Gold has traded between $1,111 and $1,128 so far today…as of 9:30 am Pacific, bullion is down $12 an ounce at $1,116…the metal closed August at $1,134, so this is shaping up to be an unusual September as this is typically Gold’s strongest month of the year…Silver is off 13 cents at $14.50…Copper has rallied to $2.35 as it pushes off key support…Crude Oil is flat at $45.31 while the U.S. Dollar Index has added one-third of a point to 96.29…

Despite today’s advances, U.S. and global equities are headed for their worst quarterly showing since 2011, with investors rattled by China’s economic slowdown, uncertainty over Federal Reserve policy and growing pessimism about corporate earnings…

HSBC says it expects a recovery in the euro against the U.S. dollar, which in turn should support the bank’s “moderately positive longer-term Gold view”…

Chinese purchases of Gold for its reserves continue, although the decline in the country’s overall foreign-exchange reserves could limit future buying, according to Commerzbank…the People’s Bank of China reported that it upped its Gold holdings in August by 520,000 ounces to 54.45 million, or an increase of 16.2 tonnes…while slightly less than July’s figure of 19 tonnes, it’s still a greater pace of accumulation for China than the 604 tonnes added between 2009 and 2015 as announced in June.  “Monthly reporting of Gold purchases should contribute to greater transparency and make it easier to track the actions of the Chinese central bank,” Commerzbank says. “Given the size of Chinese currency reserves and the extent of its domestic Gold production, even higher Gold purchases might have been assumed. That said, the decrease in currency reserves may have put the brakes on buying interest of late – in August, currency reserves declined to a 2-year low of $3.56 trillion.”

Meanwhile, investors have withdrawn a record amount of Gold from the Shanghai Gold Exchange this year, adding to signs that demand in China is recovering after a stock market rout and a shock devaluation of the yuan…withdrawals jumped 37% to 1,891.9 metric tons through September 18 from 1,380.9 tons a year earlier, according to data on the bourse website…trading increased 150% in the first 8 months, said Liu Liang, a spokesman for the exchange, the world’s largest spot bullion market…

In Today’s Morning Musings…

Updates on Equitas Resources (EQT, TSX-V), Pure Energy (PE, TSX-V) and Sernova Corp. (SVA, TSX-V), a look at long-term charts for the Dow and TSX for clues regarding what may unfold in Q4, and, believe it or not, statistics showing Chinese consumers are upbeat (fortunately, only a small percentage of them have exposure to that country’s volatile stock market)…

Read more…

Gold has traded between $1,124 (just above its 50-day moving average) and $1,136 so far today…as of 9:30 am Pacific, bullion is down $1 an ounce at $1,131…Silver is up a nickel at $14.65…Copper has added 2 pennies to $2.27…Crude Oil has gained 87 cents to $45.30 while the U.S. Dollar Index has fallen nearly one-fifth of a point to 95.89…

The Fed will “probably” increase interest rates later this year (we’ve heard that before) and tighten policy gradually thereafter, New York Fed President William C. Dudley said yesterday, echoing the sentiment of Chair Janet Yellen that an uncertain global outlook won’t postpone liftoff into 2016…Fed personnel are sounding like politicians now, sort of like Obama, Mulcair and Trudeau, and that’s what savvy traders are picking up on…Fed-fund futures data conflict with the Fed’s assessment, showing traders see only a 41% chance the Fed will raise rates by year-end, down from a 64% probability September 16, the day before the Fed’s latest policy statement…odds climb to 48% by January, according to data compiled by Bloomberg…

Another central bank in full stimulus mode – India has lowered its key interest rates for the 4th time this year, and by a more-than-expected 50 basis points as economic growth in the current fiscal year is forecast to be weaker than previously projected…the bank was expected to reduce rates by a quarter point today as it did in January, March and June…

Glencore – The Next Lehman Brothers? 

London-listed Glencore recovered around 15% today as some analysts defended the value of the debt-laden company and even suggested it could be taken private…a note from Citi said the sell-off has been “overdone”, and the broker maintained its “buy” rating for the stock…the Swiss company’s shares fell about 30% yesterday on fears that the commodities trader and producer would need to take more drastic action to reduce its heavy debt burden amid concerns that commodity prices ranging from Copper to Coal, two of Glencore’s key earnings drivers, could fall further…

Copper Updated Chart

Copper is at a critical point, at key support based on this 20-year monthly chart…this is what might be adding to concerns regarding Glencore…as you can see, the metal is in danger of tumbling below both a downsloping channel and a long-term uptrend support line…chartists will be watching this carefully…sell pressure is the most intense it has been since 1999, which from a contrarian standpoint is a good sign…however, sell pressure could still intensify further…one cannot rule out the possibility of a sudden, rather violent plunge in Copper which would lead to an important bottom…the other scenario is that the metal manages to hold on to these critical levels and starts working its way higher…

Canadian Dollar Update

The Canadian dollar hit a new 11+ year low this morning, trading briefly around 74.5 cents before recovering modestly…the loonie, which has fallen 20% since the middle of last year, likely has a little further to go on the downside with an obvious near to short-term target (Q4) of 72.5 cents which served as strong support in early 2004…obviously the October 19 elections could have an impact on the loonie, especially in the event uncertainty is created with a minority government…

Goldman Sachs Turns More Bearish

Goldman Sachs cut its year-end forecast for the S&P 500 today, citing a combination of the slower pace of economic activity in China and the U.S. and the fall in Oil prices…the U.S. investment bank cut its year-end price forecast for the S&P by 5% to 2000…it had previously forecast the index to rise to 2100 by the end of the year…Goldman also lowered its 2015 earnings-per-share estimate by 4% to $109 for the S&P 500, from a previous forecast of $114…

“The impetus for these reductions is that our models now incorporate a slower pace of economic activity in the U.S. and China and a lower Oil price than we had been previously assuming,” Goldman said in a note on U.S. equity strategy…

Today’s Equity Markets

Asia

Japan’s Nikkei is under significant technical pressure after breaking down below 18000…it fell another 4% overnight to close at 16931…China’s Shanghai Composite lost 2% to finish at 3036…

Europe

European markets stabilized today and finished down just slightly…

North America

The Dow is up 8 points as of 9:30 am Pacific…optimism among U.S. consumers continues to grow this month, adding to August’s gains and beating expectations, according to the latest data from the Conference Board, which this morning said its monthly Consumer Confidence Index for September rose to 103…that was up from the August reading of 101.3…according to consensus forecasts, economists were expecting to see a decline to 96.2…

Meanwhile, U.S. home prices continued to rise in July, according to the latest S&P/Case-Shiller Home Price Index released this morning…it rose 5% in July, roughly in line with analysts’ estimates for a 5.1% increase…

Volatility Index (VIX)

The VIX needs to be watched carefully – it closed at 27.63 yesterday, above the key 25 level which is not good for stocks…it has backed off a full point in trading so far today…the VIX is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices…intra-day August 24, RSI(14) on the VIX spiked to a level not even seen during the 2008 Crash…

In Toronto, the TSX has recovered a modest 45 points after yesterday’s big drop, while the Venture is 3 points lower at 524…

New One-Step Plasma Process For High Purity Silicon?

Interesting news this morning from PyroGenesis Canada (PYR, TSX) that potentially could have a revolutionary impact on the high-purity silicon market…the company has filed a provisional patent for a 1-step process using plasma for producing high-purity silicon from silica…the Purevap is a proprietary process that uses a plasma arc within a vacuum furnace to produce high-purity, metallurgical-grade silicon (MG-Si), solar-grade silicon (UMG Si) and polysilicon from quartz…

“We expect this process to not only have strategic significance with respect to silicon, but will allow PyroGenesis to further develop distinct plasma processes geared to refining other high-grade and valuable metals as well,” said Pierre Carabin, director of engineering of PyroGenesis. “Applying plasma to silica in this manner is another example of how PyroGenesis is finding high-value niche markets for its plasma-based processes.”

“Advances in solar energy and electronic applications have made silicon a strategic material in the 21st century,” said Peter Pascali, President and CEO of PyroGenesis.  “The world consumption of silicon metal in 2014 alone exceeded $6 billion (U.S.).  Therefore, there is a significant need to finding ways to reduce the cost of producing strategic materials, and PyroGenesis’s processes are poised to do just that.”

Adventure Gold Inc. (AGE, TSX-V) Update

One Venture company we’ve maintained confidence in throughout the turbulent last several years in the junior resource sector is Adventure Gold (AGE, TSX-V), a well-run operation with money in the bank and numerous projects in its pipeline…its important asset in our view is contiguous to Richmont Mines‘ (RIC, TSX) Beaufor mine near Val d’Or…we suggest readers check out AGE’s August 19 news release regarding its Val d’Or East Gold Project and the New Beliveau deposit…

We completed a site visit to this project in 2011…key infrastructure includes an existing 340-m deep shaft, underground development drifts on 5 levels, industrial access road, power line, a railway within 1.5 km and custom milling facilities in Val-d’Or (4 Gold mills within 25 km)…no environmental issues apparent from past exploitation onsite…there is also strong level of local and provincial support for the project…

Our last update on AGE was in late November last year when it was trading around 7 cents, and clearly a bargain…it closed at 12.5 cents yesterday…its 200-day moving average (SMA) has reversed to the upside (currently at 10 cents, new support also coinciding with Fib.), ending a decline that started late last year…AGE has also broken out above a downtrend line going back to the summer of last year…

Given this company’s assets, AGE should be watched closely as it could continue to out-perform the market as it has over the past 12 months…

Note:  John and Jon do not hold share positions in PYR or AGE.

Gold has traded between $1,127 and $1,148 so far today as it comes under further pressure following comments by Fed Chair Janet Yellen after markets closed Thursday…as of 8:30 am Pacific, bullion is down $12 an ounce at $1,134…Silver is off 58 cents at $14.55…Copper is trading at $2.27…Crude Oil has declined 90 cents to $44.80 while the U.S. Dollar Index has reversed lower, down more than one-tenth of a point at 96.03…

Despite Yellen’s remarks regarding the “likelihood” of a Fed interest rate hike before the year is out, the central bank may have already missed its window to raise rates given a slowing global economy and the looming threat of a U.S. government shutdown in December…long-time Fed foe Peter Schiff was more blunt and colorful in his latest assessment of the Fed during an interview on CNBC.  “The whole world has been fooled by this Fed con,” said the Euro Pacific Capital CEO.  “Most people believe the Fed. They believe the Fed is going to raise rates,” he added.

Schiff has long posited that the Fed will never raise interest rates, contrary to general consensus…in fact, he believes the likelihood of another round of easing is greater than a rate hike.  “I don’t think she ever intended to hike rates,” he said. “They are in a monetary roach hotel, and they will never be able to raise rates back up.”

One should never say never, but one thing’s for sure – the Fed’s credibility is really on the line during Q4, and that’s a potential bullish set-up for Gold…several Fed officials are scheduled to speak this week, keeping the focus firmly on U.S. monetary policy…

As of last Friday, holdings in ETF’s backed by Gold increased 10.4 metric tons since the Sept. 17 Fed decision…options trading is showing bears may be starting to back away…the put-to-call ratio for SPDR Gold Shares fell last week to the lowest since 2012, according to data compiled by Bloomberg…

Russia Flexes Its Muscles Again

Another troubling sign of declining American influence in the world under President Obama as Iraq has joined Russia, Iran and Syria in a new agreement to strengthen cooperation against the Islamic State terrorist group, extending the Kremlin’s reach in the Middle East…in recent days the Russian government has stepped up criticism of the U.S. program to train and equip Syrian rebels to fight ISIS, an effort that the U.S. military acknowledges has only produced a handful of fighters…Vladimir Putin and Obama will hold their first formal meeting in more than 2 years at the U.N. later today…Putin continues to play Obama like a fiddle…words are cheap…speaking at the U.N. this morning, prior to his meeting with the Russian leader, Obama declared, “I lead the strongest military that the world has ever known, and I will never hesitate to protect my country or our allies.”

More Weak Data From China

Chinese industrial profits declined 8.8% on year in August, their sharpest fall since 2011, according to China’s National Statistics Bureau…analysts said the report wasn’t surprising given the string of recent weak economic indicators, such as tumbling producer price inflation and factory activity…

Attention now turns to China’s official September PMI and the final Caixin/Markit PMI, both due on Thursday…the reports will be closely watched after Caixin’s preliminary reading for September touched a 6-and-a-half-year low of 47, well below the key 50-level…

Today’s Equity Markets

Asia

China’s Shanghai Composite added 9 points overnight to close at 3101 while Japan’s Nikkei slid 235 points or 1.3%…markets in Hong Kong, South Korea and Taiwan are closed today…to help mitigate the impact of a slowing China, India is expected to cut its key lending rate tomorrow amid low inflation, sluggish industrial output, and a below normal monsoon…

Europe

European markets were down significantly today, generally more than 2%…shares in commodities giant Glencore PLC fell by about 30% to a new all-time low as the trader and miner struggles to convince investors that it will be able to meet its debt targets if commodity prices remain low or fall further…

North America

The Dow has slid 212 points as of 8:30 am Pacific…fewer Americans signed contracts to buy homes in August, as pending sales slumped amid broader concerns about the U.S. stock market and global economy…the National Association of Realtors says its seasonally adjusted pending home sales index fell 1.4% to 109.4 last month…meanwhile, U.S. non-farm payrolls for September will be released by the Labor Department on Friday…

In Toronto, the TSX is off 190 points while the Venture is 6 points lower at 535 as of 8:30 am Pacific…too bad there aren’t any Venture companies (yet) with claims on Mars…NASA scientists today are reporting quite a significant discovery on that planet – Mars appears to have not only frozen water but flowing streams of salty water, at least in the summertime…they say their latest observations “strongly support” the long-time theory that salt water flows down certain Martian slopes each summer…

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

Equitas Resources (EQT, TSX-V), which commenced drilling last week at its Garland Nickel Project south of the Voisey’s Bay mine, continues to look strong, up another penny-and-a-half to 19.5 cents through the first 2 hours of trading today…technical momentum is very obvious in this morning’s updated 3-month daily chart from John…RSI(14) bounced off support at 50% last week, cleansing temporarily overbought conditions that emerged early this month…you’ll note that a second pennant formed recently, within a broad upsloping channel, similar to the 13-session consolidation pennant in August that preceded an important breakout…a push above the current pennant appears to be in the works…EQT volume (CDN exchanges) has exceeded 1 million shares for 22 straight trading days, including today, so investors’ appetite for this “swing for the fences” discovery opportunity remains intense and could continue to build as the drill keeps turning…

Labrador Still Vastly Underexplored

Below is a chart from the Newfoundland & Labrador Department of Mines & Energy that shows the boom in exploration expenditures that occurred in the 1990’s following the rich Voisey’s Bay discovery, 20 miles northwest of the Garland camp where Inco got very curious a decade later…

The fact that over $250 million was spent in exploration in Labrador in the few years following the Voisey’s Bay discovery has led some to conclude that the area has been thoroughly investigated, but this is NOT the case…although $250 million seems like a large amount, keep in mind that the Voisey’s Bay project itself accounts for about half of this total, and most of the money was spent within a few miles of Discovery Hill…exploration budgets elsewhere in Labrador typically allocated about half the total spending to support services, notably helicopters, thus, the amount of money actually invested on the ground in exploration work is less than it first appears…finally, many of the junior companies (some of which had existed for only a few months previously) were attempting ambitious programs with essentially no experience in either Nickel exploration or the hostile, remote environment of Labrador…some programs were well-managed and systematic, but many weren’t…in some cases, assessment reports were never even submitted to government, and the exploration results cannot be evaluated…the post-Voisey’s Bay exploration boom did not locate a second deposit, but it did result in the discovery of numerous new examples of magmatic sulphide mineralization, many of which merit further attention…at Garland, EQT’s 280 sq. km land package had but 1 hole drilled into it historically prior to the commencement of this aggressive campaign…various corporate distractions got in the way of Inco completing a major program there as some of its geologists wanted to a decade ago…

Athabasca Nuclear Corp. (ASC, TSX-V) Update

Athabasca Nuclear (ASC, TSX-V) has been gently firming up in recent sessions, though many investors are probably still not aware of the company’s recent extensive staking surrounding Equitas‘ land package…this includes ground featuring the presence of troctolities contiguous to EQT’s western extension of its southern response trend (SRT) at Garland…

In an exclusive interview with BMR, Athabasca CEO Ryan Kalt stated, “Like Equitas, we recognize that advances in technology have created opportunities to identify new prospects and look at ground in a new light. Whether it’s the availability of VTEM or drones, accessing newly-released satellite imagery or crunching large volumes of assessment reports through the cloud, the exploration game is changing, and quickly. While new technology certainly doesn’t put ore in the ground, it does make searching for it far more effective. For this reason, it is strange that more people do not regard the exploration part of mining as more of a technology sector since at the end of the day, hardware, software and science are playing an ever increasing role. For efficacy and cost-reduction, a great deal of technology can and should be deployed well before a drill starts turning.” 

It’s important to emphasize that ASC is not just a Garland “area play”, though its large land position there could nonetheless give the stock a substantial lift over the near-term if the right events unfold for Equitas…the company is active on several Uranium and diamond projects, has a clean balance sheet and only 52 million shares outstanding…Kalt controls 25% of the stock, and the balance is believed to be in retail hands (no major funds involved which is good)…

We noted recently how ASC has broken out above a long-term downtrend line, a very bullish development in the current junior resource climate…the 200-day SMA, currently 3 cents, is also now turning to the upside, so a major reversal appears to be in its early stages here…more on ASC later in the week…

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

As Kalt pointed out, not only are advances in technology allowing for important reinterpretation of areas around the rich Voisey’s Bay discovery that were poorly explored or overlooked in the 1990’s, but Garibaldi Resources (GGI, TSX-V) is a great example of a company that has used relatively new technology (hyperspectral remote sensing) to make discoveries in Mexico – the most recent of which was a first-strike high-grade drill hole (Silver Eagle discovery) at Rodadero in Sonora State…

Meanwhile, in northwest B.C.’s prolific Sheslay district, Garibaldi has been using the latest technology to “unmask” a large area at Grizzly Central which has been overlooked historically due to 95% overburden cover…this is truly an emerging world class district, one that we identified for our readers through extensive research more than 2 years ago…given the information that is now known about the region, and Grizzly Central, it’s our view that GGI is on the cusp of another new discovery that could become the third deposit defined along the under-explored, 30 km long mineralized Sheslay corridor…the drilling stage is drawing near…

Technically, GGI has many factors in its favor at the moment including a 50-day SMA that has reversed to the upside, and RSI(14) and price breakouts above downtrend lines…

Biorem Inc. (BRM, TSX-V) Update

In the non-resource area, we’re very excited about Biorem Inc. (BRM, TSX-V) given its revenue and earnings momentum…we first introduced BRM to our readers when it was trading around 30 cents a few months ago…it more than doubled in value at the end of August/early September after its Q2 financial results were released…that created temporarily overbought conditions with the anticipated pullback showing strong support in the 40’s…

With only about 13.5 million shares currently outstanding, Guelph-based BRM is an environmental biotechnology/engineering company that designs, manufactures and distributes a comprehensive line of high-efficiency air emissions control systems used to eliminate odors, volatile organic compounds and hazardous air pollutants…may not sound glamorous but these guys are making money (9 cents per share on total revenue of $9.3 million for the first 6 months of 2015) and that’s what counts…they’re also a major beneficiary of a low Canadian dollar…

John’s latest chart shows an unwinding of the temporarily overbought conditions at the beginning of this month…plenty of Fib. support around current levels as well as a rising 50-day SMA at 38 cents…

Silver Short-Term Chart

Today’s trading is yet another demonstration of how volatile Silver has been since the beginning of last month…the metal has swung between strong Fib. resistance just below $16 and solid support around $14…the band of Fib. resistance between $15.30 and $16.60 has proven to be very stubborn since early June, certainly due to the reality of a slowing global economy with Silver having a lot of industrial uses…

Silver’s immediate challenges are to overcome Fib. resistance at $15.29 and $15.79…RSI(14) continues to trend higher which is encouraging…

Silver Long-Term Chart

An explosive push higher (eventually) – 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 could develop…

Have we seen the  bottom of “Wave 4”?…that’s quite possible, but still too early to tell…encouragingly, RSI(14) has so far managed to hold support which goes back to 2001…

Sell pressure continues to remain very 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 started modestly in early 2013, could continue for a while yet…this should be viewed in a larger context as a bullish contrarian indicator given historical patterns…it doesn’t necessarily mean, however, that Silver has found a bottom just yet…

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

If you were to ask the typical Canadian on the street if they thought the last year or so has been a good time to buy quality Gold stocks, 9 out of 10 would probably say no, given the drubbing Gold has received in the mainstream media – especially from “talking heads” in the United States who can’t see beyond their own borders and thus look at bullion very differently than the rest of the world.

Since peaking at just over $1,900 an ounce U.S. in late 2011, Gold in U.S. dollar terms has experienced a healthy, normal correction of as much as 44% before the latest recovery.  A lot of the selling has been eagerly absorbed by Asian investors who have a natural affinity toward the metal.  Over the long-term, Gold has established itself as the Ultimate Currency and that trend will probably only intensify in the years ahead.  The “talking heads” in the U.S. will eventually understand that reality.

Gold in U.S. dollars has held up impressively over the last year, especially considering the record advance in the greenback.  In other currencies, the metal is flat-out, big-time bullish.

Below is a Gold 2.5-year weekly chart in Canadian dollars.  This helps explain why certain smaller Canadian-only producers, such as Richmont Mines (RIC, TSX), Kirkland Lake Gold (KGI, TSX), Claude Resources (CRJ, TSX) and others have performed so remarkably well since mid-2014.  We’ve consistently been emphasizing these opportunities to our readers.  Feasibility studies and PEA’s for companies like Pretium Resources (PVG, TSX) and Kaminak Gold (KAM, TSX-V) have assumed a much higher Canadian dollar, so project costs for some companies building mines in Canada could be lower than anticipated.

Gold has been in an uptrend in Canadian dollar terms since the 2nd quarter of 2013, climbing 23% during that period based on Friday’s close of $1,527 CDN.  Gold surged to $1,655 CDN near the end of January, retraced to Fib. support at $1,400 by July, and has since pushed through 3 levels of Fib. resistance while the 200-day moving average (SMA), currently $1,484 on this weekly chart, continues to rise.

What appears increasingly likely during the upcoming quarter is a re-test of the downtrend line from the 2011 high, which was about $1,900 CDN, and that downtrend line currently intersects around $1,630 (this would equate to more than $1,200 U.S.).  Every indicator on this chart is positive.  Note how RSI(14) has been following an uptrend line since 2013 and is now showing increasing momentum.

If and when Gold breaks through $1,650 CDN, watch out – it could spike significantly higher very quickly from there.

In loonie terms, quite simply, Gold is a bull gaining speed.

Gold In Euros

Gold is looking great in euros as well.  It bottomed in late 2013 and has been in an uptrend ever since, recently bouncing off the uptrend support line.  Significantly, RSI(14) has broken out above its downtrend line that formed after the early 2015 high of 1165 euros.  The 200-day SMA has been climbing from the summer of last year.  A bullish +DI cross appears to be forming, and SS is at a bullish position as well.

TSX Venture Exchange and Gold

The Venture continues to battle resistance at short-term moving averages (EMA-8 and EMA-20), and once these are overcome the path will be clear for a significant move to the upside.  For the week, the Venture was off 8 points, closing at 541.50, in line with a 2% pullback in the TSX while the NASDAQ fell 2.9% last week.

For the month of September, with 3 trading sessions remaining, the Venture has declined 3.2% after a 5.9% drop in August and an 11.5% rout in July.  Selling pressure has diminished substantially.  The Index could certainly provide some positive surprises in October, particularly in the event of some exciting exploration news or a rebound in commodity prices.  Gold is looking stronger than it has in a while and could challenge its August high ($1,170) in the near future.

Venture “Awareness” Chart

As soon as the Venture can break loose from its EMA(8) and EMA(20), currently 545 and 550, respectively, that’s when this market will gain fresh momentum and traction, taking it through chart resistance at 560.   The Venture would then be expected to test the next Fib. resistance on John’s 4-month daily chart which is 586.

Other key takeaways from this updated “awareness” chart:

1.  RSI(14) has climbed out of oversold conditions which it had been trapped in since the beginning of July.  It’s currently at 39% – near-term resistance at 50%, new support at 30%;

2.  The recent bearish trend (ADX indicator) has weakened dramatically since the August 24 low – what to watch for here is a potential +DI bullish cross over the near to short-term;

3.  Fib. support at 515 has held; on a monthly basis, Fib. support around 560 also held in August (we’ll see if there’s an immediate rally and it holds for September).  One cannot rule out the possibility of a double bottom at the 515 Fib. level, but this continues to be an ideal time to search aggressively for high-quality, undervalued plays.

More than ever, the Venture and the junior resource market in general urgently need a fresh grassroots discovery in Canada.  Two of the best near-term possibilities in our view are in Labrador and northwest British Columbia – Equitas Resources‘ (EQT, TSX-V) Garland Nickel Project south of the Voisey Bay’s mine, and Garibaldi Resources‘ (GGI, TSX-V) Grizzly Central target in a district where a second deposit has already been found and more appear to be a virtual certainty.  First-ever drilling at Garland is now underway, while GGI is proceeding aggressively toward initial drilling at the Grizzly.

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, and recent weakness with the drop below $1,100, is that it has forced producers to become much more lean in terms of their cost structures. Producers, big and small, continue to make hard decisions in terms of costs, projects, and rationalizing 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.

U.S. Dollar Index Update

The greenback remains a crowded trade, though the technical picture has deteriorated significantly since the spring.

The consistent position we’ve maintained over the last several months is that the Dollar Index hit its 2015 high during March-April based on what has proven to be, so far at least, a very reliable 9-month daily chart.  Fundamentally, a runaway dollar would not be healthy for the U.S. or global economies, and such a scenario has certainly played into the decision making of the Fed at its recent meetings.

Dollar Index support has been strong around the 93 level as expected up to this point.  Stiff resistance exists between 96 and 97.  The potential for a serious unwinding of the greenback over the next few months is very real after the record run that started in the summer of last year.  This could mean a drop to about 88 (base support) on the Dollar Index which would be very supportive of commodities.

Gold Update

September is traditionally Gold’s best month of the year, and after a slow start to this September the yellow metal finally kicked into gear around mid-month and climbed another $6 an ounce last week to close at $1,146.

Gold is now comfortably above its 50-day SMA which is preparing to reverse to the upside.  The $1,150, $1,160 and $1,170 levels all represent resistance, but it’s certainly not inconceivable that Gold could rip through $1,170 in the coming weeks and take a run at $1,200 again based on fresh technical strength, short-covering, increased Asian demand and any weakness in the U.S. Dollar.

As John’s 2.5-year weekly chart shows, Gold has been trading within a downsloping channel since 2013.  Each time it has touched the bottom of that channel, bullion has rebounded back to the top of the channel within 2-3 months.  So a Q4 move up to about $1,225 could certainly be in the works.  What will be hugely significant is when Gold either breaks out above this channel or collapses below it.

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Gold has traded between $1,140 and $1,149 so far today after hitting a fresh 4-week high yesterday…as of 10:00 am Pacific, bullion is down $8 an ounce at $1,146…Silver is flat at $15.13…Copper is at $2.29…Crude Oil has added 48 cents to $45.39 while the U.S. Dollar Index is relatively unchanged at 96.30…

Follow-through buying in Gold from yesterday, over the next few sessions, would suggest a near-term price uptrend in Gold can be sustained…chart resistance exists at $1,160, as outlined by John this morning, while the August high of $1,170 will also be a key level to overcome…

The U.S. economy expanded by 3.9% in Q2, according to the final estimate of GDP for that quarter as reported by the Commerce Department this morning…that figure was slightly above expectations…

“With the third estimate for the second quarter, the general picture of economic growth remains the same; personal consumption expenditures (PCE) and nonresidential fixed investment increased more than previously estimated,” the report stated…

Too Much Focus On The Fed

This is a problem the Fed itself has created with too many mixed signals and delays in pulling the trigger on the first rate hike in nearly a decade…a week after the Fed voted to keep interest rates at zero, Fed Chairman Janet Yellen said in a nearly hour-long speech yesterday (during which she became dehydrated and started having difficulty near the end), “It will likely be appropriate to raise the target range of the federal funds rate sometime later this year (our emphasis) and to continue boosting short-term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2% objective…if the FOMC were to delay the start of the policy normalization process for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting its goals,” Yellen stated…

Central to the argument she set out to establish is a belief that slack in the economy has diminished to a point where inflation pressures should start to gradually build in the coming years (how long have we been hearing the same tune from the Fed?)…Yellen argued that those pressures aren’t asserting themselves yet, because a strong dollar and falling Oil and import prices (the #1 export out of China at the moment is deflation) are placing temporary downward pressure on consumer prices…as those headwinds diminish, she predicted, inflation will gradually rise…

Interestingly, central banks in Norway, Taiwan and Ukraine all lowered interest rates this week…the central bank of India appears on track to cut rates, too…meantime, investors have piled into European bonds, anticipating the ECB will launch a new bond-purchase program to boost the euro zone economy and inflation…other central banks that might have responded to a Fed rate increase with upward moves of their own – including those in Mexico and Turkey – instead this week opted to keep rates on hold…

Brazil In A Downward Spiral

After more than a decade of socialist rule, the wheels have fallen off the wagon in Brazil which is rapidly becoming the Greece of Latin America…Brazil’s battered currency yesterday touched a new low, unemployment surged and the central bank forecast a far deeper recession – a litany of woes suggesting a major crisis ahead for this once high-flying economy…the real, the worst performer of any major global currency in 2015, has lost around one-third of its value this year…the country’s central bank, which said it may dip into its $371 billion in reserves to stem the currency’s bleeding, lowered its 2015 forecast for a 2nd time yesterday and now predicts the economy will shrink 2.7% this year – the worst contraction in 25 years…

Gold 6-Month Daily Chart

With Gold’s 50-day moving average (SMA) possibly readying itself for a reversal to the upside, the odds do seem to favor bullion gaining further momentum into October with at least another test of its 200-day SMA (currently $1,180) as was seen in May and June…so any minor weakness in Gold could be a strategic time to accumulate some high-quality producers and juniors…

Next resistance is clearly $1,160 as shown on this 6-month daily chart…very dramatic reversal in the CMF…

Yesterday, we noted how some fresh accumulation of Gold by ETF funds is long overdue, and that’s one factor that could give bullion some strength during Q4 going into year-end…a trend that is quite evident is the slowing liquidation of Gold ETF holdings as noted in this chart below…

Frank Holmes, CEO of U.S. Global Investors, expects demand for Gold to be led by China:

“The decline of the Chinese real estate market moved billions of dollars into the country’s stock market, which saw a dramatic rise and then an equally sharp decline. If Chinese investors fleeing from stocks decide that the historic value in Gold is tempting, that could mean the next boom could come in Gold.”

TSX Gold Index Long-Term Chart

The TSX Gold Index, which is currently down for the 5th straight year, is well-positioned to snap that losing streak with a strong 4th quarter move to the upside…one important clue regarding that is obvious in this 15-year monthly chart – the rather sharp divergence between RSI(14) and price since 2014…RSI(14) has been climbing an uptrend line since the beginning of 2014 while the Gold Index plunged recently to lows not witnessed since 2001…

Next resistance is 135 while the downtrend line from the 2011 high currently intersects around 150…a break above the downtrend line would likely kick off a wave of fresh buying interest…

The Gold Index is off 2 points at 127 as of 10:00 am Pacific…

Richmont Mines Inc. (RIC, TSX) Update

Some high-quality individual producers have performed remarkably well the last couple of years despite the pressure on the overall Gold sector – bullion and stocks…and keep in mind, Gold in Canadian dollars is trading above $1,500 and looking very bullish…

Our favorite Canadian producer remains Richmont Mines (RIC, TSX) which has become an earnings machine and will also soon benefit from the high-grade resource discovered beneath existing workings at its Island Gold mine in northern Ontario…

RIC has been trading within a downsloping flag throughout 2015…we predict a breakout above this flag during Q4 and a move toward the next measured Fib. resistance which is $5.48, 40% above current levels…

Today’s Equity Markets

Asia

China’s Shanghai Composite closed down 51 points overnight to finish the week at 3092…meanwhile, Japan’s Nikkei rallied late in the day for a gain of 309 points or nearly 2%, closing at 17881…market watchers attributed the rally to speculation that the Bank of Japan will be stepping up its easing at its October policy meeting…core consumer prices dropped 0.1% in August, turning negative for the first time since April 2013…

Europe

European markets were up sharply today, around 3%, as concerns over the health of the global economy dimmed slightly after Janet Yellen suggested the Fed was still on course to raise interest rates by year-end…

North America

The Dow has climbed 218 points as of 10:00 am Pacific…

On the political front, a shocker out of Washington, D.C., as it was announced this morning that House Speaker John Boehner, under pressure from some in the conservative wing, will resign from Congress at the end of October…the announcement came just a day after the high point of Boehner’s congressional career, an historic speech by Pope Francis to Congress at Boehner’s request…

In Toronto, the TSX has added 108 points as of 10:00 am Pacific…the Canadian dollar is relatively flat after hitting its lowest level yesterday since June 2004…Bank of Canada Governor Stephen Poloz, who already cut interest rates twice this year, has said he expects exports to take over from consumer spending as the main driver for the next stage of Canada’s economy recovery, with non-commodity exports to lead the way…

The Venture is unchanged at 544 as of 10:00 am Pacific…keep an eye on Athabasca Nuclear (ASC, TSX-V) which is looking strong technically and has strategically positioned itself in the Garland Nickel camp play…ASC is up a penny at 4.5 cents through the first 3-and-a-half hours of trading…

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

Discovery Ventures (DVN, TSX-V) has enjoyed another good week…it’s up a penny at 17 cents as of 10:00 am Pacific…that’s a key Fib. resistance level that DVN has an excellent chance to overcome given the bullish “W” in the RSI(14), along with increasing volume and up momentum…the fundamentals are looking good as we’ve been impressed with the steps taken so far by new CEO Dan Omeniuk, a successful entrepreneur out of Winnipeg, with regard to the company’s high-grade Willa-Max Gold-Copper Project in southeast British Columbia…

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

If you’re bullish on Gold for the 4th quarter, keep an eye on Integra Gold (ICG, TSX-V) which is ramping up drilling in a big way at its Lamaque South Project in Val d’Or after a recent investment by Eldorado Gold (ELD, TSX)…great support at 27 cents which is the 50-day SMA and a Fib. level…band of resistance between 28.5 cents and 30 cents…balance of probabilities favors a breakout to the upside and another test of resistance near 40 cents…

ICG is off half a penny at 28 cents as of 10:00 am Pacific…

Note:  Jon holds a share position in DVN.