitas Resources Corp. (EQT, TSX-V) Update

Equitas Resources Corp. (EQT, TSX-V) has released encouraging results from a VTEM plus airborne survey completed on its Garland Property, 30 km southeast of the Voisey’s Bay mine in Labrador…9 areas of conductivity prospective for Nickel-Copper sulphides have been identified with most responses at the very limit of, or significantly deeper than, detection limits of historic surveys…this is a speculative play to watch closely over the next several months…exploration on the target areas is expected to commence in late June…evaluation of the anomalies will include mapping and prospecting, 30 line km of large-loop EM surveys, and up to 4,000 m of diamond drilling…

Since the discovery of the Voisey’s Bay deposit in the early 1990’s, small parcels of Garland have been owned by 9 separate companies…this is the first time that this large property has been consolidated under 1 owner…

EQT is up 1.5 cents to 10 cents on strong volume (all exchanges) of more than 2 million shares…

Calibre Mining (CXB, TSX-V) Update

Over the past year, Calibre Mining (CXB, TSX-V) has been a standout performer in the challenging junior resource market…the company is working strategically with strong partners in the prolific northeastern part of Nicaragua (drilling continues at the Eastern Borosi JV with Iamgold) and also has some 100%-owned ground which it is now drilling as announced just recently…

Calibre’s Phase 1 program at its Montes De Oro Gold Project will consist of 2,000 m in 8 to 10 drill holes, designed to test 2 sub-parallel Gold-mineralized structures defined by surface exploration including trenching results of 52.3 m grading 7.1 g/t Au, 27.5 m grading 4.92 g/t Au, and 33.5 m grading 2.10 g/t Au…

Overbought technical conditions in CXB last September/early October unwound during November and December…Fib. support held between 9 and 12 cents held as expected, and now the turnaround is well under way…

The rising 200-day SMA (not shown on this 2.5-year weekly chart) is now providing excellent support at 13.5 cents…based on its current technical posture, and continued positive exploration developments, CXB is poised in our view to continue to be an “out-performer” as this year progresses…

CXB closed 2 cents higher yesterday at 16.5 cents as it attempts a breakout above Fib. resistance at 15 cents…

Note:  John, Terry and Jon do not hold share positions in MCR, XAU, EQT or CXB.

Gold has traded between $1,180 and $1,197 so far today…as of 9:30 am Pacific, bullion is up $10 an ounce at $1,194…Silver is up 23 cents at $16.50…Copper has added 3 cents to $2.91…Crude Oil has surged $1.42 a barrel to $60.67 while the U.S. Dollar Index has fallen three-quarters of a point to 94.35…

Gold has posted 3 straight months of losses, the longest slump since December 2013, but keep in mind that bullion took off to the upside after that previous 3-month slide, surging about 15% in the 1st quarter of 2014…contrarians will also point to Friday’s largest drop of the year in reserves in the SPDR Gold Trust, the world’s biggest Gold-backed ETF, as a bullish sign…technically, Gold must reclaim $1,200 as new support in order to generate fresh momentum…

RBC has retained a $1,250 per ounce average price for Gold this year, even with the assumption of an initial Fed rate hike…the bank sees stronger bullion prices during the 2nd half of the year…further, it believes the first Fed rate hike has already been priced into Gold at $1,150 to $1,175…the bank also contends that key Asian physical markets are likely to remain supportive, and if a Fed rate hike were to be pushed back into 2016 (certainly very possible in our view), Gold would experience a significant upward move…

Capital Economics predicts “stronger demand for industrial raw materials, including Copper, later in the year” as signs point to Chinese authorities being committed to using “the powerful tools at their disposal to prevent a hard landing.”

The firm’s senior commodities economist sees a year-end Copper price of $7,220 per metric ton or $3.27 a pound (there are 2,204.6 pounds in each metric ton)…

Two different views on the outlook for Silver, one from Capital Economics and the other from HSBC…Capital Economics expects to see an “upturn” in Silver fabrication demand in the 2nd half of this year with Silver finishing 2015 at $23 an ounce…

Meanwhile, despite tighter Silver supplies, commodity analysts at HSBC are lowering their price forecast for 2015 and 2016, the bank reported yesterday…HSBC says that it now expects Silver prices to average $17.05 an ounce in 2015 and $18.25 an ounce for 2016, down from their previous forecast of $17.65 and $20.50.  “While the underlying supply/demand fundamentals are supportive, weak investment demand has weighed on prices; a reversal in the U.S. dollar and better commodity prices may improve investor demand,” the bank stated in the report…

Today’s Equity Markets

Asia

China’s Shanghai Composite Index finished at a 1-week high amid a 3-day winning streak, thanks to the central bank’s interest rate cut on Sunday…

Europe

European markets were down sharply today as bond markets sold off and some corporate earnings disappointed…uncertainty also continues around talks between Greece and euro zone finance ministers…

North America

The Dow has bounced back after falling nearly 200 points in early trading today…as of 9:30 am Pacific, the DJIA is off 59 points at 18052…

In Toronto, the TSX has retreated 90 points while the Venture is 2 points lower at 689, its rising 100-day moving average (SMA) continuing to provide support…

Venture-U.S. Dollar Index Comparative

One only needs to look at the U.S. Dollar Index to understand the Venture’s primary direction as there is such a strong inverse relationship between the two as this 16-year monthly chart illustrates…at the moment, the greenback is clearly in a consolidation phase as John’s shorter-term Dollar Index charts have shown in recent weeks…potentially, the Dollar Index may have topped out for 2015 just below 101 in mid-March after a spectacular run-up since last summer…it’s now under some technical pressure and how long that lasts will be key in determining how much traction the Venture can gain over the next few months…the likelihood of the Venture falling below key support is greatly reduced with the Dollar Index trending lower…

Fairmont Resources Inc. (FMR, TSX-V) Update

Something is stirring with Fairmont Resources (FMR, TSX-V) which is not surprising given how this company is so well positioned in the industrial minerals sector in Quebec with the Buttercup Property now fully permitted for production, and other projects on the go including 3 very intriguing high-purity silica plays…current market cap is only $2.5 million…

Increasing buy pressure and volume suggest FMR could be gearing up for a near-term breakout above a downsloping channel…the +DI indicator has reversed higher and RSI(14) is accelerating to the upside after landing at previous strong support…a bottom definitely appears to have formed here…

FMR is unchanged at 14 cents as of 9:30 am Pacific, after posting gains in each of the last 3 sessions…

In its 3rd annual Disruptor 50 list released today, CNBC features private companies in 16 industries – from aerospace to financial services to cyber security to retail – whose innovations are revolutionizing the business landscape…these forward-thinking upstarts have identified unexploited niches in the marketplace that have the potential to become billion-dollar businesses, and they rushed to fill them…

1.  Moderna Therapeutics (Reprogramming cells to fight disease)
2.  SpaceX (Elon Musk’s mission to Mars)
3.  Bloom Energy (Live off the grid, keep the lights on)
4.  Uber (A $50 billion on-demand ride)
5.  Airbnb (The newest idea in room service: Renting one)
6.  Dropbox (Saving a billion files every day)
7.  Palantir Tech (Helped find Bin Laden. Don’t like to talk about it)
8.  TransferWise (Getting bankers out of the forex biz)
9.  Slack (Giving “slacker” a whole new meaning)
10.Warby Parker (Taking on the Luxottica eyewear machine)

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

There are many publicly traded “disrupters” and one of them in our view is Cannabix Technologies (BLO, CSE, BLOZF, OTC) which has more than doubled in value already this year, and could be poised for an equally impressive 2nd half of 2015 as the company progresses with development of its marijuana breathalyzer…alpha device testing is well under way with medical marijuana users with the objective to maximize THC sensitivity, detection and reliability of the device for use as a roadside and workplace drug impairment tool…meanwhile, development of the beta version continues for trial testing with external organizations…continued strong news flow and media attention should keep activity in the stock brisk…

BLO has been trading in a bullish downsloping flag since February’s huge run…strong support at the bottom of that flag corresponds with last year’s resistance around 30 cents CDN (the chart below is in U.S. dollars, based on OTC trading, with CDN equivalent prices indicated on the left)…

Despite the retreat from the February high of 77 cents, the primary trend remains very bullish which should result in an eventual breakout above the downsloping flag for the next major leg up…

BLO is unchanged at 33 cents on the CSE as of 9:30 am Pacific…

IWG Technologies Inc. (IWG, TSX-V)

We suggest readers perform their due diligence on IWG Technologies (IWG, TSX-V) which is the world’s leading provider of flight-certified potable water treatment units…they’re based in Burnaby, B.C., and they’ve been helping business and commercial aircraft manufacturers improve the quality of on-board water systems since 1982…

Yesterday, IWG (39 million shares O/S) reported 2nd quarter revenue of $2.3 million, a 27% increase over the same period last year…net earnings for Q2 were $297,000 vs. $158,000 in Q2 2014…

Technically, IWG is showing strong momentum, hitting levels not seen in over a decade…this appears ready for a confirmed breakout above chart resistance at 26 cents…

IWG is up half a penny at 29 cents as of 9:30 am Pacific…

Walker River Resources (WRR, TSX-V) Update

As Walker River Resources (WRR, TSX-V) gears up for drilling at its Lapon County Gold Project in Nevada, we suggest readers take a close look at the 2-year weekly chart below…

Two things are critical to point out here:

1.  The breakout above the downtrend line in February

2.  The uptrend line which is acting as superb support and confirms the bullish overall trend.

RSI(14) has completed a healthy retracement to its trendline which currently intersects at strong support at 50%…

Given the upcoming drill program, and the stock’s technical posture, the near-term outlook for WRR has to be considered very promising…

WRR is unchanged at 3.5 cents as of 9:30 am Pacific…

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

Gold has traded between $1,178 and $1,192 so far today…as of 8:30 am Pacific, bullion is down $8 an ounce at $1,180…Silver is off 17 cents at $16.23…Copper is down a penny at $2.89…Crude Oil is off 40 cents at $58.99 while the U.S. Dollar Index had added nearly one-fifth of a point to 95.02…

After 12 straight years of gains, global Silver production is expected to fall in 2015 as lower prices take a toll…Silver mine production rose 5% in 2014 to reach 877.5 million ounces, the 12th successive gain and a new record, according to the World Silver Survey published last week by industry lobby group The Silver Institute and metals consultancy Thomson Reuters GFMS…but this year will see Silver output decline amid a dearth of new mines and as aging operations see their production fall, the report said…

“We’re just not seeing the investment in new mine capacity that would be needed to sustain continued record peak production,” said Andrew Leyland, an analyst with GFMS who worked on the report…

Oil Update

A bearish prediction by OPEC, or just another attempt by this organization to drive down prices and put the squeeze on North American producers?…Oil prices will remain below the psychologically important $100 per barrel mark until at least 2025, according to a draft report by OPEC seen by The Wall Street Journal…in its most optimistic scenario, OPEC predicts in this report that Oil will sell for only around $76 per barrel in 10 years’ time…

More Stimulus From China

China over the weekend cut its benchmark interest rate by a quarter percentage point to 5.10% from 5.35%, in order to spur economic activity and boost growth, along with the equivalent deposit rate to 2.25%…it was the 3rd rate cut in less than 6 months, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise…last week it was reported that China’s exports slumped 6.4% from a year earlier, disappointing expectations for a gain of 2.4%, while imports sank 16.2%, worse than forecasts for a decline of 12%…

Nuclear Accord With Iran? Don’t Bet On It

Yet another example of President Obama’s foreign policy blunders, and rising tensions in the Middle East which ultimately may have an impact on Gold…Saudi Arabia’s monarch pulled out of a summit to be hosted by Obama on Thursday, in a blow to the White House’s efforts to build Arab support for a nuclear accord with Iran…King Salman’s decision appeared to ripple across the Persian Gulf…the only 2 monarchs from the 6 countries confirmed to attend the summit at the White House and the Presidential retreat at Camp David are the emirs of Qatar and Kuwait…King Salman’s decision is another sign that Arab states have lost confidence in the Obama administration and will continue to act on their own to thwart Tehran, as Saudi Arabia has done in leading a military coalition against Iran-backed rebels in Yemen…

Today’s Equity Markets

Asia

The sharp advance (3%) overnight in the Shanghai Composite is another example of how China shares have been buffeted in recent months by the central bank’s easing moves, which include 3 interest rate cuts and 2 cuts to banks’ reserve requirement ratios, as well as headlines on Beijing’s attitude toward the market and its reform plans…it also quite apparent that Chinese authorities are using the stock market as a wealth-creation stimulus measure, and that strategy is fraught with danger…

Europe

European markets were down modestly today…the Bank of England announced its latest monetary policy decision today, choosing not to increase rates from their record low of 0.5%…

North America 

The Dow is down 32 points as of 8:30 am Pacific…the TSX is off 7 points while the Venture has added a point to 692…

International Montoro Resources (IMT, TSX-V) Update

We continue to keep a close eye on drilling progress by International Montoro Resources (IMT, TSX-V) at its Pecors target near Elliot Lake, west of Sudbury, where there is growing potential for an early stage Nickel discovery in an area known for Uranium and Rare Earth deposits…theories based on geophysical and geochemical evidence that a Ni-Cu-PGE system exists under the Huronian sediments are gaining credence, based on drilling to date, and this morning IMT reported that PDH-2 continues in favorable gabbro rock at a depth below 1,200 meters…the fact that they’re still in gabbro at 1,200 meters, working their way to 1,300 meters, is encouraging…this second hole was collared about 650 m northwest of the first hole which hit disseminated sulphides with evidence that a remobilization process has occurred in this magmatic system…assay results and data from a downhole probe of these first 2 holes will help immensely in understanding this very interesting large magnetic/gravity anomaly, and what’s driving it – potentially a buried massive sulphide deposit…

IMT is unchanged at 7 cents as of 8:30 am Pacific…

Venture 1-Year Daily Chart

This 1-year Venture daily chart is reason for encouragement…last week, the Index found support at its rising 100-day moving average (SMA) at 685..meanwhile, RSI(14) is following a gradual overall uptrend since December and is currently approaching the apex of a symmetrical triangle…we’ll be watching this closely for evidence of a potential breakout…sell pressure has been dominant since late last month but the Index has managed to hold key support…

Cordoba Minerals Corp. (CDB, TSX-V)

Cordoba Minerals (CDB, TSX-V) is looking more interesting after Friday’s news that it has entered into a partnership with High Power Exploration Inc. (HPX) a private exploration company controlled by Robert Friedland…HPX has agreed to make a strategic investment in Cordoba and will have the option to enter into a joint venture with CDB to earn up to a 65% interest in the San Matias Cu-Au Project in Columbia by financing the project and completing a feasibility study…

This 2-year weekly chart shows how extreme oversold conditions emerged in CDB during the last quarter of 2014 and into the early part of this year…a gradual recovery picked up momentum with Friday’s news and now the stock is trying to overcome resistance around 20 cents at a downtrend line going back to the middle of last year…

CDB is up 4 cents at 22 cents as of 8:30 am Pacific…

C02 Solutions Inc. (CST, TSX-V)

Below is a 3-year weekly chart on CO2 Solutions Inc. (CST, TSX-V) which is drawing considerable investor interest with its patented technology addressing carbon emissions…

This chart is an excellent example of what can happen with a stock when it breaks above a downtrend line…CST briefly fell below Fib. support at 8 cents in January but quickly re-established that support when it pushed above the downtrend line in February…this month it broke out of a trading channel, after releasing full pilot testing results April 29…the company describes its technology as a new economic benchmark for low-cost carbon capture…

CST climbed as high as 30 cents in trading this morning which is a Fib. resistance level it needs to overcome in order to push higher…

Mezzi Holdings Inc. (MZI, TSX-V) Chart Update

Some technical developments in Mezzi Holdings (MZI, TSX-V) that John is monitoring closely…an unconfirmed breakout has occurred above a downsloping flag while RSI(14) is moving higher from a bullish “W”…

MZI is up a penny at 20.5 cents through the first 2 hours of trading…

Silver Short-Term Chart

Silver found strong support in the mid-$15.50’s, as expected, and the current RSI(14) trend remains favorable…

You can see in the chart below how Silver gained momentum in late November after it pushed above a downtrend line…we’re now at another important point as Silver has pushed up against a downtrend line that formed after the late January high of $18.50…once the metal overcomes this resistance (the overall pattern suggests it will, the only question is when), then it should be ready to challenge the first Fib. level you see which is just below $18…

Silver Long-Term Chart

An explosive push higher – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that appears to be in the works here…

It seems quite possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce…RSI(14) has managed to hold support which goes back to 2001…

Sell pressure continues to remain strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which could continue for a while yet, should therefore be viewed in a larger context as a bullish contrarian indicator…

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

TSX Venture Exchange And Gold

The 680 area continues to provide exceptional support for the Venture which snapped a 4-session losing skid Friday to close the week at 691.  The loss for the week was 8 points despite slight gains in Gold and Oil, and a half point drop in the U.S. Dollar Index. There was a political explanation for the Venture’s under-performance.

The election of an NDP majority government in Alberta Tuesday clearly had a significant negative impact on the Canadian energy sector, and the Oil-sensitive Venture felt the affects as well.  Just a temporary blip?  We’ll see.  The Alberta NDP would be wise to tread very carefully on policy issues, especially since they weren’t elected on the basis of their left-wing ideology but more out of disgust with the sense of arrogance and entitlement shown by the Progressive Conservatives.

Venture 5-Month Daily Chart

The Venture has been stuck in a 28-point range between support at 680 and resistance at 708 for the last 26 trading sessions.  Ultimately over the coming few weeks, or the next couple of months, the Venture will take the path of least resistance which we speculate will be a breakout to the upside based on numerous indicators including the bearish trend in the U.S. Dollar Index.  Further gains in the CRB Index are also likely between now and the end of the summer, as John has shown in recent charts, and Copper is looking very interesting as well from a broad perspective.  So the Venture’s upside potential as this quarter progresses exceeds its downside risk, a very different scenario than the one that existed last September when the Index simply fell apart technically.  Yes, the resistance just above 700 is frustrating but the Venture has also been building a strong base over the last 5 months, and its 100-day moving average (SMA) has also reversed to the upside which is always a positive sign.

Sell pressure in this 5-month daily chart is the strongest we’ve seen since the end of December, yet the Venture has managed to hold support at 680 (the critical Fib. cluster of support is between the 650’s and 680).

U.S. Dollar Index Updated Chart

John called this one bang-on – the Dollar Index topped out, temporarily at least, at 100.71 in mid-March and also hit the minimum support level of 94 after the right shoulder of the H&S pattern fell below the neckline last last month.  The Index is also now below its uptrend support line (now resistance) that goes back to last summer.  A bounce back up to 96 or 97 could certainly occur in the near future, but a reaction around that area is very likely.

It’s conceivable that the Dollar Index could retrace to the 88 level by the end of the summer which would jive with charts that suggest commodity prices and the euro will both continue to trend higher over the next few months.  This would have positive implications for the Venture.

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

It was a relatively uneventful week for Gold which continues to drift slightly below resistance at $1,200.  Bullion finished up $10 for the week at $1,188.  RSI(14) at 45% is exactly in the middle of its range over the past year, though encouragingly it’s climbing an uptrend line on this 2.5-year weekly chart.

Bullion continues to consolidate within a downsloping channel.  It had 2 moves to the top of the channel during 2014 (mid-March and early July).  Another test of the top of the channel came in late January, and it last hit the bottom of the channel in early November.

Silver posted its second straight weekly gain, adding 30 cents to $16.40.  Copper finished unchanged at $2.90.  Crude Oil briefly topped $60 a barrel (strong band of resistance between $60 and $65) and closed 21 cents higher for the week at $59.47.  The U.S. Oil rig count fell for the 22nd straight week to 668, compared with 1,528 at the same time last year.  The U.S. Dollar Index, meanwhile, lost nearly half a point to 94.79.

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices.   Despite Gold’s largest annual drop in 3 decades in 2013, the fundamental long-term case for the metal remains solidly intact based on the following factors: